COMMERCIALISATION FUNDING

COMMERCIALISATION: BRINGING RESEARCH TO MARKET

An invention remains as invention unless commercialized with economic returns.

MVF

Young Graduates

Symbiosis Grant(CRDF)

BSF

BGF

Others

VCs /Loans /

Debt Ventures

Cubicle GarageIncubatorsEntrepreneurship

Training

Nurturing & Mentoring

Value-added Services

Business Advisory

Enterprise

SEED

GOV. GRANT/ ANGEL/EARLY

STAGE FUNDING

“SEMI-VC” VC

Training & Consultancy

MTDC’s TECHNOLOGY COMMERCIALISATION PATHWAY

Appointed by the Government since 1997 to manage Government (MOSTI) grants under the Technology Development Programme (TDP).

The type of grants are :i. Commercialisation of R&D Fund (CRDF)ii. Technology Acquisition Fund (TAF)

Since the 10th Malaysian Plan, MOF has entrusted MTDC to manage two new funds for further commercialisation support and business expansion:-

iii. Business Start-up Fund (BSF)- Convertible loansiv. Business Growth Fund (BGF)- hybrid fund

GRANT/FUND MANAGEMENT

COMMERCIALISATION FUNDING

CRDF

CRDF as the name implies, is for the funding of

commercialisation activities of locally developed technologies

undertaken by Malaysian-owned companies. The technologies

can be those developed by the public sector or they can also be

the output of in-house research and development (R&D)

activities by the companies.

Under CRDF, commercialisation refers to a process by which the

results of research projects are converted to marketable

products and are commercially produced.

CRDF: FUNDING QUANTUM

Types of

CRDF

Target Group

Source of R&D / Technology

Quantum of

Funding (RM)

Percentage of

Funding

1 Spin-off company Public Sectors R&D 500,000 90%

2 Start-up company Public sector R&D 500,000 70%

3 (a) SMEInternally generated/Public Sectors R&D

4 mil 70%

3 (b) Non-SME

Internally generated/Public Sectors R&D 4 mil 50%

TAFTAF is established to facilitate eligible Malaysian companies in the acquisition of foreign technologies for immediate incorporation into the company’s manufacturing activity.

TAF’s partial grant enables companies to avoid expensive and often risky technology development stages.  The acquisition of technology could be in the form of acquiring know-how / IP exploitation / rights / blueprints via one of the following methods:i. Licensing of technology; and ii. Outright purchase of technologyiii. Technology support from foreign experts; andiv. Training of local personnel abroad (whichever related)

Provides funding of between 50% - 70% of total eligible costs or RM4m, whichever is lower.

BSFBSF is for seed funding of technology-based start ups.

Under BSF definition, a start-up is an early growth company, involves in technology commercialisation activities and ready to bring their products to markets:-

• New university spin off companies;• Companies started and self funded by entrepreneurs, but

without significant revenue;• Companies with high novelty/innovative products and have

potential market; and/or• New companies set up with collaborative research and

established market overseas.

BSFName : Business Start-up Fund (BSF)

Fund size : RM100 million

RP3 (RMK-10) : Year 2013: RM25.0 million

Focus : Technology Based Companies

Funding Per Company

: Maximum of 90% of total project cost or RM5.0 million whichever is lower

Fund Structure : Promissory Notes Convertible to Redeemable Convertible Cumulative Preference Shares (RCCPS)

Coupon Rate : 3.5%

Repayment : • Maximum of 8 years inclusive of 3 years grace period

• Repayment shall commence on the first month of the 4th year on monthly basis over 5 years

BGFBGF is a Hybrid Fund:-

• Acts as a transition and bridge to VC financing• Financial assistance in two forms:-

o Grant; ando Equity (same structure but more flexible than

conventional VC)• Grant is disbursed to finance the tail-end of technology

development phase• Equity portion disbursement is only upon fulfilment of the

grant milestone and upon the start of the initial phase of business development.

BGFName : Business Growth Fund (BGF)

Fund size : RM150 million

Fund Drawdown (RMK-10)

: Year 2011: RM50 million Year 2012: RM50 millionYear 2013: RM50 million

Focus : High Technology Grant Recipients

Investment Size Per Company

: Max. RM4.0 million

Fund Structure : Hybrid of Grant & Equity Funding

- Redeemable Convertible Preference Shares (RCPS)

Company profile : Early stage (successful grant recipients)

Exits : 3 – 5 years via buyback, trade sale, IPO, etc.

GRANT PROCESSING

APPLICATION RECEIVED

PRE-ASSESMENT

EVALUATION TC

The application is assessed on eligibility of the company /project.

Thorough evaluation to ensure that the proposed project's objectives and other requirements are in line with the Grant's objectives. This includes presentation, discussion on the proposal and visit by Evaluation Officer.

Technical Committee (TC) will evaluate the proposal & if deemed fit, will recommend the proposal to the Approval Committee for final approval.

AC

Final approval by Approval Committee (AC)

Signing of Agreement

To issue Letter of

Rejection

To issue Letter of

Offer

Application Returned

Client Charter : 45 working days

The application will be re-evaluated.

Approved?

OPEN A MONITORING FILE

The company is to submit a Quarterly progress report.

TC

Present the status/issue(s)of the project

PROGRESS REPORT SUBMISSION

MONITORING WORKSHOP

The company is to present the progress of the project twice a year

Progress Report Submission

Issue Acknowledgment

of Receipt

Issue a reminder letter

Review the report

submitted and highlight the

issue(s) to TC /AC if any

Company fails to attend 2 consecutive workshop

Issues Identified in

project implementatio

n

Presentation of the project status

Acknowledgment of attendance by

MO

AC

MO to present TC’s recommendation to AC

Final Presentation

for project Closure

Notification of AC’s

Decision to Company

NOTE: The project duration for TAF and CRDF approval is for 2 years.

GRANT MONITORING

Name BSF CRDF BGF TAF

Fund size RM 125 million. RM 180 million. RM 150 million. RM12 millionSource of fund Ministry of Finance

(MoF) Ministry of Science, Technology and Innovation (MOSTI)

Ministry of Finance (MoF)

Ministry of Science, Technology and Innovation (MOSTI)

Fund tenure period Budget 2011-2012. 10th MP 10th MP 10th MP

Fund objectives To support and encourage entrepreneurship and creation of new strategic businesses that are important, and potentially scalable; and the funding of supporting companies within a technology eco-system.

To promote the commercialisation of locally developed technologies (from public and private universities, Government’s Research Institutions and companies) undertaken by Malaysian owned company.

To support successful grant recipient companies until they can generate sufficient commercial value to attract VC financing and other forms of financing.

To facilitate eligible Malaysian companies in the acquisition of foreign technologies for immediate incorporation into the company's manufacturing activity. TAF's partial grant enables companies to avoid expensive and often risky technology development stages.

Focus sectors Technology companies.

Locally-developed high technology, except ICT.

High technology companies.

Technology companies.

Subscription instrument

Loan with convertible option to equity.

Partial, matching grant.

Hybrid – a combination of grant and equity.

Partial, matching grant.

RIGHT SUPPORT

OSA TECHNOLOGIES SDN BHD

Commercialisation Of Surgical Trauma Implant (orthopaedic), secured contract through Skim Anak Angkat Kementerian Kesihatan worth RM100 million (2012-2015)

Challenges:

- Long government procurement procedure in finalising contract, approximately 2 years.

- Delay in getting CE certification due limited cash flow of the company in year 2010.

- Competition from China and India products which are being sold at a very low price.

NASMECH TECHNOLOGY SDN BHD Commercialisation of CarbonatorTM for Sales and Contract Services

of Industrial Schedule and Medical Hazardous Waste. It is a 2nd generation of Carbonator which is used to treat, reduce and convert industrial schedule waste and medical hazardous waste into stable, odorless and harmless compound. Accumulated sales: RM11,210,781 (2011 – 2012).

Challenges:

- Requires high capital investment for test bed to showcase and promote their technology before securing confirmed purchase from their customers, Pantai Medivest

- Continuous upgrading is required by the company in order to reduce operation cost and to enhance operation of the system.

S.I.T SCHIFFS- & INDUSTRIE TECHNIK (M) SDN BHD Acquisition of technology for the manufacturing of CD92

Homogeniser System (Mechanical Fuel Treatment System) -complete system to reduce sludge, improve combustion, blend different grade of oil and produce water-diesel emulsion to be used in large ship engine system. Accumulated sales: RM5,394,000 (2008 to 2012).

Challenges:

- No support from technology provider. The company is supposed to ride on ‘Buyback’ clause in the Licensing Agreement. However, the technology provider failed to transfer the Purchase Order from their clients to the company with no reason.

- Emergence of ‘copycat’ homogeniser makers and suppliers worldwide that price their products as low as possible in order to penetrate Asia Pacific market.

MALAYSIAN PHOSPHATE ADDITIVESDN BHD Commercialisation Of Organic Feed Phosphate. Technology to

manufacture and marketing of inorganic feed phosphates (DiCalcium Phosphate and Mono DiCalcium Phosphate). Their 30,000 MT per annum plant is the first of its kind in Malaysia and South East Asia. Local & export sales amounting to RM43.95 mil (2009-2011)

Challenges:

- Requires test bed to showcase and promote their technology before confirmed purchased from their customers, Pantai Medivest - involved high capital investment.

- Continuous upgrading is required by the company in order to reduce operation cost and to enhance operation of the system.

ECLIMO SDN BHD

Commercialisation of electric scooter – Model ES11

Technology lies in the combination of in-house development (battery of the ES11) and acquisition of stator block from KLD Energy Technologies, Texas.

Leveraging the advantages of two technologies which complement each other to enhance competitive advantage of the product.

START-UP/ SPIN-OFF FUNDING – THE SYMBIOSISTM EXPERIENCE Challenges:

- Difficulties in securing funds from commercial financial institution : no track records and considered as high risk businesses.

- Rate of research commercialization is targeted at 10% but….Reported: 5.1 % in RMK-6 and RMK-7, 3.4% in RMK-8 and 4.5% in RMK-9

- Lack of interest and business skills amongst academic staff to become entrepreneurs - Limited technical support from technology provider (Uni/RIs) – limited knowledge of industrial up-scaling and commercialisation.

- Small pool of technology entrepreneurs - One key problem in achieving significant rates of commercialisation of research is the relatively small pool of experienced entrepreneurs in Malaysia who are comfortable with technology and willing to take up and commercialise research outcomes from universities.

• RM927.46 mil Sales

• RM203.56mil• Export sales• RM418 mil

Private Investment

• 249

• 2,706 Job created

Approved RM294.72 million

CRDF 9th MP - OUTCOME

Disbursed RM221.17 million

• RM182.70 mil Sales Generated

• RM43.2 mil Export Sales

• RM131 mil private investment

• 55 IP Generated

• 642 Job Created

ApprovedRM45.81 million

TAF OUTCOME

DisbursedRM19.6 million

THANK YOU