Technology Incubator Program ’s draft model

1. Technology Incubator Program’s draft model Valdis Avotins, LIDA

2. Aims of the presentation • To present draft model of the program • Receive feedback/ comments to the model • Discuss linkage with pre-seed and seed scheme

3. Technology Incubator Scheme • Why? • Goals • Selection criteria • Financing • Decision mechanism • Supporting measures

4. Goals • Stimulate development of new technology intensive SMEs by supporting innovative entrepreneurs in the early stages of technological entrepreneurship • Stimulate export of technology intensive products • Motivate scientists and engineers that once left Latvia to establish business in Latvia • Facilitate attraction of VCF investments in R&D / technology intensive NSMEs • It is not regional instrument

5. It is necessary because • The lowest amount of SMEs(18 per 1000 inhabitants) among the EU candidate countries • Mental and psychological barriers to establish first company • No sufficient support / guidance available to inventors • Few R&D intensive projects among NSMEs • No real success in existing few “incubators”

6. Target groups • Engineers and designers from private sector (industry) • Academy (scientists, PhD students, engineers from universities) • High-level scientists and specialists that have left Latvia, including engineers abroad

7. Selection Criteria for New SMEs Evaluation done by private TI operator: • Knowledge intensive SMEs (R&D investment exceeds 3% from annual turnover) • Explicit orientation towards global market (export) • Market potential • Management capability • Acceptable time scale • IPR transferred to NSMEs (signed commitment letter)

8. SME’s liabilities • The SME has a liability to repay the received grant as regular payments from sales • It is done by paying ~3% of yearly revenues till the 100% of the received grant is repayed • These revenues government re-circulates within TI support program.

9. TI services to SMEs • basic infrastructure • basic (management, marketing, strategy) services • specialized technology services • Provision of financing for new SMEs • IPR services

10. Grant model to private TI operator • approved TI activity business plan • This grant is given max for 3 years. It can be used only for ensuring TI activities and not for investing in new SME • Up to 75% of operation’s costs = 25% private financing required • Next project 3Y period grant reduced (e.g. 65%) • Maximal grant for one TI is 350 000 EUR per year

11. Selection criteria for TI applicants Evaluated by SAP Commission: • TI business plan (deal flow) • TI management experience • Experience of TI manager / team • Amount of offered financingfor TI operation • Ability to invest 20% in NSMEs • Availability of infrastructure

12. Eligible costs • Management costs • basic (general) services and consultations • specialized technological services and consultations • finance management consultations • training of employees • marketing expenses • IPR protection costs

13. Split of shares Registration • author of technology idea (inventor) – not less than 50%; • TI operator – 20%; • Management, employees, mentors – up to 10%; After registration • Rised capital during next 24 month • TI is allowed to invest • Negotiations with strategic partner ongoing

14. Performance evaluation 2. For new SME operation: • number of created new SMEs • export volume • amount of taxes paid to the government • number of created working places • increase in the volume of realization 1. For TI operation: • number of approved projects • number of created new SMEs • amount of services provided • export volume • number of created working places • number of stable SMEs in the long run • volume of attracted capital

15. Supporting measures • Entrepreneurship motivation scheme • Awareness creation program • Dissemination of success stories / best practices

16. VENTURE CUP – W-Sweden

17. EMP scheme

18. EMP scheme

19. Thank you for attention!