Written evidence submitted by the Centre
for Business Research, Judge Business School, University of Cambridge
THE ROLE OF TICS IN REJUVENATING BRITISH
Since 2007, we have been working on a project to
examine how academic research in the physical sciences could be
commercialised more effectively. This work has entailed an extensive
examination of Germany's Fraunhofer Institutes and other organisational
models on which the TIC concept might be based. It has included
visits to leading R&D organisations in Europe, the United
States and Far East, as well as public and private sector organisations
in the UK. This submission summarises the key findings and makes
detailed proposals for how TICs should be selected, directed,
managed and funded.
The project has been undertaken as part of the EPSRC
funded Cambridge Integrated Knowledge Centre for Macro-Molecular
Materials. The aim of the IKC is to accelerate the commercialisation
of a group of plastic electronics and photonics projects in the
Cavendish Laboratory and Electrical Engineering Division at the
University of Cambridge by attracting industry partners and adopting
a more "managed" approach to the portfolio.
The CBR project has two special features:
- Tracking the IKC technology projects in real
time to examine how strategies and expectations evolve, and identify
barriers to commercialisation,
- A parallel programme of visits to other "role
model" laboratories and organisations in the US, continental
Europe, Taiwan and Korea in order to compare their approach with
the IKC and identify organisational models and policies of relevance
to the UK
This submission and its conclusions are based on
this work, which included a high level policy symposium CBR organised
in November 2008 with senior speakers from the Fraunhofer-Gesellschaft,
IMEC, DIUS, EPSRC, TSB and MOD. It also builds on a number of
other innovation research projects undertaken by the authors and
other members of the CBR, including research undertaken in its
capacity as co-host of the UK Innovation Research Centre (UK~IRC),
funded by ESRC, BIS, TSB and NESTA. Finally, it draws upon David
Connell's experience as founding Chief Executive of an early stage
venture capital fund (TTP Ventures), member of the management
team of one of Cambridge's most successful technology "consultancies"
(The Technology Partnership plc, now TTP Group plc), and 15 years
experience of providing consulting advice to large corporations
on R&D management, technology exploitation and new ventures.
This research has included visits to three Fraunhofer
Institutes in Germany and one in the United States. Visits to
other "Intermediate R&D Organisations" include the
Industrial Technology Research Institute (ITRI) in Taiwan, the
Electronics and Telecommunications Research Institute (ETRI) in
Korea, The Holst Centre in the Netherlands, the Inter-University
Micro Electronics Centre (IMEC) in Belgium and the Printable Electronics
Centre (PETEC) in Sedgefield, County Durham. Our visits to these
institutions have been supplemented by interviews with senior
people from industry, government agencies and academia in their
host nations to provide insight into their operation and level
of success. Fieldwork in Japan will take place during early December.
This project is still "work in progress".
Details of some of the results have been published in a working
and this formed the basis of an input to the Hauser Enquiry earlier
FINDINGS: I. EXPLOITATION
Our research has shown that there are major problems
in accelerating commercialisation in conventional university research
- Most externally funded research projects in universities
are undertaken by teams staffed by PhD students and post-docs
who tend to move on quickly. As a result it is very hard to retain
competence in depth or build the core technology team required
to create a spin out business. This is exacerbated by the dominance
of short term grants and employment contracts.
- The time that must be devoted to writing publications,
teaching, supervisions and giving papers at academic conferences
means that R&D during a pre-venture stage can only be advanced
in fits and starts.
- IP is often not managed throughout a project,
but is typically only thought about at the point of considering
a spin-out or negotiating with large users who may wish to commercialise
the technology. Past leakages of various kinds and competitor
positions may only then become apparent. The problem is particularly
acute for the long lead time technologies which typify much academic
research as there may be an accumulation of IP over successive
projects involving many different individuals attached to a given
research group. Failure to protect early inventions (or where
appropriate to publish to ensure "freedom to operate")
can compromise commercialisation opportunities that may arise
several years later.
- Pressure to collaborate with industry, coupled
with changes in personnel, means that exploitation rights are
not always properly thought through or managed over the long term
in the way that a commercial organisation or Intermediate Research
Organisation such as a Fraunhofer Institute would. This can cause
conflicts to emerge later that can restrict the potential for
spin-off or effective licensing and contract research developments
with potential commercial funders.
- It is very difficult to accelerate the pace of
R&D prior to the stage when a technology becomes ripe for
exploitation, for example by increasing the size and commercial
orientation of the R&D team during the pre-venture stage.
As a result any competitive advantage can be eroded at this critical
- Universities are not normally equipped with the
expertise or resources to take technologies to the demonstrator
stage required to attract investment or customer interest.
- University academics lack the time and experience
to manage a portfolio of projects using stage gate approaches
to manage risk and progressively focus funding on the projects
which are most promising from a commercial perspective.
It is difficult to see how these problems could be
addressed within a conventional UK university research setting.
These issues are compounded in the UK because in
many areas of technology the natural industry collaborators are
foreign companies with little inclination to commercialise in
the UK. Spin-outs, commercialisation partnerships with smaller
UK based companies, and a systematic attempt to encourage the
attraction of inward investment must therefore play a disproportionate
role if there is to be significant economic benefit to the UK.
Furthermore, SMEs often lack the funding or resources to engage
with university academics, especially given the long lead times
to commercialisation that is often involved.
This interpretation is reinforced by research on
the business models pursued by the most successful companies within
the Cambridge Cluster.
This concludes that very few of its most successful science and
technology companiesat least in the physical and engineering
sciences - have their origins in academic intellectual property
and that the importance of direct university spin-offs has been
In particular, the city's technology "consultancies",
described later, have been a more important source of successful
spin-offs in terms of jobs created.
This research also shows that R&D contracts with
customers and the "soft start-up"
model has played the dominant role in funding these successful
companies through their early stages, with venture capital playing
a less significant, or later stage, role than the conventional
wisdom would imply. The report argues also that multi-partner
R&D collaborations, the dominant model in UK Government and
EU R&D funding for companies, are of little relevance to early
stage firms and other SMEs.
Lead customer contracts from private and public sector customers
usually provide a much better mechanism for directing and funding
their technology development.
Our international comparisons have revealed a variety
of ways in which other countries' innovation systems address these
problems and designed institutions that are better equipped to
exploit long lead time commercialisation opportunities for national
FINDINGS: II. INSTITUTIONAL
Private Sector Technology Consultancies
The R&D organisations with the most relevant
track record of turning R&D projects into product businesses
in the UK are to be found in the private sector, and comprise
the Cambridge technology "consultancies" (Cambridge
Consultants, TTP Group plc, PA Technology and Sagentia as well
as smaller companies focused on specific sectors). The term "consultancy"
is really a misnomer and relates more to their revenue model (fees),
than the kinds of outputs produced. These are predominantly developed
products and specialised manufacturing and test equipment for
their customers, rather than reports or advice.
Individually the four main firms are of similar size
to the Fraunhofer Institutes and they perform a very similar role
for their private sector customers. However, this has been almost
entirely without Government or EU funding of any kind (the Fraunhofer
Institutes are roughly 50% Government and EU funded), and they
typically earn 60-70% of revenues from exports (cf 10% or less
in the case of the Fraunhofer Institutes). Furthermore, the rate
at which jobs have been generated in product spin outs is significantly
better than the Fraunhofer-Gesellschaft
and they have had bigger, and more sustained, successes.
The Cambridge consultancy cluster is not mirrored
anywhere else worldwide and is an important national economic
Only the larger Cambridge consultancies are able to invest significantly
in technology development on their own account and the relatively
short term focus of the consulting model militates against this.
Nevertheless, they have been able to harvest IP and expertise
developed over the years to spin off many successful product businesses.
In one or two cases very long term investments in platform technologies
have been made alongside commercial contracts for specific applications.
The trigger for the creation of a product spin-off
has often been the loss of a major customer, bringing both opportunity
(through, for example, the chance to acquire unwanted IP) and
The four largest Cambridge consultancies employ over
1,000 people between then, but have created product spin-off business
employing over 5,000 people, including two of Cambridge's largest
and most successful companies, Domino Printing Sciences and Cambridge
Silicon Radio. The Cambridge consultancies are some of the most
effective organisations we have seen anywhere in developing and
commercialising new technology. So in considering how to exploit
the academic science base better, we would do well to learn from
their successes. In later sections we draw upon aspects of this
private sector model that can be borrowed in designing public
sector subsidised interventions.
The Fraunhofer Model
The operation of the Fraunhofer Model is described
in our working paper.
Its principal advantage over the private sector consultancy model
is the core public sector funding that Institutes receive. This
enables them to invest in long lead time technologies and supporting
equipment where it is more difficult to attract private sector
funding. This in turn helps them create the technology platforms
around which commercial R&D contracts can later be sold.
Of the Fraunhofer Laboratories we have visited during
the research, the Fraunhofer Institute for Photonic Microsystems
(IPMS) in Dresden illustrates best the kind of role we believe
such organisations could play in the UK. Although it is possible
that its position in the old East Germany has brought it particularly
high levels of public sector funding. In technology terms IPMS
is also a good comparator to the Cambridge University Integrated
Knowledge Centre in Macromolecular Materials, whose EPSRC grant
provided most of the funding for our research.
IPMS was founded in 1992 around a core team of 100
people from one of the GDR Academy of Science's Laboratories in
Dresden, home of the DDR's large, but uncompetitive semiconductor
It is important to understand the relationship between
Fraunhofer Institutes and academia. They are not university institutions
and are managed, directed, administered and funded entirely outside
the university system. Their role and modus operandi is very different.
A close relationship with a local university is important, but
this is subservient to their role as developers of technology
for their industrial clients and the level of interaction with
academia is much smaller than sometimes believed. Today IPMS has
some 200 permanent staff with a further 25 doctoral students and
25 masters students from related universities. Two of IPMS's directors
hold chairs at the Technical
University of Dresden.
This level of interaction with academia is typical
of other similar Fraunhofer Institutes, with roughly one in a
hundred of their 17,000 permanent staff holding university positions
IPMS's 2009 revenue budget was $24 million comprising
$7 million from core government funding, $7 million from public
projects (contracts, grants etc) and $10 million from bilateral
contracts with industry, license revenues etc. The Fraunhofer
funding model uses a formula for the amount of core funding provided
each year which is carefully designed to encourage revenues from
bilateral industry contracts at between 25 and 55% of the total.
In addition to the core funding for operating expenditures,
capital investments at Fraunhofer Institutes are also funded by
government on a case by case basis. IPMS has benefitted greatly
from EU, Federal and Länder investments over the last five
years. This has enabled it to acquire two significant clean room
facilities and specialised processing equipment at a total cost
of some 60 million. One is for producing CMOS based microelectronic
mechanical systems (MEMS) and micro opto-electronic mechanical
systems (MOEMS) and the second is for OLED based productslighting,
organic solar cells and OLED-on-CMOS devices. The latter was originally
built as the Dresden manufacturing plant of Micro-Emissive Displays,
an Edinburgh based venture capital and AIM funded company. IPMS
acquired this facility when MED went into administration in 2008.
Both clean room facilities are operated around the
clock on three shifts, five days a week. They have dedicated process
management teams through whom research scientists must work to
get experiments designed and run.
Both facilities can produce devices at pilot or small volume production
scale, although there is considerable sensitivity amongst Fraunhofer
management to conflicts of interest; they stress that these facilities
would not (and cannot) be used to compete with existing German
or European companies. It is difficult to see how a comparable
style of operation could ever be achieved within a UK university
The primary role of all Fraunhofer Institutes is
to support German companies, including SMEs, without competing
with them. In each case they aim to deliver fully developed products
and if necessary the process equipment to manufacture them. In
some cases they can also undertake pilot scale manufacturing on
Fraunhofer Institute equipment and even full scale manufacturing
for niche products where no fully commercial facilities are available
This contrasts strongly with the role of universities which are
limited to developing very basic "proof of concept"
Professor Lakner, the Executive Director of IPMS, stresses "the
difference between a demonstrator which may show that a
product is feasible, but without meeting a customer's full specification
and a prototype which must meet full specification without
meeting lifetime, yield and cost targets". The Fraunhofer
Institutes go well beyond the prototype stage to manufacturable
product, just like the Cambridge consultancies.
There are significant differences between Fraunhofer
Institutes in their mode of operation. IPMS typically works on
product developments that are five to seven (or more) years from
market and it is characterised by its industrial investment in
capital intensive process technologies. Some are closer to market
and more comparable with the Cambridge consultancies.
The most comparable facility to IPMS in the UK is
the Printed Electronics Centre (PETEC) in Sedgefield. PETEC has
had comparable levels of government investment to IPMS, but is
inconveniently located for overseas customers and is geographically
distant from major academic centres of materials and electronics
Whilst IPMS has yet to demonstrate that it can spin-out
substantial product businesses this is only one indicator of success.
The level of engagement from (predominantly) German industry suggests
it is a successful organisation in broader terms. Some Institutes
seem to have a less good reputation and have probably suffered
from low staff turnover and the gradual decline in the relevance
of R&D programmes to which all privately and publicly funded
laboratories are prone without regular review and rejuvenation.
The most publicised success of any of the Fraunhofer
Institutes in commercialising technology on its own account relates
to the MP3 standard. This was developed by the Fraunhofer Institute
for Integrated circuits, based in Erlangen, and has generated
tens of millions of Euros for the Institute in licence revenues.
A good deal of effort has been devoted in recent years to encouraging
the establishment of spin-off companies. Some 150 spin off companies
have so far been created, though most seem still to be quite small
and it is still too soon to evaluate how successful this activity
Within the Fraunhofer system there have historically
been certain aspects of the model, notably levels of pay and other
incentives, as well as attitudes towards personal risk taking,
which might have reduced their effectiveness in commercialising
technology on their own account. If replicated in a UK context,
the need to attract and retain the best people will be cardinal.
This is particularly true in relation to creating economic value
through that part of their activity concerned with spin-out businesses.
Other Intermediate R&D Institutes
In terms of economic impact, two of the most interesting
institutions we have visited are the Industrial Technology Research
Institute in Taiwan and IMEC in Louvain. We focus on the former
ITRI was instrumental in building the service based semiconductor
industry in Taiwan, of which the Taiwan Semiconductor Manufacturing
Company (TSMC) is the key element.
In 2009 the Taiwanese semiconductor industry had revenues of $39
billion and was the world's largest in terms of manufacturing.
Its investment in semiconductor manufacturing has enabled many
other companies to become established at other points in the supply
chain. However, it should be noted that this was a "catch
up" strategy involving licensing in existing semiconductor
manufacturing technologies from western companies. Insofar as
strategy is concerned with spin outs it is also important to note
that the spin out performance of ITRI has not been central to
its role in recent years. This is in part a reflection of the
growing strength of Taiwan's companies and their use of strategies
less dependent on government funded R&D to move into major
new areas of business, like LCD displays. The central lesson from
the ITRI model is the strategic creation of a central capacity
to develop major businesses located in Taiwan.
A key part of ITRI's role in strategic capacity building
has been in training.
160,000 alumni have graduated
from ITRI, with more than 140,000 of them currently employed in
the business community. More than 5,000 work in Hsinchu Science
Park, in which ITRI is based, serving in mid to high level management
positions. 60 of ITRI's alumni are Chief Executives of Taiwanese
corporations. The expertise built up through on-the-job training
in technology development and exploitation in an organisation
like ITRI is of course very different to that acquired in a university
Finally, we would point also to one further interesting
modelthe Computer Aided Design Centre created in the early
1970s in Cambridge. This was largely Government funded with some
industrial contracts. It was not part of the University of Cambridge,
although there was an active 3-D modelling group at the University's
Computer Laboratory. The CAD Centre went through some difficult
times and many changes, including privatisation and flotation.
Today it has transmogrified into AVEVAs
the world's leading engineering IT software provider to the plant,
power and marine industries, employing over
600 people. In addition, some of CAD Centre's early staff went
on separately to found a succession of very successful software
Fraunhofer Institutes and other intermediate R&D
laboratories have three key features which contribute to the role
they play in technology exploitation: long-term government support
through core funding and capital investment; their focus on mission
oriented development rather than research and academic publications;
and engagement with real customer innovation needs with significant
R&D funding from lead customers. These include procurement
contracts from government agencies.
Experience from the Cambridge cluster shows that
the role played by lead customers in defining needs, funding technology
development and trialling prototypes is crucial to successful
technology exploitation. In the US government has played a key
role in the process, through the £2 billion a year SBIR programme
and other innovation procurement programmes.
Indeed, the vast majority of US government funding for R&D
in companies is based on the procurement contract model as opposed
to the multi-partner collaborative model involving companies and
universities favoured in the UK.
In contrast in the UK, Government has found it far more difficult
to encourage spending departments to place R&D contracts with
POLICIES FOR TRANSLATING LONG LEAD TIME TECHNOLOGIES
INTO COMMERCIAL BUSINESSES
In deciding how much money to commit to Technology
Innovation Centres, it is therefore important to consider what
could be achieved through a complementary policy of increased
innovation procurement from private sector companies. Both policies
have the potential to bridge the gap between academic science
and commercial markets illustrated in Exhibit 1. The former plays
a dominant role in the US, the latter in Germany, though even
the German Fraunhofer model depends for its success partly on
Institutes being able to win R&D contracts from customers
in the public sector as well as the private sector.
Of these two complementary policies, we would place
at least as much emphasis on expanding government funding for
innovation procurement contracts to capitalise on the successful
"soft company" model exhibited in the Cambridge context
(and elsewhere) and enable the private sector to play the dominant
role in technology development.
The funding and endorsement from lead customers this brings would
also make it easier for entrepreneurs to grow their businesses
more aggressively when the time is right, with funding from venture
capital firms if needed.
As indicated this would also support UK TICs created on the Fraunhofer
model where this approach makes sense.
Experience of UK Faraday Centres and the more recent
network of Micro and Nanotechnology facilities suggests that past
UK attempts to create "innovation centres" have suffered
from a poor understanding of success factors and inadequate specification
of the model, coupled with its subsequent dilution to try to satisfy
individual regional agendas on a restricted budget.
Nevertheless, we believe that TIC's based on a modified
Fraunhofer model could have an important role to play for long
lead time technologies where there is no conflict with an existing
Their objectives should be to undertake mission driven
R&D leading to the creation of commercial products and processes,
and through this activity to train scientists and engineers in
both the technical and management disciplines involved. In time
this should enable TICs to generate revenues from contract R&D
for customers, licences and spin-offs.
It should be emphasised that this will require a
very different style of operation to a university laboratory,
with very different management philosophies. Whatever the process
involved in the identification and selection of TICs, and while
collaborative university and industry initiatives will be welcomed,
it is essential that TICs have the independence and governance,
management and incentive structures needed to deliver this mission
driven, and strictly commercial orientation.
We recommend that:
- TIC's should be focused on a small group of related
long lead-time technologies with engineering support. These should
normally be newly emerging areas of technology with significant
potential commercial impact but a scarcity of expertise internationally.
A single, high risk area of technology is probably too narrow
as it would inhibit comparison with other technologies and possibly
prevent rational resource allocation within a TIC.
- TIC's should aim to be competitive globally for
contract R&D, rather than perceiving themselves as providers
of services to UK industry. It is by working with the best and
most demanding customers world-wide that expertise and IP is built
up over time to enable spins outs and commercialisation programmes
with UK companies.
- Each TIC should have 80-200 people. Experience
from the Cambridge technology consultancies suggests that this
is the "sweet spot" for economies of scale in R&D,
though the initial start up team would obviously be smaller in
- TICs should be twinned with a single, geographically
close university with existing world class competence and sizeable
teams in their fields of interest (This should not of course prevent
individuals and teams from any university in the UK or indeed
elsewhere from using a Centre's facilities or collaborating on
projects on an ad hoc basis).
- However, TIC management, administration, funding,
resource allocation, remuneration and appointment processes should
be entirely independent.
- CEOs should have significant experience of managing
R&D in industry and an international reputation in their field.
- A small number of other directors or staff should
also have joint positions in varying proportions in terms of the
time devoted to their TIC and university roles (the Fraunhofer
norm appears to be roughly two per institute).
- To ensure a development rather than research
orientation, senior staff should be recruited mainly from industry.
Some of those joining at graduate or post doctoral level direct
from university would be expected to move into managerial positions
in due course.
- Salaries should be linked to competitive industry
norms rather than academic scales.
- With the exception of the small number of staff
at a TIC holding joint positions with the twinned university,
staff should have no formal teaching roles The objective of each
Centre should be to develop and commercialise; academic publications
should play no formal role in performance evaluation at TIC level.
- TICs should be encouraged to take a limited number
of PhD and Masters students on secondment.
- Specialised equipment should be professionally
operated and managed by experienced technicians on the TICs payroll.
- The funding model adopted should be based closely
on the Fraunhofer Institute model:
- a multi-element formula for the amount of core
funding provided annually to reward Centres proportionally to
bilateral contract income secured between 25% and 55% of total
- typical, steady state funding split target: 25%
core government funding; 25% public sector contracts, EU etc;
50% bilateral private sector contracts;
- core funding guaranteed for at least six years
on a gradually reducing rate; and
- grants for major equipment investments available
from Government; such equipment to be treated as a national resource.
- Although the institutions we have reviewed have
had very long life spans and include provision for rolling reviews
within that, consideration should be given to a normal TIC life
expectancy of 15 years. They should in any event be subject to
major review after 10 years, with the possibility of privatisation
or disbandment to follow. This would have the following benefits:
- It would avoid TICs losing their innovative edge
as the best people move on and as the new technologies on which
they are based become more mainstream and more readily available
from the private sector.
- It would help encourage commercialisation: the
evidence from the technology consultancies and elsewhere is that
loss of regular revenues can stimulate new thinking in pursuit
of commercial returns and enable R&D activity to be converted
into a scalable product business.
- It would release funding for the creation of
In essence this proposal has some similarity to the
way MRC research institutes are funded.
- The programme for new centres should first be
piloted with at most two centres, with others added after two
years operational experience, if positive, at the rate of one
new TIC every one to two years.
David Connell is a 1% shareholder in TTP Group plc
and Director of TTP Capital Partners, General Partner of its venture
David Connell, Professor
Alan Hughes and Dr Andrea Mina
Centre for Business Research, Judge Business School, University
1 December 2010
6 See http://www-g.eng.cam.ac.uk/CIKC/
(EPSRC grant reference EP/EO236141/1) Back
Mina, A, Connell, D. and Hughes, A. (2009), Models
of Technology Development in Intermediate Research Organisations,
CBR Working Paper No. 396, Centre for Business Research, University
of Cambridge: Cambridge. Back
Inward investment in science and technology industries is, of
course, often itself associated with the acquisition of an existing
In a recent major parallel set of CBR surveys of academics and
businesses funded by the ESRC the most important and frequently
cited factor which businesses identified as constraining their
interactions with the science base was their own lack of internal
resources. Academics cited lack of time. Neither rated differences
in culture or time scales as a significant factor.
Connell, D. and Probert, J. (2010), Exploding
the Myths of UK Innovation Policy: How 'Soft Companies' and R&D
Contracts for Customers Drive the Growth of the Hi-Tech Economy,
Research Commissioned on Behalf of the East of England Science
and Industry Council by the East of England Development Agency.
CBR, University of Cambridge. Back
See also Hughes, A. (2008), "Innovation policy as cargo
cult: Myth and reality in knowledge-led productivity growth",
in Bessant, J. and Venables, T. (eds), Creating Wealth from Knowledge.
Meeting the innovation challenge, Edward Elgar, Cheltenham and
of the Effectiveness and Role of HEFCE/OSI Third Stream Funding:
Culture Change and Embedding Capacity in the Higher Education
Sector Toward Greater Economic Impact,
A report to HEFCE by PACEC and the Centre for Business Research,
University of Cambridge. Back
A "soft company" is a science or technology based company
whose business model is to provide R&D based services (e.g.
technical consulting, contract R&D) and which draws on its
expertise and/or proprietary technologies to provide bespoke offerings
for a range of customers and applications. A "soft start-up"
is a company that uses this model in whole or in part to finance
its early development, thereby reducing or avoiding entirely the
need for external equity investment. Soft start-ups may continue
to adopt this model and remain a service business, or they may
transition to a "harder" business model based around
standard proprietary products. Back
Exploding the Myths of UK Innovation Policy, op. Cit. Back
There are individual organisations with some similarities in
many countries. Back
For examples of how this has worked in practice, see Page 26,
Exploding the Myths of UK Innovation Policy, op. Cit. Back
Op cit. Back
On appointment, the Executive Director of a Fraunhofer Institute
is also simultaneously appointed as a professor at the university
with which it is twinned. It should be noted also that it is rare
for a Professor of Engineering in Germany not to have experience
of working in industry first. Back
New Institutes typically start with 20-30 people, sometimes as
a spin-off from another institute, or by acquisition of another
organisation. The level of core funding is usually guaranteed
for six years initially on a gradually reducing basis as commercial
contracts are expected to be won. After this the amount of core
funding an institute receives is calculated according to a formula
linked to its success in winning contracts. In the case of IPMS,
the start up team was larger-around 90 people-and the transition
time was a little longer. Back
Dresden is also the home of the manufacturing facility of Plastic
Logic, the VC backed spin-out from the University of Cambridge,
though this is not co-located with IPMS and the two organisations
have not collaborated on R&D projects. Back
This compares with the typical UK university arrangement where
students use the equipment themselves, with minimal specialist
technical support Back
Producing technology demonstrators at the level needed to interest
potential investors in spin-off companies and commercial partners
is very challenging within the academic environment, even with
policies designed to assist this process. Back
The most successful "exit" so far seems to have been
the sale to Dolby for $250m of an MP3 related company formed with
a Swedish partner. Back
IMEC's focus is on semiconductor processing. This makes it unique
in Europe. Because of the huge investments in R&D and capital
expenditure entailed in developing next generation process technology,
the large companies involved are prepared to collaborate in a
major way. A similar organisation in the US is the Albany Nano-technology
Complex; its predecessor Sematech now has an international customer
base. This approach is particularly appropriate where large players
in mature markets are willing to co-invest on the scale and in
the collaborative way necessary. For further discussion see Mina,
A, Connell, D. and Hughes, A. (2009) Models of Technology Development
in Intermediate Research Organisations, CBR Working Paper No.
396, Centre for Business Research, University of Cambridge, Cambridge.
TSMC manufactures semiconductors for development and marketing
companies like Cambridge Silicon Radio. It has enabled a whole
new business model, that of the fables semiconductor business. Back
See Models of Technology Development in Intermediate Research
Organisations, op.cit. Back
See Case Study 9, page 50 in "Exploding the Myths of UK
Innovation Policy, op. cit. Back
Connell, D. (2006), 'Secrets'
of the world's largest seed capital fund: How the United States
Government Uses its Small Business Innovation Research (SBIR)
Programme and Procurement Budgets to Support Small Technology
Firms, Centre for Business
Research, University of Cambridge, Cambridge. Back
Lead contractors in the US may well use small companies or academics
as subcontractors, but this is not generally prescribed a priori
by government agencies. Back
After two false starts the UK's misnamed Small Business Research
Initiative is running successfully, but at a still very small
level, at around £25 million a year. Back
See also submission to House of Lords Committee on Science and
Technology on this subject by David Connell, December 2010. Back
Data on returns from the British and European Venture Capital
Associations show that average returns on early stage investments
in the UK and European technology sectors are inadequate to attract
pension funds and other investors. Importantly, this is a long
term problem, not a feature of the current economic climate. Significant
complementary public sector support, as in the US, is therefore
required to increase participation and procurement innovation
contracts would be a way of helping to achieve this. Back
The choice should be informed by a systematic strategic analysis
as advocated by the Council for Science and Technology in their
Report Strategic Decision Making for Technology Policy
Key elements include an assessment of the scale of the market,
the potential to capture a significant component of it based on
outstanding scientific excellence and a commercialisation model
capable of appropriating a key component of the value chain and
where the technology requires the kind of sustained output identified
in this submission. Back