By DR EUGENE LOTTERING Executive Director September 2004 THE.

by

DR EUGENE LOTTERINGDR EUGENE LOTTERINGExecutive Director

September 2004

THETHE

Population : 43 million

GDP : ~ $130 Billion (US)

Origins of GDP :

o Agriculture ~ 4%

o Industry of which ~ 32%

• Manufacturing ~ 20%

o Services ~ 64%

Unemployment : ~ 30%

PROFILE OF SOUTH AFRICAPROFILE OF SOUTH AFRICA

ECONOMIC PERFORMANCE INDICATORSECONOMIC PERFORMANCE INDICATORS

KEY INDICATOR : -

1. Standard of Living

• Growth in Productivity

• Income distribution

• Unemployment rate

ECONOMIC PERFORMANCE INDICATORSECONOMIC PERFORMANCE INDICATORS

PRODUCTIVITY GROWTH

• Investment in Capital formation ( + Infrastructure )

• Investment in People (Education & Training)

• Investment in Technology Advancement

“New Growth Theory” Physical capital + Human Capital=

• New Economic Growth Theory :

Physical Capital + Human CapitalPhysical Capital + Human Capital

• Technical change – scientific discoveries – academic research

• Technology advancement – new products; new productivity processes + spillover

• Knowledge as a public good & economic good

SHORTCOMINGS OF NEW ECONOMIC GROWTH THEORYSHORTCOMINGS OF NEW ECONOMIC GROWTH THEORY

• Identifying new scientific / technology attractive profit prospects

• Best institutional mechanisms that facilitate new tech promotion / adoption

• Attendant Risk

• Appropriability problem

• Government contribution

ECONOMIC GROWTHECONOMIC GROWTH

INNOVATION FUND TRUSTINNOVATION FUND TRUST

• Created on 3 March 2000

• Objectives

o To promote technological innovation within the research community

o To promote the key issues of competitiveness, quality of live,

environmental sustainability and harnessing of information technology

o To promote multidisciplinary and cross-sectoral collaborative research

and development programmes within South Africa’s national system of

innovation

o To own the assets and run the affairs of the Innovation Fund

o To attain the objectives of the Innovation Fund as set out in Section 3

BENEFICIARIES OF THE TRUSTBENEFICIARIES OF THE TRUST

Involved in R&D aimed at the promotion of technological innovation

BusinessBusiness AcademicsAcademics

Science Science CouncilCouncil

ResearchersResearchers

ParastatalsParastatals

EVALUATION CRITERIAEVALUATION CRITERIA

i. Innovation

ii. Technical Details

iii. Potential for utilisation of results / commercialisation

iv. Capacity

v. National Benefit

NATIONAL BENEFIT EXAMPLESNATIONAL BENEFIT EXAMPLES

o Introduction to SA of new technologies

o Improvement in the efficiency, productivity and competitiveness

o Diffusion of technologies or value add operation to industry

o Increased employment

o New capital investment

o Exports

o Import replacement

i. Innovation

ii. Technical Details

iii. Potential for utilisation of results / commercialisation

iv. Capacity

v.v. National BenefitNational Benefit

FROM RESEARCH CONCEPT TO MARKETFROM RESEARCH CONCEPT TO MARKET

Basic Research

Publications, HR Development etc.

Applied Research

Publications, HR Development, Patents

Financial Losses; Inventory, etc.Start-Up Company

Expansion Revenues; Profits

MARKET PLACE

Patents, Proof of concept, Prototype, Products etc.

R&D Development

SALESSALESMarketing Marketing

PhasePhaseProductProduct

Testing Testing PhasePhase

Design Design PhasePhase

PROOF OF CONCEPT FUNDINGPROOF OF CONCEPT FUNDING

RESEARCHRESEARCH

Conceptual Conceptual PhasePhase

Opportunity

RISK

LowHigh

CREATION OF A NEW VENTURECREATION OF A NEW VENTURE

• Wealthy Individuals / Angel investors• Wealthy Individuals / Angel investors

• 3F’s [Friends, Family & Fools]

• Venture Capitalist (private Equity)

Entrepreneurs

Market Reports

Business Strategy

Negotiation Skills

Patent Analysis

Networks

o Seedo Start-up / early stageo Development & Expansiono Buy-out

DEVELOPMENTDEVELOPMENT MANUFACTUREMANUFACTURECREATION OF NEW CREATION OF NEW

VENTUREVENTURE

DISCLOSURE

TECHNOLOGY TRANSFER PROCESSTECHNOLOGY TRANSFER PROCESS

RESEARCHINTELLECTUAL

PROPERTY EVALUATION

COMMERCIALISATION R & D PROTECTION

• Document• Date & Sign• Witness

• Invention / Device• Process / Method• Innovation

• Document• Manager Confidentiality

& Non-Disclosures

• New• Useful• Non-Obvious• Commercial Potential• Competition

• Start-up• License• Royalty• Equity• Management Team /

Entrepreneur• Business Partnership• Due Diligence

• Negotiate ResearchAgreements

• Project Monitoring• Milestone Driven

• Patent• Copyright• Trade Mark• “Know-How”

Project PortfolioProject Portfolio

Summary of IF Investment portfolio Summary of IF Investment portfolio

RoundPre-Proposal

applications received Grants awarded Commitments (R)

1Applications received by DST

19 96,989,000

2Applications received by DST

22 127,261,000

3Applications received by DST

16 104,364,411

4 126 18 104,167,214

5 209 11 94,082,517

6 127 12 101,681,542

2002/2003 MiTech 150 6 21,840,000

2002/2003 TAP Included in MiTech call 2 14,263,000

TOTAL 612 106 664,648,684

NB. The 612 pre-proposals is limited to the total applications received under the new IF business process.

Increase in DST allocation to the Innovation Fund (1998-2004)

Increase in DST allocation to the Innovation Fund (1998-2004)

Total IF investments per sector Total IF investments per sector

Investments in the Health Sector Investments in the Health Sector

Investments in Agriculture Investments in Agriculture

Investments in the Manufacturing Sector Investments in the Manufacturing Sector

Investments in Mining and Minerals Investments in Mining and Minerals

Investments in the Environment Sector Investments in the Environment Sector

Analysis of the ICT Sector Analysis of the ICT Sector

Total awarded per institution Total awarded per institution

Awarded per Science Council Awarded per Science Council

Awarded per HEI Awarded per HEI

Profile of Project Leaders Profile of Project Leaders

IF ORGANOGRAMIF ORGANOGRAM

CEOCEO

MDMD

BEEBEEFUNDINGFUNDINGMKTG & MKTG & COMMCOMM

LEGALLEGALIFCOIFCO

Snr. Commercialisatio

n Manager

Richard Doyle

Snr. Patent Attorney

McLean Sibanda

MiTech & TAP Manager

Lara Sukhdeo

Commercialisation Manager

Calvin Fambisayi

Commercialisation Manager

Commercialisation Officer

Financial Controller

Marius Strydom

PO ICTThemba Maseko

PO Biological Sciences

Mbali Mtshali

Tech. Promotions

OfficerLinda van Staden

SecretaryChristelle

Bonthuyzen

PADenise Ristow

EXECUTIVE EXECUTIVE DIRECTORDIRECTOR

Eugene Lottering

Manager

(Vacant)

Econ. Growth Manager

(Vacant)

Manager BEE & Corp.

Development

(Vacant)

SEED Manager (Vacant)

PO New Materials (Vacant)

Contract Lawyer(Vacant)