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Transcript of Spin Off Firms and Gazelles - High Growth Firms from Universities and NRC Presentation to FPTT,...
![Page 1: Spin Off Firms and Gazelles - High Growth Firms from Universities and NRC Presentation to FPTT, Toronto, 2005 May 31st Denys G.T. Cooper, Senior Advisor,](https://reader035.fdocuments.in/reader035/viewer/2022062304/56649ea05503460f94ba3291/html5/thumbnails/1.jpg)
Spin Off Firms and Gazelles
- High Growth Firms
from Universities and NRCPresentation to FPTT,
Toronto, 2005 May 31st
Denys G.T. Cooper,
Senior Advisor, Technology & International, IRAP
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2
Purpose
To assess the presence of Gazelles -
High Growth Firms as Spin Off Firms from:
• Universities,
• including a sub group –> N.C.E.s
• Networks Centres of Excellence
• N.R.C.
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Definition of a UniversitySpin OFF and Spin OUT Firm
1. SPIN OFF Firm: created to COMMERCIALIZE
INTELLECTUAL PROPERTY that is:
UNIVERSITY OWNED * & / OR
UNIVERSITY RESEARCHER OWNED2. SPIN OUT Firm: created by a GRADUATE that has some
links to the university – services, equipment etc, but NO University linked I.P. [Not part of this study]
3. IRAP Assisted University Spin Off FIRMReceived >$15,000 of IRAP Funding
within First 5 Years after Start Up
* Includes some Hospitals
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4
Definition of Gazelles in Spin Off Firms - in Canada
1. Employment: • Double employment within 5 years during the 1990s+
and • Have at lest 20 employees within a 5 year period• Adopted in Statistics Canada / IRAP study
2. Sales: • Double sales with 5 years during the the 1990s and• Have at least $10 M sales within a 5 year period
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Definition of Gazelles – High Growth Firm – Other studies mostly based on new firm formation and spin outs
Sweden considered:
* 3 sources of growth and
* grouped them into 7 types of growth.
Sweden dropped sales definition.
As also with Stats Canada 2003/4 study
Finland 50% growth in sales in each of 3 years.
Holland Looked at growth in urban versus rural areas
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Why Gazelles - 2005
University Spin Offs
I.R.A.P.
GAZELLES.
N. R. C. .
N. C. E..
Jerome Doutriaux, Ottawa U. Denys Cooper, IRAP 1995 +
O.E.C.D.
16,000
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University Spin Offs – International Comparison
Country Sample Size Period Covered Reference
US 4081 1980-2003 AUTM 2003
Canada 1100 1962-2003 Cooper / Niosi
France 320 1984-1991 Mustar
Holland 300 1980- 90s U. Twente
Australia 97 1984-1999 Thornburn
Finland 66 1980 –90s Min of Trade & Ind
U.K. 1499 1981-2002 Wright /Sainsbury
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8
Spin Off Firms from Universities and SBDAs - Surveys
Stats Can Bordt and Read – 20032003 Survey = 880
NSERC Laciak ‘ Research Means Business’ 134 Case profiles
SBDAs 1998-2003 = 120 **
AUTM Universities 2002 = 667 65 newSlowing down? Peaked at 68 in 2001
** NRC has created 103 Spin Offs and Spin Outs as from 1970+?
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Socio - Economic Contribution from Universities / Federal LabsOrders of Magnitude:
1. Training of Students Graduates higher salaries better Jobs for the economy and Taxes - Univs
2. Licence of technology to established firms products & services
Jobs, Sales and Taxes3. Staff as Consultants to industry products and services
Jobs, Sales and Taxes
4. University / SBDA Spin Off firms products and services
Jobs, Sales and Taxes
• The one most studied for its socio-economic contribution
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803 University Spin Off Firms
* NRC / DC 2001 Nov.
0
100
200
300
400
500
600
700
800
900
1921
1964
1966
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
NonIRAP
IRAP
No.
of
Co.
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11
Long Term Studies of Firms Gazelles - High Growth Firms
Country Researchers Period Sample # Gazelles
1. U. S. A. D. Birch, M.I.T. 1969+
2. Sweden P. Davidsson et al 1987 – 96
3. Canada Statistics Canada 1995 - 2000and D. Cooper, D. Guillemette NRC- IRAP
4. Holland Erik Stam 1999-2004
5. Finland Erkko Autio 1994 – 97 Stats. Canada Innovation Analysis Bulletin – # 88-003-XPE, 2004
Nov
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Long Term Studies of Firms Gazelles - High Growth Firms
Country Researchers Period Sample # Gazelles
1. U. S. A. D. Birch, M.I.T. 1969+ 12 Million 2 -4%
2. Sweden P. Davidsson et al 1987 –96 11,748 1,66214%
3. Canada Statistics Canada 1995 - 2000 1 Million 16,005and D. Cooper, D. Guillemette NRC- IRAP 1 -4%
4. Holland Erik Stam 1999-2004 785,000 3,688 0.46%
5. Finland Erkko Autio 1994 – 97 127 K firms 410 0.3%
Stats. Canada Innovation Analysis Bulletin – # 88-003-XPE, 2004 Nov
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Statistics Canada - 2004
1995 data 1,104,602 firms
1995 Deaths552,531
Matched records 552,071 firms
2000 data 1,159,528 records
2000 Births
607,457
Longitudinal Employment Analysis Program – Small Area File
16,005 Gazelles
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Rank for 50 largest Canadian Cities by Size vs # of Gazelles
0
500
1000
1500
2000
2500
3000
0 10 20 30 40 50 60
Rank City 1 = large --> Small
# G
aze
lle
s
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Average % Gazelles v. Size of City Rank 1--> 200
0
0.5
1
1.5
2
2.5
0 50 100 150 200 250
Rank Largest City --> Smaller City
% G
azel
les
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High Growth in Technology Sectors (SIC)
Ref: Statistics Canada / NRC-IRAP
% Gazelles - High Growth by Technology Sectors
4.1%
0.2%
1.1%1.3%1.5%1.3%1.4%
0.9%
3.7%
-
50,000
100,000
150,000
200,000
250,000
P
rimar
y
In
dust
ries
Bas
eM
anuf
actu
ring
Sec
onda
ryM
anuf
actu
ring
Con
stru
ctio
n,
Tra
nspo
rtat
ion
Who
lesa
le &
Ret
ail T
rade
Ser
vice
s
Gov
ernm
ent
Ser
vice
s
Acc
omm
odat
ion,
& F
ood
Unk
now
n S
IC
0.0%
1.0%
2.0%
3.0%
4.0%
n (1995)
% High Growth
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Gazelles for Spin Off FirmsUniversities, by Sector
Sector # Univ S/O # Gazelles %
Life Sciences 366 77 21%
Electr / Software 238 50 21%
Manuf / Engineering 79 11 14%
Other 119 15 13%
Total 803 153 ** 19%
** Excludes 8 para gazelles
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Gazelles for Spin Off FirmsUniversities, IRAP vs Non-IRAP Assisted
Type Gazelles Gazelles with IRAP % IRAP
Gazelle 91 70 77%
Grow & Drop 62 * 41 66%
Para Gazelle - doubled in 5+ yrs 8 4 50%
Closed 1 0 0%
Total 161 103 64%
* Increased in 2004
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Gazelles for Spin Off FirmsUniversities, By # Firms by Decades, for Gazelles for
Employment and Sales
#
0
10
20
30
40
50
60
70
80
90
1960s 1970s 1980s 1990s
Gaz E
Gaz Sales
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Gazelles for Spin Off FirmsUniversities, # Gazelles by Company Size
Staff SizeFirm Size
#
Gaz Empl
65
40
31
10
0
10
20
30
40
50
60
70
< 50 50-99 100 - 499 500 +
Gaz Empl
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University Spin Off Firms,
By Stage – 803 Spin Offs , 353 funded by IRAP
0
100
200
300
400
500
600
Ongoing Taken Over OnExchange
Closed Inactive
Univ Spin Offs
IRAP
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22
University Spin Off Firms vs GazellesBy Region – 803 Spin Offs , 344 funded by
IRAP - Gazelles GE and GS
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23
NRC and Canadian Universities – Spin Off Firms (from 1996-2001*)
0
4
8
12
16
20
24
28
32
36
40
44
48
NRC
Toront
oUBC
Alber
ta
Mon
treal
Simon
Fra
ser
McG
ill
Que
en's
Weste
rn O
ntario
Calgar
y
Man
itoba
Conco
rdia
Sherb
rooke
Wate
rloo
McM
aste
r
VALUE FOR CANADAVALUE FOR CANADA
Benchmarked against Canadian universities, NRC is first with 49 spin-off companies formed over a period of six years.
(Source: Association of University Technology Managers)
* FY 2001 is the most recent Association of University Technology Managers Licensing Survey available.
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103 NRC Spin Offs / Spin Outs
0
20
40
60
80
100
120
1947-69
1970s 1980s 1990s 2000+.
Cummul
Total
Non IRAP
IRAP
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91 NRC Spin Off Firms – by Socio-economic Impact
Jobs identified in 84 firms = 1447 *
Sales identified in 35 firms = $68 M
New Capital Raised in 37 firms = $360 M
IPO / RTO on Stock Exchanges 4 firms
* Latest year, excludes 5 spin in firms.
• One Closed NRC spin off peaked at 1,400 jobs O
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GROWTH in SALES & JOBS from Canadian Univ Spin Offs
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1990 1995 1999 2002 2004
SALES $M
JOBS (x 10)
* NRC / DC 2005 Apr
For public firms S = $4.7 B of $6.1 B J= 18000 of 29400
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Gazelles for Spin Off FirmsUniversities, NCEs and NRC
Gazelles Univ NCEs NRCSample base 803 95 91
Gazelles [ Jobs] 153 = 19 % 8 = 8 % 18 = 19 %
Jobs - 1995+ * 29,400 476 1400 **
# G E 91 8 11# G EDrop / GE Close 62 - 7
Sales - 1995+ $6.1 B $6 M $68 M
# G S 26 2 1# G SDrop 19 - -
• Latest year known,
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Gazelles for Spin Off FirmsUniversities, NCEs and NRC
Lag Time by Sector 50 Employees
# Firms
0
2
4
6
8
10
12
14
16
18
1-5. 6-10. 11-20. >20
Life Sci
Elect / Soft
Manuf
Other
Years
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Gazelles for Spin Off FirmsUniversities
Lag Time by Sector $10 M / Yr Sales
# Firms
0
2
4
6
8
10
12
14
16
1-5. 6-10. 11-20. >20
Life Sci
Elect / Soft
Manuf / Other
Years
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II
84 Public University Spin Off Firms: With and Without IRAP
0
5
10
15
20
25
30
1960 1970 1980 1990 2000 2010
Incorporation Year
Ye
ars
to
IPO
/ RT
O
Series1
Series2
Linear (Series2)
Linear (Series1)
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Gazelles for Spin Off FirmsUniversities, NCEs and NRC
What do we now know about the creation and growth of Spin Off Firms?
We know where they are, in which cities, and in what sectors.
We know some data on certain inputs i.e. VC funds and Stock Exchange status of NCE and NRC spin offs.
We know Little about the ingredients or characteristics for their creation or growth growth.
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Inputs to Gazelle Formation / Growth ? – Stats Can bases Universities 1 of 2Item Sample R 2 Gazelles Size # % .
1. Gazelles and # Universities per City 38 0.89 0.13
2. Gazelles and Research funding /City a. Total R&D [$100s Million] 30 0.85 0.06 b. Total University R&D $ 38 0.60 0.015 c. Univ NSERC $ Av 96 & 97 31 0.15 0.030 d. Medical R&D $ to univ. & hospitals 14
0.023
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Inputs to Gazelle Formation / Growth – Stats Can bases ?
2 of 2Item Sample Size R 2 Gazelles
# % 1. Gazelles per Fulltime
university students / City 82 0.93 0.020
2. Gazelles related to Univ. Spin Off Firms by City 441* 0.35
0.0001
3. Gazelles related to VC 1996 / City 23 0.90 0.096
4. “ “ “ “ 1999 & 2000 / City 24 0.1275. H.Q.P. by City 21 No Link
* University Spin Offs with info on jobs and still surviving
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Gazelles for Spin Off FirmsUniversities, NCEs and NRC - Examples
Firm Sector G Empl 100+ G Sales $100 M+
Cytovax Bio YDalsa Elect Y YQLT Pharma Y YSciex Elect Y YSiGe [NRC] Elect YStem Cell Bio YVirtek Bio/ Manuf YZenon Enviro Y Y
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IRAP SCOREBOARD803 University Spin Off Firms
• Closures Neutral
• Sectors Neutral
• Slow Growth Firms + Fewer
• Gazelles +
• 2004 Sales / Firm + [Few Bio so far]
• 2004 Jobs / Firm - Av 61 vs 71 jobs / Firm]
• Taken Over Firms + +
91 Public Companies + +
• Market Cap +• Sales ++ For Sales over $10M or $100 M• Jobs ++ For Jobs over 100 or 1000• R&D +• Investments – 2 Yr + Bio
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Analysis of Gazelles in University Spin Off Firms 1 of 2
1. University Spin Off firms have a higher % of Gazelles • 18% versus 1 - 4% for Canadian industry as a whole • Davidsson in Sweden found 14% for all sectors
2. High Tech sector shows higher growth rates, in Canada• with little difference within key sectors. • US, Holland and Finland show higher levels in Non-
Tech areas
3. Manufacturing sector shows lower levels of Gazelles
4. Still got some Gazelles for larger firms
5. Average Time to takeover unrelated to:
• Gazelle or if firm received IRAP support,
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37
Analysis of Gazelles in University Spin Off Firms 2 of 2
6. Low closure rates – only 1 Gazelle [ <1%] vs 20% for spin offs
- i.e. firms do not ever-extend themselves – as confirmed in Finland study
- Normally 50% of all firms close in 5 years
7. So far 58 university spin offs taken over [7% vs 20% for Gazelles]. - Most were IRAP funded.
8. There is considerable turbulence in employment levels • especially in 2003/4 - where Gazelles grew then dropped back but NOT
to original levels. • Similar results in Europe for spin outs
9. Sizeable lag time to get Sales, but R&D jobs grow e.g. in Bio.
10. Few GS Sales Gazelles in NCE and NRC spin offs• Still too early
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38
Conclusion
1 This is the first study of its kind covering both Gazelles and University Spin Offs, as well as NRC Spin Offs.
2 Gazelles account for 75% of Sales and 70% of Jobs from University Spin Offs.
3 Based on available metrics from Statistics Canada data, most of the university parameters had little link to % of Gazelles.
4 More studies are needed to ascertain the reasons for gazelle
formation and growth, in both university spin offs and industry
overall. We now know where they are, but not how they get
there.
5 Need some social science studies?
• People issues, Networks for suppliers, Angel funding?
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Dr. Denys Cooper, Senior Advisor, Technology & InternationalIndustrial Research Assistance ProgramNational Research Council Canada(613) 993-7620 fax (613) 952-1079 [email protected]
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Previous Studies on Benefits from Government Assistance Programs
Some studies show that their assisted firms perform better than non-assisted firms
e.g. US SBIR program: firms raise more VC funding
But many studies suffer from:• Sample size not being large enough• Inability to get well matched firm profiles with / without
funding• Insufficient ability to assess attribution to program
activity• Inability to discount the “filtering in” process
• i.e. select better firms that are more likely to succeed
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Does this study of 803 University Spin Offs address the prior concerns?
• Are the Closure Rates the Same ? YES• Are IRAP funded Firms the Pick of the Crop ? NO
• IRAP funded 44% of 803 firms in this study
• Do we have Similar Sectors ? YES
• Do we have a Large enough Sample Size? YES
Note: University Spin Off Firms now tend to be in Higher Tech areas.
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52 University Spin-Off Firms (Bio / Non-Bio) Incorporation Year to Initial Public Offering (IPO)
0
5
10
15
20
25
1968 1972 1976 1980 1984 1988 1992 1996 2000
Bio Non-Bio
Years
to
IPO / RTO
Incorporation Year 6 firms were Reverse Take Overs (RTO)
and 1 firm closedNRC - DC/JCP
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95 Network Centres of Excellence [NCE] Firms – 35 Firms with Jobs and IRAP
IRAP Firms withSupport Known Jobs # Jobs Ave /Firm
Yes 14 of 20 274 20
No 21 of 75 202 10--------- ---- ---
Total 35 of 95 476 14
13 other firms were known to have NO jobs25 Firms have received IRAP support
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Industrial Research Assistance Program - IRAP
Established in 1961 by the National Research Council of Canada
Mission: To stimulate innovation in small and medium-sized enterprises (SMEs)
Technology Assistance• 12,000 Clients per year• 2,900 Funded projects• 260 Industrial Technology Advisors in 90 Technical
Organizations
Budget $160 M / year - $106 M budgeted for projects in Firms
• Advice - 50% time of Advisors • Projects - $15 K, for decision in 2 weeks,
with larger projects $500 K –> $1.5 M
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Canadian University IP Base
1. Canada does not have a Bayh-Dole Act
2. 50% of centres, universities own the IP• Balance mostly researcher owned, a few have joint
ownership
3. There is no major difference in outputs / impacts whether the IP is university or researcher owned except for the numbers of patents filed is higher if university owns the IP *
* Bruce Clayman, 2004, using AUTM data
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Gazelles for Spin Off FirmsUniversities,
Effect of IRAP on Sales and Employment Growth – above ave of 44%
% Growth Leaps
0%
20%
40%
60%
80%
100%
120%
100
200
300
400
500
700
>100
0
% IRAP SALES
% IRAP EMPL
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95 Network Centres of Excellence [NCE] Firms
95 NCEs of all 1100 Spin Offs = 8.6% or created in the same time period of 1994-2004
= 14%
Job creation / firm for NCEs = 14vs
Similar sample from 803 Spin Offs = 14
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95 Network Centres of Excellence [NCE] Firms – by Socio-economic Impact
Jobs identified in 35 firms = 476
Sales identified in 7 firms = $5.9 M
New VC Capital Raised in 22 firms = $445 M
IPO in Aspreva - Bio in BC 1 firm = $200 M
Strategic Alliances in 1 firm = $200 M
NCEs spin off technology also to other established firms
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Gazelles - High Growth Firms in Canada
Ref: Statistics Canada / NRC-IRAP 2004
16005 Gazelles - High Growth Firms and % for 1995-2000
11464
2961952 556 72
1537716005
2.9
1.41.4
3.9
1.1
4.75.1
0
2000
6000
10000
14000
18000
1-19 ILU 20-49 50-99 100-499 500+ All Small (1-99)
Firm Size Categories – Labour Units
0.0
1.0
2.0
3.0
4.0
5.0
6.0
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Credit and Thanks to
NRC - IRAP - Denise Guillemette- Corporate - K. Torkko - NRC data- Records Services for pulling hundreds of files- CISTI - K. Cook, A-P. Bruneau
Stats Can – S&T: - F. Anderson, M. Bordt, L. Earle, C. Read + +
NSERC - NCE - J-C Gavrel
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Gazelles for Spin Off FirmsUniversities, NCEs and NRC
1. .