Gaining independence and maintaining interdependence . 119

further talks with other partners. Ulf mentioned they met with Rolf Bjerndall and Mats Lönne around 2011 when they were exploring opportunities, but they have recently also obtained a patent for use in children’s food. Ulf felt that the lawyer played an important part, as it was important to protect the patent.

He emphasized that it was important that they were “free” from demands from investors and that the researchers would be able to concentrate on what they do best.

4.1.4 Gaining independence and maintaining interdependence

projects together where they look at further development of other products.

Aventure AB expressed an interest in licensing the rights of the patent by Östman and Björk. This enabled them to have the confidence to register the company to take over the patent and maintain it themselves. During the initial setup, they also received some assistance from Öste and they subsequently collaborated to file a follow-up patent with him as a co-inventor.

It is not just one or two companies but it’s a network of people being in different roles and they interact together, and that created the momentum. And that momentum is very difficult to find in a big company because there is a lot of walls and bureaucracy that hinders the development of these ideas. That is why bigger companies are looking at small companies in terms of open innovation. Here (in the smaller company), everyone feels the ownership but the weakness is in terms of financing.

Jörgen Holm (then-CEO, DoubleGood AB), personal communication 2014 The AFC project was a strategy from Björk to attract researchers to the project.

AFC was not formed yet when they filed the first patent, but it was during the FuncFood period when they got more aware of the idea of innovation and patents. AFC provided them with the opportunity to further develop their research. AFC was designed to be attractive to researchers and to be able to work with an idea that they already had that was relevant within the scope of AFC or even patented with funding to support that. InnovaFood took this opportunity and it was there that they worked on the second patent with Öste as co-inventor. The AFC project had helped with them taking ideas that had been accumulating for years to develop new understandings so it could be

“renewed” again. For example, the recent patent was in discussion at the same time with the patent with DoubleGood when they were in working with Forskarepatent I Syd around 2006, but it had not come to fulfillment until now when they could make a new study. They had talked even with Mats Lönne from Ottos Baby Food about it as it relates to baby food. AFC allowed them the exposure of their ideas to companies, which was in line with what Vinnova had expected. However, the partners who were involved in AFC could be still quite reluctant to take on new projects, though that has allowed them to pursue opportunities outside of the AFC network.

The very first patent that they had done with a PhD student and aided by Lund University for the first few years. The latest one in 2013 they did by themselves for the first stage of application with some help from a family friend who is a patent officer as a way to maintain low costs at that initial stage.

Östman commented that as a research finding is normally finalized at the end of a PhD, the finding needs to be filed as a patent quickly before the publication of the thesis or the patent would not meet filing requirements.

This is a problem they have reflected on, but found it hard to overcome due to existing regulations. In the first 12 months after filing the patent, they have the opportunity to add in new data to the application. However, they are often not able to use that 12-month period as they are often lacking in resources to add in more data. This is something that Östman referred to as a system requirement that is not so conducive to the innovation environment when it comes to the filing of patents and patent requirements. This also made Östman more aware of the requirements of resources during the innovation process.

We have learnt what is the format of a patent text, what to include etc. We needed to discuss with someone with the language, which was something we are not used to. But I did the uploading and it was also a much smaller cost. And we know when it comes to the next phase, you have to use a patent firm because there was too much paper work to do on your own. What I have learnt and reflected upon, which is a problem for us is when we make a finding, it is often at the end of someone’s PhD work. So they are not supposed to continue and we need to file the patent very quickly before they go public with the thesis.

That we know, and have known all the time. The problem is then when you have filed the patent, you have 12 months to put more information into the patent application and those 12 months run very quickly because normally it is in a project that is about to finish. We don’t have any staff to put time for this crucial 12 months and time goes and then it’s the end of the 12 months and there is no new data to add. You don’t make use of those valuable time and possibility to insert or fine tune. That is something for the system, I think, to take into consideration. That’s when you need where we need resources really, if we can get some kind of innovation scholarship for part-time during that period to really try to do your best of this patent that was filed. And later on see to evaluate if it was worth investing more in it. Once you go for a patent you should really give that 12 months and I think it would help when the decision is going to be made for the commercialization.

Elin Östman, personal communication, 2015 With regard to the patent they were working on with Öste, it was something they already knew the outcome of, it was an ongoing project, and they had dedicated resources to it. They did not have ambition to be entrepreneurs, choosing instead to be a licensing company for the patents they own. They

want to stay in research and protect their findings, and to assist those who want to bring their findings further into the commercial market. The amount of on-going research after the patent is licensed out depends on the type of markets that the patent is meant to be used when entering the market to determine the extent of their involvement and what roles they take on. For example, if the product to be developed using the patent involves more on health parameters, then they would be more involved in the quality certification aspects of it.

They now have a new patent, which were findings that had been accumulated over quite a few years, and are currently in talks with one global distributor and another that has indicated interest in producing it. They are waiting for more confirmation before setting up a daughter company to house the new patent.

Östman realizes that they have to be more involved into the business aspects to enable the patent to go into the commercial aspects with the partners.

From the perspective of the financing party, ALMI commented that InnovaFood were one of the few companies that exhibited business sense and managed to proceed with their product development through ongoing conversations with a confirmed customer. ALMI provides innovation counselors who meet companies or people intending to start companies with innovative ideas from all types of sectors within Sweden. With InnovaFood, they met up with Ulf and Elin, together with another colleague within ALMI who worked with financial notes in 2010. Ulf was curious about ALMI and had called ALMI up to understand the type of help they can obtain. They concluded that InnovaFood offered an innovation. Certain types of grants can only be used for external costs, such as the lawyer for licensing agreement in the case of InnovaFood. ALMI had a good impression of them when they first met, as InnovaFood AB have a solid background in science through Elin and business management skills that Ulf offers with his different backgrounds and perspective. In many cases, research-based microenterprises exhibit strengths only on the technological aspects of the business, not in their business skills.

However, for THG the research strength was complemented by Ulf’s experience and involvement.

ALMI kept in contact with Elin in terms of updates or new questions. In 2012, they got grants for applying for patent applications. There are no stipulated points of control that ALMI requires from the companies who receive the grants, but more natural ones, for example, receiving the invoice for patent application to be paid by ALMI. There is a certain level of openness and flexibility (i.e., no demands) when it comes to receiving affirmation from companies that they are progressing. However, the innovation loans ALMI provides are usually divided up into two or three stages that allow the release of

funds according to certain goals toward commercialization, for example getting a customer on board like a letter of intent, etc. Once this milestone is reached, the beneficiary microenterprise will get the next sum of money after that. Every end of the innovation loan aims at commercialization as the end destination.

They do not perform operations but only provide advice, while the companies have to take their own action. Most projects fail or are closed for some reason even though they are good. There are always hurdles to be faced for new companies and they might only see a few hurdles at any point during their innovation process. They do a yearly follow-up with the projects or contacts they meet with.

InnovaFood initially received financing from ALMI in 2010 for feasibility studies or to use for the legal agreement for the licensing area, which was an area that required a large amount of funds. Once the licensing agreement was in place, there were payments provided after each milestone was reached. Ulf felt that they dealt with ALMI personnel who were good and supportive of what they were doing and who also provided good advice.

With regards to having external parties joining as board members in the company, they have a lawyer who has been working with them and would be interested to come on board. Currently it is just Östman, Björk, and Ulf. They are still consistently applying for grants, but have not been qualified for any.

They find there are still difficult aspects when it comes to funding for innovation; in this case it was for clinical verification. They are often not told what they are lacking when they do not get the grants. In terms of having external people joining the company, Östman is open to having them participate in their daughter companies but still wants to maintain control of the main company, InnovaFood.

The driving force for Innovafood is to have money coming back so it can be used in other projects or patents to run the business instead of having them put in private money. For example, another daughter company they have, Ryefactor, is currently under consideration if they should maintain it or if it should be sold to ensure it is being kept in use. They had filed the patent without a clear idea of how they will be developing it. There were no partners they could work with in the first year although they managed to get some financing for it. They managed to sell and option to use it at an early stage, but the money is being used to run the company and the funds are running out.

They have tried to formulate a project idea around the patent and provide an opportunity for them to take over the patent and also in a way so they can remain connected with the development of the patent for an eventual product.

4.1.5 Analysis

This case describes the process of commercializing two university researchers’

innovation of the use of amino-acid mixture to regulate blood glucose or the glycaemic index. The critical events identified for this case were in relation to their patent filing and funding process. While they are considered university spin-offs and embedded within the University Innovation system, they went through various roadblocks with their first patents. This included having to setup a company to house their patent after the University Innovation system indicated no interest in maintaining the patent after the first two years. The navigation process from setting up their first patent and subsequently seeking funding for further development and commercialization of the patent may be a familiar story to most microenterprises. Figure 11 shows a network diagram representation guided by the analytical framework based on the ARA model (Håkansson and Snehota, 1995). This facilitates the following analysis of the innovation process of how Innovafood AB was incepted and the interaction between the three substance layers: activity links, actor bonds, and resource ties plays a part in

4.1.5.1 Activity Links

We have to be pragmatic and do what is suitable for each situation.

Rikard Öste, personal communications, March 2015 Activities are tasks undertaken by actors, which can provide or create access to resources. Håkansson et al. (2009) recognized the relevant activities configurations to include all that surrounds the production of an end product.

In this innovation process, activities are seen as those performed by both individual actors and between actors in the focal network with the purpose of accessing or creating resources to commercialize the innovation product/process.

One way in which activities are performed jointly in this innovation process case can be seen by the joint promotion and work performed to establish both the patent and DoubleGood AB’s product in the marketplace.

New products in the food sector need to be established in the right and successful way and there are many aspects that need to be considered. The legislative barriers can be frustrating, but can also help weed out any shallow claims and also legitimize their findings in terms of the medical field

perspective. These new products in the food sector can take a very long time to come out due to the layers of legislation and testing that are involved. This meant that before DoubleGood AB’s product using their patent could be launched in the market, there was a lack of “testimony” to support the further application of InnovaFood AB’s patent. The founders of InnovaFood AB are convinced that when the product is launched, it will be easy to communicate to the consumers what these products do because they have scientific research to support the claims. The association with the university based on their research also can help legitimize the research and the product.

While InnovaFood AB did not want to be involved in the marketing too much, there is a need perform this activity together with DoubleGood AB for future product applications. For instance, InnovaFood AB is going to conferences with DoubleGood AB to not just promote the product but the research, which they own, behind it. Another example is the continued work on supporting the claim that can be used for DoubleGood’s product through further testings, as they were denied by EFSA in summer 2014 and they plan to do another study for a specific claim for the product to be able to sell in Europe. DoubleGood AB had planned to launch the product in the US market, as they fulfilled the FDA requirements. Their network in the US had a personal friend who was successful with another product that was focused on metabolic syndrome. The preliminary market survey found that due to the large amount of diabetes there was already recognition of the claims from the market; this can strengthen the potential of the table water product DoubleGood is launching. So they are preparing for the US market launch while still waiting for EFSA’s approval. Innovafood will be involved to some extent in the upcoming study.

These collaborating activities are not just conducted based on the fact that the patent is being used for DoubleGood AB’s product and the actors have a direct link with each other. Rikard Öste shared in an interview that besides trust and commitment for each other when working together, skills are another aspect he thought was important when working in a network. For him, the selection of good partners is aided by having good insights on how interesting or difficult to work with the potential actors in his network are. He screens whom they work with, and was guided by the saying: “You have to take people for what they are, not for what you want them to be.”

Besides trust, skills. We want to collaborate with the best ones. And I have good insights into my areas and my research and I know who is doing an excellent job and who are interesting. And who are difficult to collaborate with. Those I avoid. And those who want to collaborate and clever, we work with. We have to do that. We have to have those that I know who can collaborate, are generous, are helpful, generous, smart. I don’t collaborate with those who don’t fit into that criterion.

Rikard Öste, personal communication, March 2015 For InnovaFood AB, the learning experience of working with DoubleGood AB on these activities has enabled them to subsequently apply those learning points when they worked with another patent with other actors under InnovaFood AB.

4.1.5.2 Resource Ties

For this innovation process case, resources are recognized as those that are being used or have the potential to be used in the case. In view of the critical events, the resource ties related to financial and advice are discussed for this case with connection to both critical events. As Figure 11 shows, while the ties between the actors are relatively strong, it mostly relates to the particular event or project in time and does not assure a continuation of the flow of resources for the continuation of the microenterprise’s existence. As such, this creates the situation where the microenterprise is constantly in a state of “hanging in there.”

The first part of the discussion relates to the lack of or poorly organized support for researchers wanting to commercialize their findings, as detailed in section 4.1.3. The university later reorganized their support organization (now known as Lund University Innovation System) to help researchers commercialize their innovations and findings, such as helping with the patent application process and consultation. InnovaFood AB’s experience with the university system has not been very effective. This was mainly due to the changes in personnel at the patent office and lack of documentation. This lack of continuity has affected their encounters of support from the university.

They instead did everything and learned on their own during the process. This lack of resources in the innovation landscape of a university spin-off can also be considered to contribute to the accumulation of events that resulted in the eventual setup of InnovaFood AB to house the patent.