How Can We Become More Successful in Fostering Early

Stage Ventures?

Kjell-Håkan Närfelt

Chief Strategy Officer, VINNOVA

kjell-hakan.narfelt@VINNOVA.se

First some words on VINNOVA…

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VINNOVA is Sweden’s Innovation Agency

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2billion SEK were invested in

Swedish R&D 2009 by VINNOVA

BY SECTORBY SECTOR

BY COUNTY WITHBY COUNTY WITHTOP 25 RECIPIENTSTOP 25 RECIPIENTS

1807

R&D projects received funding614

of theseinvolved SME’s

500-250-500200-250150-200125-150100-12575-10050-7520-500-20(mkr)

Public R&D-funding in Sweden per receiving body (budgets 2008)

Univer-sities

12 bn SEK

42%

Univer-sities

12 bn SEK

42%

Swedish ScienceCouncil

3.6 bn SEK

13 %

Swedish ScienceCouncil

3.6 bn SEK

13 %

Formas

0.7 bn SEK

3 %

Formas

0.7 bn SEK

3 %

FAS

0.3 bn SEK

1 %

FAS

0.3 bn SEK

1 %

VINNOVA

1.8 bn SEK

7 %

VINNOVA

1.8 bn SEK

7 %

Energy Agency

0.9 bn SEK

3 %

Energy Agency

0.9 bn SEK

3 %

Space

0.8 bn SEK

3 %

Space

0.8 bn SEK

3 %

Other Civilian

Agencies

2.8 bn SEK

7 %

Other Civilian

Agencies

2.8 bn SEK

7 %

Public reseach

foundations

1.5 bn SEK

6 %

Public reseach

foundations

1.5 bn SEK

6 %

Defence Agencies

1.5 bn SEK

11 %

Defence Agencies

1.5 bn SEK

11 %

Mainly curiosity driven Mainly needs driven

Ministry of Education and Research

Min. ofEnviron-

ment

Min. ofHealth &SocialAffairs

Ministry of Enterprise, Energy and Communications

Swedish GDP 3 220 bn SEK Public R&D funding: 0.84 % of GDP = 27.1 bn SEK

Sustainable societyCompetitiveness of Swedish industry

Improved innovation capabilities

Sustainable societyCompetitiveness of Swedish industry

Improved innovation capabilitiesSweden 2020

Strategy areas

Challenge-led innovation and growth

Information Society 3.0

Health and wellness of citizens

Sustainable and attractive cities

Competitive production in

industry and public sector

Established firms

New companies

Market exploitationintensive

R&D-intensive

The Support System for Commercialisation

Venture Cap, e.g.Industrifonden

Create and Verify

Create and Verify

Innovationsbron

Launch and establish

Launch and establish

Grow and Expand

Grow and Expand

Improve and renew

Improve and renew

VINNOVA

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INNOVATIVESTRENGTH

Investment & Utilization of research and innovation (R&I)

Innovationcapacity

SMEs

Effectivecooperation

Policydevelopment

Globallinkages

Publicsector

Swedish participationin EU R&D programs

BenchmarkingCatalyzing

meeting places

Globallycompetitive innovation

environmentsUniversities

Researchinstitutes

Intermediaries

Bilateral R&Icooperations

R&I projects

Verification

Coaching

R&I projectsfor growth

Participation in Intl cooperation

Industry

Test- andDemo sites

Strategyprocesses

We need to be better in commercialising our research

or..

How Can We Become More Successful in Fostering Early Stage

Ventures?

Is Our Challenge A Funding Gap?

Performance of US and EU Seed Funds?

Fund type 3y 5y 10y 20y

US Early/Seed 1.7 3.7 36.0 21.8US Balanced 4.6 8.4 13.5 14.5

US Later Stage 9.4 8.7 7.5 14.5

US All ventures 4.3 6.4 15.5 17.0

NASDAQ -10.3 -4.6 -3.2 7.3

S&P 500 -10.0 -4.0 -3.0 6.1

EU Early/Seed -1.7 -0.2 -2.4 -1.1EU All Ventures 0.0 2.1 0.4 3.1

EU All Buyouts 8.5 14.1 13.3 14.1

Source: Thomas Reuters Performance Data 2008-12-31

Or are we working ineffectively?

More Money…?

BusinessGrowth

Business Operation

TechnologyInvention

Business Plans, Patents, Prototypes

Valorisation of Research and Technology – Current Situation

Requirement: A Newco AB

After You Have Received Funding…

• It’s all about product development…

• …and execution...– Drives organisation

development– Drives sales and

marketing– Drives costs

Prototyping

Alpha test

Beta test

Launch

Business Operation in early stages

Do ventures fail due to the lack of products or technologies?

No, they fail because they lack customers and proven business operations

BusinessGrowth

TechnologyInvention

Business Operation

• Business System

• Beachhead on market

• Operational Effectiveness

Business Invention

• Verify Business

concept & customer

value proposition• NABC

Valorisation – A Reference Model For Tackling The Right Risks First

• Operational Efficiency

• Innovation

Business Creation

• Verify Sales process &

Business Model• Reference

Customers• Investor Value

Proposition

Conclusions

Focus on verifying your value proposition = customer benefits of

business concepts

Then learn how to sell and make money = business benefits of customer value

propositions

From funding gaps to investment readiness

it’s about customer driven invention and verification of business concepts

From product development and execution to learning and discovery driven processes

it’s about understanding and discovering what will make your venture successful

You are not out there selling

–You are trying to understand the customer, the

competition, the market and the industry

Thanks for Your Attention!