MSCA fellows and Career Progression EventApril 2019

Commercialising Research

Eithne McShane,

Senior Commercialisation Specialist,

Enterprise Ireland.

Agenda

• EI Research Commercialisation activities:• Wider context in Ireland• Technology Centres• EI Commercial Case Feasibility (CFF) & Commercialisation Fund (CF)• How CF projects are assessed• What good projects look like – examples of spin-outs

• Spin-out process

• Licensing IP, KTI and National IP Protocol

• High Potential Start Ups (HPSUs):• A HPSU can be defined as a company that is internationally focused and has the potential to

employ at least 10 persons within 3 years of starting and to generate revenues of at least €1million. <5 years old.

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Overall guiding mantra around 3rd level collaboration with industry and research commercialisation

• Maximise the economic impact of the state’s investment in 3rd level research in Ireland• Exports and employment

• Harness the talent and technology capabilities within 3rd level system to improve the competitiveness of Irish industry and EI client companies:• Technology Centres, Innovation Partnership Programme, Innovation Vouchers, Technology Gateways

• Harness the 3rd level system as a source of new spin-outs that become EI HPSUs:• Commercial Case Feasibility, EI Commercialisation Fund, Business Partners Programme, Mentors

Programme, Investor Panel

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Research and Innovation –Agency ecosystem in Ireland

Scientific Excellence

with Impact

Market Focused

Innovation Driving

Company Growth

Winning FDI

Investment

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Ireland’s National Commercialisation activities –System performance 2017

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Abbreviations:KTI = Knowledge Transfer IrelandLOAs = Licenses Options and AssignmentsRPO = Research Performing OrganisationSME = Small to Medium Enterprise

Reference:https://www.knowledgetransferireland.com/About_KTI/Reports-Publications/KTI-Review-and-Annual-Knowledge-Transfer-Survey-AKTS-2017.pdf

EI Commercialisation of Research

• Research and Innovation Division in EI involved in a lot of activities - Research Commercialisation:

• The Research Commercialisation team is divided into three Directorates:

• Lifesciences and Food Commercialisation (LSF)

• Manufacturing, Engineering and Energy Commercialisation (MEEC)

• ICT Commercialisation (ICT)

• There are ~16 Commercialisation Specialists (CS) spread across the three directorates based on volume of pipeline and location of technology centres

• Each CS is assigned to specific institutes and Technology Centres e.g. a large institute like TCD will have 3CSs – one from each of the three directorates

• Each CS has a rolling portfolio of ongoing Comm Feasibilities, Comm Funds (pre and post award) and Technology Centre responsibilities

• There is also a specific CS team focused on identifying, managing and progressing our spin-out pipeline

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Technology Centres

• The Technology Centre programme is a joint initiative between Enterprise Ireland and IDA Ireland. It allows Irish companies and multinationals to work together on market focused strategic R&D projects in collaboration with research institutions.

• The 10 Technology Centres in the programme are resourced by highly-qualified researchers who provide a unique ecosystem for collaboration in areas identified, by industry, as being strategically important.

7https://www.enterprise-ireland.com/en/research-innovation/companies/collaborate-with-companies-research-institutes/technology-centres.html

Technology Centres

• Collaborative entities established and led by industry, generally on 5-year funding cycles• Funding is usually on a 1:1:1 ratio of: core funding: competitive funding: industry cash

• Resourced by highly qualified researchers empowered to undertake market-focussed strategic R&D for the benefit of industry based in Ireland (but more specifically for the benefit of its members)

• Technology Centres embed MNCs, SMEs and Higher Education Institutes in goal-oriented rapid response projects to deliver on the research needs of companies

• Centres are driven by EI to be industry-focused in their design, working environments, industry manager, culture, project selection processes and project turnaround times

• In excess of 750 companies engage with Technology Centres on an annual basis through membership of a centre &/or engagement through workshops, projects, etc.

8MNC = Multi National CorporationsSME = Small –Medium Enterprises

Technology Centres - EI Role and CS role:

• Before funded:• At the outset, helping with the industry formulation of the Detailed Description of Needs (DDN) and refinement process

• Working with sector colleagues to identify EI client companies that should input into the DDN and submission process and join other members of the industry cluster

• Ensuring sector relevance and EI client company relevance

• Involved in creating and curating the international assessment process (and identifying relevant assessors)

• Bring the paper to the IRCC and the EI Board for funding approval (€5m initially and upto €5m-€20m to scale further)

• After funded:• Ensuring the ongoing industry-led focus of the centre is maintained

• Identifying additional relevant EI client companies to join/benefit from the centre

• Attending and contributing to Centre Steering Committee (acting as EIs “eyes and ears” in the centre)

• Identifying client companies to join the CSC

• Performance assessment and KPI monitoring – and agreeing course corrections

• Looking for spin-out opportunities

• Looking at the sustainability (1:1:1) and scaling potential of the centre

9KPI = Key Performance IndicatorsIRCC = Industry Research Commercialisation Committee

Innovation and R&D impacts on businesses are real

R&D Active Firms achieve more exports than non-R&D Active Firms

ESRI/EI Study: Product Lifetimes in export markets are only 1-3 years on average: constant innovation is required to maintain/grow exports

BUT: Irish firms do not do enough RDI:International measure is ‘R&D intensity’ (R&D expenditure as a percentage of GDP)

Ireland:1.54%

Denmark:3.08%

Finland:3.17%

Israel:4.2%

0% 50% 100% 150% 200%

RDI Grant impact on Company Sales

RDI Performing Companies with EI in-company support + 23%

+ 78%

RDI Performing Companies

RDI Performing Companies with EI Collaboration Support

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RDI programmes & BERD Impacts

In-company R&D funding

Innovation Partnerships

Technology Gateways

Technology Centres

Innovation Vouchers

H2020

ESA

Commercialisation Fund

HPSUs

Campus Incubation

New Frontiers

Intensity of Impact

Time to BERD Impact

H2020 SME Instrument

SBIR

SFI Research Centres

SFI Spokes SFI Strategic Partnerships

SFI TIDA

Scientific Excellence Market Led Utility

H2020European Research Council

EI In-Company

EI Collaborative/HEI

SFI

11BERD = Business Expenditure in Research & Development

Commercialisation Fund Programme

Commercial Case Feasibility Award

✓ €15,000

✓ Apply anytime - get external expert

help

✓ Scope the commercial case

Commercialisation Fund Project Award

✓ Develop and commercialise

✓ Fixed calls and invited options

✓ 100% funding~€80-€350K

600+ projects (since 2010)

21 institutions

Address a significant customer/end-user need

Have potential to positively impact the Irish economy

Provide a unique solution over existing technologies

Support the development of innovations at all stages of the commercial pipeline

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TRL 1 – Basic principles observedTRL 2 – Technology concept formulatedTRL 3 – Experimental proof of conceptTRL 4 – Technology validated in labTRL 5 – Technology validated in relevant environment (industrially relevant environment in the case of key enabling technologies)TRL 6 – Technology demonstrated in relevant environment (industrially relevant environment in the case of key enabling technologies)TRL 7 – System prototype demonstration in operational environmentTRL 8 – System complete and qualifiedTRL 9 – Actual system proven in operational environment (competitive manufacturing in the case of key enabling technologies; or in space)

https://enspire.science/trl-scale-horizon-2020-erc-explained/

Commercialisation Fund - TRL

EI Commercialisation Specialist Role

• Engaging with TTO and researchers with commercial ambition working on potentially commercially attractive IP / technologies

• Finding and funding projects suitable for EI Commercialisation fund support – this our major financial support

• Working in partnership with the Technology Transfer Offices and PIs to stress test commercialisation opportunities and co-create/build fundable commercialisation projects

• Steering the Comm Fund projects and helping the teams that are funded towards commercial outcomes (spin-outs)

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Commercial Case Feasibility Support

• Researcher applies in partnership with the TTO or equivalent office

• €15,000

• 3-month project

• Fund independent experts / consultants

• Not designed to fund laboratory-based research

• Deliverables - Report

• How strong is evidence gathered?

• Follow-on application?

• Market analysis + segmentation (top down)

• Market validation (bottom up): engage (interview) customers, end-users, industry experts

• Profile competitor landscape and your potential Minimum Viable Product

• Patent landscaping and IP Strategy

• Investigate potential routes to exploitation to the economic benefit of Ireland

• Understand the Regulatory issues or other domain-specific barriers/hurdles (e.g. HEOR*)

• Create a small demonstration or early prototype (case by case)

15*HEOR – Health Economics & Outcomes Research

From: “Talking To Humans” by Giff Constable

EI Commercialisation FundIn advance of applying for Comm Funding, seek guidance

• Engage with Tech Transfer Office (TTO) / Case Manager early

• Consider when/whether to avail of Commercial Case Feasibility support

• Writing Commercial Case Feasibility proposal

• NB: Project Tasks and specification for external commercialisation consultant to be hired

• Steering the consultant along the way as evidence/issues emerge

• Assessing the quality of the evidence gathered during Comm Feasibility direct from customers/users versus secondary

research - any gaps?

• Converting Comm. Case Feasibility evidence into a full Comm Fund proposal

• If available, accessing entrepreneurial/lean start-up training (e.g. NDRC commercialisation bootcamp) to complement

feasibility

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EI Commercialisation Fund• When applying for full Commercialisation Fund:

• Engage with Tech Transfer Office (TTO) / Case Manager early

• Seek guidance on how to put the best project proposal together and what evidence is required (feedback on multiple

proposal drafts)

• Putting the correct blend and scope of tasks, milestones and deliverables in the project proposal

• Technology development and prototyping

• Securing and engaging with trial partners to iterate prototype to Minimum Viable Product (MVP)

• Ongoing identification, characterisation and validation of the market opportunity

• Advising on appropriate scope, budget and timelines for the project

• Identifying appropriate assessors to review project and provide letters of support

• If Approved – next steps will be to agree and refine the contract annexe

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Commercialisation Fund Proposals

Innovation and Technical Development

• Level of Innovation – potential for IP generation

• Technical feasibility

Commercial Opportunity

• Size and accessibility of the opportunity

• Direct validation of the market, customers, end users via customer discovery

Economic Impact in Ireland

• Opportunity for Ireland – license or spin out?

• Route to exploitation – intent of team

Project Team, Workplan and Management

• Technical workplan and skillsets within team

• Commercial workplan and skillsets within team

Project Costs

• Value for money

Evaluation Process:

– Internal and/or external assessors review proposals, present to assessor panel and a consensus funding recommendation is made

– Assessors apply their commercial common sense (= former promoters, CTOs, VCs, corporate execs + some academics also)

– Funding recommendations are presented to the Enterprise Ireland Industrial Research and Commercialisation Committee for decision (IRCC)

– Funding Decision and Feedback is provided to all applicants and TTO after the IRCC meeting

~3

MO

NTH

S

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Characteristics of a successful application

• Commercial Case is critical• Credible market/customer need demonstrated via

direct f2f customer interviews (at scale)• Market segmentation understood (and precise)

with large market potential • Competitive advantage is clear and maps well to

IP• Industry-specific, relevant contacts being made

and baked into the project e.g. KOL relationships established, investor engagement, etc.

• Patentability assessed/good IP protection plan • Regulatory, Reimbursement and other adoption

barriers explored and thought through

• Project is leveraging from previous research• Technical feasibility demonstrated • Good plan to test minimum viable prototype

with users/customers• Project team with relevant technical and

business skills and appropriately resourced• Clear, detailed, feasible work-plan • Specific, measurable, realistic technical and

commercial deliverables• Value for money research• Intent to build/test/iterate the product, team

and commercial business model

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EI Commercialisation Specialist Role

• During Commercialisation Fund:

• Help set up the project to succeed

• How to engage with third party consultants and maximise value from their input

• Ongoing interaction/input and advice on progress/direction of project

• Review and ongoing assessment of agreed project deliverables

• Helping and agreeing when to pivot the project and the budget allocation

• Introductions and networks to other PIs, founders, investors, mentors, etc. –right support, right time

• Helping and challenging the team on project and commercial ambition, project direction and not letting them fall into comfort zones

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EI Commercialisation Specialist Role

When a tipping point is reached and the project has spin-out potential:

• Helping the team understand what skillsets are required in a founding team

• Help with strengthening the founding team (EI Business Partner programme)

• Access to EI Mentors for advice

• Helping research teams and potential founders/co-founders understand the journey of a spin-out (post Comm Fund project funding) well before end of project

• Explaining the wider ecosystem of investor, accelerator, EU and EI HPSU supports that become relevant when transitioning from a commercialisation project to a NewCo

• Buddying up with EI HPSU Start team at the appropriate time

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Big Ideas

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Overall objective – an EI High Potential Start Up (HPSU):

• Less than 5 years old (from date of registration of the company) • Have the potential to develop a product or service that will succeed on international

markets • Have the potential to create at least 10 new jobs and €1m in sales within 3 years of

starting up • Have no distributed profits • Have not been formed through a merger • Have <50 employees and Turnover <€10m

• Have secured seed equity investment that provides 18 month runway

• Potential for EI equity co-investment

Our target is 15 HPSUs per annum from state-funded research

(against EI’s overall annual HPSU target of 90)

24https://www.enterprise-ireland.com/en/Start-a-Business-in-Ireland/Do-I-qualify-as-a-HPSU-/

Some recent HPSU spin-out examples from Comm Fund

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A co-founders matchmaking programme to match

commercially experienced entrepreneurs with

technically talented co-founders to form

investible, commercially sustainable spin-out

companies from Irish research performing

organisations (3rd level)

Business Partners Programme

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• A strong commercial track record

• A founders mentality and ability to work collaboratively and motivate, lead and inspire co-founders

• Ideally, previous technology start-up and founding leadership experience

• Capacity to personally invest and/or leverage equity investment by others

• Ability to identify and validate (de-risk) commercial opportunity from early stage technologies

• Ability to ramp up time commitment as required in the creation of a new spin-out company and stay onboard at least through initial (Seed and Series A) funding rounds

• Ability to leverage or create relevant industry contacts and networks (e.g. investors, customers, channels)

Ideal Business Partner

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Spin-out process• Trials and testing going well - generating real data

• Team roles, responsibilities and time commitment levels becoming clearer

• Gaps in team bring addressed from within or via external co-founders

• Founders agreement regarding equity distribution going forward

• Go to market, business plan and fund-raising strategy becoming clearer

• Team need to present a credible plan to TTO if they want to license the IP

• NewCo registered

• Licensing (Term Sheet) and SHA agreement + campus company process

• Fund raising

• Seed funding secured from private investors

• Enterprise Ireland (EI) equity co-funding

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IP = Intellectual PropertySHA – Share Holders AgreementTTO = Technology Transfer Office

Licensing• Between:

• RPO TTO and collaborating company (collaborative project)

• RPO TTO and NewCo spin-out

• TTO negotiate IP license terms and put the relevant contracts in place

• Depending on the programme, Heads of Agreement have to be put in place in advance, leading to:

• Licensing Term sheet

• Full license agreement

• NB: National IP Protocol – set of governing principles and approaches for TTOs and Industry in Ireland to handle most collaborative project and IP licensing scenarios

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IP = Intellectual PropertyRPO – Research Performing OrganisationTTO = Technology Transfer Office

KTI and the National IP Protocol2019 Just Launched!

• Brings predictability into the system

• Helps industry understand how, why and when to access the research base

• Technology, IP, expertise

• Provides practical resources

• Facilitates best practice

• Funds TTO network

• Monitors, Reviews and Reports on individual TTOs and TTO system performance

• Supports policy development

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Thank You

eithne.mcshane@enterprise-Ireland.com

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