Technology Incubator Program’s

draft model

Valdis Avotins, LIDA

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

Technology Incubator Scheme

• Why?

• Goals

• Selection criteria

• Financing

• Decision mechanism

• Supporting measures

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

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”

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

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)

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.

TI services to SMEs

• basic infrastructure

• basic (management, marketing, strategy) services

• specialized technology services

• Provision of financing for new SMEs

• IPR services

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

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 financing for TI operation• Ability to invest 20% in NSMEs• Availability of infrastructure

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

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

Performance evaluation

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

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

Supporting measures

• Entrepreneurship motivation scheme

• Awareness creation program

• Dissemination of success stories / best practices

VENTURE CUP – W-Sweden

EMP scheme

CoachingBusiness

planCompany

30. 09.2 pages

PR campaign Applications Evaluation

andcompetition

Division ofparticipants

15.10.-31.03.

Entrepreneurshipcourse

Competition ofmarketing plans,Self-teaching,seminars,mentors

31.05.30 pages

Mentors New entrants Competition Individual

feedback Prizes as starting

capital

Contacts Business labs Consultations

Business idea

EMP scheme

New entrants

Mentors

Businessidea

competition

Marketing plancompetition

Entrepreneurshipcourse

Business plancompetition

Businessidea

D i v i s i o n o fparticipants

High qualitybusiness

plans to starta new

company

Incubators, businesslabs, greenhouses

and otherinfrastructure to start

a new company

Self-teaching &workshops

Thank you for attention!