Abbreviations used in the text

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Department of Business Administration

Title: Transforming research into business

Author: Thomas Torounidis

15 credits

Thesis

Master of Business Administration in Marketing Management

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Master of Business Administration in Marketing Management

Title Transforming research into business

Level Final Thesis for Master of Business Administration in Marketing Management

Adress University of Gävle

Department of Business Administration 801 76 Gävle

Sweden

Telephone (+46) 26 64 85 00 Telefax (+46) 26 64 85 89 Web site http://www.hig.se Author Thomas Torounidis

Date 2010-09-30

Supervisor Per-Arne Wikström

Abstract This thesis describes the innovation system in and around Lund. The aim was to investigate the innovation system in and around Lund by using functional analysis, i.e. analyzing functions and processes rather than actors and their independent task. Actors have been identified, grouped by their relevance and connection to specific processes, and described. A functional analysis has then been performed on the selected actors to establish current status and potential future needs.

Keywords University, Technology transfer.

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Thesis for the degree of Master of Business Administration

Transforming Research Into Business

Thomas Torounidis

UNIVERSITY OF G ¨AVLE Sweden 2010

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Transforming Research Into Business Thomas Torounidis

2010

c

°Thomas Torounidis, 2010

Report XYZ

Thomas Torounidis BOX 36

SE-267 21 Bjuv, Sweden email: torounidis@gmail.com

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Transforming Research Into Business

Thomas Torounidis

Abstract

This thesis describes the innovation system in and around Lund. The aim was to investigate the innovation system in and around Lund by using functional analysis, i.e. analyzing functions and processes rather than actors and their independent task Actors have been identified, grouped by their relevance and connection to specific processes and described. A functional analysis has then been performed on the selected actors to establish current status and potential future needs.

Keywords: University, Technology transfer.

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Acknowledgement

I would like to thank all persons that I have encountered during the last years for fruitful discussions concerning commercialization and innovation issues. The innovation system as a whole in Sweden as well as local innovation system, like the one investigated in Lund, are constantly changing to adopt itself to the environment it acts within. It can be illustrated with drops falling into in water creating water rings. An actors actions will effect the other actors in the system and they in turn will affect the first actor.

Land and labour can be used by one actor at a time - knowledge can be used by many simultaneously.

Thomas Torounidis Helsingborg

2010

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Abbreviations used in the text

AB Aktiebolag

BMC Biomedical Center

FOSAM Collaborative Research Committee GEM Global Entrepreneurship Monitor

ICT Information and Communication Technologies IP Intellectual Property

IPR Intellectual Property Rights

LU Lund University

LUIS Lund University Innovation System

NUTEK Swedish Agency for Economic and Regional Growth

PC Portfolio Company

R&D Research & Development

STU Board of Technical Development SUN Collaborative University-Enterprise TEA Total Entrepreneurial Activity

VC Venture Capital

VINNOVA Swedish Governmental Agency for Innovation Systems

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Introduction

U

niversities are driving engines for Swedish innovation and growth. They are to educate the most competent labor force, produce and present world class research results, and in addition to that also be involved in what is known as the third task (education and research is the first and second). The third task is about interaction with the surrounding society and to make the research useful for the society. In order to succeed with this task, the universities need a smooth knowledge and technology transfer function between the various actors in the system. How to achieve a successful innovation system around the university is a rather difficult task due to the complexity of the system itself and that various fields of research, at various stages operating in diverse markets just to mention a few, all need to be individually matched.

It has been recognized that performance of economies in terms of innovation and productivity is not only based on results that origins from public and private investments. It is also based on the type and intensity of interactions and processes between the actors being operative in the innovation system. The actors in these case are for example producers, suppliers and users. The universities have been under an increased pressure to participate in the development of the economy by creating and promoting innovations in society. The creation and performance of an innovation is divided into both international, national and regional system.

In 2009 a requirement in the Higher Education Act stated that Swedish universities should interact with the surrounding community and to inform about their activities as well as acting to make the research results achieved at the universities useful.

In Sweden a discussion concerning the knowledge economy has been ongoing for a while. The discussion concern the money spent on research & development (R&D) and that Sweden when compared to other countries spends a lot of money on R&D but gains very little in terms of commercial products and services [1].

There are however similar discussion on a European level but nevertheless Sweden and other European countries are behind in terms of commercializing research when compared to mainly the United States. There are other ways of measuring the entrepreneurial activity in a country and one such monitor is the Global En- trepreneurship Monitor (GEM). In the report from 2004 it can be seen that Sweden and also most of the Nordic countries are not particularly entrepreneurial [2].

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One of the most important indexes for the entrepreneurial activity is the Total Entrepreneurial Activity (TEA) where Sweden had a figure of 3.7 compared to the average value of 9.4. In fact only two countries had figures lower than Sweden (Japan and Belgium). There are several opinions that this low value is due to cultural differences, lack of doing business, low unemployment rates or high opportunity costs.

It is always interesting to look at the best performers when trying to develop innovation systems at a local level. Several foreign universities are of particular interest. For example the Massachusetts Institute of Technology and Stanford University have been very successful in the technology transfer and are very good at commercializing research. Molecular cloning process discovered in 1973 [3] gave 250 billion dollar revenue in licensing to Stanford when 468 companies had signed. In addition a license from Stanford gave a quality stamp making others invest in the companies that purchased a license.

1.1 Problem description

The thesis aims to investigate the infra structure of universities and their capability of commercializing their research, either using their own entities or external entities situated in the vicinity of the university. The infra structure could be one key element to see why some ideas become growing and successful companies and why some don’t. One current issue is that Swedish universities are increasingly encouraging their researchers to commercialize their research results. The process of transforming research into business varies from various universities and large variations can be found when Swedish universities are compared to foreign universities.

1.2 Objectives

The aim is to describe how Swedish universities organize their commercialization processes and to suggest possible improvements. Several universities offers help during this process in one way or another. This could be patent writing, management, funding and so on. The result of the thesis could lead to the definition of some key performance indicators that distinguishes successful innovation actors. The empirical base is made by investigating the process of transforming research into business and identifying key actors in the university innovation systems. The actors role and position in this innovation system are connected to theoretical studies of innovation systems. The organization of the actors and their role in the innovation system have a specific focus in this thesis. The question to answer is whether the organization as it is today is the most beneficial or not. This thesis analyzes Lund University, but the approach could be transferred to investigate other universities with some changes.

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1.3 Scope/Limitations

The thesis is limited to investigate only the university in Lund and their way of commercializing results. This means that e.g. institutes and large companies and how they commercialize are excluded from this thesis. There are for example several management consultants, intellectual property firm that professionally could help entrepreneurs and start-up companies. However, the aim here is to focus on similar functions present in and in close vicinity to the university in order to investigate their performance. In addition the scope of the thesis is limited to the university in Lund.

1.4 Disposition

The thesis begins with an introduction and description of the hypothesis to be investigated in this chapter including objectives and limitations. The methodology and data collection is described in the following chapter including a discussion about validity and reliability of that data. The methodology chapter is followed by a theory and literature review chapter in which the theoretical frame work is described. The empirical data is then presented with a description of each actor and finally the thesis is concluded in the final chapter with the most important findings as well as a few recommendations for the innovation system around Lund.

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Chapter 2

Methodology

T

his chapter describes the methodology used in the thesis, how data was collected and also describes the validity and reliability of the data.

2.1 Methodology

By analyzing the process in terms of available entities when going from a research idea to self supporting companies it should be possible to find out important steps and key actors. There are roughly 30 universities in Sweden of whom 21 have the right to award the PhD degree. Some key universities that have different organizations or subjects that make them of particular interest is Chalmers University of Technology being a foundation owned university and Karolinska Institute being a highly specialized university within medicine. In addition a small comparison with a few foreign universities could be beneficial to understand future steps that a university needs to take.

However, this thesis focus in the university of Lund being a large and multi- disciplinary university. The various actors being active and important have been identified. Innovation supporting functions, business development organizations, organizations within intellectual property, venture capitalists, risk capitalists, incubators, funding bodies, business angels have been investigated and examples of companies they have invested in are shown. The aim is to find out where in the commercialization process they belong and if there is overlap between them and also give a definition of what the difference between them is and when they are important. For example at what point in the process do incubators enter, what are they supporting with and when are they letting the company move on to the next step.

Other issues affecting the way of commercializing could be related to e.g.

donation rules, governmental regulations, and teachers exemption. Analyzing the differences among actors in and around a university and if possible compare it with some other university in order to see if there are similarities or differences and how they affect the various steps needed in the process of commercialization.

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2.2 Data collection

The empirical data has been collected from business databases, agencies, web pages and personal communications. Databases such as Affrsdata have been used to establish ownership, the people involved and to see how various organizations and institutions are interconnected. Material has also been gathered from various governmental agencies. The material includes investigations and analysis on various parts of the innovation system. Web pages for each actor (where available) have been thoroughly analyzed and also annual reports for each actor during the last year or perhaps two years in some cases. Reports, thesis and other sources have also been used in the empirical data to achieve a complete and accurate description. In addition, the author having a previous background from VINNOVA (Swedish Gov- ernmental Agency for Innovation Systems) have during the last three years discussed with persons at a majority of the actors described in the thesis.

2.3 Validity and reliability

The selection and gathering of the empirical data have been based on hard facts found in the annual reports, and to some extent in their webpages. This has been combined with more soft facts from the personal discussions with various persons. In addition several sources have been used for each actor to make sure that information from one source is similar to the information gathered at another source.

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Chapter 3

Theory

T

his chapter describes the theoretical framework that will be used in this thesis.

3.1 Functions in innovation systems

3.1.1 Introduction

The innovation systems are complex and tend to overlap each other in terms of activities. To be able to analyze an innovation system a framework capable of understanding the dynamics in such a system is needed. A framework that is useful for guiding policy makers, firms and other organizations. The dynamics in an innovation system are interesting both from a structural as well as functional point of view.

One such approach is functional analysis. In its basic form, a functional analysis is needed to identify what functions the upcoming product (or service) needs to reach the demand or demands that need to be covered. It is a model used to analyze the innovation system and its capacity to explore current resources, to identify the new in the innovation system, to create a buffer capacity against disturbances but also able to allow variation and change (i.e. being adaptable). The functions and how they interact with each other rather than actors are in focus in a functional analysis.

There are several definitions of relevant functions to be used in the literature by for example A. Johnson [4], M. Hekkert et al [5] and A. Bergek et al [6, 7]. In this analysis the seven functions derived by Bergek et al will be used as they are found to be most suitable for analyzing an innovation system. The outcome of the functional analysis will also depend on the level on which the analysis is applied. For example, one could analyze a sector in the innovation system, such as the cleantech industry, another approach is a regional innovation system within a specific competence area, which could be the cleantech industry in the southern part of Sweden or finally a regional innovation system as such, where cleantech is one part.

3.1.2 Structural componenents

Structural components include firms in the whole supply chain that operate on the market. Other organizations, such as government bodies, industry and bridging organizations, interest organizations and universities are also part of the structural components in an innovation system. Political entities are also part of the structural

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components, for example lobbyists as well as institutions working with policy and regulatory framework. These components can be divided into three components;

Actors, Networks and Institutions.

A. Actors

Actors are individuals, private and public firms and organizations that perform a task that contribute to the development of the field

Actors include firms that are present in the entire value chain within the system. In the case of a product it would involve for example, designers, manufac- turers, suppliers of the complete product as well as a parts to the product. Actors also include universities, industry organizations and bridging organizations as well as governmental bodies. During the formation of an innovation system, a new firm entering the system will bring with them knowledge and other resources, in some cases capital. These new entrants will try and find new opportunities to fill the gaps in the innovation system by for example becoming a specialist supplier or the like. In the same way, other organizations that enter the innovation system will also bring with them efforts that enriches the system. For example, universities could provide specialized courses. Bridging organizations could act as meeting places and organize events in connection to those. Other interest organizations may promote a specific technological field.

B. Networks

Networks are defined by the relation they have between different entities in the innovation system

Networks can be divided further into various types of networks. For example, so called learning networks can be used to link suppliers with users, related firms, competitors or university researchers. This type of network is important for the transfer of knowledge and also an influence regarding expectations of the future. Another type of networks are the political networks, which are constituted by a number of actors that share the same beliefs and also tries to influence the political agenda with their beliefs. This influential strive could in some cases be in competition with other groups. Yet another observation regarding political networks is that they tend to be non-technological and focus the debate on a higher level. One example is cleantech as such, which does not necessarily focus on a specific innovation system.

C. Institutions

Institutions are sets of norms, common habits, routines, established practices, rules or laws that regulate the relations and interactions between individuals and groups The third component is institutions and is the legal and regulatory aspects, norms and rules that regulate the interactions between actors. Institutions also

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define the base value in various segments and influence firms and how the make decisions, structure their learning process (agendas, guiding principles and ways to do business). Changes in the institutions is a process wherein new technologies may gain ground, which implies that a firm besides competing on the market also competes to gain influence over institutions.

In some parts of the literature, a fourth component called technology is used. The technology is in those cases made up by artefacts such as tools, machinery and coded knowledge such as patents, drawings. One common denominator is that they are used to develop the technological field. Noticeable is that technology could be both a structural component as well as an output from the innovation system.

The structural components then form part of the dynamics in an innovation system using three main processes. Firstly, the entry of firms and other organizations that are used to bring resources, fill the gaps in the value chain, form a critical mass and open up for new applications. Secondly, it is the formation of network and their impact on how resources flow, and what kind of opportunities that is present. Thirdly, it is about the institutional alignment and about the competition to gain influence over institutions. The structural processes are all interdependent and connected to each other. Sometimes a fourth process is described which involves the accumulation of knowledge and artefacts. Going from structure to functions requires in some cases additional processes. One is the ability to trace how structures evolve, another is to be able to value how good a structure is. Yet an important process if one would like to guide policy makers, is to find weaknesses in the innovation system. To be able to speed up the rate of diffusion and instruct actors what needs to be done, it is crucial to be able to explain the current rate of diffusion and weaknesses in the innovation system. The process of going from structure to performance are referred to as functions of the innovation system.

3.1.3 Functions

The following seven functions are based on various previous literature reviews in various fields and combined with empirical studies on innovation systems [6,7]. The seven functions are: 1) Knowledge development and diffusion, 2) Influence on the direction, 3) Entrepreneurial experimentation, 4) Market formation, 5) Resource mobilization, 6) Legitimation, and 7) Development of positive externalities or free utilities.

1. Knowledge development and diffusion

This function is considered to be placed centrally in an innovation system and concerns both breadth and depth of the knowledge base in the system. It also describes how well that specific knowledge is diffused and combined in the system.

It is related to the concept of learning, which in a sense is a core in the innovations if on considers that the fundamental resource in a modern economy is knowledge, and thus accordingly, the most important process is learning. Knowledge development

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does not necessarily take place solely in academic or firm research and development groups. It involves learning by doing, using imitation etc., and a precondition for learning is the knowledge diffusion.

Indicators that could be used to map this function are: R&D projects, patents, bibliometrics, investments in R&D, learning curves, number of workshops or conferences, size and intensity of learning networks.

2. Influence on the direction

In order for an innovation system to develop, a large number of firms and other organizations need to be presented with entrepreneurial opportunities within that system and also enter the system. To achieve this, a number of incentives are needed to do so, or in some cases a pressure for them to do so. These opportunities and incentives describes the second function as a combined strength of the two. In addition, mechanisms that has an influence on the direction of search in terms of different competing technologies, markets, business models etc are also included in this function. An important issue is that the factors inducing a firm to enter or influencing a choice of technology is not controlled by a single organization. Instead various number of innovation system components as well as factors not directly related to technology are determining. This requires knowledge of the surround world and directions therein.

Indicators that could be used for mapping this function are: factor or product prices (e.g. taxes and prices in a industry sector), regulatory pressure which for example could be a quota system in part of the industry sector, government or industry targets regarding the use of a specific technology, estimation on future growth potentials and the articulation of interest by leading customers.

3. Entrepreneurial experimentation

An innovation system is developing under a certain quite high degree of uncertainty regarding for example the technology and market. These uncertainties are not exclusive for a research and development unit in a firm. They are present at various levels in the innovation system, and in order to handle these uncertainties is to make sure that several entrepreneurial experiments take place. This function is somewhat related to the first function of knowledge development and diffusion, but instead focuses on how the potential of new knowledge, networks and markets are turned into concrete actions in order to get and advantage of new business opportunities. During the experimentation a number of firms will fail, other will succeed and a process of social learning will be unfolded.

Indicators that could be used to map this function are: number of new entrants, number of diversification activities of incumbent actors, number of experiments with the new technology, number of different applications.

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4. Market formation

In an innovation system that currently is emerging there might not exist any markets or they could be quite underdeveloped. The reason for this could be that customers have not articulated their demands or at an earlier stage do not have the competence to do so. Another factor might be that the pricing versus performance of the new technology is poor. Sometimes the term nursing market is used, which describes a kind of protected area in which an innovation system can learn and develop technology and form expectations. The formation of niche markets is one such example. The nursing markets can later develop into so called bridging markets that allow volumes to increase and the innovation system to grow. The markets could be formed several decades after the nursing markets are formed.

Indicators that could be used for mapping this function are: number and size of the markets that are formed, timing of the market formation and the drivers for market formation.

5. Resource mobilization

Resources are required as an input to all the activities in the innovation system.

An understanding of how the innovation system is able to mobilize human capital, financial capital and complementary assets is needed. Human capital is mobilized by education in various scientific and technologic fields as well as in entrepreneurship, management and finance. Financial capital is mobilized by seed and venture capital, diversifying firms and government funds for long term R&D projects and demonstrations. Finally complementary assets are mobilized by products, services, infrastructure etc.

Indicators that could be used for mapping this function are: volume of capital and venture capital, volume and quality of human resources, volume and quality of complementary assets.

6. Legitimation

In organization theory, legitimacy is known as a prerequisites in order to shape new industries. This function is about adding the innovation system to that prerequisite.

This means that the new technology needs to be considered as appropriate and desired in relation to relevant institutions. This judgement is made by relevant actors in the innovation system and is required for resources to be mobilized, for demand formation, as well as for the actors to achieve a political strength.

Strategies among the actors are influenced through expectation and legitimacy.

Worth mentioning is that legitimacy is something that is formed by the actions that various organizations and individuals make. However, it is difficult for individual actors to influence the legitimacy and therefore help is needed from advocacy coalitions.

Indicators that could be used to map this function are: attitudes towards

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technology among various stakeholders, rise and growth of interest groups, extent of lobbying activities, and the political debate in parliament and media.

7. Development of positive externalities

The final function describes the development of positive externalities, which is the outcomes of investments that an investor cannot fully appropriate the benefits of.

This implies that other actors could benefit from the ”spill-over” or ”free utility”

in terms of knowledge development such as R&D and reduce uncertainties as well as strengthen legitimacy. These may be increased with the number of new entrants to the innovation system.

Indicators that could be used to map this function are: the strength of the actors in terms of political strength, the activities aiming at uncertainty resolution, the existence or development of a clear division of labour, intermediates and/or labour market, and how the information and knowledge flows.

Yet another complexity is that if a particular function is weak, it does not necessarily mean that the function is bad. Using the same mindset, a strong function is not necessarily a good function. It is not how the system is functioning, it is how well the system is functioning. Therefore, it is crucial to try and evaluate the system having the relation between the functions in mind.

3.1.4 Relation between structure and functions

The full dynamic proportions of the innovation system can be described using five main relationships, numbered (1)-(5) in figure X. The relationships are shortly defined as (1) Dynamics between structural entities, (2) Influence of the structural entities on the functions, (3) Influence of exogenous factors on the functions, (4) In- ternal dynamics of the functions, (5) Feedback from the functions to the structure.

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Figure 3.1: Seven functions in the evolution of an innovation system. From Hellsmark and Jacobsson (2008).

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Figure 3.2: Schematic representation of the dynamics in an innovation system. From Hellsmark and Jacobsson (2008).

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Chapter 4

Actors

T

his chapter presents the actors that are present in the innovation system in and around Lund University [8]. The chapter describes the most important actors in the regional innovation system in Lund.

4.1 Lund University

In the university, there were in the early 1980s a few formal structures for interaction between the university and the surrounding industry. The University had for example, with the support of the Board of Technical Development (STU), already in 1969 established a particular function called The Secretariat to enhance the dialogue between the university and industry and in the late 1970s, developed a pilot with so-called contact researchers, i.e. researchers over a finite period, that worked at a company, under the Collaborative Research Committee (FOSAM).

Both these activities had rather limited resources. The Secretariat had 3-4 services to its disposal and under FOSAM they worked with about 50 projects.

A major initiative to develop forms of collaboration was the creation of the Foundation SUN. SUN and its chairman, Governor Nils H¨orjel came to play an active role in the emergence of the science park Ideon in 1983. Ideon in this context is the absolute expression of an ambition to strengthen the cooperation between the university and industry in the 1980s. A special unit within the administration was created in the mid-1990s as head of links with industry. This unit have during the last three years undergone a sharp transformation, going from a small unit with general business knowledge to LU Innovation focusing on commercialization.

LU Innovation currently has approximately 10 employees with experience from all areas of the commercialization process, from idea to start up (patents, law, finance, business). LU Innovation is responsible for the coordination of innovation work at Lund University.

4.1.1 LUAB

LUAB [9] is a company wholly owned by Lund University. The business of LUAB aims to help university researchers to get their research and ideas on the market.

It is done by support and funding of the company during the start up. In addition, LUAB manages and sell shares in companies that have their origin at Lund

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University. The profit that LUAB eventually gets when for example selling a share in a company is later used to support other new research projects. Currently LUAB is a partner in approximately 35 companies.

LUAB suggests that an initial contact for a researcher that wishes to commercialize his or her research should be with LU Innovation, which should give them practical assistance in for example patent issues and some business development. After LU Innovation, LUAB will enter to help with funding and additional support. In this way LUAB promote themselves as catalyst and platform for research ideas in all academic activities. LUAB offers consultant services, patent, funding etc.

The background to LUAB is that the government in 1994 initiated what now is known as holding companies connected to the universities and colleges, including Lund University. The task of the holding companies’ was to increase interaction between universities and the surrounding society, and to include support for the commercialization of ideas in the universities.

LUAB also has four subsidiary companies (LU Development, LU Bioscience, LU Food Science, and LU Cleantech) which are described below.

LU Development

LU Development was formed in 2007. LU Development acts as a hub of the expanded investment in the commercialization of innovation and aims to create a strong capital base for the thematic venture capital companies. In order to develop activities and find new funders, LU Development AB was formed, which will attract and invest external capital. The company is a subsidiary of LUAB and is expected to bring in between 200 and 300 million for a number of years in venture capital. Risk capital is invested in companies that origins from research. LU Development focus on Life Sciences (biology, biochemistry, genetics and medicine) and then the areas of technology and foods.

LU Bioscience

LU Bioscience [10] was also formed in 2007 by LUAB and already now plays a quite important role in the innovation system connected to Lund University.

Through selective investments and appropriate development plans together with management teams experienced to drive projects, a significant increase of value in holdings is expected. LU Bioscience cooperates with other Nordic early-stage investors to achieve extended competence, broader consultant network, even more rapid and cost-effective invention analysis. They also try to combine projects to form portfolio companies to attract funding in a similar way that Karolinska Institutet.

LU Bio works closely with inventors at all stages of our cooperation. Throughout the invention development process and the running of portfolio companies, they take

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care of everyday activities with the inventor acting as advisor. In this way, inventors are released from the pressure of being business entrepreneurs to concentrate on what they do best to advance their own invention. Typical areas of bioscience that LU Bioscience promotes are: pharmaceuticals, biotechnology, diagnostics, and medical devices.

LU Bioscience has a clear exit strategy for all investments before running a project. They will only invest in inventions with an obvious exit potential within a maximum period of 7-8 years. A clear exit opportunity is an important goal as the pharmaceutical industry is very interested in in-licensing or purchasing new and potentially successful biomedical substances from biotech businesses. During this period, resources will be allocated to obtain the best possible development and investment value. If the evaluation process progresses well, a portfolio company is established where the inventor can receive up to 60% of the share value. LU Bioscience’s investment model comprises of two stages an initial build-up phase and and an investment and value creation phase in the portfolio company; Build-Up Phase LU Bioscience has been established with a targeted lifespan of approximately 10 years. During the build-up phase LU Bio will focus on creating a portfolio of approximately 10 companies with significant commercial potential, Value Creation Phase After the initial investment, LU Bioscience will make selective investments in the portfolio companies. Together with the management of each portfolio company, LU Bioscience will seek to develop optimal strategies for product development, commercial development, syndicating and exits.

LU Food Science

Lund University has also through its holding company LUAB started another venture capital company, Lund University Food Science AB, which are expected to operate specifically in the food sector. Research in food is a profile area of Lund University, but there is a lack of capital for the development and commercialization of innovations in the field. One of the objectives of LU Food Science is to provide its shareholders a good return and long-term capital growth by building up a portfolio of start-up companies in the food sector. There are already examples in appetite regulation, functional food, processing of new cereal varieties, osteoporosis and food control. LU Food Science is now in an initial stage of raising capital up to 40 million.

The purpose of this first capital raising is to build a basic portfolio of a dozen investment with significant development potential. LU Food Science planned life is a ten-year period and estimated that the additional capital of 100-300 million will be necessary for the development of portfolio companies and further investment.

LU Food Science is now seeking both large and small investors, where the minimum investment is 300 000 SEK. The company is particularly interested in people with

”heart and interest” for the food industry.

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LU Cleantech

Lund University Clean Technology AB (LU Cleantech ) is an investment company focused on the cleantech sector with the aim to identify and invest in spin-offs from Lund University and other Nordic research institutes. LU Cleantechs main objective is to create attractive returns for investors, as well as successful business opportunities for entrepreneurs. In addition, LU Cleantech through active ownership shall contribute to the highest possible growth in its portfolio companies and act as a source of inspiration for innovation at Lund University. LU Cleantech is an investment company focusing on investments within the cleantech area.

LU Cleantech is expected to invest in both innovations from Lund University as well as in national and international projects within cleantech. LU Cleantech has established the following criteria and guidelines for investments: New or relatively new firms and companies in the expansion, Possibility of an initial stake of 20-40%, Initial capital of 5-15 million, Large growth in an international market, A realistic business model in relation to the market, competition and financial resources.

During the writing of this thesis LU Cleantech was laid down.

4.1.2 LU Innovation

LU Innovation [11] is a supporting organization at Lund University, where researchers can turn to, to take the research results to market. Their aim is to make research accessible to a broader public and to the market. LU Innovation serves as a first contact at the commercialization of research at Lund University. In order for LU Innovation to manage the whole process they have gathered various skills from diverse backgrounds, including a patent engineer to help with the patenting and licensing, a number of business developers and advisers with specific areas to help with business development, a lawyer who helps researchers with legal aspects, such as agreements with funders as well as a marketer who can help with the initial marketing.

LU Innovation provide guidance in the very early phase of the business process where they assess the potential of an idea, by setting goals and organizing the entire business process together with the researcher. Having a patent engineer that closely collaborates with patent offices and agents, the researcher can get help with examining the novelty patentability. If estimated that the idea is patentable, there is most likely a business opportunity. To some extent LU Innovation can provide help with grants to cover the patent application. Their lawyer will answer general questions and help with various legal matters that may be crucial to the business, such as write contracts with financiers, intellectual property, etc.LU Innovation also claims having an extensive financial network with all types of investors and examples include LUAB, LU Development and Connect ”Business Angels”, Teknoseed etc. Through LUAB, administrative support could be given and other assistance with the business finances, such as accounting, bookkeeping, financial statements, revenue, budget and budget monitoring..

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After going through the process as a researcher, the next thing is to decide upon how to progress with commercialization of the idea. Some researchers are eager to start their own company, while other sell the idea further. LU Innovation states that they have knowledge to help with at least guidance depending on the option the researcher choose. The advices given from LU Innovation are free to obtain. LU Innovation could also assist with verification grants to cover costs of, for example, patenting and marketing research.

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4.2 Incubators

An incubator assists entrepreneurs and innovators with active and appropriate management support, financial, technical and commercial networks, and a creative growth environment and related office services. Incubator provides entrepreneurs and innovators with a structure necessary for a company’s long-term development and survival.

Working within an incubator is good for new companies, especially since they are more beneficial when it comes to attracting seed capital. In addition the incubators besides capital, also finds other valuable resources. One is knowledge and another, perhaps the most important on, is to develop relations and networks for the companies. The incubator should thus think in terms of what kind of relations are they able to help a specific company with. This strategy has to some extent been validated in a dissertation from Chalmers University of Technology [12].

History

In September 2004 Ideon Innovation opened up their activities as the first perma- nent incubator in the Ideon Science Park. But incubator activities have been in Ideon history since the research village’s birth in 1983. The basic idea of Ideon was to transform knowledge from Lund University into future companies and one of the first buildings in the Ideon research village. These first buildings consisted of temporary barracks as in all their simplicity, they offered new Ideon companies an ideal environment. The barracks had been previously used by Sveriges Television and transported from Stockholm to Lund, where they were raised outside the Lund Institute of Technology. One of the first companies that moved into the incubator was the spin-off company Ericsson Radio Systems.

4.2.1 Lund Bioinkubator

Lund Bioinkubator [?] opened up their activities in 2007. The idea was to offer incubator companies with laboratory operations as an alternative to Ideon Inno- vation. Lund Bioinkubator is a specially adapted incubator for companies based on biotechnology, biomedical and medical research. It provides access to advanced laboratory facilities, office space and proximity to the unique research environment and the services companies. Among other things, they can take advantage of the Biomedical Center (BMC) and the University Hospital in Lund. This environment is essential for early validation work for the development of proof-of-concept, and when the first steps onto the market must be taken. Lund Bioinkubator is a national establishment, and companies from across the country can search here.

Lund Bioinkubator is located in the heart of Lund biomedical and clinical research, with the Lund University Hospital as their neighbor.

The base for the incubator is people with good ideas and people that are willing to work as hard as getting into the incubator as getting out of the incubator and into the market. This means that Lund Bioinkubator is profiled as a high

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demanding incubator in terms of their business innovation. Therefore innovative height and large market potential are prerequisites to enter the incubator and each company is assigned to a an experienced business developer. Their aim is to become Europe’s best incubator for companies in life science, and thereby serve as a model for other companies in the same industry. As siblings incubators, companies can move between Lund Bioinkubator and Ideon Innovation depending on needs.

The incubator program comprises of roughly six parts. The first one is business development, where the business developers are key persons in relation to enhance the development. Each company may be assigned to an experienced business developer which act as coach during the whole time in the incubator. The second part concerns the business of the company and to help the company in the incubator several experienced consultants and partners are involved. This may include eg, audit, law, agreements, contracts, patents, design protection, financing and risk management. The third part is about educating companies. All start-ups need education and understanding of business process in its various parts. The fourth part concerns strategic relationships and is needed since finding networks and establish contacts is part of a company’s everyday lives, and often decisive for the continued success. Several activities are planned and executed involving alumni, funders, organizations and other invited guests. The fifth part is about infrastructure and this simply means arranging for all practical things such as telephone, reception, networking, etc. work. Th sixth and final part concerns funding and involves both contacting potential financiers as well as attracting capital to the company.

Some of the recently listed companies are: Bjarga AB, Clinical Laserthermia Systems AB, Medetect AB, Pharmalundensis, Phase Holographic Imaging AB, PreeLumina AB, SPAGO Imaging AB.

4.2.2 Venture labs

At Lund University, there are thousands of students with new and exciting ideas.

To encourage that more of these students to realize their ideas in their own business, and to help them along the way, Venture Lab [13] was created. Venture Lab has become has become the university way of stimulating entrepreneurship and supporting and assisting students and graduates who are considering starting their own. Since its inception in 2001, there have been hundreds of companies that went from idea to reality. Venture Lab offers free and confidential advice, lectures and seminars, and free office for student business for a year. It is open for all students, regardless of what you are studying and no matter how far you have come in your studies. Venture Lab helps as well students who are considering offering a new service that those who are thinking about a new product.

Venture Lab was started in 2001 by the Head of the Institute for Economic Research Allan T. Malm. Today Venture Lab is a fixed element in the university’s activities and has grown to encompass two full-time employees and its own incubator

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with office space for approximately 20 student companies.

4.2.3 Ideon Innovation

Ideon Innovation is at the center of the Ideon Science Park [14], in the place where the research village once started. The rooms are simple, functional, modern and fresh. Similarly to Lund Bioinkubator people with good ideas is the basis for Ideon Innovation. Ideon Innovation is one of 13 selected incubators in the National incubator program (NIP) - a network consisting of the strongest incubator in Sweden. Behind program, created with the aim to professionalize incubator processes in Sweden, is the Innovation Bridge Sweden and VINNOVA. The objective of Ideon Innovation is to become one of Europe’s best incubators and thereby serve as a model for other incubators.Another objective is to annually generate viable growth through the companies housed in the incubator. Ideon Innovation is a collaboration between Lund University, Lund and Ideon Science Park.

Ideon Innovation is part of the system in Lund that supports the innovation process, and that is to commercialize innovations. This innovation is made up of different units which together form a resource bank for innovators. Here are capital, counseling, physical environments, etc. The innovation is not a linear sequence of events, it has no entrance or exit and there are many different ways to approach it.

The system has evolved, changed and adapted over the years. Actors have changed and adopted new roles.

In the incubator at Ideon Innovation, there is room for between 20 and 30 companies. How much space an innovation company occupies varies, and there is always room for growth. Besides innovation companies, Ideon Innovation holds administrators, business developers, and representatives from related organizations.

A list of recent companies are the following: ARC Aroma Pure, Arisone Medic Sweden AB, Biwoz AB, Bjarga AB, Candet, Clinical Laserthermia Systems AB, Colloidal Resource AB, Eazpac AB, EcoEtanol at Sweden AB, Ekobalans Fenix AB, Medetect AB, Membrayner, Microfluid AB, Myfi.net, PharmaLundensis AB, Phase Holographic Imaging AB, PreeLumina AB, Qlucore AB, RaviteQ AB, Reosense AB, Resources On Internet Sweden AB, ResQU AB, Serstech AB, SPAGO Imaging AB, Storytel, Swiftfoot Graphics AB, Venatech AB.

4.2.4 LIFT

LIFT is an incubator with a primary focus on business and companies working with services. LIFT consists of a dozen offices in the area Ideon in Lund. In LIFT, each business can get a tailored support, training, ongoing advice and access to experts and networks on a daily basis. Each company in LIFT has its own development with frequent reconciliations. The goal is to as quickly and efficiently as possible achieve a sustainable commercial success. LIFT funded by IKANO Fastighets AB, Innovation Syd AB, Lund Kommun, NUTEK / Region Sk˚ane and Sparbanken Finn Future Foundation. LIFT is not to be considered as a competitor to existing

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incubators but rather as a complement. When LIFT turn to companies they do not necessarily need to have a service / product innovation with a certain height or products being patentable, but they must be based on a high level of knowledge.

Some of the recent companies at LIFT are: IMCure EQO - Equal opportunities Arisone Medic AB BK Consulting devi Hlsopromotion ADD MySign A-Dev Netviking AB Candet Ceffort AB Ingenjrskraft NTV-TV.

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4.3 Innovationsbron

Innovation bridge (in Swedish Innovationsbron) [15] work all over Sweden with the to do business of research and innovation. They work with innovations for new products, services or processes based on new knowledge and that has commercial potential. Innovation Bridge supports scientists, innovators and entrepreneurs to commercialize their ideas. The ideas can come from academic research, industry, public sector or individual innovators and entrepreneurs. Innovation bridge supports also incubators with operational funding and experience. Innovation bridge helps to overcome the initial difficulties and risks in the development of business cases.

Understanding and having close collaboration with national and regional partners is a prerequisite for the work at Innovation bridge. Business skills and seed capital needs to be supplied in a structured and professional manner in well-functioning innovation system. Some of Innovation bridge important partners are institutions, holding companies, incubators, investors, Vinnova, Norrland Fund, Industrial Development, the Energy Authority, ALMI, administrative boards and regions, VentureCup, CONNECT etc.

A common denominator is that ideas should be research-oriented and possess a high growth in a global perspective. Innovation bridge provides seed financing, combined with industry-related business development. The goal of Innovation bridge efforts is to strengthen weak links in the chain from an idea with commercial potential is identified that a company develops its own power to market conditions.

The aim is to increase growth in Swedish industry.

Innovation bridge started operations in 2005 with the ambition to signifi- cantly increase the commercialization and utilization of the resources that Sweden invests in research and development (R&D) and knowledge building. The In- novation bridge operates all over Sweden. After a reorganization in 2008, the Innovation bridge parent company is headquartered in Stockholm having four regional centers: Nord, Mitt, Väst and Syd. The regional organization has offices in Lule˚a, Ume˚a, Uppsala, Stockholm, Linköping, Göteborg and Lund. In addition, after the reorganization the Innovation bridge has active operations in five subsidiaries with specific tasks in accordance with their mission: Teknopol, Teknoseed, Forskarpatent Syd, Uppsala Seed Capital and Innovation bridge render Seed Capital.

The active subsidiaries are owned as follows. Teknoseed and Innovation bridge render Seed Capital is owned 100 percent of the Innovation bridge. Technopoles owns 71 percent of the Innovation bridge, and the remaining 29 percent is owned by Region Sk˚ane and Sk˚ane ALMI. Forskarpatent Syd is owned to a 51 percent share of the Innovation bridge, and the remaining 49 percent is owned by Lunds Universitets Utveckling AB, Halmstad University Development AB, SLU Holding AB and Blekinge Research Foundation.

Innovation Bridge has eleven o’clock dormant subsidiaries whose activities

Abbreviations used in the text

Acknowledgement

Abbreviations used in the text

Table of contents

Introduction

U

Methodology

T

Theory

T

Actors

T