As discussed above, most of the TTOs have a strategy of investing and holding equity in their projects. Thus, an important indicator of the TTOs’ success is the value of their portfolios, and to what extent they have succeeded in developing a good exit strategy. In the following we give an overview of their portfolios and discuss issues related to this.
Patents, licenses and owner shares
All but two TTOs pursue an active patent strategy, see Table 4.8. On an annual basis, it is esti-mated that the TTOs apply for more than 150 patents. In total they hold more than 300 patent families5
TTO
, and about 100 patents were licensed out by the end of 2008.
Table 4.8 Patent activity and number of assigned patents and patents licensed out by end of 2008 Patent
Campus Kjeller No patenting 70
The Innovation Centre Aas 4 0 0 0
Norinnova No patenting 0
TTO Nord 2 1 0 0
Total 163 202 101 15 257
*) Approximately 50 percent of the patent portfolio of Sinvent may be attributed to the FORNY pro-gramme.
However, the scale of patenting varies a lot. Sinvent by far shows the highest level of paten-ting activity; but it should be commented that not all of Sinvent’s activity can be attributed to FORNY, as patenting and commercialisation are integrated parts of the strategy of the SINTEF Group (the mother institution of Sinvent). It is estimated that approximately fifty percent of Sinvent’s patents may be attributed to the FORNY programme. There are three other TTOs which also hold a high number of patents, i.e. Oslo Innovation Centre, Medinnova and Leiv
5 A patent family is all the patents and patent applications resulting from a specific patent application. A patent application for an invention is originally filed in one country. Sometimes this application is the basis for filing patent applications in several other countries, which in turn can be the basis subsequent applications. All of the patents and applications associated with the original patent application is called a patent family.
Eiriksson Innovation. Approximately one third of the patents are licensed out. As there may be other license agreements in addition to those based on patents, we have collected informa-tion about the total number of active licensed agreements. In total, the TTOs in 2008 had about 80 active license agreements that can be attributed to the FORNY programme, and the total revenues generated by these agreements amounted to around 15 million NOK. Again, the distribution across the TTOs is highly skewed. In fact, there are only four TTOs generating revenues of some significance; Medinnova and Sinvent generated the most with around four to six million, while NTNU Technology Transfer and Bergen Technology Transfer generated around one million each. These four TTOs were responsible for around 95 percent of the total reported revenues.
In addition to the patents and license agreements, the value of the TTOs’ equity in the start-up firms is of importance. By the end of 2008, the fourteen TTOs active in the FORNY programme held equity in 147 firms which can be attributed to the FORNY programme, and the estimated value of these was slightly more than 100 million NOK (Table 4.9). The estimate is based on data obtained from the TTOs’ balance sheet, and represents a high level of uncertainty. Gene-rally, the estimates will be conservative and may underestimate the future values of the firms;
nevertheless the data give some indications of the value of the TTOs portfolio of firms.
Table 4.9 TTO portfolio of firms which have been supported by FORNY by end of 2008
TTO Firms 2008 Estimated
value
*)Net profit from exits since 2001.
It appears from the table that the distribution of values across the TTOs is highly skewed.
There are four TTOs accounting for the lion’s share of the total value of the portfolio firms with more than 80 per cent. These four are Campus Kjeller, Medinnova, Sinvent and Nor-innova. However, also in the specific portfolios there are much skewed distributions, as a few companies generally account for significant shares of the total values. For instance in the case Norinnova with a portfolio of 14 firms, three of the firms account for more than fifty per cent
71 of the total estimated value. Thus, the success of the TTOs to build high value portfolios de-pends much on their ability to include the most successful companies in their portfolios.
However, the main objective of the TTOs is not to build portfolios of great value per se, but to generate revenues that may be channelled back for further commercialisation activities and for strengthening the research activities of the institutions that provide ideas for commerciali-sation. Thus, exit strategies are important, and the ultimate success criterion is to what extent the TTOs succeed in their exit strategies and create returns on their investments.
It appears from the table (4.9) that apart from Sinvent, the TTOs so far have not had many ex-its. In fact, during a period of eight years, there have been no more than around thirty exits (when Sinvent is not included), i.e. three or four per year. However, it should be kept in mind that some of the TTOs are quite young organisations and cannot be expected to have exits during such a short period of operation. Moreover, it is worthwhile noticing that the total value of all the reported exits amounts to around 100 million NOK, and again we have the pattern of a skewed distribution. By far, Sinvent is the TTO with the best performance in terms of the value of exits, in fact, Sinvent is accounting for half of the total values generated by exits. Also Oslo Innovation Centre, NTNU Technology Transfer and Norinnova have succeeded in generating some revenues on exits.
We also asked the TTOs to what extent they had developed an exit strategy and if they per-ceived any problems related to exits. Apart from Sinvent and possibly one or two other TTOs, the remaining had not developed a systematic exit strategy, and the majority report signifi-cant problems related to exits. Generally, the time from investment to a potential exit is rather long. One group estimate the average time to be four to six years, while another group claim that the average will be more than six years.
The TTOs generally perceive it as difficult to carry out an exit in the early years of a new firm, as it might create problems for its further development. Continued involvement by the TTO may be a precondition for getting access to seed capital or other investors, and an early exit by the TTO may give a negative signal to other investors. Moreover it is argued that ‘second order’ investors are missing, thus it is generally difficult for the TTOs to carry out exits.
Summarising the situation, the TTOs spend most of their resources on projects that give small opportunities for exits. Rather than creating good opportunities for returns on their invest-ments, the investments seem to be tied up in projects in which the prospects for exits are rather modest. This may also be regarded as a result of the lacking supply of ideas with high potential for commercialisation, and it may also reflect the results of inadequate selection strategies by the TTOs.