AUTHORS: Dr. Aleksander BĄKOWSKI (editing) Marzena MAŻEWSKA (editing)

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2 AUTHORS: Dr. Aleksander BĄKOWSKI (editing) Marzena MAŻEWSKA (editing) Elwira KOPROWSKA-SKALSKA Jacek KOTRA Dr. Karol LITYŃSKI Marek MIKA Ewa POPIELCZAK Dr. Andrzej SIEMASZKO Małgorzata SNARSKA-ŚWIDERSKA Anna TÓRZ 2

3 REVIEWER: Professor Edward Stawasz The publication has been co-financed from the European Social Fund under the systemic project Development of human resources through promotion of knowledge, transfer and popularisation of innovation (the Operational Programme Human Capital, measure 2.1.3). The electronic version of this publication is available on the Innovation Portal The publication prepared by the experts of Polish Business and Innovation Centres Association. Opinions and arguments presented in the publication do not reflect the position of the Polish Agency for Enterprise Development, but only the position of the Authors. Copy available free of charge Copyright by Polska Agencja Rozwoju Przedsiębiorczości, Warsaw 2012 ISBN

4 CONTENTS PREFACE... 5 DETERMINANTS OF SUPPORT INFRASTRUCTURE DEVELOPMENT IN POLAND (MARZENA MAŻEWSKA, ALEKSANDER BĄKOWSKI)... 7 TECHNOLOGY PARKS (MARZENA MAŻEWSKA, ANNA TÓRZ) TECHNOLOGY INCUBATORS (ANNA TÓRZ) PRE-INCUBATORS AND ACADEMIC BUSINESS INCUBATORS (MARZENA MAŻEWSKA) BUSINESS INCUBATORS (JACEK KOTRA) TECHNOLOGY TRANSFER CENTRES (ALEKSANDER BĄKOWSKI) SEED CAPITAL FUNDS (KAROL LITYŃSKI) BUSINESS ANGELS NETWORKS (EWA POPIELCZAK) LOCAL LOAN FUNDS (MAREK MIKA) LOAN GUARANTEE FUNDS (MAREK MIKA) POLISH TECHNOLOGY PLATFORMS (ANDRZEJ SIEMASZKO, MAŁGORZATA SNARSKA-ŚWIDERSKA) CONCLUSIONS AND RECOMMENDATIONS

5 PREFACE To an increasing extent the current development processes are going on in a specific network covering business networks, scientific and research institutions and nongovernmental institutions as well as public administration and citizen s initiative. The role of network relations which facilitate merging of ideas and the exchange of information is growing. The innovation and entrepreneurship centres which have been developing in Poland since the early 1990s of the 20 th century matter more and more in these processes. Currently, the entrepreneurship support infrastructure in Poland consists of different types of innovation and entrepreneurship centres: technology parks and incubators, business incubators, pre-incubators, technology transfer centres, training and advisory centres, loan funds, guarantee funds, seed funds etc. These institutions are mainly intended to enhance the people s creativity, entrepreneurship and innovation leading to the more efficient use of the local growth factors. Since the beginning of system transformation the number of innovation and entrepreneurship centres has been systematically growing up to 821 in the mid The process of developing the entrepreneurship supporting system is still going on however, and there are new initiatives and new areas emerging where the innovation and entrepreneurship centres operate. The changes observed and analysis of the experience acquired by knowledge economy leaders show an increasing role of support infrastructure in the process of the Polish economy innovation development. In the era of technological changes and dynamic expansion of the innovation to the services, organisations, marketing and social issues, the enterprises are looking for new solutions and this is where the innovation and entrepreneurship centres may have substantial contribution. This report is the ninth edition of the Report on Innovation and Entrepreneurship Centres in Poland. It was drawn up by the experts of Polish Business and Innovation Centres Association under the systemic project entitled Development of human resources through promotion of knowledge, transfer and popularisation of innovation implemented by the Polish Agency for Enterprise Development. For 17 years these reports have been a major source of information and knowledge about development trends of support system in Poland. The data and information presented include not only the diagnosis of the current state of entrepreneurship support infrastructure in Poland, but also a broad analysis of the observed trends in the activity of innovation and entrepreneurship centres over the last several years. While preparing the report, the synthetic characteristic of activity of each type of centre has been made with reference to the results of the previous analyses. The report also includes an analysis of barriers encountered by the centres and the recommendations for further actions. In the first quarter of 2012 the analytical work involved updating of name, address and telephone data of the local and regional economic development support institutions. The identified entities received the questionnaires with the information form concerning their activity. Due to the financial provisions some data refer to the end of 2011, while the 5

6 other reflect the state of centres in the mid The analytical parts of the report were prepared based on the collected statistical information, comments and suggestions of people managing nearly 500 centres. Participation in the surveys was voluntary. The data of centres that despite several requests did not participate in the surveys were published as a supplement to information summaries. Traditionally, we attempted to reach all institutions and initiatives across the country. The results of the surveys will be used to update the data on the Polish Innovation Portal of the Polish Agency for Enterprise Development ( We would like to thank all directors/managers of innovation and entrepreneurship centres that participated in the surveys for cooperation and sharing their knowledge and experience, which were very helpful in preparing this publication. We also hope that all people dealing with the subject discussed will be willing to cooperate with us and edit the next report. Poznan/Warsaw, 28 August Aleksander Bąkowski Marzena Mażewska 6

7 DETERMINANTS OF SUPPORT INFRASTRUCTURE DEVELOPMENT IN POLAND (Marzena MAŻEWSKA, Aleksander BĄKOWSKI) The concept and objectives of innovation and entrepreneurship centres At present, knowledge and innovation are recognised as the key factors of enterprise competitiveness. The economic policy instruments shift towards this idea and commence to form a basis for the development-oriented support systems. The support for entrepreneurship and innovation processes includes provision of specific services and development of economic and social environment which is favourable to the entrepreneur and conducive to independent business 1. This also involves establishing and developing dedicated support institutions. The entities active in the area of support for entrepreneurship, innovation and competitiveness are usually referred to as innovation and entrepreneurship centres 2 in Poland. Actually, there is no explicit and uniform definition for this type of institution. Even the glossary Innowacje i transfer technologii 3 contains its definitions that slightly differ depending on the institution activity. In the light of this publication, it was considered appropriate to use the characteristics which reflect the best the idea and objectives of the centres in the economic development process. Thus, based on the analysis of a variety of undertaken tasks, target groups of service recipients or the required staff competence, the support institutions can be classified as follows 4 : 1) entrepreneurship centres broad promotion and incubation entrepreneurship (often in discriminated groups), provision of support services for small enterprises and boosting the development of peripheral regions or regions affected by structural crisis; 2) innovation centres broad promotion and incubation of innovative entrepreneurship, technology transfer and provision of pro-innovative services, mobilization of academic entrepreneurship and cooperation between science and business; 3) financial institutions easier access to finance for the start-ups or small enterprises with no credit history, provision of financial services adjusted to the specific features of innovative economic undertakings. 1 Krzysztof B. Matusiak, Budowa powiązań nauki z biznesem w gospodarce opartej na wiedzy [Building links between science and business in the knowledge-based economy], Warsaw School of Economics, Warsaw, 2010, p For the first time a term innovation and entrepreneurship centres was used in the discussions of national and foreign experts at the Polish-German seminar in March 1991 in Rydzyna near Poznań. This meeting can be considered as the beginning of the movement of innovation and entrepreneurship centre promoters in Poland. 3 K.B. Matusiak (ed.), Innowacje i transfer technologii, Słownik pojęć [Innovation and technology transfer, Glossary], Polish Agency for Enterprise Development, Warsaw K. B. Matusiak, Rozwój systemów wsparcia przedsiębiorczości. Przesłanki, polityka i instytucje [Development of entrepreneurship supporting systems. Premises, policy and institutions], Institute for Sustainable Technologies, Radom-Łódź

8 Each of these groups may be subdivided into categories of support institutions defined according to their functioning method and scope and characterized by specific mission, objectives and structure. Diagram 1. Classification of innovation and entrepreneurship centres Innovation and entrepreneurship centres Innovation and entrepreneurship centres Training and advisory centres, Entrepreneurship centres, business centres, Entrepreneurship clubs, consulting centres, consulting and advisory centres, Pre-incubators and academic business incubators Source: own study Shadow banking financial institutions Regional and local loan funds Local guarantee funds Seed capital funds Business Angels Networks Innovation centres Technology transfer centres Academic business incubators Technology incubators e-incubators Technology, science, research, industrial and technology parks, technopolis All above-mentioned categories of support institutions will be elaborated in this report along with their general characteristics, line of business, achievements and functioning barriers as well as their future plans. A characteristic feature of support institutions is their non-profit operation - this also the case of the institutions with their legal form based on the Commercial Code 5. Due to their specificity and social background they are important elements filling the gap between the market mechanisms and public administration tasks. They are service providers which form a specific network of institutional infrastructure that allows the entrepreneurs to make the development processes more dynamic and to implement the selected strategies. Over the last dozen or so years, these institutions have undergone a profound transformation from the centres based on enthusiasm and voluntary activity of their creators into the professional support institutions operating as effectively as commercial entities. In Poland, entrepreneurship support infrastructure keeps developing and is subject to regrouping, as the new forms of activity and operation emerge. Thus, the market is still 5 Due to the possibility for obtaining funds to achieve statutory objectives some institutions were obliged to transform into capital company. Their statutes, however, obliged them to devote the total profit on achieving statutory objectives. 8

9 active and creative and it is the most appropriate partner for the entrepreneurs due to the flexibility of entities operating thereon. It should be noted that the planned support infrastructure policy implemented over the last several years a diversity of innovation and entrepreneurship centres allows to provide support for all types of economic operators ranging from start-ups and SMEs to high-tech enterprises almost in each country region. Diversification of support institutions activities favours development of entrepreneurship and stimulates continuous development of the enterprises as effectively as the market competition. The entrepreneurs are permanent seekers of market opportunities and the innovation and entrepreneurship centres skilfully provide them based on new services offered every now and then. Support system organisation Recently, support for entrepreneurship and innovation processes is becoming more important both in terms of social and economic development as well as technological challenges faced by the Polish enterprises. As a result of unprecedented technical progress even small enterprises at the early stage of development establish global business relationships. On the other hand, changes in production technology and services provision take places much faster than ever before. In consequence, provision of specific services and development of economic and social entrepreneurship-friendly environment as well as starting business activities are becoming increasingly important. The relevant activities include a number of instruments from stimulators built in the economic and social system and legal order, through programmes and tasks undertaken directly by public authorities at different levels, to the dedicated institutions of the citizen sector 6. All these actions have let establish a support system in Poland that consists in the activity of independent entities which are spot-funded to implement the tasks set out in the strategic plans at various decision-making levels. This solution has its advantages and disadvantages. The advantages include a farreaching self-reliance and independence of support institutions in their activities and the ability to quickly respond to the entrepreneurs needs without the approval of the governing body. The disadvantages include financing instability which often forces the centres to temporarily suspend the provision of some services or to take actions in the areas marginally related to their leading activities. It seems, however, that the advantages outweigh the shortcomings and the indicated deficiencies are certainly an important stimulus for the activity and development of the centres. However, taking into account the fact that within a few years many centres strengthened their position on the market and found a way to carry out their tasks with the combined fund sources, and in the light of the scale of present investments, it is advisable to ponder on the implementation of the national integrated support programme with an 6 K.B. Matusiak (ed.) Ośrodki innowacji i przedsiębiorczości w Polsce - Raport 2010 [Innovation and Entrepreneurship Centres in Poland Report 2010], Polish Agency for Enterprise Development, Warsaw

10 inherent independent system to monitor the activity of the centres. The implementation of the initiative Effective Environment for Innovative Business 7 shows that the specific character of the activities carried out by the innovative and entrepreneurship centres results in the limited adaptability of educational programmes aimed at economic operators in terms of organisation and management. This requires the development of dedicated educational programmes combined with the exchange of experience between the centres and the dissemination of good practices. Due to a large rotation of professional staff, the centres need a constant support in raising the qualifications of their employees and people working with them. In the long perspective (4 5 years) this programme should be characterised by regularity rather than intensity. All types of centres should be able to benefit from this programme. This would allow to disseminate innovative aspects outside large urban areas and to significantly strengthen cooperative relations at the regional levels. It would be important to involve the centres in determining the substantive scope and the training methods for their staff as well as in the tasks completion. Such approach would facilitate the creation of formal and informal cooperation networks. It seems that the entrepreneurs and economy do not make use of the current potential in such way that it would contribute to the economic development of the country. A particular feature of the Polish practice in building and implementing support policies is a transition to the higher levels of service development while neglecting the lower level services. At present, this is the case of training and advisory centres and business incubators. Despite the fact that the surveys show that both types of centres have included the support for innovative enterprises in their scope of activities, they may participate in the support programmes only if they establish an entirely new organisational unit for that purpose. Such policy results in a disintegration of different levels, thereby preventing further development and making them restricted to the previously set operation area. Entrepreneurship and innovation activities require a longer period of time. To ensure the stability and effectiveness of such programmes it seems necessary to work out a development strategy for entrepreneurship support infrastructure and to combine its elements with the operating programmes of particular ministries, including provision of defined and stable sources of their financing. Independent monitoring at the national and regional level should be used to stabilize the support system. 7 The initiative Effective Environment for Innovative Business was intended to provide large-scale support for the institutions creating an innovative business environment. The target group or recipients consisted mainly of the management and employees of innovative business environment institutions such as: technology parks, incubators, technology transfer centres, innovation centres, seed/venture funds. The project concept assumed that they should effectively stimulate creation of new innovative enterprises, cooperation between the enterprises and universities, as well as the among enterprises themselves, contributing to the creation of knowledge-based economy. The support for institutions took the form of a series of actions facilitating the competent operation of the centres. 10

11 The dynamics of support infrastructure development in Poland Since the beginning of system transformation in 1990, the number of innovation and entrepreneurship centres has been growing steadily (except the period ) up to 735 in the mid The next verification of the support institutions was varied out in 2012 based on surveys and telephone interviews. In consequence 821 centres were recognized as active 8. They include the following groups: 8 Inaccuracy, if any, (of the order of 2-3 %) in the centres number is due to the high dynamics of the changes in the support institutions activity. Precise verification of the number of these entities may also be prevented by other, specific situations, such as: a number of local initiatives are operated under the several banners which are represented by the same people, often also in the same location; specificity of the donation programmes sometimes required to establish artificial institutions so as to fulfil the requirements (for example such centres operate in one place and under the same management: entrepreneurship support centre, consulting centre and local information centre); 11

12 40 technology parks and 14 park initiatives; 29 technology incubators; 73 pre-incubators and academic business incubators; 58 business incubators; 69 technology transfer centres; 68 seed capital funds; 10 business angels networks; 86 local and regional loan funds; 55 local guarantee funds; 319 training and advisory centres and information centres. Chart 1. Development dynamics of innovation and entrepreneurship centres in Poland in A significant change in the number of centres in mid-2012 was caused by significant changes in seed capital fund groups as well as technology parks and incubators. Recently, the increase of active centres in these groups was extremely intense. This is primarily due to the completion of investment works in many parks which were at the initial stage in 2010 (there were 21 such parks then). The number of seed capital funds increased mainly because of the competitions under OP IE measure 3.1. which initiated their relatively rapid a number of centres affiliated to institutions with other statutory purposes (universities, R&D units, chambers and guilds) are of temporary nature (from project to project) and end their activity when the external funding runs out; a number of initiatives (such as technology parks) are prepared for years and it is difficult to pick the right moment to start the activity, while very often promoters take actions simulating the start-up operations in order to improve their image; those who run the centres or representative local authorities do not admit that they have closed the entities (or leave them dormant ) when external funding ends; a short life of many initiatives is characteristic for the centres established under the large programmes directed primarily to rural areas. 12

13 emergence. At the same time, there were centres closed in all groups in the past 24 months, but these are the changes at the level of no more than 2 %. Since the beginning there are more training and advisory centres, which currently constitute 38.8 % of all active entities. These are the centres with the longest operating tradition established with the contribution of local funds. This type of centres definitely predominated in the first years of transformation when the market education, development of entrepreneurship knowledge and running business activities were particularly important. Training and advisory centres constituted almost 2/3 of all entities in the mid-1990s. With time more dedicated institutions emerged and launched services corresponding to the increasing demand of economic operators and were able to provide an offer of services for support of the innovative entrepreneurship, transfer and knowledge commercialization. Table 1. Quantitative evolution of the different types of innovation and entrepreneurship centres Detailed list Technology parks Park initiatives Technology incubators Business incubators Pre-incubators and academic business incubators * * * * * Technology transfer centres Seed capital funds * * * * * Business angels networks * * * * * * Local and regional loan funds Local guarantee funds Training and advisory centres In total The table shows that the support infrastructure development started with the simplest form of support and was gradually launching more dedicated services in the market. In recent years the number of technology parks, seed capital funds, pre-incubators and technology incubators has been quickly increasing. An increasing availability of the European funds since 13

14 the middle of this decade and introduction of the development recommendations of the European Union in Poland contributed to the development of organizationally and conceptually advanced multifunctional centres. A decrease in the number of technology transfer centres occurs mainly because of the completion of a consultancy support project for the innovative enterprises conducted by the Polish Federation of Engineering Associations (NOT), which withhold its activity in the technology transfer area after funding had ended. The institutions offering financial services, including loans and local guarantees as well as equity capitals for the start-up companies and small enterprises account for 26.7% of all innovation and entrepreneurship centres. However, every fifth initiative is associated with the support programme of business incubation (pre-incubators, business and technology incubators), which combines different soft services with offering premises for companies. Chart 2. Classification of innovation and entrepreneurship centres by types in 2012 (in %) Business Incubators 7,1% Business Angels Networks 1,2% Seed Capital Funds 8,3% Technology Transfer Centres 8,4% Academic Bus. Incubators Preincubators 8,9% Tech. Incubators 3,5% Regional and Local Loan Funds 10,5% Tech. Parks 6,6% Training and advisory centres 38,9% Local Guarantee Funds 6,7% The number of entities which offer innovative entrepreneurship support services account for 34.2 % of all centres 9 according to the last survey. This shows a persisting development trend of support system oriented towards provision of services which help develop innovation and technology potential of SME sector. This process began in 2007 and covered both technical infrastructure area, particularly technology and scientific parks and technology incubators, and financial support institutions, especially in the construction of high-tech enterprises sector. It is expected that the system will continue to develop towards innovation, technology transfer and academic business as well as creation of financial institutions financing innovative projects in the near future. The development of dedicated pro-innovation services is consistent with the strategic development trends of the united Europe In this case the innovation centres consist of: technology parks, technology transfer centres, technology incubators, academic business incubators, seed capital funds and business angels networks. 10 Europe 2020 Flagship Initiative Innovation Union, COM(2010) 546 final. 14

15 Chart 3. Number of innovation centres among all innovation and entrepreneurship centres in (in %). 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% 10,8% 9,2% 10,9% 34,2% 27,1% 29,5% 18,7% 14,2% 3,2% 3,9% The single-purpose institutions running one type of centre have a leading position among all centres (61.72 % 17.2 % less than two years ago). Double-purpose institutions (e.g. training and advisory centre and loan fund) account for % while the remaining % of centres are run by three and more separate entities. The number of institutions with three or more components has significantly increased in recent years (they amounted to 8.9 % in 2010). This reflects strengthening position of the institutions on the market and their development in accordance with the changing demands of the customers. At the regional level a number of institutions operating in a network have emerged, i.e. with 5 to 18 different centres operating in the whole voivodeship, for example Lubelska Fundacja Rozwoju it has several infrastructure components which allow to provide comprehensive services for enterprises at any development level. Chart 4. Structure of centres according to legal forms in 2012 Scientific and research institution unit 9,5% Public administration unit 6,1% Representative business unit 9,3% Association 23,1% Private limited liability company 18,4% Public limited liability company 15,1% Foundation 18,5% 15

16 The legal forms of centres are diversified depending on the specificity of the centre as well as on its size and capital. Associations (23 %) as well as local and regional foundations (19 %) are the most popular organization forms of support institutions. It is caused by the fact that training and advisory centres are still the largest group of centres. Other popular legal forms are private and public limited liability companies, based mainly on public-private partnership represented respectively by private limited liability entities (18 %) and public limited liability entities (15 %). Most of these companies allot their financial surpluses for the statutory objectives. The company is the most common legal form among local guarantee and seed capital funds, technology parks and incubators as well as business incubators. Table 2. Structure of entities managing innovation and entrepreneurship centres ( ) Detailed list Association 40 % 40 % 29 % 20 % 19 % 20 % 23 % Foundation 35 % 35 % 20 % 14 % 14 % 14 % 19 % Public limited liability company 11 % 13 % 25 % 12 % 11 % 12 % 15 % Private limited liability company 2 % 3 % 19 % 23 % 23 % 18 % Public administration unit 8 % 8 % 4 % 8 % 7 % 7 % 6 % Scientific and research institution unit 6 % 11 % 10 % 11 % 10 % Representative business unit (chamber of industry and commerce, guild etc.) 4 % 2 % 16 % 17 % 16 % 14 % 9 % It should be emphasized that the role of non-governmental organisation is decreasing in the developing support system. As early as in 1999 ¾ of all centres were still covered by this organisational and legal formula while the other forms played practically marginal role at that time. Foundations and associations allow to a wider extent to underline the noncommercial nature of the project and to develop a good image of initiative; regardless of organisational and legal formula people play a key role - their commitment and willingness to devote their energy and time to the activities which very often require improvisation and new ideas 11. More and more universities, R&D establishments and economic self-government institutions (such as chambers, guilds, associations and employer associations) participate in the system. This group of entities focuses mainly on the training and advisory services as well as on information activities and pre-incubation projects. The initiatives directly managed by the public administration remain at the level of 6 7 %. Their involvement as shareholders in the technical infrastructure projects, such as technology parks and 11 Report

17 incubators is also increasing. The legal form, such as budget entity of local government, also becomes popular for the purpose of organisation and management of such centres. The regional distribution of innovation and entrepreneurship centres is rather uneven. There are definitely less centres in the rural areas; the development support institutions still do not exist in every second poviat and in over ¾ of gminas (mainly rural). The administrative attempts (e.g. local information centres etc.) were inconsistent, mostly in the form of projects without permanent rooting in local communities. The end of funding was usually tantamount to the centre liquidation. Consequently, the support institutions increasingly concentrate the in agglomerations and medium-sized towns. The largest concentration occurs around the agglomerations (Katowice, Warsaw, Trójmiasto, and Kraków). Only 23 % of entities operate in rural areas and in small towns (up to residents) and this has not changed for a few years. Table 3. Percentage structure of innovation and entrepreneurship centres according to the location in Rural gminas Towns up to of residents as well as urban and rural gminas Medium-sized towns residents Large cities residents Agglomerations over residents

18 Chart 5. Classification of innovation and entrepreneurship centres according to the place of operation in 2012 (in %) Agglomerations over residents 28% Rural districts 3% Towns up to of residents and urban and rural gminas 20% Large cities residents 10% Medium-sized towns residents 39% The largest concentrations of innovation and entrepreneurship centres are found in Śląskie (96) as well as Mazowieckie (92) and Wielkopolskie (71) voivodeships, whereas in Opolskie (15), Lubuskie (22) and Świętokrzyskie (24) voivodships these concentrations are the smallest. The number of centres usually depends on the size of the region, its social and economic potential, transformation process dynamics of and involvement of regional and local authorities. Chart 6. Classification of innovation and entrepreneurship centres by voivodeships in 2012(%)

19 When analysing the availability of services provided by the centres, the number of residents and the number of enterprises in the region, respectively, were compared with the number of centres. Regardless of its type, there is one centre per country residents. The situation is improving, however, because this is about 10 % less than in Yet, the regional divergence is still large and the worst situation prevails in Opolskie (about residents) and Mazowieckie (about ) voivodships; on the other hand, the situation in Podlaskie (36 000) and Warmińsko-Mazurskie (36 500) is the best. Chart 7. Number of residents per 1 centre by voivodeships at the end of Insofar as the fulfilment of enterprise needs is concerned, it was found that the situation has deteriorated. The number of enterprises per 1 centre has doubled compared to 2010 (the average level for Poland enterprises in 2012 and 2400 enterprises per 1 centre in 2010). In Mazowieckie (about 7 300) and Opolskie (6 500) voivodeships the situation is the worst, while it is the best in Podlaskie (2 700) and Warmińsko-Mazurskie (about 2 900). Chart 8. Number of enterprises per 1 centre by voivodeships at the end of

20 This is probably a result of a more and more frequent changes in employment status from full-time employment to self-employment - on the one hand it is broadly promoted and on the other, it is a tool readily used by the employers. The number of centres does not increase at that rate. The indicator showing the share of innovation centres in the number of all entities is also noteworthy. It shows the rate of support system shifting to pro-innovation services and the needs of knowledge-based economy. Małopolskie (54.4 %) and Mazowieckie (50 %) voivodeships are in the best situation while Lubuskie voivodship (22.7 %) is in the worst situation in this respect. It is evident that establishment of several dozen of seed capital funds which are supporting operation of other innovation centres contributed to an increase of potential in the first two regions. Table 4. Saturation of innovation and entrepreneurship centres in the Polish regions in Voivodeship 2007 In total Including innovation centres (in %) In total Including innovation centres (in %) In total Including innovation centres (in %) 1 Śląskie Mazowieckie Wielkopolskie Małopolskie Dolnośląskie Lubelskie Zachodniopomorskie Podkarpackie Pomorskie Łódzkie Kujawsko-Pomorskie Warmińsko-Mazurskie Podlaskie Świętokrzyskie Lubuskie Opolskie In total

21 Chart 9. Number of innovation centres in the total number of centres in ,0% 54,4% 50,0% 50,0% 44,8% 41,3% 39,4% 40,0% 33,3% 33,3% 32,6% 32,1% 31,3% 30,8% 26,7% 30,0% 25,0% 25,0% 24,2% 22,7% 20,0% 10,0% 0,0% The innovation centres are still concentrated in the regions with high economic potential and strong market. Economically weak regions still lack support infrastructure for innovative business. The data indicate that the developed support system in Poland mobilises regions which are already dynamic, thus leading to the further development disproportions in spatial terms. The last two years prove it true, like the use of seed capital funds almost only in two regions (Mazowieckie and Małopolskie). If we assume that one of the main objectives of an innovative economy support system stimulated with the European funds is to increase accessibility of the enterprises to the services provided by the innovation and entrepreneurship centres, it should be noted that the number of potential customers of these institutions is still so large so that they are not able to meet their needs. Chart 10. The number of enterprises per 1 innovation centre by voivodeships at the end of Source: own study 21

22 Chart 11. Number of residents per 1 innovation centre by voivodeships at the end of Source: own study To obtain a full saturation picture the structure of centres in the particular regions must be thoroughly observed, and saturation of particular voivodships with different centres should be compared to draw the right conclusions. For example, there are currently 46 centres in Mazowieckie voivodeship, however, their structure is seriously disturbed and this is a cause of major problems for the group of seed capital funds to obtain projects to be financed. Chart 12. Structure of innovation centres by type in mazowieckie voivodeship in 2012 Technology Incubators; 1 Technology Parks; 1 Business Angels Networks; 1 Academic Business Incubators; 10 Seed Capital Funds; 25 Technology Transfer Centres; 8 Source: own study The presented data show that the policy of the Polish economy innovativeness improvement should focus mainly on developing and implementing special programmes which are adequate to the needs of the particular regions, including a wide range of instruments that help change the way of thinking and increase innovation, with the particular emphasis on the peripheral regions. 22

23 Growth perspectives Support institutions are an inherent part of the current logic of economic and social development. They enable mobilisation of endogenous regional resources and the better use of local growth factors. The modern development strategies are based on the network relationships that facilitate the exchange of ideas and information. The current development of Polish innovation and entrepreneurship centres should be recognised as a success of the local communities and people directly dealing with these initiatives. They contribute a new quality to their surrounding by activating the local community, transferring new experiences and external assistance and most of all by helping people in the execution of their business plans. The measurable effects mentioned in the Report constitute only a part of social and economic benefits of their activities. There was an increase of the number of centres in recent years. Their budget is also increasing. Their focus on the implementation of their statutory objectives is visible. All this is a result of extraordinary availability of the European funds that the centres may formally benefit from. Therefore, the public funds constitute an important element in their financing structure. This is accompanied by a decreased self-financing (expenditure covered by own revenue). This situation which will probably continue in the coming years leads to positive changes in the operation of centres and provides an opportunity to consolidate the support system. It should be noted that there are also some negative aspects, such as dependence on the public funds. Soon, the centres will have to deal with this difficult problem. In recent years the diversity of institutional forms of support has increased and the following elements appeared in system: pre-incubators, technology incubators and seed capital funds. The environment of innovative enterprises expanded also with the business angels networks, and the activity of venture capital funds increased. Virtually, there was also a dynamic improvement of all parameters used to assess functioning of the institutions from the human resources, through organisation and technical resources. The improvement is also visible in the indicators showing the results of institutions. It is expected that the number of centres will increase in the following years, particularly as a result of establishing new academic centres. The centres will be constantly improving their services. Their plans include a number of internal operations that will be taken to achieve this objective. It is planned to create special purpose entities at the universities to complete the tasks of academic support centres. This should improve the management as well as make the operation more professional. The centres are also developing horizontal cooperation based on carrying out the joint initiatives or exchanging experience and good practices. This is a very important trend for stabilization and development of support system. The situation requires a process-based approach to services provided by innovation and entrepreneurship centres and establishing standard procedures of technology transfer and knowledge commercialization. 23

24 The involvement of experienced business practitioners and cooperation with enterprises from SME sector are still insufficient from the point of view of the operation of innovation and entrepreneurship centres. Especially poor cooperation may become a serious problem in case of increase of the number of academic centres, which are generally more focused on the internal operation of parent institution. It will be necessary to implement instruments stimulating the cooperation with enterprises. Innovation and entrepreneurship centres will introduce and develop new proinnovation services. The report shows for example the dynamic growth of interest in consultancy on internationalization and development of international contacts and cooperation. The business representing institutions and local information centres have a potential for support services development but it still remains unused. For years, the following activities are crucial for strengthening of the existing institutions supporting innovation and entrepreneurship and establishing the new ones: creating more effective programmes to support entrepreneurship, innovation and development of SMEs at the national, regional and poviat level, based on experience and the needs of target groups. The appropriate programmes should provide support for innovation and entrepreneurship centres in smaller towns, where the number of potential customers does not allow for financial self-sufficiency; focusing on the stability of institution, continuity of programmes and creation of stable development conditions; creating support instruments adjusted to the development level of the centre that take into account the significant diversity regarding potential and possibility to provide different services, especially pro-innovation ones;stimulating networking and integration of various categories of support institutions, such as academic technology transfer centres, preincubators and seed capital funds, wherever it is justified by the limited dissipation of resources and increase of effectiveness; achieving clear and unambiguous interpretation of public support issues with reference to innovation and entrepreneurship centres; raising qualifications of centres staff under the programmes such as Effective Environment for Innovative Business in service provision, particularly in specific services such as: coaching, mentoring, technology broker; stimulating and using the horizontal cooperation between centres for the professionalization of services, raising staff qualifications, gathering knowledge and experience; stimulating cooperation between centres at the regional level in the regional innovation systems as cooperation networks of administration, scientific and research institutions and innovation and entrepreneurship centres; promoting modern support instruments among administration and local activists in gminas and regions; 24

25 assisting the preparation of feasibility studies and business plans of new centres as well as paying attention to their proper development in the whole country; gradual implementing of new services considered to be the elements of technology transfer processes and knowledge commercialization and not as a separate and unrelated proinnovation services ; developing and implementing the monitoring and self-evaluation models of institutions and programmes. Development of entrepreneurship at the science and economy interface constitutes a challenge for Poland and for the developed supporting system. The innovative entities operating in the area of advanced technologies are crucial for improving competitiveness, restructuring and economy modernisation. The recent information and biotechnological revolution was initiated by young people who often have just started running business. It will be possible to introduce new ways of operation bringing science, research and market closer in the existing innovation and entrepreneurship centres by using fewer resources. However, not all support institutions are prepared to operate in this way. Many of them have little factual knowledge and do not have the adequate resources. There is a need to introduce comprehensive government and regional activities and programmes that are adjusted to the recipients needs. 25

26 TECHNOLOGY PARKS (Marzena MAŻEWSKA, Anna TÓRZ) As far as their organisation and concept are concerned, technology parks represent the most developed type of innovation and entrepreneurship centres. The very notion of a technology park has a systematizing impact on organised business complexes where the policy is implemented in the following areas: supporting new innovative enterprises oriented at developing products and manufacturing methods in technologically advanced industries; optimization of the conditions for technology transfer and commercialisation of the research results from scientific institutions to business practice 12. Role and definition of parks Technology parks are intended to create the environment for effective technology transfer and to stimulate development of innovative enterprises using in the first place skilfully selected support infrastructure elements in the following form: scientific and research institutions offering new technological solutions and innovative enterprises seeking new development opportunities; wide business environment in respect of funding, consultancy, training and supporting the development of innovative enterprises; financially supported venture capital institutions; high-quality infrastructure and environment advantages; high entrepreneurship potential and business climate attracting creative people from other regions; governmental, regional and local programmes supporting entrepreneurship, technology transfer and development of new technology enterprises 13 : In November 2002 the International Association of Science Parks (IASP) adopted the following definition: technology park (scientific, research, and the like) is an is an organisation managed by specialised professionals, whose main aim is to increase the wealth of its community by promoting the culture of innovation and the competitiveness of its associated businesses and knowledge-based institutions. To enable these goals to be met 14, a Science Park: 12 K.B. Matusiak (ed.), Innowacje i transfer technologii, Słownik pojęć [Innovation and technology transfer, Glossary], Polish Agency for Enterprise Development, Warsaw p Compare: K. B. Matusiak, J. Guliński, Parki technologiczne [Technology parks] [in:] K. B. Matusiak (ed.), Ośrodki innowacji i przedsiębiorczości [Innovation and entrepreneurship centres], SOOIPP-Raport 2004, Łódź- Poznań 2004, p See: K. B. Matusiak, Wpływ parków technologicznych na rozwój ekonomiczno-społeczny [Impact of technology parks on the economic and social development] [in:] K. B. Matusiak, A. Bąkowski (ed.), Wybrane aspekty funkcjonowania parków technologicznych w Polsce i na świecie [Selected aspects of technology parks operation in Poland and worldwide], Polish Agency for Enterprise Development, Warsaw

27 stimulates and manages the flow of knowledge and technology amongst universities, R&D institutions, companies and markets; facilitates the creation and growth of innovation-based companies through incubation and spin-off processes (spin-off and spin-out); provides other value-added services together with high quality space and facilities. In Poland technology park was defined in as a separate real property complex which includes relevant technical infrastructure, established to stimulate the knowledge and technology transfer between research units and enterprises 16 where entrepreneurs employing high technology are offered consultancy services on business establishment and development, technology transfer and transformation of research results and development work into technological innovations, as well as creating beneficial business environment through the use of real property and infrastructure on contractual terms. Based on an analysis of the legal and organisational status of Polish parks, it may be said that technology parks are entities operating within an autonomous, independently managed real property with legally regulated status, including particular land and/or buildings with relevant technical infrastructure, which have of their own land management concept and development plan in the area of scientific, research and manufacturing activities intended to create new knowledge and technology. In principle, technology parks have formal and informal links with scientific and research, and educational institutions, local and regional public administration, regional institutions operating in the area of entrepreneurship and technology transfer support and risk financing (venture capital). The parks provide entrepreneurs with the business space and technical infrastructure on contractual terms as well as they offer technical support in the form of consultancy and technology transfer services, as well as provide help in establishing and developing enterprises located on the premises of real property. Concentration of many enterprises with a high development potential on a selected operation area and provision of adequately adjusted business-related services bring around synergistic effects, and this is one of the basic advantages that parks have over other less complex support instruments. Because of their precise and wide definition parks are highly individual in practice as this is a result of operational environment, culture and economic conditions, selected specialisation, as well as management methods. Their mission, objectives, forms of activity and organisation principles are their common denominators. One universal model of park or an organisational pattern that would guarantee its success does not exist. Particular 15 The act of 20 March 2002 on the financial support for investment, Dz. U. of 2002, No. 41, item 363, No. 141, Article 2, point 15, item 1177 and Dz. U. of 2003, No. 159, item 1537, not binding. 16 In the meaning of the act of 12 January 1991 on Scientific Research Committee, Dz. U. of 2001, No. 33, item 389, Article 3, point 4 and Dz. U. of 2003, No. 39, item

28 initiatives reflect the nature of the local scientific and business environment, the type of economy and industrial traditions, as well as cultural entrepreneurship conditionality. Poznań Science and Technology Park established in May 1995 by the Adam Mickiewicz University Foundation was the first Polish technology park. It is located in a slightly remote area which previously was owned by the city gasworks, however, it has good communications with the town centre. After essential adaptation work were completed in the Park, the following facilities were established: Chemical Synthesis Experimental Station, Technology Centre of the Faculty of Chemistry of Adam Mickiewicz University and Archaeology Rescue Research Centre. Saturation of demand for park services Over the period of 15 consecutive years, 66 park initiatives emerged in Poland. Some of them did not stand the test of time and for different reasons their implementation was abandoned or suspended. Currently, in the middle of 2012, a total of 54 technology parks at different stage of development can be identified in Poland 17. The first group consists of 28 parks which already have a developed organisation and operate on a fully statutory basis. Most of them are centres which have been providing full range services for enterprises for several or a few years. The second group consists of 12 parks which are all at the stage of launching their operation (active for less than a year). The third group includes the initiatives at the stage of preparatory and adaptation work (14 entities). Most of them already have organisational teams able to manage the centres and provide support services, which often are already run training, consultancy and informative activities. The survey and telephone interview indicate that parks tenants are mainly technology enterprises or firms using hi-tech in various disciplines. The parks themselves are also active in the area of pro-innovative services. Only 3 out of 40 parks surveyed responded that currently they do not provide enterprises with support regarding pro-innovative services; other provide such services to a very different extent, however, always at least in the form of basic advice in the area of intellectual property right and assistance in seeking new technologies. As far as the advancement is concerned, this area of parks activity is highly diversified and requires a separate quality test. Since the accession of Poland to the EU, parks initiatives have been developing faster, mainly due to a better access to Structural Funds devoted to such undertakings. Consequently, the number of parks operating since 2004 has increased fivefold. 17 The notion park initiatives refers to the parks at different level of operation readiness or in the process of traditional industrial parks transformation. 28

29 Table 1. Number of enterprises per one park in Poland (data at the end of 2011). Item No. Voivodeship No. of enterprises/per one park 1 Mazowieckie Łódzkie Opolskie Pomorskie Małopolskie Podkarpackie Wielkopolskie Kujawsko-Pomorskie Warmińsko-Mazurskie Śląskie Dolnośląskie Zachodniopomorskie Lubuskie Lubelskie Świętokrzyskie Podlaskie However, as the above table shows, the number of enterprises per one park is extremely diversified with the highest one in the area considered the most innovative and qualified to generate technology enterprises. Regional distribution of parks In regional terms park initiatives are implemented in all voivodeships. In Śląskie Voivodeship (8), Dolnośląskie Voivodeship and Wielkopolskie Voivodeship (6 parks per each) the number of parks is the highest. In Opolskie Voivodeship and Mazowieckie Voivodeship the number of parks is the lowest - only one per each voivodeship. In Mazowieckie Voivodeship the situation is specific - despite the highest concentration of the innovation, scientific and research potential in the country, there is only one relatively small technology park in Płock. From the point of view of the national innovation system this must be considered a significant deficiency, all the more so because in this Voivodeship there are few other innovative development support institutions at the service of entrepreneurs and scientists. 29

30 Map 1. Technology Parks in 2012 In the coming years, the growing network of parks may become an element integrating institutions which provide support for enterprises at the regional level. The infrastructure, organisation and human resources established for the purpose of innovative entrepreneurship development will constitute a significant support for innovative enterprises, all the more so because many "soft" support programmes are implemented and new pro-innovative services are developed, apart from infrastructure investment measures. Types of legal forms Technology parks have quite diversified formal and legal organisational structure. Most of them operate as private limited liability companies (61 %) and public-private joint stock companies (24 %)18, local government budgetary units (10 %) and universities functional units (5 %). The shareholders of private limited liability companies and joint stock companies include, inter alia: budgetary units of public administration (24 %), local 18 Public administration and institutions are main shareholders. 30

31 authorities (34 %), large enterprises (11 %), scientific and research units and foundations (3.7 % each). 18 higher education facilities have subscribed for the equity interests in technology parks, in two cases these are also single-member companies of higher education facilities. Academic institutions are the second investor, next to local government authorities (in terms of assets owned), in the companies managing technology parks. Involvement in the parks initiatives is typical of higher education facilities in Wrocław and Cracow. Development strategies Whether it is a non-governmental organisation or a non-profit company, each support institution has its own operational strategy which identifies short- and long-term priorities. Of the parks surveyed, a total of 85 % has developed strategic development documents; usually, these are short-term studies (for a period of 5 years), and most parks will face the need to devise new development strategies next year. Only a few of them developed strategies for a period of years. Most parks determine, more or less precisely, their specialisation in the development strategies. Based on the survey, the main specialisation groups identified by parks managers in 2012 include the following: ICT % Biotechnology 8.09 % Material technologies 1.15 % Design 1.15 % Consulting 7.74 % Other, which % Other specialisations indicated in the survey report (medicine, health protection, medical engineering and e-health, electronics, material engineering, nanotechnologies) show that despite a defined business profile, parks are highly flexible towards the enterprises that seek their support and assume innovation and development potential of the proposed projects as the main criterion. Thus, for many parks more than one specialisation can be indicated, nevertheless, most of them are linked to the areas of high technologies. Operational priorities The priorities indicated by the Polish parks are dominated by the objectives typically faced by such entities. In recent years, cooperation between science and business and development of cluster ideas has become more significant. It should be noted that there is a growing interest in creating new jobs, after a downward trend in this respect indicated in two recent surveys. 31

32 Table 2. Priorities in the technology parks operation in * Details: development of business-attractive location renting the prepared space to marketefficient enterprises support for establishing new technology enterprises creating cooperation networks between science and business attracting investors to the region creating new jobs assistance in transferring and commercialising new technologies of scientific institutions cluster development and creating networks of cooperation between local businesses development of specific pro-innovative services, unavailable in the region development of production of modern goods which are not manufactured regionally *Assessments were made with the use of 5-point grading scale, where 1 means the lowest grade, and 5 the highest. The instruments for implementation of these priorities and statutory tasks in parks are provided by support infrastructure in the form of incubators, training and advisory centres, pre-incubators and different institutions funding enterprises development which allows conducting activities for the entrepreneurship development in the analysed parks. Technical substantive potential of parks 32

33 Chart 1. Elements of the entrepreneurship development support infrastructure in the parks (% parks equipped with particular categories) in The park usually disposes of two or three elements mentioned above, however, there are also parks which are active in five fields at the same time, e.g. parks in Cracow, Gdynia, Gdańsk and Katowice. The scope of services provided by the parks is broad and diversified. Not all services are provided to the full extent, however, it must be stressed that the park teams carry out multilateral activities and the parks care for continuous development of services and instruments for the enterprise support. Organised forms of support for SMEs covering generally different type of advice and consultancy, infrastructure and an offer of the common office equipment, as well as financial aid and loan brokerage are an important element that makes each technology park attractive. Offered services In order to put some order to the areas covered by the analysis, the services were grouped based on the criteria which allowed to identify a homogenous area of the park activities. The services were divided into the following three groups: consultancy, information, education; technical office infrastructure; assistance in funds acquisition. 19 Experimentarium a separate space equipped with exhibits and devices for educational and visual purposes, including individual simple exercises and experiments in physics, chemistry and biology, both for children, as well as adults. Creativity centre a facility or a set of facilities arranged and equipped in the way that stimulates creative thinking, promotes focusing and conceptual work. 33

34 The analysis of particular groups shows that parks offer most commonly services from the first two groups and selected services from the third group. The third area of operation is still not developed well enough to meet the demand of parks tenants and customers. However, it must be admitted that this area is much more difficult than the first two areas. Table 3. Thematic scope of consultancy, information, education offered in technology parks (in %) Details: entrepreneurship and establishing of enterprises business plan access to the EU funding commercial law finances and taxes accounting * * market research and marketing business management * * IT, computers * technological audit * * * * 52 * cooperation brokerage * protection of intellectual property * * * * 48 * implementation of new products and technologies * * foreign trade and international cooperation * * quality management * * technology and patent information * 59 HR management * * * * * 36 * In the given year the survey did not include such a category in the cafeteria-style checklist. The presented data show that parks have significantly limited their services rendered for enterprises compared to the previous survey. This may partially be consequence of a higher level of entrepreneurs knowledge and higher development of enterprises which need less support in the area of entrepreneurship and establishment (-9), business plan construction (-10) or accounting (-16), typical of micro-enterprises prevailing in the structure of tenants which do not have excessive needs in this respect. On the other hand, there is an increasing number of parks which provide support to their customers in the area of general business management (+7), foreign trade and international cooperation (+6), commercial 34

35 law (+8) and implementation of new products and technologies (+7). It is obvious that they attempt to adapt to the changing needs of the tenants. However, this is bothering that there has been a general decrease in the number of parks offering different soft forms of support to their tenants and a significant decrease in quality management or access to the EU funds, both of which are very important in the portfolio of services, by -12 and -10 points, respectively. This may be symptomatic of further limiting of the operation in this respect as the number of the EU funds available for rendering soft services is decreasing. This is not good news since it proves that parks similarly to other innovation centres are currently relying mainly on subsidies. Therefore, parks are faced with a challenge of keeping in their permanent offer the most significant services needed by their tenants in a commercial form. Chart 2. Scope of services in the area of technical office infrastructure in technology parks in 2012 (in %) 100,00% 90,00% 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% LAN Seminar Hall Reception, front desk service Broadband internet Laboratories Café, bar Access to databases The infrastructural equipment of technology parks has been at the same level for many years and includes seminar halls (86 %), computer network (86 %), broadband Internet (77 %), reception area and front office service (77 %), café/ bar (55 %), and the like. What is worth mentioning is the increasing proportion of parks which offer access to the research and development laboratories (currently 64 % in comparison to 42 % in 2009). On the other hand, a decrease of more than 10 % in the availability of parks data bases (currently 36 % in comparison to 52 % in 2009) is an unpleasant surprise, though this may be associated with the soft services projects which are coming to an end. 35

36 Chart 3. Scope of services in the area of operation financial support in technology parks in 2012 (in %) 70% 60% 50% 40% 30% 20% 10% 0% In recent years the offer of support services consisting in financial aid has become less attractive compared to the last survey conducted in However, the developing cooperation with business angels networks declared by 59 %, access for enterprises to grants and subsidies supported by 33 % (-3 points) of the centres, and contacts with venture capital investment funds by 41 % (+3 points) are exceptions. An improvement of cooperation with the guarantee funds has improved by 9 % (+5 points) and with local and regional loan fund by 23 % (+19 points) within the broad support system. Technology transfer services This year, the survey attempted to define a little more precisely the scope of services provided by parks this consisted in asking a question whether the park operation included technology transfer services (measured by a contract for of at least one of the services listed). It turned out that 57 % of parks have been providing such services since the beginning of their establishment. In this respect, the last year they have been the most active in the area of protecting intellectual property rights of park enterprises (45 %), and the least active in technology assessment and evaluation ordered by enterprises (14 %). 36

37 Table 4. Selected areas of support in technology transfer in parks (%) Type of services provided at least once since the park establishment Types of services provided in 2011 preparation of technology offer or inquiry % 18 % seeking specific technologies ordered by enterprises establishing contact with a technology provider or receiver % 27 % % 32 % defining the subject of transfer % 32 % assessment and evaluation of technology ordered by enterprises advising enterprises in the area of intellectual property rights protection assistance in negotiations and contracts concluded between a technology recipient and provider advisory assistance in technology implementation monitoring of technology implementation or execution of the contract % 9 % % 45 % 14.00% 18 % % 32 % % 14 % It is obvious that involvement of the parks in specialist services provided for innovative enterprises is rather limited. The structure of services rendered in the last year also indicates a slow drop in consultancy services provided by parks. However, an increase in the consultancy services on intellectual property rights protection and assistance for enterprises in negotiations bode well. This shows that the parks are as flexible and creative as their tenants. Operational standards The majority of parks do not have ISO certificate or accreditation for the provided services; only 35 % of them have confirmed that they own such documents, while only 38 % of the remaining parks declare that they will implement procedures for particular services, mainly in the form of procedures and rules for using laboratories, and in some parks the process of developing such rules is ongoing. A little more than 42 % of parks have a system for monitoring and evaluation of their operation in place based mainly on the surveys of parks tenants and customers; some parks have applied electronic systems for entrepreneurship support or annual evaluation by EBN (European Business and Innovation Centres Network). Taking into account the scale and 37

38 scope of parks operation, this indicator is not very high and reflects insufficient professional organisational framework of such institutions. Environmental cooperation A statistical technology park cooperates in substantive and organisational terms with several institutions among which the development units (14.8), consulting enterprises (9.4), R&D units and seed funds, as well as business angels networks (6.2) prevailed. The poorest cooperation is observed between parks and Polish Academy of Sciences (1.8). The fact that the parks are very positive about the intensity and usefulness 20 of this cooperation is promising. It is also interesting that international organisations and research laboratories (ITER, CERN, DESY) emerged among the other cooperating institutions. Table 5. Cooperation of parks with support institutions in 2012 the average number of cooperating institutions Intensity Usefulness Higher education facilities R&D units Polish Academy of Sciences business angels, seed funds and venture capital enterprises development units consulting enterprises local government and its units other support institutions* regional government and its units ministries and government agencies Polish Agency for Enterprise Development *international organisations and research laboratories (ITER, CERN, DESY) Efficiency of each park depends on the generated mechanisms of technology transfer from scientific institutions to business. Cooperation between parks and scientific entities takes the following forms: training, organisation of seminars and conferences, joint submission of to the EU funds, close cooperation with technology transfer divisions of the 20 As far as these issues are concerned a scale was used to determine the level of impact of a given feature: 0 none, 1 insignificant impact, 2 minor impact, 3 medium impact, 4 strong impact, 5 decisive impact, 38

39 higher education facilities (Centres for Technology Transfer, Patent Agent, and the like), participation of science representatives in decision-making body of the park. Budget and employment On the average the statistical technology park management requires a team of 18 persons employed on a permanent basis and almost 20 persons who carry out ordered tasks. A permanent team of the park includes: 3 executives; 4 employees who coordinate R&D tasks; 6 employees dealing with consultancy and training; 5 administrative and technical employees; 7 other employees. In the case of over 80 % of parks, the management declared staff qualifications as sufficient to perform their mission and tasks. In the case of 70 % of parks, the substantive activities are backed up by the Science or Programme Council. These bodies are established with participation of the shareholders of an undertaking, local scientific institutions and local government. However, in their everyday tasks the parks more and more often tend to outsource services for their tenants and customers to the external consultancy and training enterprises and experts. Only 18 % of parks provide services based on their own staff only, the other outsource such service to different enterprises and consulting, training and expert institutions to a greater or lesser extent. The Polish parks have been set up mainly with the help of aid measures; however, the Polish sources have also contributed to their establishment. So far, the average capital expenditure in the Polish park amounted to PLN to date with the highest expenditure mentioned amounting to PLN

40 Chart 4. Structure of the expenditure on development and infrastructure of an average technology park incurred by the park managing institutions in 2011 (in %). own resources of the managing institution (e.g. from business activity) gov. measures local measures other the European funds commercial credits and loans regional measures Capital expenditure More than half of the capital expenditure in the Polish parks was funded from the EU funds. The positive aspect of this consists in the contribution of management institutions amounting to as much as 20 % while the national, regional and local funding sources were less generous. On the one hand, it is positive that centres themselves invest in the infrastructure, on the other, however, this may prove that they are not interested in such an activity in the environment, what will cause difficulties in parks effective operation in the future. An average contribution of private investors amounted in turn PLN (median PLN ). Table 6. Structure of funding of the current business of technology parks in Specification: the average park budget (in PLN thousand) including in %: proceeds from rent and other maintenance charges proceeds from training and advisory activities other own revenue foreign grants and projects domestic grants and projects regional/local grants and projects shareholders contributions, aid and subsidies sale or lease of investment plots * other external contributions

41 contribution of parent and associated scientific institutions ** ** ** 1.4 proceeds from equity investments ** ** ** 5.7 * In the given year, the survey did not include such a category in the cafeteria-style checklist. * In the given previous year, the survey did not include such a category in the cafeteria-style checklist. The current cost of the park management in 2011 required a budget of PLN 7.83 million on the average (median PLN 4.65 million); this represents a significant change compared to 2009 when an average budget amounted PLN 5.4 million. The level of selffinancing from the own income amounts 53.3 % of the current financial needs. Other financial resources come from foreign grants and projects, domestic projects and other external contributions (in which the EU funds were also indicated). It is still difficult to carry out a financial analysis due to the investment activities, however, it must be stressed that proceeds from tenants rents are decreasing that may partially be caused by the tenants rotation and periodic collection of lower rents, and a significant decrease in proceeds from the sale of soft services by parks. These proceeds were replaced by the EU funds - this is a positive signal that parks gained the skills to seek such funding. The good side of such a situation is that parks stopped commercial operations in this respect. Unfortunately, a similar tendency is found in other groups as well. The subsidies obtained increased budgets for soft services provided free of charge to tenants and parks customers. The principles of cooperation with customers The policy of nine out of ten parks considered consists in selecting the future tenants. They take mainly into account is the innovation potential, novelty, industrial cohesion with the existing users and ability to create new jobs and potential impact on the regional development. It should be stressed that in the case of 48 % of parks considered the lower rent for space rental (on average by 28 %) is an attraction compared to the average level in the region. The organisational structure or the level of development of Polish technology parks differ. There are also significant disproportions in the space they have at their disposal. The parks considered dispose of the space of around 660 ha in total, with the smallest park established on an area of 0.1 ha and with the largest on (Bydgoszcz Industrial and Technological Park) on an area of 280 ha. The average surface of the Polish park area is ha, median 4.4 which proves large disproportions. The largest area is managed by Kraków Technology Park which also manages the Special Economic Zone apart from its own land (74 ha). In total the Park disposes of 558 ha 21. There are three other parks which 21 Cracow Technology Park operating in the form of special economic zone with 35 major investors who create over 10.5 thousand of jobs (43 % of the total) significantly distorts the image of the whole population of the Polish parks. 41

42 manage the areas over 100 ha (in Bełchatów, Płock and Rzeszów). Currently, there are only four parks with an area smaller than 1 ha. In 2012, the work on infrastructure funded under the Operational Programme Innovative Economy (inter alia, in Poznań, Gdynia, Wrocław, Kraków, Nowy Sącz), under the Operational Programme Development of Eastern Poland (in Kielce, Elbląg, Białystok) and under the Regional Operational Programmes is under way or coming to an end. Therefore, there is a large group of parks at the start-up phase. These units will have to acquire the necessary staff potential and refine the substance of their offer in the nearest future. The use of infrastructure The areas owned by the parks are used in different ways. Among of the options of the land development presented in the survey the managers indicated the following forms as the most desirable: rental of ready-to-use space to enterprises and scientific andresearch 91% 22 of TP institutions; incubator for newly emerging technology enterprises; 83 % sale of objects or land for investments; 52 % pre-incubator; 26 % lease of land/ plots for investments. 30 % Currently, there are technology incubators operating in 59 % of parks and offering special conditions for new innovative enterprises and the pre-incubation programmes for new business ideas (18 %). In the middle o 2012 there were 650 enterprises which decided to run business in technology parks analysed and created jobs. Table 7. Users of the Polish technology parks in Number of entities Employment Space Small technology enterprises Other SMEs Enterprises with foreign capital Scientific and research institutions Other institutions In total *innovative enterprises set up by the representatives of the local scientific environment 22 Data from

43 Parks tenants The tenants structure is dominated by micro-enterprises (62 %). Every fifth entity operating in the park is a small technology enterprise and every tenth entity is an enterprise with foreign capital. Chart 5. Structure of tenants of technology parks in (in %) medium 13,00% big; 5,00% small 20,00% micro; 62,00% In 2011, as a result of undertaken activities, 14 new enterprises were set up in a statistical park, i.a. this three times more compared to the previous year and a return to the level of The number of parks tenants, including academic spin-off enterprises, decreased in turn compared to the previous survey. 23 This may be connected with the involvement of parks in the implementation of soft programmes which stimulate the establishment of new enterprises supported by the European measures. 43

44 Chart 6. Number of tenants in technology parks in Overall Academic spin-outs Every eighth park enterprise runs scientific and research business and in the case of leading centres this makes up to % of entities. This is an important indicator showing effectiveness technology parks performance. This result should improve significantly in the nearest future (in 2 3 years) due to a range of investments in the park R&D infrastructure. The parks tenants submitted 61 patent applications in total with the Polish Patent Office and 13 applications with the European Patent Office (EPO), and as well as registered 47 trademarks. Chart 7. Structure of tenants of technology parks according to the industry in (in %). Other; 37 ICT; 44 Consulting; 8 Design; 1 Material Technologies; 2 Biotechnology; 8 44

45 The parks tenants mainly include ICT enterprises (44 %), however, there is also a significant proportion of biotechnology and consulting industry (8 % per each). Among other entities there are in turn entities from the sectors such as: automatics, chemistry, power industry, environmental protection and robotics. Unfortunately, parks still have quite fragmentary knowledge about the enterprises which are their tenants. Cooperation with tenants cannot be considered good in a situation, in which only every third park monitors operation of the enterprises and tracks their performance after they stop using the park offer. Constraints in park development The development of the Polish technology parks is constrained mainly by the difficulties in activation of innovative entrepreneurship. This process requires cooperation and interest in the issues regarding scientific environment. According to the managers the environment tends to remain closed to commercial activities based on knowledge. Table 8. Main constraints in the development of the Polish technology parks in * Specification: legal constraints and lack of technology transfer procedures; lack of partner and business-oriented cooperation with scientific environment; lack of financial resources for the equipment and facilities adaptation; reluctance of scientific environment to commercialise scientific achievements; ** lack of projects to commercialise; bad economic situation in the region; lack of market for novelty/technological products and technologies ** ** ** ** ** 2.48 little interest in the services offered; ** ** ** ** ** 1.95 lack of people willing to set up their own enterprise; ** ** ** ** ** 1.71 black economy in the academic environment ** ** ** ** ** 1.9 problems of cooperation with local and regional institutions, lack of support; narrow organisational framework and requirements of Park organisers; ** ** ** ** ** 1.48 ** ** ** ** ** 1.4 wrong location, poor communications accessibility; ** ** ** ** **

46 lack of understanding of the idea, unfriendliness in the Park environment. ** ** ** ** ** 1.33 *Assessments were made using the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. *In the given year, the survey did not include such a category in the cafeteria-type checklist. The most important barriers identified by the respondents in the recent survey included reluctance of the scientific environment to commercialise scientific achievements (+3 points), the existing legal constraints, the lack of technology transfer procedures (+3 points per each), with the lowest position in the ranking taken by the lack of understanding of the idea and unfriendliness in the park environment. However, attention must be paid to significant changes in the value of evaluation points in the following areas: bad economic situation in the region (the change of +1 point), reluctance of scientific environment to commercialise scientific achievements (+0.5 point). Both these barriers may become significant in the context of the parks activities in the nearest period of operation. Development plans In spite of the above-mentioned barriers, the parks keep planning new areas of development. Parks indicate the following main areas of development: expansion of investment areas; development of infrastructure, including establishment of specialist laboratories, laboratory research and laboratory space renting; construction of the Technology Transfer and Innovation Centre; enhancement of pre-incubation function for the start-up enterprises; development of enterprises running their business based on new technologies by providing access to the infrastructure and funding sources, as well as linking science and business; construction of a technology platform, development of networking; establishing clusters; internationalisation of park activities; enhancement of cooperation between science and business; establishment of cooperation with similar centres (technology incubators); promotion of openness among the entrepreneurs for openness and development of skills required for operation on the competitive markets; extension of educational practices which aim is to increase the potential of regional residents. The presented development plans of the parks show that compared to the barriers diagnosed by park managers there are still many existing threats indicated in the previous studies of innovation and entrepreneurship centres. The most important threats include: 46

47 emphasis on the technical infrastructure at the expense of services designed to support entrepreneurship and technology transfer, that may result in transformation into stunningly looking industrial parks and business zones, which, however, will not fulfil the function they were set up for; lack of potential entrepreneurs with innovative business ideas and projects with market potential and an option for commercialisation; withdrawal of the scientific environment from active business operations and entrepreneurship; following the subsidies quickly drafted concepts to be submitted for in competition for subsidies without any thought given to the purpose of the adapted facilities and how the technology park is going to fulfil its functions. A technology park is an important element of the support infrastructure which is intended to increase the level of innovation of each region. Its impact on the environment is of economic nature, but the regional development is also induced by dissemination of good practices concerning both enterprises operation and activities for regional development. The success of each park is measured mainly by the development dynamics and innovation of enterprises. Multidimensional effects of the park operation resulting from interaction and synergy mechanisms should significantly improve the competitive position of enterprises and the region, both at the national and international level. 47

48 Technology Incubators (Anna TÓRZ) Definition Technology incubators (TI) are a type of a business incubation programme implemented in cooperation with scientific and research institutions 24. The main objective of a technology incubator is to support an innovative start-up company during its development and until it can independently operate in the market. To accomplish the objective, an incubator needs to operate in cooperation with scientific institutions in such areas as the assessment of innovation undertakings, and it needs to create an atmosphere conducive to starting an economic activity. Therefore, the products and services offered by an incubator should: include business supporting services (such as financial, marketing, legal, organisational and technological consultancy); ensure assistance in obtaining financial resources, including from venture capital funds; provide an office and laboratory surface area for an economic activity, adequate to the needs. Taking into account the fact that the main task of a technology incubator is to assist in the creation of and during the initial period of operation of a small, technological enterprise 25, its offer, apart from the infrastructure, includes another key element, i.e. the "soft" services, including: training as well as consultancy and information services; communication and cooperation with scientific institutions; assistance in technology transfer; access to a common technical and service infrastructure; access to diverse local and global business networks; support in emerging in foreign markets (internationalisation, soft-landing). TI idea The idea of an incubator originated in the mid-1960s in the US, and ten years later it spread to Europe. Initially, through job creation and support for individual businesses, the incubators were to be an instrument against unemployment and a component of (social and infrastructural) regeneration programmes of post-industrial regions. However, since the end of the 1980s technology incubators are more and more often used by public authorities to 24 K. B. Matusiak, Inkubator technologiczny [Technology Incubator] [in:] K. B. Matusiak (ed.), Innowacje i transfer technologii. Słownik pojęć [Innovation and technology transfer, Glossary], Polish Agency for Enterprise Development, Warsaw 2008, p S. A. Mian, Technology Business Incubation: Learning from the US Experience [in:] Technology Incubators: Nurturing Small Firms, OECD, Paris 1997, pp

49 boost economic development and the development of innovation and structural transformations, as well as the creation of new jobs. Incubators are recognised as a tool for the implementation of regional policy, which may actively influence the local/regional development and the so-called business environment through: developing advanced forms of cooperation between the scientific community and local business; crating new, sustainable jobs; technology transfer and commercialisation; supporting local development, initiation of structural transformations, management of unused post-industrial facilities; fostering entrepreneurship, economic development of the private sector; promoting the region, creating cooperation networks 26. It is emphasised that technology incubators are featured by the effect of synergy they generate by stimulating the contacts between entrepreneurs, and between entrepreneurs and the incubator team, advisors, instructors, etc. The infrastructure of an incubator is offered to young enterprises at preferential rates, which increase with the time spent in the incubator, reaching the market level at the end of the incubation period. Normally, the time spent by an enterprise in an incubator is limited to 3 5 years. Characteristics of Polish technology incubators The beginnings of incubation in Poland date back to At that time, the Wielkopolska Innovation and Entrepreneurship Centre in Poznan was established in Poznan, with the involvement of the local University of Technology, and soon afterwards the following centres, associated with public universities, were created: In Gdansk (Technology Centre at the Gdansk University of Technology), Cracow (Progress and Business Incubator) and Warsaw (Entrepreneurship Centre at the Warsaw University of Technology). Strictly speaking, these initiatives were not yet incubators, yet the objective of their activities was to provide support for enterprises implementing new products and technologies and to cooperate with scientific and research institutions. The first incubators in Poland were established at the beginning of the 1990s under international infrastructural projects (World Bank TOR#10 project Development of Small Enterprises) and were focused primarily on stimulating development of entrepreneurship 27. The intensity of creation of incubators grew owing to structural funds. During the programming period significant amounts were allocated to the expansion of infrastructure as well as for the creation and provision of consultancy services in the Sectoral Operational Programme Improvement of the 26 K.B. Matusiak (ed.), Ośrodki innowacji i przedsiębiorczości w Polsce. Raport 2010 [Innovation and Entrepreneurship Centres in Poland Report 2010], Warsaw K. B. Matusiak, M. Mażewska, T. Niesiołowski: Lokalny system wspierania przedsiębiorczości [Local Business Support System], Ministry of Labour and Social Policy, Warsaw

50 Competitiveness of Enterprises, and in the period in the framework of Operational Programme Innovative Economy and the regional operational programmes. These funds allowed for the establishment and development of centres with a mission to support innovative enterprises. In the mid-2012, 29 technology incubators were identified in Poland (cf. Table 1). It should be noted that there are many more entities operating under the name "technology incubator" which were not included in the study. The entities excluded from the group were those using the term "incubator" in connection with the implementation of projects consisting in the creation of seed funds to support launching innovative enterprises (financed under measure 3.1 Initiating innovative activities of the Operational Programme Innovative Economy). This results from the differences between the practice of activities of technology incubators and those of seed funds. Strictly speaking, technology incubators operate on the basis of an offer composed of three elements: equipped infrastructure, substantive support at the stage of an idea for a business and operation of the enterprise, support in accessing funds for the development of the enterprise. On the other hand, the seed funds (for more details see chapter on these funds) provide only a fraction of this range of services i.e. consultancy on the development of the concept for the business and the possibility of capital entry into a start-up company. Table 1. Selected descriptions of technology incubators in Specification: Number of entities Average area of individual incubators (m 2 ) 3,828 4,989 3,093 2,930 2,570 Average employment Average annual budget (PLN thousand) , , , ,509.4 In Poland technology incubators are developed according to two models: 1. through transformation from business incubators by developing pro-innovative functions (e.g. IN-MARR Business Incubator in Mielec, Kalisz Business Incubator); 2. through the creation of new incubators within technology parks (e.g. Pomeranian Innovation and Entrepreneurship Incubator within the Pomeranian Science and Technology Park in Gdynia, Technology InQbator at Poznan Science and Technology Park of the Adam Mickiewicz University Foundation in Poznan). 50

51 Map 1. Distribution of technology incubators in 2012 Technology incubators operate in 12 Voivodeships mostly in the Podkarpackie Voivodeship (6) and in the Pomorskie Voivodeship (5). The Kujawsko-Pomorskie, Warmińsko-Mazurskie, Lubelskie and Opolskie Voivodeships still lack such business environment institutions. Approximately 40% of incubators operate within science and technology parks, either as the initial form of the latter (as in Łódź, Suwałki, Kielce) or as their departments created within an already existing unit (Poznań, Gdynia). Under this model, incubators choose promising, innovative start-ups from the market and support their development and after the end of the incubation period allow them to stay in the park. In addition, during the incubation process the enterprises are supported not only by the incubator team, but also by other departments of the science and technology park. Incubator managements are of the opinion that support for starting new technology enterprises and assistance in the development of small enterprises are the major objectives of the operation of these institutions (cf. table 2). It should be noted that this is a stable tendency observed over many years. Interestingly enough, the emphasis on cooperation 51

52 with the scientific community and on the issues of technology transfer has been gradually diminishing over the years. Table 2. Priorities for activities of technology incubators in * Specification: support for starting new technology enterprises assistance in the development of small enterprises 4.7 (1)** 4.6 (1) 4.6 (1) 4.5 (1) 4.3 (1) 4.3 (4) 4.5 (2) 4.5 (2) 4.3 (2) 3.9 (2) ensuring economic viability of an incubator 4.4 (3) 3.1 (6) 3.4 (5) 3.6 (5) 3.7 (3) assistance in transferring and commercialising new technologies from scientific institutions development of science-business cooperation networks filling the prepared area with market effective enterprises 4.2 (6) 4.0 (3) 3.7 (4) 3.8 (3) 3.6 (4) 4.5 (2) 3.5 (5) 3.8 (3) 3.4 (6) 3.6 (5) 3.7 (7) 3.9 (4) 3.2 (6) 3.4 (6) 3.5 (6) creation of new jobs 4.3 (4) 3.9 (4) 3.7 (4) 3.7 (4) 3.1 (7) *assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. **the number in brackets indicates the rank of a given characteristic among all the priorities of the activities of incubators. In 2012 the major difficulties in and barriers to the development of technology incubators indicated by their managers included the issue of insufficient funds to run them (cf. table 3). Ensuring financial stability of the institution was recognised as one of the main priorities of TI activities. This may mean that managements of incubators are already running out of project sources funding their activities and are looking ahead to the immediate future with anxiety. On the other hand, it can be assumed that the area of TI funding is recognised as crucial and is becoming more important than substantive issues. Another group of barriers is related to legal and procedural limitations and difficulties in cooperation with the academia lack of understanding between scientists and business, conducting commercialisation activities outside official structures of universities and a negative image of scientist-entrepreneur still lingering among scientists. 52

53 Table 3. Main barriers to the development of Polish technology incubators in * Specification: low budget, lack of financial support 2.6 (5)** 2.8 (2) 3.7 (1) 2.6 (7) 3.2 (1) legal restrictions and lack of technology transfer procedures lack of partnership and business-oriented cooperation with the scientific community reluctance of the scientific community to commercialise scientific achievements black economy in the academic environment 3.7 (1) 2.9 (1) 3.1 (5) 3.2 (2) 2.8 (2) 3.2 (2) 2.5 (3) 3.2 (4) 3.0 (3) 2.8 (2) 2.3 (8) 2.3 (4) 3.4 (2) 3.0 (3) 2.8 (2) 2.5 (6) 2.2 (5) 1.9 (9) 2.9 (4) 2.7 (3) lack of projects to commercialise 2.3 (8) 2.2 (5) 2.9 (6) 3.7 (1) 2.6 (4) poor economic situation in the region 2.8 (3) 1.7 (8) 2.8 (7) 2.8 (5) 2.5 (5) lack of funds for equipping and adapting facilities Lack of a market for modern/technological products and technologies problems in the cooperation with local and regional institutions, lack of support lack of persons willing to start up a business 2.6 (5) 2.8 (2) 3.3 (3) 2.9 (4) 2.3 (6) * * 2.2 (8) 3.0 (3) 2.2 (7) 2.4 (7) 2.2 (5) 2.9 (6) 3.0 (3) 2.1 (8) 2.7 (4) 2.1 (6) 2.8 (7) 2.1 (10) 1.9 (9) misconception of incubators, hostile atmosphere surrounding them 0.4 (10) 1.5 (9) 1.7 (10) 2.7 (6) 1.5 (10) lack of a strategic plan for the development of the incubator 1.4 (9) 1.3 (11) 1.1 (12) 2.3 (9) 1.5 (10) little interest in the services provided by the incubator 1.4 (9) 1.9 (7) 2.2 (8) 1.8 (12) 1.4 (11) narrow organisational framework and requirements imposed by entities organising the incubator 1.4 (9) 1.4 (10) 1.3 (11) 2.0 (11) 1.2 (12) poor localisation and accessibility by means of transport 0.4 (10) 1.3 (11) 1.3 (11) 2.4 (8) 1.1 (13) *Assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. **the number in brackets indicates the rank of a given characteristic among all the priorities of the activities of incubators. 53

54 The drop in the significance of barriers that were indicated as important in the previous study should be noted. In 2012 TI managers were of the opinion that the lack of projects for commercialisation and the lack of an outlet market for innovative products were less perceptible. This can be explained by the fact that incubators have worked out more effective mechanisms for acquiring and developing valuable business ideas. Organisation of technology incubators An average incubator employs 6 persons under employment contracts, coordinating its operation and providing support services. The size of the team ranges from 1 employee delegated to take care of the incubation issues to several (10 16) at centres such as the Poznan Technology InQbator at Poznan Science and Technology Park of the Adam Mickiewicz University Foundation and the Kielce Technology Incubator. Administrative teams have 2 or 3 people, while the size of substantive teams ranges from 1 to 13 people. The number depends on two key factors the stage of the incubator's development and the adopted model of delivery of services (in larger teams substantive services are provided also by the employees of the incubator). In 2011 incubators had at their disposal funds amounting to PLN 1,509,381 on average. 1/3 of the costs incurred were covered from the incubators own revenues (the rent, maintenance charges, training), another third part from the money obtained under national grants (projects implemented by incubators under the Operational Programme Human Capital, the Operational Programme Innovative Economy, the regional operational programmes), and the remaining part from premiums granted by owners and other revenues. Foreign programmes and grants are of marginal significance to TI budget only one incubator indicted them as a component of its budget. Chart 1. Financing structure of a technology incubator (as at the end of 2011) (%) Training and Regional/local consulting; 2,80% grants and projects; 7,30% Other own revenues; 10,50% Other; 1,90% Freign grants and projects; 0,50% Rent and other maintenance charges; 31,10% Ccontributions, subsidies and premiums of shareholders; 16,10% Domestic grants and projects; 29,80% 54

55 A change in the structure of incubators' budget should be noted. Compared with the previous years, the level of self-financing of these institutions has decreased dramatically (proceeds from charges, trainings, etc,) to 33.9%, which is the lowest level in the history of the studies. On the other hand, the significance of national grants and projects increased considerably. Currently, incubators spend funds allocated under operational programmes for the development of the products and services they provide and their infrastructure. This, on the one hand, presents a chance for them to implement their statutory tasks from external funds, but, on the other hand, this also poses a threat that the managements will excessively base their activities on project funds and, following the end of the programming period, the incubators will experience difficulties in achieving financial independence. For the same reasons the considerably increased support granted to incubators in the form of subsidies and premiums by their owners may give a cause for concern. Table 4. Financing structure of ongoing activities of technology incubators in (%) Specification: proceeds from the rent and other maintenance charges proceeds from training and consultancy activities other own revenues European grants and projects domestic grants and projects regional/local grants and projects contributions, subsidies and premiums of shareholders other external contributions Over 50% of incubators surveyed declare that they monitor and evaluate their activities, primarily for the purposes of an ongoing analysis of the effectiveness of their actions and further improvement of their offer. Many actions are taken as a result of the participation in studies carried out by external entities (government agencies, associations, owners of incubators), which expect the managements of incubators to deliver a lot of data. Some entities carry out the evaluation as a result of implementing the ISO 9001 quality system. Areas most frequently examined are those related to the organisation of work of an incubator, the quality of services provided by an incubator and the needs of the customers. Information about TI tenants allowing following the development of enterprises and verification whether the latter still fulfil the criteria for incubated entities is also collected (in the form of surveys, interviews, etc.). 55

56 Infrastructural offer Services provided by technology incubators An average incubator takes up 2,570 m 2, out of which 72.2% (as in 2009) is intended as a net area for rental by businesses and other users. In the case of most incubators the infrastructural offer can be used for 3 to 5 years, while 33% of incubators do not impose any limits. Most TIs apply diversified rates depending on the type of the tenant, time and type of the area rented. A particularly attractive offer is addressed to start-ups, which upon starting the cooperation with an incubator can count on a discount of even 75% of the fees. Significant differences in rental fees can be observed among technology incubators the fees ranging from several (PLN 2.20 per 1 m 2 of the production or office area in Krintech Krosno Technology Incubator) to several dozen PLN/m 2 (PLN 60 per 1 m 2 office area rented for commercial purposes at the Technology Incubator at Krakow Technology Park). The rates depend on: the standard, location, kind of the enterprise or the area (production, office, other) and the situation in the local real estate market. In the case of incubators located in large cities (Gdynia, Kraków, Łódź, Poznań) rates for the rental of 1 m 2 of an office area in the first year are similar and amount to approx. PLN Table 5. Average fees for the rental of 1 m 2 of the area at technology incubators in 2012 Type of area fees (PLN per 1 m 2 ) at the time of entry after a year commercial rate Production Office Other Apart from the equipped area, incubators normally put office equipment (a fax machine, a copying machine), a computer network, broadband Internet and a seminar room at the incubated enterprises disposal. However, only 1/3 of them have workshops and laboratories and a canteen at their disposal. The rental rates over a three-year incubation period differ from market rates in the case of over half of the incubators the former being usually lower by 50 to 75%. In one case, though, the amount paid by strategic tenants for the rented area is twice as high as the average price in the region. Over the last three years, 40% of incubators extended their service range to include virtual incubation. For some institutions the reason behind the provision of the new service was the need to find a new source of income, for other - the intention to establish a relationship with those enterprises to which the incubator could not offer any free area for rent. 56

57 Substantive offer For many years technology incubators have been gradually expanding the scope of the support offered. The assistance covers consultancy of various kinds (cf. Table 6). 8 out of 10 incubators provide their tenants with support services based on a mixed model i.e. the services are provided partly by the incubator team and partly by external partners. Table 6. Subject scope of consultancy and training offered at technology incubators in (implemented in % of TIs). Specification: entrepreneurship and starting up a business access to the EU funding commercial law accountancy finance and taxes business plan development IT, computers market research and marketing implementation of new products and technologies protection of intellectual property * * * cooperation intermediation business management international cooperation quality management technology audit * * * technology and patent information * * human resources management * * * * 53 *the survey did not include this category in the list of possible answers in a given year Apart from the scope of support presented above, some incubators offer additional services such as coaching at the Technology Incubator at Krakow Technology Park or support for cluster initiatives at the Technology Incubator at Gdansk Science and Technology Park. The range of instruments for financial support offered is definitely poorer. The most popular instrument access to loan funds is provided only by 53% TIs. In addition, only every second incubator cooperates with business angels, and 40% with seed capital funds. 57

58 Cooperation with guarantee funds, credit intermediation and subsidies are practically non existent. Over half of the incubators surveyed offer the pre-incubation service to their customers. In some cases it is based on cooperation with the Academic Business Incubators Foundation. Some technology incubators have developed their own pre-incubation tools. Pomorskie Innovation and Entrepreneurship Incubator runs a six-month consultation and training programme. The Technology Incubator at Krakow Technology Park gives classes on entrepreneurship at lower and upper secondary schools, training and consultancy for people intending to start an economic activity and competitions held at the Technology Incubator at Krakow Technology Park. The pre-incubation measures provided by the Technology InQbator at Poznan Science and Technology Park of the Adam Mickiewicz University Foundation can be divided into two groups. Initiatives promoting self-employment as a way for a professional life include, for example, a course in entrepreneurship for students and PhD students at Adam Mickiewicz University. On the other hand, initiatives for the improvement of business ideas include, for example, "The First Step towards Self-Employment": a training and consultancy programme for academia based originators from the Wielkopolskie Voivodeship, developing business ideas to reach investment readiness. Tenants In the mid-2012 a total of 258 entities employing nearly 1,000 persons operated within the surveyed technology incubators. 38% of the tenants are start-ups which at the time of entering the incubators had been present in the market for not longer than one year, and 9% are spin-offs (cf. chart 2, table 7). Chart 2. Breakdown of the tenants of technology incubators by type in 2012 (%) Other enterprises (with preferential arrangements); 33% Strategic tenants; 16% Other; 4% Academic spinoffs/spin-outs; 9% Start-ups; 38% 58

59 Table 7. Users of Polish technology incubators Type of resident : Number of entities Employment Area occupied (m 2 ) Start-ups* , , Academic spin-offs , Other enterprises (with preferential arrangements) , , Strategic tenants , , Other institutions , , Total , *operating for not more than one year at the time of entering the incubator 17, Last year an average of about 80 people interested in starting a business or in continuing an already started business applied to an incubator. It should be noted that in the case of larger centres the number was twice or ever three times greater (150 to 250 persons). An average of 20 to 25% of submitted business projects are deemed "interesting enough" by the incubator team. In over 50 enterprises left the institutions due to the end of incubation period, as well as due to the need for larger area for the business than the area that could be offered by the incubator. Chart 3. The rate of changes in the number of tenants of technology incubators in Tenants Start-ups 59

60 In the majority of incubators the procedure for the selection of enterprises is covered by the rules of operation of the institution and is based on particular criteria of entry and preferences for indicated sectors or types of enterprises. The selection process most often involves submission of a completed application form and a business plan by the candidate and the assessment of the documents in terms of fulfilment of admission criteria laid down in the rules. The criteria may include: the size of the enterprise (micro, small, medium-sized); activities based on implementation of technological innovations or R&D studies; operation in particular sectors (e.g. at the Technology Incubator at Gdansk Science and Technology Park these are IT systems and telecommunications networks technologies, materials engineering technologies and nanotechnologies, biotechnologies, food and drug chemistry and technologies related to environmental protection and to the use of renewable sources of energy); convergence between the planned activities and the incubator's profile of activities. The enterprises are assessed either by an Admission Commission composed of the incubator employees, or with support from advisory bodies such as the Incubator Board or Scientific Committee, and often it also involves a meeting with the potential tenant. The decision to conclude an agreement with entities interested in operating within the incubator depends on the degree to which the criteria have been met and the availability of free area, and finally it is made by managements of these institutions. People in charge of technology incubators assess that they have helped to establish over 1,200 enterprises. In 2011 there were 110 such enterprises. However, it should be noted that these include only entities based in TI. These statistical data do not cover enterprises which benefited from other services offered by the incubators (pre-incubation, training, consultancy) and decided to start a business as a result of this cooperation. The founders of enterprises located in the incubators are mostly students and PhD students. This group establishes 28.8% of enterprises which are tenants of incubators, while 8.1% of such enterprises are set up by academic researchers. Micro enterprises account for over 90% of entities residing in TIs. Small enterprises account for less than 10% of tenants, while medium-sized enterprises hardly ever occur. 60

61 Chart 4. Breakdown of tenants by sectors in 2012 Other; 32,00% ICT; 41,00% Consulting; 14,00% Design; 4,20% Material technologies; 5,00% Biotechnology; 36,00% Only one third of incubators monitor the operation of enterprises which completed their incubation period. Such enterprises receive newsletters, invitations to attend training and events organised by the incubator, and invitations to participate in competitions. Some enterprises leaving the incubator are placed within the structures of the park, which is the most effective guarantee of further cooperation. On the other hand, over 40% of the enterprises which have left the incubator continue the cooperation with the incubator primarily by using its consultancy and innovation-oriented services (such as innovation audits). Compared with the previous study, the percentage fell quite considerably (in 2010 it amounted to about 60%). 61

62 PRE-INCUBATORS AND ACADEMIC BUSINESS INCUBATORS (Marzena MAŻEWSKA) With the orientation of the European policy to the development of innovative undertakings, the interest in academic entrepreneurship increased, particularly in looking for new forms of technology transfer, stimulating the foundation of academic spin-offs and mobilising the academic environment to undertake economic initiatives with the use of the knowledge acquired during their studies and work. The analysis of the need of the academic environment for support in the above area has led to the development of the idea of academic pre-incubators 28. ABI definition Academic business incubators activities are usually initiated by the academic environment. Their objective is to provide assistance in starting an enterprise and in the initial assessment of the enterprise chances to succeed in the market. Pre-incubators carry out their statutory tasks in the area of education, promotion of entrepreneurship and the support of actions for the commercialisation of new products and technologies. The idea behind the support for academic entrepreneurship is to actively include it in the educational processes with the use of such tools as: promotional actions related to classes in entrepreneurship, university contests for business plans among the students, PhD students and young academic researchers, organisation of trainings and consultancy for potential academic entrepreneurs, establishment and development of academic creativity centres, Development of a wide network of external contacts with venture capital investors, graduate associations, other business support institutions. According to the programme assumptions, the pre-incubator within a university should create opportunities for the development of new businesses by facilitating the access to: technological and patent consultancy, the expertise of scientists and students when providing consultancy and training services, databases of researchers and inventors, ideas, patents and technologies. 28 The term covers both academic business incubators with the necessary infrastructure, and pre-incubators which are a unique form of support. A pre-incubator means a unique type of business incubator discovered at the end of the 1990s, extending the education process to include an opportunity to learn how to move around in the market and verify knowledge and capacities in one s own business. Created within universities, incubators provide support to students and academic researchers in practical operation in the market. Apart from the functions fulfilled in traditional incubators, this type of units also take numerous unique measures aimed at teaching entrepreneurship and at commercialising new products and technologies K.B. K.B. Matusiak (ed.), Słownik Pojęć, Innowacje i transfer technologii, Polish Agency for Enterprise Development, Warsaw In Poland the academic business incubator (ABI) is the most widely used term, 62

63 Like technology transfer centres, academic incubators form part of institutional structure of the model of an enterprising university. A study on ABIs carried out by the Information Processing Institute in March 2012 shows that the initial enthusiasm associated with the launch of pre-incubators at Polish universities slightly diminished after a few years of their operation and the centres themselves look for a way to operate in the specific environment. The provisions of the Higher Education Law of , Dz. U. [Journal of Laws] No 164, item 1365, as amended (hereinafter referred to as the Law ), allow for development of academic entrepreneurship and technology transfer infrastructure, while allowing the university latitude in selection of the organisational and legal form (university-wide unit, commercial company, foundation) adequate to the needs of a given university. The Law also allows university employees and students to combine their scientific work and education with a status of an entrepreneur, and the academic business incubators are created to support this activity. These type of initiatives lack patterns and precise models both worldwide and in Poland, and foreign experience in this area differs significantly 29. ABI size and structure The conducted studies allowed to identify a total of 73 pre-incubators and academic incubators in the mid Currently, three types of pre-incubators functioning under different legal bases operate at universities. The first group (21 centres accounting for 28% of all entities) operates under the Law which includes provisions on legal possibilities of cooperation between a university and the economic environment, inter alia through the dissemination of the idea of entrepreneurship within the academic environment 30. Academic Entrepreneurship Incubators Foundation network with its 45 pre-incubators (accounting for 61% on all entities) forms the second group. The third group consists of academic incubators operating within technology parks and of independent support institutions 7 centres (11% of all entities). Description of the ABI Foundation Academic Business Incubators within the Academic Business Incubator Foundation (ABIF) operating under agreements with 45 domestic universities are unique both because of their legal form, network-like way of operation, as well as less formalised functioning than pre-incubators set up by universities. 29 J. Guliński, K. Zasiadły (ed.), Innowacyjna przedsiębiorczość akademicka. Przewodnik po doświadczeniach międzynarodowych, Polish Agency for Enterprise Development, Warsaw This is referred to in Article 86 of the Law, which provides that: To make a better use of intellectual and technical potential of a university and to transfer the outcomes of scientific work to the economy, universities may run academic business incubators and technology transfer centres. Academic business incubators are created to support economic activities of the academic environment, or of university employees and students who are entrepreneurs. ABI established as: a university-wide unit operates under rules approved by the university senate; a commercial company or a foundation operates under relevant constitutional documents. Source: The Higher Education Law of 27 July 2005, Dz. U. of 2005, No 164, item

64 The structure of the ABIF network consists of: 1) The Management Office located in Warsaw and coordinating activities throughout the country. It handles administrative and financial operations of all branches and their business projects and it provides specialised services largely with the use of IT technologies. 2) 45 academic business incubators operating within universities throughout the country, managed by ABI directors, coordinating actions in their regions and constantly taking care of the incubated enterprises. Rules of operation of ABIF pre-incubators: Admission to an incubator is granted through a contest and individual meetings with the students with an idea for a business. The incubated project is implemented according to the legal personality of the Foundation, which means that people implementing it are actually ABIF contractors. This structure relieves them from the requirement to register the enterprise and makes the Foundation partly assume the risk of the failure of the project. The scope and conditions of entering and leaving the incubator are laid down in the agreement between the Foundation and the project contractor. Advantages of the adopted solution include the limited business risk for the project initiator and the avoidance of formalities associated with the registration of an enterprise. The drawbacks of such construction include operation in quite artificial conditions as a subcontractor of the Foundation, possible problems associated with intellectual property rights or the rights to fixed assets, intangible assets and equipment acquired for the implementation of the project. The total costs of incubator running incurred by the Foundation are subsequently divided by the number of projects implemented by the incubator and paid by the incubated projects from their income. The costs of stay in the incubator are covered gradually, and the incubated entities pay full fees only after several months of operation. Incubation period lasts until a given entity gains independence, but not longer than 3 years. After leaving the incubator the enterprise undertakes to share a certain percentage of its profits with the incubator for the period corresponding to the incubation. ABIF incubators provide their customers with the following services: trainings in entrepreneurship for students and academic researchers; mentorship, individual running of promising projects by selected tutors; accounting and legal services for ABI programme participants. In addition, a future entrepreneur has access to a computer with Internet connected, a printer, a fax machine, a phone and other multimedia devices, as well as to support in accessing laboratory infrastructure. Due to their specific way of cooperation with the project contractors, ABIF incubators have a unique possibility to monitor business progress made by a potential entrepreneur. This allows them to react quickly in case of unexpected difficulties. 64

65 For the support for promising projects, AIP Seed Capital fund was launched in March Other forms of support offered within the ABIF network include the following: (1) joint promotional actions ( Support ABI Young Business campaign) where it is possible to win new, attractive contracts; (2) acquisition of financial support grants, scholarships, credits, financing by capital investors; (3) a broad range of trainings. In 2009, the Foundation launched a project of six "Business Links" 31 under Measure 5.2 of the Operational Programme Innovative Economy, coupled with a system for the provision of innovation-oriented services for entrepreneurs and enterprises at the stage of pre-incubation and incubation. In the immediate future, the ABI Foundation plans to: develop services provided for young entrepreneurs, implement new added values facilitating first steps in business put more emphasis on the promotion of the idea of entrepreneurship and enterprising attitudes among young Poles, and to organise national-wide promotional and information campaigns develop ABI office network. Academic ABIs Academic business incubators operating within public universities are most often associated with university centres for technology transfer and career offices 32. This type of ABIs normally functions as an independent project. The potential and existing entrepreneurs, primarily from the academic environment, may benefit from a wide spectrum of the forms of support in the setting-up process. They include, among others, consultancy and trainings, assistance in technology transfer, access to databases and international contacts, and frequently also information on and support in accessing national and foreign grants and venture capital funds. However, according to incubator managers the general university bureaucracy and frequent lack of understanding of the idea behind the implemented activities are the drawbacks of this form of business. covering: Academic incubators generate a lot of benefits for the university, directly More attractive educational offer and improvement of the image of the university, Improvement of relationships with the environment and local business, 31 Business links form a platform provides support to start-ups under a specially developed programme for business development allowing to obtain substantive and organisational support and establish business to business contacts. Within their activities, business links provide their customers with: a virtual address, coworking area in 6 Polish cities, accounting and legal services, mentorship and trainings as well as inclusion in the network of enterprises of the business link. 32 E.g. Academic Technology Incubator at University of Warsaw, University Technology Transfer Centre (UOTT UW) or Academic Business Incubator within Technology Accelerator at the University of Lodz. 65

66 Increase in revenues from cooperation and technology transfer to graduates enterprises, Increase in the orders and sponsoring research activities, Acquisition of additional funds under programmes for the support of technology entrepreneurship, Additional income opportunities for students and academic researchers and engineers and technicians. Legally and organisationally the academic incubators are most frequently university-wide units subordinate to the rector or the vice-rector. They carry out service, training and scientific activities aimed at fostering and supporting entrepreneurship within the academic environment. Their activities focus on pre-incubation. Carefully selected projects developed by students, graduates, PhD students and young academic researchers receive a broad substantive and financial support until market stabilisation is reached. Non-academic pre-incubators Pre-incubators operating within technology parks and incubators 33. The establishment of academic pre-incubators within already operating business support institutions is a consequence of a relatively low activity of universities in this respect. Technology parks and incubators with excellent technical infrastructure and extensive national and international contacts are ideal places for creating start-up companies basing on innovative solutions and spin-offs. Unlike the previous types of pre-incubators, nonacademic pre-incubators put potential entrepreneurs and later enterprises, from the very beginning of their operation, in contact with the business environment and a wide range of services offered by technology parks and incubators. The way and scope of operation differ from one group to another. ABIF preincubators offer the most basic support and in most cases they do not have area for incubation at their disposal. The university centres also rarely have well-prepared incubation area. The study conducted indicates that in the group of academic ABIs the activity of universities in the area of setting-up ABIs decreased considerably. A considerable number of operating centres rarely or never carry out their statutory activities due to scarce resources and abilities. Academic business support centres are extremely diversified both in terms of the level of development and the scope of the services provided. On the basis of the collected data it is difficult to identify a standard offering that would enable an actual comparison of their activities 34. Over the last three years new pre-incubator projects emerged in the market of support institutions, stimulated by the activities of seed funds and business angel networks. 33 E.g. Academic Business Incubator at Wroclaw Technology Park and Academic Pre-incubator at Podkarpackie Science and Technology Park. 34 See: A. Bąkowski, E. Dąbrowska, K. B. Matusiak, M. Mażewska, Akademickie ośrodki innowacji, Information Processing Institute, Warsaw

67 This leads to the development of a new pre-incubation model linked with capital investments described in more detail in the chapter on Seed Capital Funds. Geographical distribution Map 1. Academic business Incubators in 2012 Geographical distribution of pre-incubators ensures access to their services practically in every voivodeship, although the activity of academic ABIs in particular is significantly limited. This results from the fact that the focus is put on training and information activities for the academic environment (intra-university activities). Geographically, pre-incubators operate in all the voivodeships. The majority of preincubators are identified in the Mazowieckie Voivodeship (8 in Warsaw and 2 in Płock) and in the Małopolska region (9). Wrocław network, characterised by a wide organisational diversity 1 ABIF, 3 academic and 2 park pre-incubators should be noted. In turn, Warsaw pre-incubators are entirely managed by the ABI Foundation. In the Zachodniopomorskie, Dolnośląskie and Kujawsko-Pomorskie regions there are seven pre-incubators operating in each the region. This is a significant change indicating a gradual activation of the region which until now hardly conducted any activities in this respect. The lowest number of incubators can be found in the Lubuskie and Warmińsko-Mazurskie regions (1 in each) and in the Podlaskie region (2 incubators). 67

68 Table 1. Selected characteristics of academic incubators in Number of pre-incubators * Average pre-incubation area (m 2 ) Employment Total number of projects/enterprises Average annual budget (PLN thousand) 244,2 100,5 70,7 215 * including 21 academic incubators, 7 non-academic incubators and 45 branches of the Academic Business Incubator Foundation. ABI potential and infrastructure An average academic business incubator has a space of 410 m 2 in total (median of 180 m²) at its disposal. This is a significant change compared to the previous study, resulting primarily from the implementation of large infrastructural projects in this respect. However, it should be noted that the smallest incubator in this survey covers the area of 18 m² while the largest one has 3,000 m². In the group surveyed, ABIs have at their disposal two facilities exceeding 1,000 m². ABIs with the area of several dozen square meters are much more frequent, while an average ABIF covers 54 m². Technical equipment has improved significantly and includes a phone, a fax machine, a printer, and computers with Internet access. 60% of the centres offer secretariat services; over 20% are able to facilitate access to research laboratories, while only 1 in 5 ABIs provides access to databases. Over 70% of the centres surveyed offer seminar rooms, access to broadband Internet and a computer network. Creativity centres are not a common form of support yet among academic and park ABIs only 1 offers this form of cooperation with the customer. This form of support is provided by 8 incubators of the Academic Business Incubator Foundation. A statistical pre-incubator employs 3 permanent employees, 3 temporary agents and involves over 16 people in its work on the basis of mandate agreements. In addition, a registered voluntary service has emerged within ABI activities. In 2011, an average of 1.1 volunteers worked for an ABI. The annual average budget for the operation of a centre amounts to PLN 15,915, (median of PLN 215,000) annually, while the lowest budget indicated was PLN 15,000. Since 2006 the budgets have been steadily decreasing. It should benoted that in many cases the nature of the activities based on projects, the voluntary service provided by the people involved and a unique organisational improvisation make it impossible to identify the full costs. 35 Such a high budget results from the implementation of a large project financed from EU funds. 68

69 Chart 1. Financing structure of an average ABI in 2011 (%) Contribution from parent and associated scientific institutions; 14,00% Dobestic grants and projects; 12,80% Other external contributions; 2,80% Affiliation fees; Training and 9,40% Rent and other consulting; charges; 19,20% 0,50% Other own revenues; 3,30% Regional grants and projects; 41,00% Gov. grants and projects; 22,20% European grants and projects; 11,90% In 2011, the structure of the centre budgets changed significantly. It is obvious that the centres have began to reach for the so-called project money and pre-incubation is gradually replaced with the activities in the area of knowledge dissemination and promotion of entrepreneurship. This is reflected in the statistics on the outcomes of their activities. Cofinancing of the parent institution for which pre-incubators are most frequently the only link to a broader activity amounts to an average of 15.5%. This is probably connected with the need to provide their own contribution to the implemented projects. The tendency in the structure of income may prove to be dangerous for the centres in case of any limitation of the possibilities to obtain funds from project sources. Table 2. Financing structure of the ABI ongoing activities in Budget of an academic incubator (PLN thousand) Including in %: Affiliation fees * Proceeds from the rent and other maintenance charges Proceeds from training and consultancy activities Proceeds from other own revenues European grants and projects

70 Cont Governmental grants and projects Regional grants and projects Local grants and projects * * Domestic grants and projects * * * 12.8 Contribution from parent and associated institutions Other external contributions * the survey did not include this category in the list of possible answers in a given year. Significant changes in the structure of the ABI sources of financing partially result from the changes in costs incurred by the customers (fees for particular services instead of affiliation fees) and partly from a decreasing number of pre-incubated entities. Operating barriers In 2012, as the major barriers to ABI development the ABI managers indicated in the following order: lack of partnership and business-oriented cooperation with the scientific community, legal restrictions and lack of technology transfer procedures at scientific and research institutions as well as small budget and lack of financial support. Table 3. Main barriers to ABI development in * Lack of partnership and business-oriented cooperation with the scientific community 3 3,4 3, Legal restrictions and lack of technology transfer procedures 3,3 2,7 2,7 4,2 3,1 Reluctance of the scientific community to commercialise scientific achievements 1,7 3,1 3 2,3 3 Low budget and lack of financial support 4,3 3,9 3,9 3,6 2,9 Lack of projects to commercialise ** 2,7 2,5 3,1 2,9 Black economy in the academic environment 1,7 2,7 2,7 2,5 2,7 Lack of resources for fittings and incubator adaptation 3,1 3,5 3,2 3,1 2,6 Lack of persons willing to start up a business ** ** ** ** 2,5 Problems in cooperation with local and regional institutions, lack of support ** 3,1 2,4 2,6 2,5 70

71 Cont. Narrow organisational framework and requirements imposed by entities organising the incubator Insufficient number of professional advisors/coaches Misconception of incubators and a hostile atmosphere surrounding them Little interest in the services provided by the incubator Bad situation in the region, malaise and stagnation ** ** ** ** 2,4 ** ** ** ** 2,3 ** ** 2,4 2,3 2,2 ** ** ** ** 2,1 ** ** ** ** 2,1 *Assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. **The survey did not include this category in the list of possible answers in a given year. The activities of pre-incubators change depending on their organisational, personnel and material capacities. Recent years mark significant changes in ABI activities which are focused on information and promotion in the area of entrepreneurship and on training activities for academic researchers and students. It is disturbing that the number of centres organising contests for business plans have decreased as well as the fact that accounting and legal services for start-up companies have been limited. This indicates a decreased activity in the area of pre-incubation in favour of a broadly defined dissemination of entrepreneurship within the academic environment. Table 4. Identified components of pre-incubation programmes in ( % of ABIs) Information and promotional activity in the area of entrepreneurship Access to infrastructure for start-up companies (a desk, a phone, a computer, seminar rooms, address, etc.) Accounting and legal services Open tender for a business plan Training courses on entrepreneurship for students and academic researchers Academic classes in entrepreneurship at local university/-ies Assistance in accessing laboratory infrastructure Mentorship, individual running of promising projects by selected tutors

72 ABI offer Consultancy, training and information services are the main forms of support of all pre-incubators. The services provided systematically focus on issues of entrepreneurship, setting-up an enterprise and developing a business plan. Recently, the focus is also on promoting issues of protection of intellectual property. Services provided in the area of financial support, which cover grants and premiums for new economic undertakings, are also of significant importance to start-ups. However, according to the surveys, only 20% of incubated enterprises make use of financing of activities from EU funds. The service range in the area of knowledge commercialisation, implementation of new products and services or internationalisation is also developed to a much lesser extent. Table 5. Scope of consultancy, information and training at pre-incubators in (% of centres providing services in selected areas) Consultancy, training and information services: entrepreneurship and starting up a business accountancy business plan access to the EU funding market research and marketing commercial law finance and taxes business management protection of intellectual property * cooperation agency * * * * 20 accountancy * * * * 60 IT, computers * * * * 20 technology audit * * * * 20 human resources management * * * * 50 internationalisation and international cooperation Implementation of new services and products * * * * 20 * * * * 20 quality management * * * * 40 * the survey did not include this category on the cafeteria-type checklist in a given year. Organisation of services provided to ABI customers is partly based on the work of the own team of incubator and partly on subcontracting. While 30% of centres implement their services exclusively on the basis of its own advisors and consultants, there is not a single centre 72

73 that would subcontract all its tasks. ABIF centres and academic centres are directly report to the university authorities and almost always are directly report to the rector or the vice-rector for science and cooperation with the economy, and the work of 70% of centres is supervised by supervisory or programme boards. Despite the seemingly good authority and substantive support as much as 40% of pre-incubators do not cooperate with universities where they run business. Those declaring such cooperation limit it primarily to the organisation of and participation in promotional and information actions or to the involvement in the work of scientific circles. In response to the needs of their customers, 50% of the centres strive to specialise in particular thematic areas, the most popular being biotechnology and ICT. Most ABIs, apart from ABIF, do not develop formalised network relationships, with the exception of centres associated with foreign organisations. Similarity, Polish network institutions are not popular among pre-incubators. Activity outcomes Each month about 12 people interested in starting their own business apply to a pre-incubator. Although the number of centres increased, the average number of customers has not changed over the period of last 2 years. ABI managers are of the opinion that 30% of the ideas are worth to be analysed more thoroughly 36. Ultimately, in 2011 an average ABI admitted 19 business projects (median 12). Projects are usually submitted to ABIs by graduates of the university (38%) and last-years students (32%). PhD students and young academic researchers account deliver nearly 20% of projects. In addition, the share of female initiators of projects increased. In 2011, they accounted for over 24% of all ABI customers. The statistics of the centres indicate that on average the enterprise incubation period at ABI lasts 1 year and 8 months. Chart 2. Average number of those interested in starting up a business at ABI (per month) in For comparison, in % of the ideas submitted were worth further analysis. 73

74 For years the main indicated problems with the implementation of business ideas have related to the lack of financing at the initial stage of the operation of a business, poor determination to implement one's projects and lack of economic skills among potential entrepreneurs to run an enterprise. Table 6. Main problems with the implementation of business ideas at ABI in * Specification: Lack of financing at the initial stages of the business operation Lack of knowledge on legal and administrative procedures of starting up and running an enterprise among the candidates for entrepreneurs Poor determination of potential entrepreneurs Low market orientation of the projects Lack of knowledge and economic skills *Assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. At the end of 2011, 1675 business ideas at various stages of development were incubated at ABIs analysed. The incubated projects include many very interesting ones, mainly in the area of IT services and applications. ABIs can also be proud of the successes of those they have in charge. So far, 70 enterprises have won awards in national contests, and 6 in international contests. Capacities and threats associated with ABI activities The Law assumed that it was supported to be much easier for academic preincubators to develop cooperation with academic and scientific and research units, and that the pre-incubators were to use the infrastructure and staff resources of universities. The very fact that they are created by a university was supposed to make their activities reliable and stabilising, among others, the financial flows associated with implementation of external projects. However, Polish science and higher education environment still can hardly see the developmental opportunities in the activation of academic entrepreneurship and in cooperation with business. The broad spectrum of issues of academic entrepreneurship is frequently limited to pre-incubation and academic business incubators treated as a temporary trend. The objective of numerous academic initiatives is exclusively to obtain EU funds allocated for raising the potential of human capital, promoting innovative economy, etc. In this context, academic incubators are often created only when there are funds, and when the funds dry out, the interest in the subject vanishes as well. When the funds are exhausted, the initiatives are closed down or become dormant. 74

75 To intensify pre-incubation programmes it is crucial to develop cooperation between universities and academic researchers, on the one side, and the business community, local and regional administration and support institutions on the other. Academic entrepreneurship should receive comprehensive support at regional level. This requires cooperation to be developed between universities and innovation centres, i.e. technology parks and incubators, business angels, seed funds, clusters, venture capital funds, etc. However, success in this area depends on the real will of the universities and the centres to cooperate. Regional and local authorities may prove to be an important partner in the implementation of this task, whose mission is to coordinate the implementation of Regional Innovation Systems as a network of cooperation among enterprises, administration, scientific and research institutions as well as innovation and entrepreneurship centres. 75

76 BUSINESS INCUBATORS (Jacek KOTRA) Introduction Business incubators function as tools aimed at supporting entrepreneurs who begin self-employment. Functioning of the incubators is a part of the policy supporting entrepreneurship at the national, regional and local levels. However, business incubators have a significant impact at the level of local communities, enabling them to develop and use the best practices in creating enterprises. In a properly prepared business incubator offer there are basic services reducing the costs of running a business as well as a range of ancillary services giving the entrepreneurs an advantage over enterprises operating in the market without such support. The basic services include: renting the office space and the production area under favourable financial conditions lower than the market conditions. Most often, the space offered includes basic fittings (often also computers) which significantly facilitates running a business and reduces the costs in the first phase of the operation of an enterprise. Incubators offer also consists of advisory and training services which have a significant impact on preparing the enterprises to deal with competition more efficiently. Since Poland s accession to the EU, the incubators increasingly provide support to entrepreneurs in applying for grants aimed at enterprise establishment and development. Most probably, the system of financial support for enterprises will be further developed in the coming years, maybe in the form of low-interest loans. Operation of the business incubators (BI) is a form of the most basic, yet full, support for the originators of business projects. In case of smaller localities or towns without strong academic or industrial centres, business incubators are the institutions which adapt best to the local needs, aiming not only at supporting entrepreneurship but also at enhancing entrepreneurial climate in the local market. Eventually, the incubators operation contributes to reducing unemployment and has a positive impact on the job structures in local community. In case of larger urban centres, business incubators are usually part of an entrepreneurship support system, created together with other support institutions and adjusted to the local and regional characteristics (technology parks, economic zones, technology incubators, academic business incubators). Polish business incubators First business incubators in Poland were created back in the nineties; at the end of the nineties the number of these institutions stabilised and in the years there were between 44 and 53 of business incubators operating in Poland. In 2012, 58 business incubators were identified in Poland, and in a dynamic growth of their number was recorded, compared to the previous years. This trend will probably not 76

77 last due to a gap in financing of the creation of new incubators from the EU funds. The increase in the number of incubators results from the completion of the processes of creating infrastructure, started under the FP for During the same period, 3 entities, namely in Łódź, Borne Sulimowo and Tarnów, have been closed down. The increase in the number of entities, compared to 2010 when 46 operating incubators have been recorded, has been the most significant one since the beginning of activity of these institutions in Poland. It should be stressed that this increase took place despite the fact that some business incubators were transformed into technology incubators. Chart 1. Number of business incubators in Poland in the years Source: own study and on the basis of reports Ośrodki innowacji i przedsiębiorczości w Polsce [ Innovation and Entrepreneurship Centres in Poland ] from As in the previous years, the majority of business incubators, namely 11, operate in Śląskie Voivodeship, followed by Mazowieckie and Dolnośląskie Voivodeships with 6 business incubators each; by Małopolskie, Łódzkie, Podkarpackie Voivodeship - 4, Lubuskie, Kujawsko-Pomorskie, Pomorskie, Świętokrzyskie and Wielkopolskie Voivodeship - 3, Opolskie Voivodeship 2, Lubelskie and Podlaskie Voivodeship 1 business incubator each. Apart from Śląskie and Mazowieckie Voivodeships, business incubators are located mainly in smaller localities and are the only centres of support for entrepreneurship, also the innovative one, in their area. Business incubators in Poland are quite diversified in terms of legal organisation. A significant number of incubators (43.5%) are commercial companies, including 28% of private limited liability companies and 15.5% of public limited liability companies. The study also distinguishes 21% of entities operating as associations and up to 22% functioning as foundations. The remaining 13.5% of the incubators are entities established as part economic self-government institutions (3.5%) and 10% are public administration budget centres. 77

78 Map 1. Business Incubators in 2012 Business incubator infrastructure Chart 2. Division of business incubators in terms of organisational structure public administration business units; public limited units; 6 2 liability companies; 9 private limited liability companies; 16 associations; 12 foundations; 13 78

79 Incubators organisational structure most often results from the character of the founders and of the partnerships established to create an incubator. In case of partnerships, the incubator usually operates as a commercial company. Local social initiatives are usually transformed into foundations and associations. Operations of the local government result most often in business incubators organised as public administration units. Of course, frequently slightly different structures are being created, e.g. incubators established as commercial companies with participation of the local government. Business incubators in Poland can still be characterised by great diversity in terms of size of floor space occupied and rented to the enterprises. On average, a typical incubator currently occupies the space of 2590 m 2 (from 506 to 9602 m 2 ) and approximately 70% of the space is rented to tenant enterprises. In 2011 space, like in the previous period, was used almost totally (99%). Currently, the incubators do not have reserves of free space at their disposal which they used to have 2 3 years ago, when several new, big units were initiated that had only begun to recruit enterprises. It should be noted that the previous year did not confirm the former decreasing trend in the number of business incubators with less than 2000 m 2 of space. According to the international standard, the space of 2000 m 2 is considered as a boundary that ensures economic self-sufficiency. In 2011, up to 48.6% of the business incubators surveyed did not exceed the space of 2000 m 2. The 2011 survey has shown that 17.5 entities on average operated in one Polish business incubator, which as a whole translates into approximately entities on a country-wide basis (enterprises, strategic tenants, other institutions). For the analytical purposes, all the incubator tenants have been divided into four categories; a new category spin-offs has been for the first time covered by the study: start-ups enterprises less than one year old at the time of entry to the incubator; university spin-offs; other small enterprises covered by all concessions and preferences; strategic tenants (paying a market rent since the entry) with an established position on the local market. 37 In the course of the survey, no operation of university spin-offs was detected, which may result both from the actual lack thereof as well as from different understanding of the term university spin-offs by the incubator managers. Last year has marked the completion of the phase of significant changes in the percentage structure of particular groups of incubator tenants. In percentage terms, a group of strategic tenants has stabilized, and currently it constitutes approximately 25% of the 37 In Poland a formula often found in the USA was adopted, namely locating in the incubators, on commercial terms, the so-called reliable payers providing the institution with stable revenue, which often cannot be ensured by the enterprises entering the market. Usually ca % of the incubator space is allotted for strategic tenants. Selection of this type of enterprises takes into account local and regional preferences in terms of industry structure development. See: K.B. Matusiak, Ośrodki [Centres ], p

80 companies hosted by incubators. The decreasing trend in the percentage share of start-ups has also been stopped and for the last 3 years these enterprises have constituted a group of between 22.6% and 28.4% of incubator tenants. In total, the enterprises account for over 95% of all tenants. The remaining 5% are foundations, associations and departments of public institutions. It seems that the current percentage structure of a statistical incubator s tenants will remain at the same level in the coming years. This type of structure undergoes only slight changes, resulting from the completion of the enterprises incubation process and from aging of the incubated enterprises. Table 1. Structure of the entities in business incubators in Categories of the 1995* 1998* 2000** entities Start-ups 67.7% 46.9% 44.3% 37.6% 41.2% 28.4% 22.6% 28.3% Other enterprises 24.5% 28.4% 31.1% 40.5% 32.2% 46.6% 37.4% 40.1% Strategic tenants % 19.1% 17.7% 21.1% 20.9% 25.8% 26.8% Other institutions 7.8% 6.5% 5.5% 4.2% 5.5% 4.1% 13.5% 4.8% In total 100% 100% 100% 100% 100% 100% 100% 100% Enterprises that left the incubators * analysis covering technology incubators which at the time were called technology centres ** analysis covering technology incubators which at the time were called technology centres and technology parks The percentage share of strategic tenants which, like in technology parks, are mature enterprises connected with the incubator for many years and ensuring its financial stability should not increase further since they may distort the target character of incubators (departing from their definition, mission and goals). Nevertheless, this share will depend on the economic situation of particular units. One-time increase of the percentage share of other institutions among the incubator tenants, observed in 2010, should be treated as a one-time deviation from the average. The incubators group mainly micro- and small enterprises. As the survey shows, nearly 90% of tenant enterprises are micro-enterprises, while only 9% are small enterprises. This is in accordance with the expectations, mainly as regards employment; microenterprises employ up to 9 persons while small enterprises up to 50. In this case the turnover criterion is not important and it usually does not influence the qualifications of enterprises in the incubator due to their initial stage of operation. 38 Pursuant to Articles of the Act of 2 July 2004 on Freedom on Economic Activity (Dz.U of 2004, No 173, item 1807, as amended), the following categories of enterprises are distinguished: a medium-sized enterprise a medium-sized enterprise is an enterprise which employs less than 250 employees and which has annual turnover lower than EUR 50 million or total annual balance lower than EUR 43 million; a small enterprise a 80

81 Table 2. Structure of the entities in business incubators in 2011 Category of the enterprise Percentage share micro-enterprises 89% small enterprises 9% medium-sized enterprises 2% In a statistical business incubator 2% of the enterprises are qualified as medium-sized. These types of enterprises are probably also the incubators strategic tenants, whereas the qualification to the group of medium-sized enterprises may equally concern the number of employees and the turnover or annual balance. The aim of the survey was also to check which industries are represented by enterprises located in business incubators. Like in technology parks, the main group of enterprises in business incubators can be qualified as representing ICT industry; statistically this group constitutes 34% of all tenants. Another, quite numerous group of enterprises represents the consultancy, advisory and training industry. Table 3. Industries represented by the business incubator tenants Type of industry % share information and communication technologies 34% Consulting 12% Design 4% Material technologies 2% Other 48% The survey has also shown that almost half of the enterprises located in incubators represent other industries than the ones listed in Table 3. These include: production, services in general, trade, architectural services, private security services, photographic services, services in the field of organisation of leisure time (e.g. language schools, organising trainings and thematic workshops, etc.). The survey aimed at defining precisely only the priority areas. Over 52% share of the priority industries indicates that in smaller localities business incubators assume the role of technology incubators to which the access is clearly more difficult. The group distinguished in the survey, due to its size, should be examined more thoroughly in the next analyses despite the fact that it does not represent the key industries. small enterprise is an enterprise which employs less than 50 employees and which has annual turnover lower than EUR 10 million or total annual balance lower than EUR 10 million; a micro-enterprise a micro-enterprise is an enterprise which employs less than 10 employees and which has annual turnover lower than EUR 2 million or total annual balance lower than EUR 2 million. 81

82 Business incubator offer Almost all of the business incubators specify the maximum period of a resident enterprise s stay on their premises. On average, it is 36 months that is 3 years - half a year less than in the previous years, when the average period of a maximum stay was 3.5 year. The period of time in which the incubators host the enterprises ranges between one and five years. Approximately 10% of the incubators point out that they do not impose any time limits on the enterprises as regards the space rental. Shortening of the average period of a maximum stay is a good signal for the future, and it reflects the orientation towards supporting enterprises at the pre-incubation and incubation stage. In this way, the stage of enterprise development will be executed in other specialised units (technology parks) or in the open market. In the course of time, the rental prices of spaces offered by the incubators become more diversified. Increased costs of building maintenance as well as completion of many new investment processes result also in putting into service incubators with higher infrastructure standard, which translates into a significant increase of the average rental prices for each type of offered space. The average cost of renting office space increased by more than 26% in the last year. The rate is influenced by factors such as: (1) type of the space (production, office, other); (2) location of the facility (agglomerations, small towns, communication accessibility); (3) standard of the facility (new, old, technical and service infrastructure); and (4) level of differentiation of the services provided to the tenants (advice, information, training, and other services). Incubators located in the bigger cities are definitely more expensive. Like in the previous period surveyed, they provide more services to their customers than the facilities located in smaller localities. 39 The renal prices range between PLN 3 and PLN 54 per m 2. Usually the level of rental prices for the space in incubators depends also on the "seniority" of the enterprise in the incubator. Enterprises operating less than one year bear the lowest costs and offered prices at the level of PLN 13.4/m 2 of office space and PLN 6.5/m 2 of production area. Enterprises operating in the incubator structure longer than a year bear, on average, the cost of ca PLN 16.7/m 2 for office space and PLN 8.9/m 2 for production area. Enterprises which have completed their incubation period or which have operated as a strategic (commercial) partner since the beginning will have to pay, on average, PLN 28.8/m 2 of office space and PLN 11/m 2 of production area. 39 M. Matusiak, Inkubatory Przedsiębiorczości [Business Incubators] [in:] K.B. Matusiak (ed.), Ośrodki Innowacji i Przedsiębiorczości w Polsce [Innovation and Entrepreneurship Centers in Poland], Report 2010, Polish Agency for Enterprise Development, Warsaw 2010, p

83 Table 4. Average price for the space rented in business incubators in (in PLN per m 2 ) At the entry After one year Commercial rate Type of space rented production office other average cost minimum rate maximum rate It should be stressed that especially the first year of the enterprise s operation in the incubator still generates much lower cost than in the case of renting commercial spaces. The average rental price for office spaces and for production areas in an incubator, depending on the region, is 33% and lower than in commercial office buildings. However, from the above table it can be seen that the existing maximum rent prices are much higher than commercial prices in office buildings. Such high level of prices may contradict the mission of business incubators, which should support start-ups by letting them floor area on preferential terms instead of supporting development of enterprises with the greatest potential. The level of rental prices is often equal to or even higher than the level of market prices, and the reasons for that include: prestige of the incubator location, rent offer coupled with a rich advisory offer, and - as a negative reason problem with settling the de minimis aid provided to the tenants in the form of lowered prices for services. In Poland business incubators carry out the pre-incubation projects, which should be one of the basic support tools for the future entrepreneurs, on quite a limited scale. Only 36% of the respondents have pointed out that such projects are carried out, but no characteristics was given. A dynamic growth of interest in business incubator services focused on starting up a business has been noted. In 2009, the average number of applications was 51, in , and in 2011 the average exceeded 135. Nevertheless, it should be noted that more than half of the respondents have pointed out that the interest in 2011 did not exceed 25 persons. The interested parties are predominantly men, constituting 85% of the group. From a statistic point of view, it is important that the group of recipients of incubator services, which in the previous years was dominated by the unemployed (more than 70% in 2009, and more than 44% in 2010), transformed into a group of persons economically inactive 40 (e.g. 40 Persons not in employment and not looking for employment. The group of persons economically inactive consists of: persons not willing to be employed despite having the capacity to take employment, elderly people (in retirement age) or persons who are in a working age but have obtained entitlements to an invalidity pension and are not going to return to the labour market. State of inactivity concerns also disabled people and 83

84 students) and employed. Currently, the unemployed account for barely 18% of business incubator customers. Incubator managers estimate that over 18% of the proposed projects involve ideas with high market potential. This is a high percentage considering that there are technology incubators and science and technology parks dedicated to advanced ideas. This increase is also correlated with an increase of interest in incubator services among young people, mainly from the group of those economically inactive. The turn of 2010 and 2011 marked an increase of interest in the services provided by incubators - from 7.6% to 13.2%. There may be several reasons for such dynamic changes, an important one being the smaller support of poviat employment offices in the form of grant aids for the unemployed. Changes in the configuration of the target groups for EU projects can also be observed, such as for example measure 6.2 of the Human Capital Operational Programme, which allows for more support for other groups of beneficiaries than just the groups of unemployed, as well as for intensification of academic entrepreneurship support measures. The majority, namely 73% of the business incubators surveyed, have in place a selection procedure for the projects to be incubated. In the context of providing services to almost all groups of potential beneficiaries is it a very high percentage, which is an element facilitating cooperation only with persons who are relatively well-prepared. In terms of management, having a selection procedure in place is a positive signal and it reflects the willingness to select the portfolio of projects for incubation properly. The incubator managers named the following as the basic elements of the selection procedure: proper preparation of an application, positive result of an internal competition, short period of operation in the market. Some business incubators perform an internal assessment of the innovation of a given idea which conditions the possibility of operating in the incubator. The process of incubation of enterprises is always enhanced with advisory and training services. However, such services involve cooperation with qualified experts from various business and business-related industries. In 50% of the cases surveyed, business incubators have their own advisory staff or partly their own staff supported by external partners. The survey did not identify incubators based only on advisory services purchased in the market. In the previous years, the package of services provided to the customers was transformed and supplemented with new solutions. One of these is the service of virtual incubation, which, on the one hand, enables the entrepreneur to use the advisory and training support and, on the other hand, does not offer space rental. The service also enables registration of business at the incubator premises, which means it has an address in a well identifiable location. However, as the survey shows, this type of service has been implemented by no more than 10% of the incubators surveyed, and the number of enterprises using the service is still slim. young people who have not begun professional career yet or have temporarily withdrawn from the labour market due to continuing their education or to the necessity of taking care of a child or family. For the purpose of Labour Force Survey (Badanie Aktywności Ekonomicznej Ludności, BAEL), persons of 15 years of age and over are accounted for in counting the number of people economically inactive. See: nieaktywni_zawodowo.html 84

85 The analysed business incubators in Poland combine key priorities, which are often independent on the local characteristics. According to the latest data, the key priorities for the incubators operation in 2011 are the following in order of priority 41 : Table 5. Operation priorities for the incubators in assisting small enterprises in development filling the prepared space with market-efficient enterprises creating new jobs ensuring economic viability of a given incubator supporting the activity of certain social groups/professions (academic researchers, 3.4 women etc.) - developing specific industries, considered as strategic for the region creating cooperation networks between science and business supporting the establishment of technology enterprises technology transfer and commercialisation 2 Year by year, the actual priorities of the incubators operation increasingly overlap with a standard definition of an incubator. While analysing the data, attention should be paid to the high rank in the assessment of, on the one hand, the aspects of the incubators mission manifested in priorities such as assisting enterprises in development or creating new jobs", and on the other hand, of the necessary pragmatism in operation, manifested in "ensuring economic viability of the incubator as both issues are equally important. As in the previous year, for analytical purposes, three groups of services provided by the incubators have been distinguished: (1) advice, information, courses, trainings; (2) technical and service infrastructure; and (3) financial assistance. The first group of services consists of the following items, provided by a percentage of incubators: Table 6. Group of services provided by incubators (advice, information, courses, trainings) Advice, information, courses, trainings regarding: entrepreneurship, starting up a business 91% 91% establishing a business plan 81% 91% finances, taxes 67% 64% access to European funds 81% 73% accounting 57% 64% business management 33% 64% human resources management ** 45% 41 Assessments were made on the basis of a five-grade rating system, where 1 is the lowest grade, and 5 is the highest. Results of the survey carried out in the previous year (2010) are given in brackets. 85

86 Cont market analysis and marketing ** 45% law 52% 36% implementation of new services and products ** 27% computers 38% 18% quality management ** 18% cooperation brokerage ** 9% internationalisation and international cooperation ** 9% technological audits ** 9% other ** 9% protection of intellectual property ** 0% ** these categories were not included in the questionnaire used for collecting data in a given year The second group of support elements consists of the following items, provided by a percentage of incubators: Table 7. Group of services provided by incubators ( technological and service infrastructure) technological and service infrastructure: copier, fax 95% 91% broadband Internet<0} 77% 91% seminar room<0} 81% 91% reception, secretarial services<0} 86% 73% computer network<0} ** 73% database access<0} 29% 18% cafeteria, bar<0} 14.3% 18% workshops/laboratories<0} ** 9% creativity centre<0} ** 0% ** these categories were not included in the questionnaire used for collecting data in a given year According to the data in this category, the services provided by the incubators most often include access to office equipment such as copier, fax, seminar room or broadband Internet which is made accessible by the incubators much more often than in the previous year. Also securing a place for integration meetings (bar, cafeteria) seems to be of more importance than in A more than 10% decrease was recorded for two items: services regarding database access and reception and secretarial services. The decrease may be explained by smaller attractiveness of those services and by their availability on the market (databases). 86

87 According to the data from 2011, in the third category (financial assistance) of services provided by the incubators the service indicated most often were local/regional loan funds. This service is provided by almost half of the respondents. Fewer, but still a significant number of incubators provide services of cooperation with business angels. Table 8. Group of services provided by incubators (assistance in obtaining financial support) assistance in obtaining financial support: local/regional loan fund 62% 45% cooperation with business angels ** 36% guarantee funds<0} 47% 18% seed capital funds<0} 15% 9% grants, subsidies<0} ** 9% credits and credit intermediation<0} 24% 9% other forms<0} ** 0% ** these categories were not included in the questionnaire used for collecting data in a given year Within the first group of services, an increasing interest of the incubators in providing complex advisory and training business related services should be noted. A significant increase in the field of establishing business plans and in generally understood business management may reflect, in the context of services provided individually, an increase in competencies of incubator staff and/or the managers looking for alternative forms of financing the current operation of an incubator. A decrease in the interest in advisory services offered by incubators as regards financing by loan funds, guarantee funds, credits or seed capital funds definitely does not prove that the entrepreneurs have stopped looking for financial resources,, but it rather shows that the entrepreneurs have a direct contact with financial institutions. A positive aspect of the operation of business incubators is their cooperation with the networks of business angels (36% of the total number of incubators offer such services) which shows that these institutions try to intermediate in the aspect of financing business activity, and they have the knowledge and partners who can provide such financing. On the other hand, the interest of the networks of business angels in business incubators reflects their potential for incubating valuable business ideas, which may find partners in the market. Putting in place project selection procedures made business incubators a reliable partner for the institutions financing innovation. Business incubator potential In 2011, the incubators surveyed allotted on average PLN 606,706.5 for their 87

88 operating activities, with significant diversity between them; the allocations ranged between PLN 50,000 and PLN 1,957, 386 (in 2009, the corresponding figures were PLN 671,424.4, PLN 38,243 and PLN 2,507,051.1). The previous year was the first one when the resources spent slightly decreased on average, and in terms of the maximum amounts spent. Like in the previous years, the majority of expenditure has been covered from the rental proceeds and from other maintenance charges (on average 78%). Last year, the rental proceeds have increased by over 7% in the average, general budget of incubators. Commercial training and advisory activities cover on average 6.4% of the business incubators' annual budget. The European grants are another source of financing of the current expenditure. In total, the financing from grants (European, regional, national, local) accounts on average for 15% of a statistical incubator budget. It should be underlined that for 20% of the incubators surveyed the Union funds constituted 86% of the institution s annual operating budget. The negative effects of such a way of financing may affect business incubators starting already in For many years, the lowest positions in the contributions to the budget used to be shareholders grants and subsidies, contributions of parent and associated scientific institutes, as well as regional grants and projects. The total support of the latter three does not exceed 0.6% of a statistical incubator budget. Chart 3. Incubator operating budget (in%) training and advisory activities 6% other 1% grants 15% rent and other charges 78% Like technology parks and technology incubators, the incubators created currently are prepared to be financially self-sufficient from the beginning of their operation. Only such an approach enables these institutions to be independent from continuous subsidies by their owners. Analysing the data from the previous years, one can observe a trend consisting of an increasing impact of the proceeds from rent and other charges on the operating budget of incubators. The impact of local or regional grants is insignificant, and has decreased by 4% throughout the statistics during the year. 88

89 Chart 4. Structure of the business incubator budget in % 80% 60% 40% 20% 0% 70% 71% 73% 78% 72% 60% 48% 48% 38% 23% 18% 18% 18% 26% 18% 21% 16% 17% 17% 12% 11% 12% 12% 10% 13% 15% 7% 7% 8% 7% 10% 5% 9% 6% 6,4% 0,6% Rent Grants Other own revenue Other contributions In the previous year, the average level of full-time employment in business incubators slightly decreased. For administrative services, there are on average 2 full-time employment positions, while statistically a professional team consists of 2.5 full-time employment positions. The largest recorded team consists of as many as 13 persons, who have been assigned with duties of 10.5 full-time employment positions. However, there are also teams consisting of 2 persons (2 full-time employment positions). In the analysis attention should be paid to an alarming proportion between the professional and administrative staff employed in these institutions. Even in larger institutions the proportion remains at the identical level despite much larger global employment in the incubator. Administration seems to be too extended, especially in larger incubators. Table 9. Average number of employees and nature of the employment in business incubators in Nature of the employment: Year: Full-time employment Barriers to operation of business incubators In successful and effective functioning of a business incubator dealing with encountered difficulties and barriers plays a significant role. Unlike the previous years, the table with data for 2011 contains several new categories; it was checked i.a. whether the legal restrictions and lack of technology transfer procedures can cause a serious problem hindering incubator s development Among 17 categories the difficulty indicated most often is a low budget and the lack of financial support, which is a problem for the majority of the incubators surveyed, followed by legal restrictions and the lack of technology transfer procedures. Next, the lack of resources for fittings and adaptation of the incubator was pointed out. For nearly half of the respondents a barrier hindering development is the lack 89

90 of partnership and business-oriented cooperation with the scientific community. The element hindering development, indicated least frequently by the respondents, is the lack of strategic development plan for the incubator. Table 10. Difficulties in and barriers to development of business incubators in * Types of difficulties: low budget and lack of financial support for development of support services legal restrictions and lack of technology transfer procedures ** ** ** 3.1 ** ** ** ** ** lack of resources for fittings and incubator adaptation lack of partnership and business-oriented cooperation with the scientific community 2.9 ** ** ** ** ** lack of support and problems in cooperation with local institutions lack of projects to commercialise 2.6 ** ** ** ** ** bad situation in the region, malaise and stagnation lack of understanding of the idea of an incubator, and unfriendly climate reluctance of the scientific community to commercialise scientific achievements ** 2.2 ** ** ** ** ** lack of persons willing to start up a business lack of market for novelty/technological products and technologies 2.2 ** ** ** ** ** faint interest in incubator services ** tight organisational framework imposed by the incubator organisers ** ** ** bad location and resultant poor accessibility black economy in the academic environment 1.5 ** ** ** ** ** lack of strategic development plan for the incubator 1.4 ** ** ** ** ** small facility, little space for rent ** ** ** ** * assessments were made on the basis of a five-grade rating system, where 1 is the lowest grade, and 5 is the highest. ** these categories were not included in the questionnaire used for collecting data in a given year For business incubators the black economy in the academic environment is not a barrier, which is directly related to a clear division of competences, visible recently, between 90

91 technology parks, technology incubators and business incubators. Business incubators usually do not have the possibility to operate in academic circles, since they are situated in smaller localities, without academic centres. It is difficult to interpret the low grading of the risk resulting from the lack of strategic development plan for the incubator. The data can be interpreted as a lack of interest in having such a strategy, which is an unnecessary tool for the incubator managers (e.g. due to the lack of possibility to expand or to change the service package). Second interpretation is that there is no barrier in this scope, due to having a strategy in place. Conclusion Data collected from the survey vary a little from those gathered in the previous years. The essential part of the values of indicators has remained unchanged. The main trends in development of these institutions and their characteristics have also been maintained in the course of the whole survey period lasting several years. In conclusion, it should be noted that: - the number of business incubators in Poland has slightly increased, - the occupancy rate has been nearly 100% for the last 2 years, - the space for rent of a statistical Polish business incubator keeps increasing, - the essential part of the business incubators proceeds for current operation comes from charges for space rental and provision of own services, - operating budget of an average Polish incubator keeps increasing, - the package of services and facilities offered to entrepreneurs by business incubators keeps increasing, - the majority of newly established business incubators are planned and created based on economic expediency and ensuring self-sufficiency. As regards the above conclusions, it can be said that the operation of incubators, which currently is largely subject to market forces, aims at professionalization and at ensuring self-financing. Increasing of infrastructural and professional potential causes some of incubators to leap in the future and will enable their operation also in the period when no external financial contributions are available. However, due to limited resources, numerous incubators will need continued support of the sponsors, without whom they will not be able to function. Among major threats to the operation of incubators, apart from a financial gap, will definitely be professionalization of other business environment institutions and mutual permeation of the area of operation, competencies and services. Advanced business environment institutions, such as science and technology parks, technology incubators or academic business incubators, capture individual business projects as well as whole target groups of originators, and will definitely continue to do so increasingly. 91

92 TECHNOLOGY TRANSFER CENTRES (Aleksander BĄKOWSKI) In today s economy knowledge becomes a resource that increasingly determines the competitiveness of enterprises. The key factor for achieving success is the creation of knowledge transfer mechanisms between the social and economic entities 42 and the mechanisms of its commercialization i.e. transformation of knowledge into innovations. The capacity to transform knowledge into new products, services, technologies, marketing methods and organisational arrangements is increasingly determining not only the competitiveness of enterprises but also regions and entire economies 43. The effective technology transfer may only take place in the process consisting of continuous interactions between people and entities creating an innovative environment 44. Hence, the activities aimed at establishing units able to initiate and carry out the process of knowledge commercialization, such as technology transfer centres. The technology transfer centres are able to efficiently and effectively support this process if they can take all the opportunities offered by innovation infrastructure (innovation, incubators and technology parks funds), i.e. the system of innovation and entrepreneurship centres. The technology transfer centres are created for selling and transferring the development work and precompetitive research results to the economy. Definition of technology transfer centres (TTC) Technology transfer centre (TTC) is a structurally diversified non-profit group of consultancy, training and information units, operating in the area of technology transfer and commercialization and dealing with all tasks related to this process. The activity of technology transfer centres operating in the field of science and business should result in the adoption of modern technologies by SMEs or establishment of new enterprises based on the latest technologies and contribute thereby to the raise of innovation and competitiveness among enterprises and regional economic structures. TTCs should operate as an intermediate between commercialization, scientific research and teaching activities at universities 45. TTCs in Poland The first TTC in Poland was established in 1995 and named Wroclaw Centre for Technology Transfer of the Wroclaw University of Technology. Since then, there has been a steady increase in the number of TTCs. A dynamic growth of consultancy, training and information units, operating in the area of technology transfer and commercialization and 42 J.G.Wissema, Technostarterzy: dlaczego i jak, Polish Agency for Enterprise Development, Warsaw, K.B. Matusiak (ed.), Ośrodki innowacji i przedsiębiorczości w Polsce, Polish Agency for Enterprise Development, Warsaw, K. Santarek (ed.), Transfer technologii z uczelni do biznesu: tworzenie mechanizmów transferu technologii, Polish Agency for Enterprise Development, Warsaw, K.B. Matusiak (ed.), Innowacje i transfer technologii, Słownik pojęć, Warsaw

93 called technology transfer centres took place in the period , when there number was doubled. It was undoubtedly related to the launch of support programmes for commercialization of scientific research results under the first programming period of Structural Funds Another significant increase in the number of centres took place in 2007 and was primarily followed establishment of the centres in the whole country under the project Innovation Centres Network of Polish Federation of Engineering Associations financed from the Structural Funds 46, which resulted in establishment of 35 technology transfer centres based on the regional Engineering Associations. The centres established by the Polish Federation of Engineering Associations aimed at fostering the implementation of innovation in SMEs. In its report, the Polish Business and Innovation Centres Association identified 34 such centres in However, innovation centres of the Polish Federation of Engineering Associations changed their line of business after Currently, none of them operate as TTC 47. This results in a decline of TTC number in Most TTCs functioned in 2010 as there were 90 centres then. In the mid-2012 the number of TTCs amounted to 69. Chart 1. The number of Polish TTCs in Establishment and development of TTCs depends on the proximity of scientific environment that is ready to transfer its achievements to the economy. In 2012, out of 69 identified TTCs, 59.4 % operated under scientific units 48. The TTCs considered can be divided into 2 subgroups: academic TTCs, operating at universities or as separate legal entities established by or dependent on the university and 46 Sectoral Operational Programme Improvement of the Competitiveness of Enterprises Information about termination of the activity in this field was obtained by telephone from the head office of Polish Federation of Engineering Associations in Warsaw and it was also confirmed by the employees of regional associations, with whom people collecting data have contacted. 48 Within the meaning of the Law on Education Financing Rules of 10 April 2010 (Dz. U. [Journal of Laws] of 2010, No 96, item 615). 93

94 TTC not directly associated with the universities. Academic TTCs account for 49.3 % of all TTCs. Map 1. Technology transfer centres in Most Polish technology transfer centres operate in Krakow (9), Warsaw (8), Poznań (8) and Łódź (5). Most academic TTCs operate in Krakow (5) and Łódź (4). Table 1. The number of TTCs by the organizational form in Specification: Scientific institution units Foundations and associations Companies Other Innovation centres of Polish Federation of Engineering Associations Total* Including academic centres (academic units) Including park and incubator centres

95 * - with the exception of Innovation Centres of the Polish Federation of Engineering Associations TTC structure and organisation In 2010, out of 56 functioning TTCs % operated in the scientific units and 37.5 % operated at the universities (academic technology transfer centres) In 2012, after the stabilisation period , the number of TTCs within universities has significantly increased. As for the organizational and legal aspects the TTCs in the scientific units constitute the largest group (59.4 %). The second group consists of separate entities: foundations and associations (17.4 %) as well as commercial companies (14.5 %) and other entities 50 (8.7 %). In the last three groups the number of entities remains virtually the same in the period The number of TTCs operating under technology parks and incubators also did not change. Chart 2. Organisational assignment of TTCs in 2012 (in %) Joint stock companies and limited liability companies 14,5% Other 8,7% Foundations and associations 17,4% Scientific institution units 59,4% TTCs in the scientific units operate in the organisational formula of the department, office or team highly placed in the scientific unit hierarchy and directly subordinate to the director, rector and prorector. These units have no legal personality. Most of them have also consultancy bodies such as supervisory, programme and consultative boards TTCs that operate as independent entities report to the statutory authorities of the organisation. There is one TTC operating as a company that is controlled by the Chancellor of the university. 49 * - with the exception of Centres of the Polish Federation of Engineering Associations 50 Other organisational and legal forms include chambers of commerce, innovation and rationalisation clubs and consortia. 95

96 This survey involved 38 centres of this type (55.1 % of all TTCs), including two at starting phase and two TTCs at the organisational phase. The academic TTCs accounted for 86.8 % of the centres surveyed % of academic TTCs are constituted as the administrative department of the university. The rest includes the separate legal entities operating as limited liability companies or foundations. It is characteristic that the number of academic TTCs operating as companies is not increasing. Although it is commonly believed that commercial companies professionally dealing with the technology commercialization operate more effectively. In addition, there are appropriate legal regulations allowing scientific units, especially the universities, to establish new companies. In this case too much risk associated with the establishment of such entity by a scientific unit can be identified as an obstacle. The academic TTCs form an element of the university structure of technology transfer and commercialization of scientific research results. The universities usually consist of various entities that along with academic TTCs are responsible for cooperation with the industry, protection of intellectual property and commercialization. With regard to protection of intellectual property, the academic TTCs indicated the office of patent agent or other departments which deal with this subject. In the area of cooperation with industry, apart from the academic TTCs there are various university structures which are active in this field, ranging from the structures reporting, for example, to the prorector for contacts with economy or prorector for education, through advanced technology centres, interdepartmental research centres and career centres to academic innovation and entrepreneurship centres, such as pre-incubators and technology incubators as well as technology transfer departments and innovation centres. Advanced technology centres, inter-departmental research centres and academic innovation and entrepreneurship centres also perform tasks in the area of technology commercialization. Many universities have separate organisational units which specialize in specific areas of technology transfer. These are usually the units operating inside the organizational structure of the university and external units operating as separate legal entities. The aims of TTC The performance of tasks in the area of technology transfer and commercialization of research results is dispersed and uncoordinated. There is no explicit division of responsibilities of particular academic centres dealing in this subject and this is why they often overlap each other. It does not improve the efficiency of undertaken activities. Nevertheless, the academic TTCs have good opinion of the cooperation with the university staff and administration. The major aim of technology transfer centres is broadly understood knowledge exploitation and commercialization. 96

97 Chart 3. Aims of TTCs (by number of responses 51 ) Other EU funds Development of enterprises International cooperation Research support Use of intellectual potential Information, consultancy, trainings Establishing cooperation with business Start-ups assistance Promotion of scientific achievements Intellectual property management Technology transfer and commercialization The main aims of TTCs include: technology commercialization and transfer (technology transfer to the economy, commercialization of scientific research results, contacts with enterprises for technology transfer, establishment of university technology transfer system) as well as intellectual property management (protection of scientific research results, patent clearance, licensing and implementation agreements). In addition, three main aims usually include: entrepreneurship support, promotion of scientific research results and the establishment of cooperation with business. The category other includes aims such as raising regional competitiveness and innovation, enhancing business cooperation in clusters, specialist expert opinions. TTCs focus mainly on the transfer and commercialization of new technologies as well as technology and patent consultancy. These activities consume 30 % of their working time. Furthermore, they devote 13.4 % of time for promotion of scientific achievements with regard to their commercialization. Protection of intellectual property (10.5 %) and consultancy services for SMEs (10.3 %) also play a significant role in the academic TTCs activity. All these activities are typical for the area of technology transfer. The structure by type of TTC activity is consistent with the above-mentioned aims. 51 Based on replies of 38 centres that could indicate no more than 3 the most important aims. 97

98 Chart 4. Structure of activity according to the working time in 2012 (in %) Assistance in establishing an enterprise; 6,20% Information about EU programmes; 8,50% Other; 10,30% Technology transfer and commercialization ; 30% Preparing a grant application; 9,60% Consultancy and trainings for large enterprises; 1,10% Consultancy and trainings for SMEs; 10,30% Protection of intellectual property; 10,50% Promotion of scientific achievements; 13,40% The generic structure of TTC activity explicitly shows the tendency to spend more time on core activities related to technology transfer and protection of intellectual property. What is more, TTCs spend more time on providing support for the establishment of new enterprises and the subject of entrepreneurship. Recently, the importance of training and consultancy services for SMEs has significantly declined in the TTCs activity. This is caused also by a large number of academic TTCs in the TTC structure. The changes observed are typical for this subgroup 52. Preparation of project applications also constitutes a significant aspect of the TTC activity. However, compared to the previous years, this activity is less important in the operation structure of TTCs. Table 2. Changes in the generic structure of TTCs activity according to the working time in (in %) technology transfer and commercialization, technology and patent advice promotion of local scientific environment achievements protection of intellectual property Consultancy and trainings for SMEs preparing grant applications providing information about EU programmes A.Bąkowski, E.Dąbrowska, K.B.Matusiak, M.Mażewska, Akademickie Ośrodki Innowacji, Polish Business and Innovation Centres Association, Warsaw,

99 Cont assistance in establishing and functioning the start-ups Consultancy and trainings for large enterprises. Other TTC potential and infrastructure On the average 9 persons are employed on full-time basis and 14 people have mandate contracts and task-specific contracts. In addition, there is a huge employment diversification: from 1 person to 26 persons in the group of full-time employees and from 0 to 58 in the group of people having mandate contracts and task-specific contracts. The median of full-time employment does not differ from the average and amounts to 7 persons. However, the median of employment on civil-law contract basis is significantly below the average and amounts to 6 persons (for the centres employing such persons). This difference is due to the fact that 2 centres have employed 108 people on civil-law contract basis. Centres where there are 10 or more full-time employees account for 41.7 % in the group surveyed. For comparison, according to the report Innovation and Entrepreneurship Centres in Poland Report 2010 technology transfer centre employed on average 8 full-time employees and additional 17 employees on mandate contract basis. Full-time employment has slightly increased compared to 2010 while the number of persons employed on civil-law contract basis has decreased. Table 3. Selected characteristics of TTC in The number of centres Area in m Full-time employment Consultants, advisors and instructors (mandate contracts)

100 Cont The centre budget (in PLN)*, including own income (w %) The number of customers * data presented concern the previous, full reporting year The average office surface area of TTCs amounted to 162m 2 in 2012 with the large diversification ranging between 13 and 900m 2. The median is slightly less than the average and amounts to approximately 151 m 2. This is the area mostly for offices and consultants rooms. Almost all centres have access to the basic office infrastructure (fax, copier, telephone) and computer networks (94.4 %) as well as broadband Internet (69.4 %). What is more, 77.8 % of surveyed have access to databases and conference/seminar rooms. Some centres have their own seminar facilities, other centres declare to have access to the infrastructure of the parent unit - this mainly the case of the university centres. Access to the laboratories and workshops is still limited. Only 25 % of respondents mention such possibilities. As every tenth centre indicated such possibilities in 2010 it seems that there has been a progress since then. The average annual budget of TTC amounts to approximately PLN (from 120 thousand to 4 million). The median is at a slightly lower level and amounts PLN This is so because three centres have budgets ranging between PLN 3.5 and 4 million which considerably exceed budgets of other centres. Compared to the previous survey (data as of end of 2009) the average budget of TTC has significantly increased - by about 71.1 % over the period of last two years. Grants and projects (66.3 %) are the most important sources of funding. Contributions of the parent institution, generally at the level of to 21.5 %, are also a very important financing source. Proceeds from the centre own activity account only for 9.5 % of budget. Chart 5. Financing structure of TTCs in 2011 (in %) Contribution of the parent institution 22% Own income 9% Other external contributions 3% Regional grants and projects 1% Domestic grants and projects 47% European grants and projects 18% 100

101 Compared to the situation of TTC as on the end of 2009, it can be found that own proceeds have significantly decreased (from 24.5 % to 9.5 %), while the contribution of the parent institution has increased (from 8.9 % to 21.5 %). Chart 6. Own income in TTC financing in (in %) ,3 24,1 24,5 9, Despite a 70 % increase of the TTC average budget in this period, the proceeds from centre own activity have declined not only as a percentage of the financing structure but also in terms of absolute value. About 50 % of centres surveyed have no income from their own activity or such income is marginal, i.e. below 2 % of the budget. Only 25 % of centres have their own proceeds in excess of 10 % of total budget. For TTCs with the highest revenue it ranges between 30 and 40 % of their budget. Similarly, income derived from projects implementation remain at the same level in the financing structure. In 2011 they accounted for 66.8 % of the financing structure, compared to 66.9 % in The relations among the projects financed from regional, European and national sources have changed in favour of the latter. Implementation of projects financed from the public funds is the main source of TTC financing. The change in financing structure of TTCs, in relation to the previous years, consists in the significant increase of the financing level of the parent institution and a dramatic decline in income derived from own activity. Thus, TTCs are financed almost in 90 % from the public funds. Own income, especially derived from training and consultancy services, dropped to the lowest level in 7 years. Therefore, TTC activity is becoming more and more dependent on the public funds. 101

102 Table 4. Financing structure of the TTC ongoing activities in Specification: Budget (in PLN thousand) and in % proceeds from training activities proceeds from consultancy activities other own income European grants and projects domestic grants and projects regional/local grants and projects shareholders contributions, grants and subsidies other external contributions TTC own revenue comes from the conducted trainings (training activities), advice (consultancy activities) and other sources. Other sources of revenue include sale of licences, contracts for commercial orders, leasing. Own revenue derived from other sources account for 5 % of financing structure and is the largest value of own proceeds. Revenue derived from consultancy and training activities account for 2.3 % and 2.2 % of the budget, respectively. Other external contributions account for to 2.7 % of the budget. Large enterprises and public administration are usually indicated as the main sources. Chart 7. Structure of TTC services according to the number of customers in 2011 ( in %) TTC offer Advice 11% Other 6% Trainings 40% Information 43% Most customers make use of information and training services. A decreasing trend of customers using information services observed in the previous years has been halted. The 102

103 number of customers making use of consultancy services with high added value still remains relatively low. Table 5. Structure of TTC customers according to service types in (in %) Specification: Trainings Information Advice Other TTCs increasingly concentrate their activity on the areas related to the technology transfer at the expense of other activities. This phenomenon is the result of progressive professionalization of offer implemented by a team of experts gathered in TTC. They offer trainings, advice and information primarily under projects financed from public funds, in which they participate. Only few services are provided according to the market economy principles. Table 6. The subject of courses and trainings conducted in TTC in (in %) Specification: protection of intellectual property * * entrepreneurship and establishing enterprises access to the EU funding business plan implementation of new products and technologies quality management market research and marketing internationalisation and international cooperation business management HR management legal technological audit * * * finances and taxes cooperation mediation book keeping and accountancy IT, computers * the survey did not include this category in the cafeteria-like checklist. 103

104 TCC training activity focuses on two basic topics related to the technology transfer: protection of intellectual property and entrepreneurship. Most TTCs deliver trainings of this type. Trainings of other types are offered by a much smaller number of TTCs and remain at a slightly lower level than in previous years. The number of trainings related to aid fund acquisition was significantly reduced. Priorities covering information services include consultancy and training services. They explicitly focus on the basic aspects of technology transfer: entrepreneurship, protection of intellectual property and implementation of new technologies. Along with depletion of subsidies from the European funds, the consultancy and information services for preparation of grant applications and information about funding opportunities under the European programmes have lost their primacy over the technology transfer services. There has been also a significant increase in services related to the protection of intellectual property. Table 7. Thematic scope of consultancy services in TTC over the period of (in %) Specification: entrepreneurship and establishing enterprises implementation of new products and technologies protection of intellectual property * * access to the EU funding internationalisation and international cooperation devising business plan technological audit * * * cooperation mediation market research and marketing business management legal quality management HR management * finances and taxes accounting IT, computers * the survey did not include this category in the list of possible answers in a given year TTCs provide more information and consultancy services in the internationalisation area. There was a significant increase compared to 2010 in this respect. The importance of services in the field of technological audit increased as well. This may indicate the progressive thematic specialisation of TTCs. 104

105 More than 60 % of TTCs under survey operate in the specific thematic areas. The most frequently indicated areas of technological specialisation (according to the frequency of responses) are as follows: life science, including medicine, biotechnology, chemistry, environment protection, ecotechnologies, agri-food sector, energy, materials engineering, production engineering. TTCs are still paying little attention to the implementation phase of technology transfer and this is reflected by its low position in the service catalogue: market research, technology testing and prototyping, business management. On the other hand, these services and services related to business operation (for example legal, taxes and finances, HR management) are increasingly provided by TTCs compared to the previous years. Table 8. Thematic scope of TTC information offer over the period of (in %) Specification: entrepreneurship and establishing enterprises protection of intellectual property * * access to the EU funding implementation of new products and technologies internationalisation and international cooperation devising business plan technological audit * * * cooperation mediation legal market research and marketing business management accounting finances and taxes quality management IT, computers * the survey did not include this category in the list of possible answers in a given year. Pro-innovation services such as creation of technology enterprise, implementation of new services and products as well as protection of intellectual property, have been placed at the TTC service catalogue. The significance of two other pro-innovation services such as 105

106 internationalization and technological audit has also increased. Some TTCs offer also mentoring service. Ten centres surveyed (14 %) declare that their offer includes mentoring services which are understood as individual support and strategic advice for entrepreneur provided by the experienced business practitioner. TTCs provided a number of pro-innovation services within the contracts with customers covering at least one of these services. Such contracts were carried out by 85 % TTCs. Chart 8. Pro-innovation services provided by TTCs in 2011 Implementation of technologies (contracts) Advice on the implementation of technologies 38% 44% Ass. in negotiations and R&D agreements Advice on IPR for the enterprises 63% 69% Technology assessment and evaluation 44% Defining the object of transfer 56% Networking Searching for tech. on behalf of the enterprises Preparing an offer or request for technology 81% 81% 81% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% The availability of dedicated financial support offered by TCCs for innovation projects and establishment of technology enterprises is still not satisfactory. Only 60 % of TTCs offer assistance in accessing funding. They provide support in obtaining seed capital and venture capital (14.3 %), and business angels capital (22.9 %). Most centres provide assistance in obtaining subsidies and grants (28.6 %). However, a decline has been observed, since 43 % of TTC offered assistance in obtaining that kind of financing in The centres still do not fully benefit from the opportunities of cooperation with loan funds and institutions which award loans or local guarantees (8.6 %). In case of a dynamic development of the institutions which provide financing of innovative ventures such cooperation will certainly improve. Similarly, the number of special funds at the universities cooperating closely with TTCs will also grow. Regulations and procedures for technology protection and commercialisation A growing number of universities implement their own regulations which govern the management of copyright and related rights as well as industrial property rights. Such 106

107 regulations were implemented by 50 % of TTCs surveyed. It is an important tool for their operation. In addition to regulations, special procedures related to protection of copyright, related rights and industrial property rights are implemented. Such procedures are implemented by 50 % of TTCs surveyed. Regulations do not always include procedures and in some cases procedures replace regulations. In total regulations and/or procedures are used by 62.5 % of TTCs. The half of TTCs have ISO 9000 or 9001 certificate. The rules concerning commercialisation of research results and development work at universities are the most problematic. Only two TTCs refer to Regulations for protection, use and commercialisation of intellectual property. Almost every third TTC declares that it has another type of regulation in this area. The most effective TTCs have developed and implemented some procedures related to the technology transfer and research commercialisation. These procedures are developed for internal use, based on the given centre practice and do not form a set of procedures that describe processes of technology transfer and commercialisation. There are no standard procedures concerning the commercialisation process of scientific research results. Failure to implement regulations for protection of intellectual property, especially procedures concerning technology transfer processes is considered a major obstacle to the efficient operation of TTC. Implementation of procedures for provision of services is a prerequisite for a professional delivery of such services. Their development requires horizontal cooperation and exchange of experience between the centres. The operation outputs The main objective of TTC is to commercialise know-how generated in scientific environment and to build links between science and economy. Most TTCs place particular emphasis on the commercialisation of know-how through the establishment of new enterprises. Entrepreneurship and creation new enterprises take the first place among the services provided. Many academic TTCs are implementing pre-incubation programmes and some of them also have incubators. As a result of this activity 71 enterprises were created in total. These enterprises were established by academic TTCs and TTCs located in parks and incubators. On average, one such TTC has established 4 enterprises. In quantitative terms the average centre achieved the following outcomes in 2011: 3.7 technologies commercialised, 12.9 patent applications to the Polish Patent Office submitted, 1.6 patent applications to the European Patent Office (EPO) submitted, 1 trademark obtained, 0.6 utility models obtained, 2.75 business plans developed, 8.4 grant applications prepared, 107

108 support for 4.7 business project conducted with TTCs received, support for 3.6 scientific and research project prepared with TTCs received. The outcomes achieved by TTCs in 2011 are almost 2 times higher than in The outcomes achieved by TTCs are, however, very diversified. Only the group of the most efficient TTCs achieves good outcomes 50 % of centres surveyed achieve almost 90 % of all outcomes. TTC customers The average number of customers of one TTC amounted to 702 people in 2011 and remained at the similar level over the period of the last few years, i.e. within the limits of: persons making use of TTC services per year. Customers from academic environment, i.e. academic researchers, students and PhD students constitute the largest group (60.9 %) of TTC customers. The owners and managers of enterprises as well as SMEs employees form a significantly smaller group of customers (18.8 %). This implies that very important changes occur in the TTC customer structure compared to previous years when the managers and SME employees constituted the largest group of recipients that included about half of TTC customers. In addition, there has been a significant increase in the number of students and start-ups using TTC services. In previous years the group of start-ups constituted less than 10 % of customers. In 2011 it exceeded 15 %. It is clearly seen that academic TTCs are dominating among TTCs, as they focused mainly on the academic environment and very often play the role of pre-incubators supporting the academic entrepreneurship and establishing new enterprises based on solutions developed at universities. Chart 9. Structure of customers making use of the TTC services in 2011 ( in %) SME employees 5,10% Owners and managers of SMEs 13,70% Public administration 3,10% Other 1,90% Academic researchers 29,60% Start-ups 15,30% Students 19,80% PhD students 11,50% 108

109 The group other customers includes the employees of other business environment institutions. It may be a proof of a beginning of horizontal cooperation between business environment institutions. Table 9. Structure of TTC customers in Specification: total Including in %: academic researchers students doctoral students owners and managers of SMEs SME employees start-ups public officials other Cooperation On the average, one TTC declares permanent cooperation with 94 enterprises (the median 29), mainly with the local SMEs. The term cooperating enterprises means in practice enterprises which the centre contacts at various occasions. 11% cooperating enterprises run scientific and research activity. The average number of cooperating enterprises (90 enterprises) and the percentage of cooperating enterprises running R&D activity (9 %) have not changed compared to TTCs closely cooperate with enterprises, which have signed letters of intent (only 5 % of all cooperating enterprises), customers (44.8 %), participants in joint projects (15.8 %) and participants in joint undertakings (15 %). TTCs highly value cooperation with scientific units (3.9 on a five-point scale) and the atmosphere around the centre (3.8 on a five-point scale). TTCs participate in the activities of domestic and international networks. The Enterprise Europe Network, Proton Europe, KSU/KSI, KIGNET and the cooperation with the Polish Business and Innovation Centres Associations and clusters are the most popular. In addition, the university TTCs have cooperation agreements with foreign universities. Barriers to TTC operation All development barriers are less significant in 2012 compared to the previous survey. This should be considered conducive to the development of TTC. The major 2010 barrier, i.e. lack of projects for commercialisation, has become less severe, however it is still one of top 5. The TTC leaders also count reluctance of scientific environment to the commercialisation and cooperation with business, little interest in creating technology enterprises and complex legal procedures related to the technology transfer and 109

110 commercialisation among major development barriers. The latter seems to be a key factor. It is related to the obstacles encountered by TTCs in the comprehensive implementation of technology transfer projects that require specialist knowledge in many fields. TTCs do not have experts or are not able to pay for the relevant external services. In addition, they did not implement and use effective procedures. In 2012, for the first time they raised an issue concerning the image barrier of TTC activity. Misunderstanding of the centre idea and functions was on the sixth place of the ranking of barriers. This barrier is probably a result of a diversified character of TTCs as well as of the tasks or a number of teams operating at universities and performing related tasks, so that the potential customers are confused. Table 10. Development barriers of TTCs in Poland in * Specification: reluctance of the scientific community to the commercialisation of cooperation with business little interest in creating technology enterprises complex legal procedures related to the technology transfer and commercialisation lack of projects for commercialisation low budget, lack of financial support misunderstanding of the centre idea and functions ** ** ** ** 2.6 lack of market for modern/technological products and technologies ** ** poor economic situation in the region, stagnation little interest of business in the centre offer shadow economy in consultancy services, commercialisation and technological services legal constraints and lack of technology transfer procedures problems in cooperation with local and regional institutions *assessments were made with the use of the five-point scale, where 1 means the lowest grade, and 5 the highest. **the survey did not include this category in the list of possible answers in a given year. 110

111 Plans and development trends As the main future goal TTCs indicate: the implementation of a comprehensive technology transfer system in the parent institutions, the implementation of the intellectual property management system and the implementation of technology evaluation procedures. TTCs intend to continue the technology transfer activities and limit any activities that are not related to the mainstream of their activities. This will require further professionalization of services, including raising the staff competence and introducing new pro-innovation services such as development of commercial services portfolio. In addition, they plan to: - increase efficiency and indicators, such as the number of licences and the number of new spin-offs, and - develop premises which would allow to launch the academic incubator. TTCs plan the following development trends: - professionalization of services by strengthening the human potential of TTC, improving the employees competence and implementing technology transfer supporting tools, - integration of technology transfer services: combining TTC functions with pre-incubation, incubation and seed funding, - raising awareness of the possibilities offered by TTCs among the researchers (academic entrepreneurship and commercialisation processes), - developing activity in the field of academic entrepreneurship and creation of start-ups, - strengthening external contacts with entrepreneurs and introducing a system of customer needs identification, - strengthening its position in the region by strengthening contacts and cooperation with local authorities, - developing national network of contacts with business environment institutions and international networks, - introducing new pro-innovation services, including monitoring, technology broker, the enterprise operating in the foreign markets, - establishing special purpose entities to perform tasks of TTCs. The present assessment shows that TTC performance is still unsatisfactory, although compared to 2009 there was a twofold increase of almost all indicators related to performance outcomes. TTC is significantly changing its line of business, which will influence its future functioning. Primarily, the number of academic TTCs is increasing. It is likely that this trend will intensify in the future. Academic TTCs being directly in touch with the scientific environment seem to have the best prospects for development in future. 111

112 The financing structure of TTC is also changing. The role of financing from the parent institution is growing, while the own revenue is decreasing. TTCs would not be able to operate without funds from the public programmes of technology transfer and entrepreneurship development. Although TTCs are dependent on public funds, they are able to perform their fundamental tasks covering knowledge commercialisation. Paying greater attention to self-financing by the increase of own income will lead to commercial services provision that do not necessarily contribute to the execution of TTC objectives. Especially when TTCs are dominated by academic TTCs operating at universities, their market possibilities will be inevitably limited. It is expected that the vast majority of academic TTCs will be still operating at universities. Some of them are planning to establish a special purpose entity. It seems that this process will continue and the number of TTCs operating as commercial companies will be growing. The improvement of TTC operation will require: stabilisation of staff and the staff competence improvement. TTC activity requires special knowledge, including practical knowledge. Therefore, mutual learning through the exchange of experience between employees from different centres and practitioners seems more effective. providing stable financing of TTC core activities, developing procedures for technology transfer processes (covering various stages of technology commercialisation) and their implementation in TTCs with the procedures related to intellectual property management. The introduction of transparent procedures should have a positive impact on motivating customers to cooperate with TTCs, as well as on the creation of positive image of TTCs and should contribute to the reduction of main barriers and foster the development of the best TTCs, monitoring and periodic evaluation of TTC activity by introducing appropriate uniform system for all TTCs. conducting surveys concerning customers needs and introducing new pro-innovation services that meet their expectations. TTCs recognise this need and will certainly make efforts in this direction. So far, the survey concerns rather customers satisfaction from TTC services than their needs, Integrating within TTCs the technology transfer activities with pre-incubation and if possible with incubation of new technology enterprises and seed funding. This tendency is increasing and certainly it will foster the TTC development. TTC is a very diversified community. One group consists of strong and well-developed entities with stable budget that employ several people and achieve visible results. These centres have a high potential for development. Their development strategy should be based on introducing principles mentioned above. The second group consists of weak entities that incidentally conduct their statutory activity based usually on project base, have low budget 112

113 and employ few people. This group can be estimated at about 40 % of all TTCs. Those TTCs are not able to independently implement the above-mentioned recommendations. The development strategy of this group should include learning from more advanced centres and introducing solutions already implemented and checked by other centres. 113

114 SEED CAPITAL FUNDS (Karol LITYŃSKI) Introduction Seed capital funds (SCF) are high risk financial instruments (venture capital). They provide capital to originators or new entrepreneurs in exchange for shares in a company established to commercialise the given solution. As opposed to a credit or loan granted by a bank, when SCF contributes financially to a venture it neither requires an originator to provide a security deposit nor to have reliability implied by the fact of running a business for many years. In exchange for the capital invested the fund takes a significant (often the majority) share in the company and has financial control of its operations, while its representatives in the company board have decisive influence on the venture management process. SCF investments represent a financial mechanism that provides new innovative entrepreneurs with working capital which is practically inaccessible in such an amount elsewhere. Principles of the SCFs Seed capital funds are entities which deal with professional investments. They provide rather small amounts (up to EUR 1 million) to be invested in projects at a very early stage of development seed phase and start-up phase. The main aim of investment for the seed capital fund is to achieve a dynamic growth of the market value and development of the entity established. Seed capital offered by SCFs is usually designed for construction of a product prototype, initial market research, preparation of a solid business plan in order to find another source of financing (second round), and subsequently for implementation of the venture. 53 SCFs are very specific about securing intellectual property right to the solution commercialised, so that they may obtain exclusive rights to solutions used by the company. Thus, the money invested by SCF includes the costs of patent procedure and implementation costs of the venture. The funds commit themselves only to innovative ventures with a high rate of return, which additionally have to secure the possibility to exit the company in a specific moment when the venture reaches the intended indicators. The capital is transferred to the company in tranches after the company management board completes certain tasks specified in the investment agreement (mile stones). Such SCF operations should be considered as intended to increase effectiveness of the technology transfer and commercialisation process. After the investment target related to the venture development and increase in its value is reached the SCF withdraws from the company and resells its shares (divestment). The shares may be purchased by another investor interested in further company development and in increasing its value, professional investor or members of the 53 P. Głodek, Fundusz kapitału zalążkowego, [in:] K.B. Matusiak (ed.), Innowacje i transfer technologii, Słownik pojęć, Polish Agency for Enterprise Development, Warsaw 2008, p

115 existing company management board. Exiting from the company through the sale of shares at the stock exchange is another option which usually requires the company to be transformed into a joint stock company. Contrary to the banks, SCFs offer interest-free capital which additionally helps the company to maintain liquidity in fast developing ventures 54, which for a long period of time will not be able to generate necessary income. The funds may offer long-term share capital usually invested for the period of 3 7 years. The survey shows that equity capital of the SCF is funded mainly with public money. Other shareholders include other capital funds, entrepreneurs and natural persons. Recently, the seed capital funds are established mainly in large economic centres distinguished by a strong position of the academic circles. In search of interesting investment projects the SCFs have increased cooperation with scientific institutions choosing them as a source of projects at the initial stage of development. The observed shift of SCF s interest towards projects that are at the research stage increases the risk of the investment decisions and may be caused by lack of a sufficient number of projects with appropriate market potential compared to the investment capabilities of SCF. Consequently, there is an increasing interest in cooperation of the funds with innovative entrepreneurs, including the university spin-offs and spin-outs as well as scientific institutions. Unfavourable legal arrangements in the area of commercialisation of the results of research conducted by scientific institutions are still a problem and the applicable legislation definitely discourages them from holding shares in companies which implement innovative solutions. Another barrier to SCF commitment to projects which require further research is a high level of operating expenses of SCF compared to the capital invested. Expenditure on search for and evaluation of an investment project is comparable to large equity investments at the stage of expansion, and the amount invested by the SCF is much lower and entails much greater risk of failure. Therefore, the SCFs have to take into account a larger share of investments which fail, despite intensive engagement of the staff carrying out particular projects. A way to address the problem of raising capital by start-up companies is to initiate government support for the investments of SCF at the initial phase of the project development. This consists in recapitalisation of SCFs with public money (National Capital Fund) or entrusting them with management of capital based on public money (Measure 3.1 of the Operational Programme Innovative Economy (3.1 OP-IE)). 54 K.B. Matusiak, Ośrodki innowacji i przedsiębiorczości w Polsce, Report 2007, Polish Business and Innovation Centres Association, Łódź Kielce Poznań 2007, p

116 History of the SCFs in Poland First initiatives intended to create SCFs in Poland emerged in 2005 under Sectoral Operational Programme Improvement of the Competitiveness of Enterprises (sub-measure Support for establishing seed capital funds). The programme essence consisted in returnable co-funding granted by the Polish Agency for Enterprise Development from the European Regional Development Fund and from the state budget. Currently, Measure 3.1 OP-IE is one of the main funding mechanisms for SCF. The programme is designed for business environment institutions (BEI) which provide capital for innovative ventures and are experienced in technology commercialisation services. The programme provides for twostage support for the originators. At the first stage, the projects that are the most promising in terms of market prospects participate in a pre-incubation programme which is to confirm technical excellence and innovation of the solution (proof of concept). The best projects with the greatest market potential are presented to the capital investors. Within the framework of the programme BEI establishes a company with the author of the idea and possibly with an external capital investor. For this purpose BEI receives funds from the Polish Agency for Enterprise Development to acquire less than 50% of the shares in the company established, and the maximum recapitalisation for one venture from the project public money corresponds to EUR The remaining shares have to be held by private investors. The originator also may become a shareholder of the company established in return for the contributed capital or contribution in the form of intellectual property rights. The programme implementation resulted in the selected BEI starting to function as preincubators and SCFs. Funds obtained from divestment are designed for subsequent SCF capital entries. Measure 3.2 OP-IE implemented by the National Capital Fund (NCF) is the second programme focused on support for venture capital funds investing in innovative ventures. This institution, which is a 100% subsidiary of Bank Gospodarstwa Krajowego, takes over 50% of shares in the venture capital funds selected in the process of negotiations, which declare investments in the SME innovative ventures, with particular focus on innovative entrepreneurs pursuing research and development activity and those with the greatest development potential. 55 Additionally, NCF obtained funds from the so-called Swiss fund. 56 So far, NCF has recapitalised 13 venture capital funds with the amount between EUR million Swiss-Polish Cooperation Programme, that is the so-called Swiss fund, is a form of non-returnable international aid granted by Switzerland to Poland and 9 other countries that joined the European Union on 1 May On the basis of the international agreements signed, more than CHF 1 billion was made available for the ten new Member States. The contribution to Poland amounts to nearly half of the funds (ca. CHF 489 million)

117 This way the aid schemes contributed to the establishment of a whole network of seed capital funds, among which 44 entities have been identified. This is not an exhaustive list of SCFs, as some of them are not aid schemes beneficiaries. Seed capital of the SCFs The investment capital owned by SCFs in Poland is very diversified (between PLN several hundred thousand and PLN 100 million). The average value of capital available to SCF in Poland amounts to ca. PLN 10 million. This amount is sufficient to carry out investment at the seed phase, especially in the industries which do not require expensive tooling. SCFs acquire between 25 51% of shares in the companies established. The surveys show that they acquire ca. 40% of the shares on the average, usually as a minority shareholder. Despite the minority shareholding the SCFs secure themselves the influence on decisions regarding direction, way and pace of the venture development. The average amount of funds invested by the SCF in one venture ranges from PLN 300 thousand to PLN 2.5 million. Such a wide range in the investment results from significant differences in the capital intensity of the ventures developed, which include IT projects (relatively low expenditure), on the one hand, and other technological projects which require purchasing expensive equipment and specialist infrastructure from the outset, on the other hand. Regional distribution of the SCFs The surveys identified 68 SCFs, two thirds of which have been established under the measure 3.1 OP-IE. Regional distribution of the registered companies clearly shows two main regions in terms of the number of operational SCFs (Mazowieckie 25 and Małopolskie 12) and three associated centres (Śląskie 5, Pomorskie 4 and Wielkopolskie 7), in the remaining six voivodeships the number of SCFs does not exceed 2. In five regions no fund was registered. The National Capital Fund (NCF) contributed to establishment of 13 new seed capital funds. Analysis of the funds recapitalised by the NCF shows that only one fund had been registered (SATUS Bielsko-Biała) apart from Warsaw and Krakow. The presented regional distribution of SCFs shows strong correlation with the dynamic economy of the regions and the position of scientific institutions operating there. It is natural that they show interest in solutions coming from large academic centres. The observed trend may also result from the greater entrepreneurial spirit of the workers and students coming from these centres. It should be noted that although the funds established under the OP-IE do not declare a regional character due to their way of operation, the projects located not too far from the fund office have additional advantages for the SCFs. 117

118 Map 1. Seed capital funds in 2012 under measure 3.1 OP-IE Source: own study Capital structure of the SCFs The largest shareholder of the SCFs is the capital from the public funds. It amounts to ca. 57% of the whole capital available to at the funds. The National Capital Fund is the main source of the public funds its share in the SCFs amounts to ca. 35% of the whole capital invested and ca. 61.5% of the public capital. There is no data on commitment of funds from pension funds and insurance companies in the SCFs. This capital market segment is still characterised by conservative behaviour regarding investment risk. A large group of SCF shareholders is formed by natural persons and entrepreneurs (ca. 18.8%) and other venture capital funds (ca %). Commitment of the latter has a special character resulting from specific conditions for participation in the contests held under measure 3.1 OP-IE. Many venture capital funds take the opportunity to apply for funds for the capital by establishing non profit entities. Thus, they could use significant funding of their activities under that measure. A negligent share in the SCF capital is held by foundations and associations (0.1%) whose area of interest generally does not overlap with the support for establishing 118

119 innovative businesses by feeding them with initial capital, though they meet the criteria of non profit organisations. Employment Employment level in SCF is largely diversified. The funds under survey employ between 3 and 12 persons. It is particularly difficult to explain the upper employment level (12 persons), since functioning of such a large team is usually not justified by the nature of SCF operation. On average SCFs employ 5 persons. The SCFs established under measure 3.1 OP-IE have the highest employment level. Operating budget Chart 1. Operating budget of the SCFs Shareholders contributions; Charges on 11% finalised transactions; 8% Other ; 1% Other external contributions; 6% Credits, loans; 3% Domestic grants and projects; 71% Source: own study Funds from the public grants (71%) are essential contribution to the SCF budget. Contribution from private entities, including venture capital funds (certain SCFs are their subsidiaries), amounts to ca. 11%. Proceeds from finalised transactions currently constitute only 8%. Along with development of projects initiated in various periods ( ) SCF revenue should show a strong upward trend. Preserving the share in the influence at the same or slightly increasing level allows to expect that after the programme is completed the funds will not be financially self-sufficient. In consequence, they will require continued cofunding or they will have to be closed down. In the period of survey the beneficiaries operating budget nature determined their operations mainly as entities executing a public grant with all the consequences of that fact, starting from supervision to the reporting system, which the SCFs have to comply with. As a result this specific business, i.e. equity investments, has been subject to administrative supervision without any necessary experience in that field. 119

120 Areas of investment ventures support expected by the originators The survey results show that the entities subject to the SCF investment expect Fund support in the following areas 57 : - development and implementation of a company strategy 4.27 points; - consultancy on an organisation structure 4.18 points; - networking and establishing business relationships 3.95 points; - assistance in financial management 3.86 points; - maintaining company s liquidity 3.82 points; - legal assistance 3.73 points; - know-how made available for managing the venture 3.59 points; - marketing and PR support 3.55 points. The least interest is in the support for the following services: - finding qualified executives and staff 2.5 points; - assistance in intellectual property management 3.27 points. The above data show that the originators looking for an equity investment lack most of all the knowledge of effective company organisation and management, economic knowledge related to financial management and the knowledge of law. It implies that an SCF that is able to provide an entrepreneur with a relevant service package in this area becomes not only a financial, but also an economic partner who complements the venture originator's shortages in terms of knowledge and experience contributed. Moreover, the survey results show that in the majority cases a financial partner should not have problems with taking over the managerial activities in the company leaving the technological/technical side of the project development to the originator. Generally, such a division of responsibilities is considered conducive to fast development of a venture. Based on an analysis of the least wanted items on the list of support expected from the SCF it can be assumed that the originators who lack relevant managerial and financial knowledge believe that the staff selection in these areas is the SCF's task, therefore they do not report any relevant needs. It should be noted that the consultancy on the intellectual property management is rather underestimated. The reasons may be as follows: - the said rights are properly secured before SCF equity investment; - lack of sufficient knowledge among the originators on the importance of securing the intellectual property rights properly and developing a venture development strategy in this respect; - such problems are considered to be within the scope of the SCF s tasks, as the risk level of the SCF investment decreases when the intellectual property rights are secured; 57 The average of the answers, scale of 0 5 points. 120

121 the overwhelming number of projects comes from the IT sector where obtaining protection does not require registration and is based on the authors copyright. Further surveys are needed to make a more precise diagnosis which will be an important guide for evaluation of the efficiency of current support in the area of intellectual property under the OP-IE and regional operational programme. Industry profile of ventures qualified for pre-incubation Some of the SCFs have a defined industry profile, whereas other Funds do not narrow their profile and are predominantly guided at the pre-incubation stage by the quality of submitted projects. The remaining SCFs have a multi-discipline profile. It is justified by low supply of projects suitable for equity investments. Consequently, the trade characteristics of the projects qualified for pre-incubation do not always overlap with the trades preferred by the SCFs surveyed. As the survey shows, the declared spectrum of trades where the SCFs look for customers is also very wide. Representation of industry preferences of the SCFs surveyed is presented below. Chart 2. Investment ventures industries preferred by the SCFs 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 88% 79% 67% 54% 46% 46% 38% 38% 25% 17% 8% 8% Source: own study Data on the projects actually supported show that the most of pre-incubated ideas represent broadly defined IT/media industry ca. 33%. Subsequent trades include biotechnology and e-commerce ca. 8.5% respectively. Ventures related to telecommunications constitute 6.5% of the qualified submissions. For other applications it is difficult to determine a prevailing trade (none of them exceeds 4.5%). 121

122 Acquiring new projects The number of projects submitted to SCFs is very diversified and ranges between 3 and 50 projects per month submitted to one SCF. There are many factors affecting this number. Undoubtedly, the Fund s operation in the market affects the interest in cooperation with it. According to the SCF managers, only one out of five projects submitted is suitable for further business analysis. This situation is corroborated by the identification of problems related to making investment decisions. Chart 3. Problems associated with equity investments 4 3,5 3 2,5 2 1,5 1 0,5 0 3,74 3,23 2,74 2,65 2,64 2,35 2,27 Source: own study The score for problems with low market potential of the submitted projects was 3.74 points on a scale of 0 to 5 points. An excessively low rate of return for SCF which undermines the sense of executing a capital entry is another significant reason for the lack of interest in the presented projects (3.23 points). Questions related to protection of intellectual property are also an important problem. For a capital investor it is of fundamental importance, since the rights to an invention are often the only contribution of the originator to the company established. An invention which is still at the stage of patent application is often such a contribution, though this does not grant exclusive right to the solution and increases the venture's risk. All and any problems that occur in relation to securing the intellectual property rights are therefore tantamount to a decrease in the value of the contribution in kind and a loss of potential competitive advantage of a product based on the invention. The second group of problems encountered by the Funds looking for investment opportunities is connected to the originators lack of basic economic knowledge as well as lack of knowledge and experience in running a business (2.65 points), and also to a little determination of the originators in delivering the venture intended objective (2.64 points). 122

123 While the solution of the first problem may be compensated with an increased engagement of the fund's staff, the second problem is critical to the innovative venture development. When beginning to commercialise, the originators are often unaware of the labour input necessary for the final success. Their motivation is significantly weakening when they find the remuneration considerably lower than expected at the initial phase of the project. The originator s withdrawal may contribute to a collapse of the company implementing the solution. According to the SCFs the least yet quite real problem is the originator s lack of trust in the Fund (2.27 points). As the Funds were respondents, not the entrepreneurs, more weight should be attached to this issue since it significantly affects the initiation of cooperation and further relationships of the parties. Profile of the applicants applying to the SCFs Entrepreneurs are the largest group of applicants for recapitalisation from the SCFs (ca. 53%). Time of running a business has no impact on the number of applications they submit, so this may imply that despite many years of operation the entrepreneurs do not gain creditworthiness, and investment capital is the only available source of funding. The group submitting the least applications (ca. 3.5%) includes young academic researchers, while all the employees of the science sector constitute only 7.15% of the applicants, which means that the model of commercialisation through starting up one s own business which looks for a capital investor is still not popular in the academic community. Types of investment process support granted by the SCFs Support granted by the SCFs results mainly from the lack of knowledge and competence of the originators. It is necessary for proper development of the project and increase of the company value. The type of support granted not only reflects the demand for specialist consultancy services, but also the current potential of the originators. Chart 4. Revenue and risk relationship in the initial phase of the enterprise development Development Revenue Time Risk Source: own study based on F. Jurzyk, Fundusze seed i venture capital, 123

124 Chart 5. Average values of results of the SCFs operation in 2011 Number of originators who completed full pre-incubation programme 26 Number of originators who started up a business based on pre-incubated idea, without SCF investment Number of originators who participated in the pre-incubation process in ,6 20 Number of originators participating in the pre-incubation process Source: own study The highest score (4 points 58 ) (type of support granted which the respondents indicated most often) is for the consultancy services in respect of: support in networking and establishing business relationships; assistance in financial management; legal assistance; support in development and implementation of a strategy; consultancy on an organisation structure. The lowest score (3 points) is for the support to an incubated venture in finding qualified executives and staff. Taking into account the fact that the last recruitment for measure 3.1 OP-IE took place in 2010, the average number pre-incubated projects per one Fund (37 since 2008) indicates a strong growth dynamics (in 2011 on average there were ca. 20 pre-incubated projects per one SCF). The reasons for the growth dynamics should be explained mainly by the enhancement of the methods of project acquisition by the Funds participating in measure 3.1 OP-IE. The survey shows that the pre-incubation process gives nearly 26% of projects. The average share of the investment entries in the pre-incubated projects is very high and amounts to 42.7%. However, the range of the investment shares between particular centres is quite significant and ranges from 0 to 100% of the pre-incubated projects. Both of the extreme values are alarming. The bottom value raises doubts about the correct recruitment for the pre-incubation process in terms of the market potential of the projects accepted, while the upper value is doubtful as regards the economic reasons for an equity investment in each of the pre-incubated projects. 58 Evaluation on a scale of 0 to 5 points. 124

125 The survey allows to make one observation more. There exists a certain pool of valuable projects which did not arouse capital investors interest but have become the basis for starting up a business by the originators. Since the role of a SCF does not consist in looking for a professional investor, the chances of these ventures for a market entry are significantly limited due to the lack of external financial support. Forms of exit preferred by the SCFs (at a scale of 0 to 5) The SCFs consider the sale of the shares to another capital or professional investor as the preferred exit path (4.26 points). Exit by selling the shares at the stock exchange has lower score (3.35 points) as this sometimes requires the company to be transformed into a joint stock company and entails additional costs and time to carry out the whole operation. Management buyout is treated almost at the same level (3.43 points). However, in this case the sale does not entail additional costs, but it is difficult to find reference to the market value of the shares sold. One of the more important elements of cooperation with the entrepreneurs is control of the investment. In this respect the SCFs also have their preferences. In most indications the Fund's representative prefers the function of a member of the supervisory board in the company established (4.36 points); another form of control is an arrangement that the expenditure of the company management board that exceeds a specified amount requires to be counter-signed by the SCF representative (3.73 points). The least popular form is the SCF representative s participation as a member of the company management board (1.73 points). This is associated with the nature of the SCF whose limited staff focuses on supervisory actions in many companies instead of managing the entity subject to the investment directly. Basic barriers to development and task performance of the SCFs (on a scale of 0 to 5) Despite operating in the centres with a confirmed high innovation potential, the funds are not quite satisfied with the situation in which they have to function. According to the SCF managers the most important task performance barriers of the SCFs are the following 59 : scarcity of projects fit for commercialisation 3.95 points reluctance of the scientific community to commercialise scientific achievements 3.33 points reluctance of the administrations of the scientific institutions to commercialise research results through establishing companies 3.29 points legal constraints and lack of technology transfer procedures 3.00 points low budget, lack of financial support 2.77 points lack of entrepreneurs trust in this form of funding the venture 2,77 points 59 Scale of assessment from 0 to 5, where no influence corresponds to 0 points and decisive influence corresponds to 5 points. 125

126 lack of beneficiaries knowledge on the mechanisms of funding through equity investments 2.73 points. Special attention should be paid to the problem of lack of good projects to commercialise. This proves that the unfavourable situation still prevails, where the scientific community (researchers and administrations of the scientific institutions) using the public funds can operate successfully regardless of the actual needs of the economy for solutions with significant market potential. Moreover, it should be emphasised that the majority of indications in this respect pertains to the lack of cooperation between the science and economy. Main partners in carrying out the SCF statutory aims Main partners of the SCFs are the Funds that have established them and entities which provide projects with high commercial potential in the framework of cooperation agreements. Thus, the SCFs attempt to solve one of the main problems of their operation which consists in the lack of sufficient number of projects worthy of equity investments. SCFs sources of information on the projects (on a scale of 0 to 5 The basic information source are individual submissions of entrepreneurs to the SCFs (4.39 points) which means that the SCF offer, despite many problems and barriers, is still popular among the entrepreneurs. Next, there are active forms of acquiring projects (3.52 points) such as: meetings, workshops, seminars, conferences organized by the SCFs. Other important information sources are: the Internet and newsletters (3.91 points) as well as informal networking (3.64 points). The least effective source of acquiring projects are contacts with chambers of commerce and employers' organisations (1.57 points) which focus on representative functions and lobbyism rather than on marketing activities for their members. Positive aspects of initiation measure 3.1 OP-IE for the SCFs Entities which became beneficiaries of measure 3.1 OP-IE confirm that the principles of the Programme are correct and point out its main benefits in the form of: access to the capital which would allow to initiate implementation of innovative ventures, and increase of the competence level among the employees of the BEI operating on the market for innovative projects commercialisation. Other positive aspects are the following: emergence of incubators which may provide certain projects with capital improving the reliability of an application to the venture capital funds; opening of a commercialisation channel as a result of establishing a company for projects coming from the scientific institutions; 126

127 improvement of the position of an incubator/pre-incubator which, apart from providing the entrepreneurs/originators with the space necessary for carrying out the venture, also has its own capital, often sufficient for the phase of initiating the implementation; initiating a complementary funding stream for projects which did not qualify for support under measures 8.1 and 8.2 OP-IE; development of entrepreneurship and creation of new jobs in innovative companies; inspiration for actions aimed at tidying issues related to the technology transfer from the science institutions. Negative aspects of initiation of measure 3.1 OP-IE for the SCFs The respondents emphasise the adverse impact of the programme on the market of investment funds operation because of the entities which offer easily accessible investment funds for projects of little value. Another aspect mentioned is the fetish like striving after the intended indicator of investment entries (it was taken into account in contests under measure 3.1 OP-IE) thereby investment ventures are initiated without a sufficiently solid business analysis. The originators are aware of this situation and are reluctant to develop ventures and to carry out business models which are poorly prepared. The public nature of the Fund causes the programme to have an opinion of an easily accessible capital for ideas which already by definition may end up in failure. This leads to a significant increase in the originator's expectations regarding the valuation of their projects, which in turn prevents the cost-efficient investments that would allow Fund continued operation in the future based on money obtained from capital exits. Current results of the programme are put at risk by the fact that the Polish Agency for Enterprise Development has entrusted programme to entities which are not experienced in innovative projects commercialisation services. A serious risk is also caused by the fact that following a contest held under measure 3.1 OP-IE in the majority of cases the funds were allocated to the entities established only in order to acquire the funding offered, instead of being allocated for strengthening of the existing BEIs as regards innovative projects commercialisation,. Therefore, there is a quite real concern regarding the durability of the initiated solutions (the SCFs established) after the project funding ends. Necessary improvement actions in case of a future edition of a similar programme The key messages which aim at improving the formula of measure 3.1 OP-IE in future, submitted by the SCFs surveyed in the framework of the survey carried out, are presented below: uniformity in the assessment of the investment projects submitted by the SCFs to the Polish Agency for Enterprise Development, development of explicit rules on reinvestment of the capital raised after the exit, 127

128 recognising as eligible the costs of supervision and of creating instruments for supervising incubated companies until the time of exit, defining procedures for assessment of pre-incubation reports during capital entries from the so-called aggio, simplification of the system of clearing the requests for payment in order to eliminate the liquidity risk of the SCFs. Possible causes of failure to reach the intended project indicators by the SCFs In the survey also the fund managers were asked to name the main causes of failure to reach the intended indicators. The following causes are the main ones and were indicated most often by the respondents: insufficient number of projects with high market potential, negotiation barriers threatening timely completion of the start-up phase of a special purpose entity, lack of the originators determination to commit themselves to reach the intended business objectives, fiscal arrangements hindering the business incubator transfer from universities to business, unfavourable fiscal arrangements for the shareholders who contribute in kind. All the above causes are practically out of the range of SCFs control and they can hardly be considered as subjective. It should also be mentioned that ca. 30% of the entities surveyed do not see any risks related to reaching the project's intended indicators. The problems faced by the SCFs mainly result from their poor establishment in the business support system addressed by the programme. This situation is often caused by the lack of formal and informal relationships established in the course of a longer time of operating in this market segment, but also largely by the lack of good knowledge of this market. Polish economy, still in transition, requires both development and strengthening of the BEIs as well as the venture capital funds operating for profit. There entities have many common areas for cooperation related to finding and preparing projects to commercialise. Unfortunately, when the dedicated public funds become available, their behaviour becomes mostly egoistic and the overarching goal, i.e. cooperation aiming at the competitiveness of the economy, recedes into the background. Therefore, when support schemes regarding commercialisation of innovative solutions are imitated in the future, a consistent demarcation policy between the target groups of potential beneficiaries should be maintained. 128

129 BUSINESS ANGELS NETWORKS (Ewa POPIELCZAK) Business angels networks are institutions which, due to their active financial and educational operations in the last 10 years, gained recognition in the markets of entrepreneurs seeking funding. In 2003, when the first Polish network Polban was established, the term business angels was an enigmatic concept unheard of even by many economists, and it raised concerns and mistrust. Currently, thanks to numerous initiatives disseminating the idea and principles of operation of business angels, entrepreneurs know how to obtain funding and are aware of the consequences of particular forms of cooperation with such financial institutions. Definition of business angels A business angel is a wealthy private individual, usually experienced in business, who invests part of his estate in start-up enterprises. Business angels see this as capital allocation, offered to the originators of ideas, along with personal managerial support as well as expertise and skills, in return for a stake in the company 60. One of the best known business angels in the world, W.H. Payne, extends this definition by specifying that business angels are investors who in most cases sold shares in their enterprises or are retired businessmen who simply like working with entrepreneurs and helping them. In this way, they want to repay for the help they received at the beginning of their careers. Supporting start-ups is their passion. They find satisfaction in having contributed to success of new enterprises, and at the same time they generate above-average profits 61. So as to balance the risk of investments in start-ups, business angels expect that the value of enterprises they support will increase several times over a few years, and will bring them a return on investment 10 to 30 times higher than the amount they initially invested. Many people are of the opinion that such returns are unrealistic, however, there are hundreds of enterprises that have achieved such a result. This is possible in particular in the case of enterprises whose operation is based on advanced technologies. Therefore, business angels seek mainly innovative enterprises. The term business angels comes from the USA, where it originally referred to affluent people supporting Broadway shows. Over time, the term stuck to wealthy entrepreneurs who used their capital and experience to support promising ventures in return for shares in such companies. This kind of activity bloomed in the Silicon Valley, where investors, whose properties were multiplied thanks to the acquisition of shares of high-tech enterprises, sought the possibilities to allocate their capital in venture projects 60 Ch. Saublens, All money is not the same! SME access to finance. Guidebook for public decision-makers and intermediaries, Eurada, Bruksela 2006, p. 7, W.H. Payne, The Definitive Guide to Raising Money from Angels, 2006, p

130 with promising high rates of return. Frequently, this resulted in allocating capital in start-up, innovative enterprises 62. Business angels in Europe and in the USA Since business angels remain anonymous and most of them do not belong to any kind of angel organisation, it is impossible to precisely assess the overall market of such investors. The U.S. market is the most mature one in this respect. Although Europe as a whole is trying to keep up with the U.S. market, there is still a long way ahead of our continent. The following table shows that in 2010 there were 400 business angels networks in Europe. In this respect Europe has managed to outdo the USA, however, the number of angels in Europe is still almost 3.5 times lower than in the USA, and the number of investments they make annually is 4.5 times lower, whereas the annual volume of venture capital investment in start-up phases of enterprises development is 3 times lower. The European market of business angels is still growing and shaping, whereas the USA set trends and development directions. The maturity of the U.S. market is demonstrated by more developed network structures (fewer networks associating more investors) and a bit larger investments, made often in syndicates of several business angels. Table 1. The summary of statistics regarding business angels in Europe and in the USA in Europe the USA The number of business angels networks Commercial networks 20% unknown Investments in the I round EUR 200 EUR 158 thousand thousand The number of business angels thousand thousand The volume of investment made by business angels (annually) EUR 3 4 billion EUR 18 billion Venture capital investment in the seed and start-up stage (annually) around EUR 2 billion around EUR 6 billion Source: J. Błoński, Rozwój rynku aniołów biznesu [The development of business angels market], Definition of business angels networks Business angels networks are specialised institutions associating individual investors business angels. Their main task is to support the investment activity of business angels. Among the operations of such networks, the following should be highlighted: 62 B. Mikołajczyk, M. Krawczyk, Aniołowie biznesu w sektorze MSP [Business angels in MSE sector], Difin, Warsaw 2007, p

131 - identification of potential investors and of innovative entrepreneurs, along with determining their preferences; - services consisting in direct matching of the proposed projects with investors; - services consisting in establishing a pitching session where chosen entrepreneurs may present their business plans to groups of selected investors; - managing databases and website; - advice and training. Networks also serve as a platform for exchange of experience between investors, and they promote knowledge in their environment on the nature of business angels capital and on the possibilities to obtain it. Such networks ensure anonymity of investors and grant them access to promising projects of high quality; for entrepreneurs, on the other hand, networks give access to capital and to valuable partners. Investment preferences of business angels Polish business angels seek investments with the time horizon of 3 5 years, and the value between PLN 50 thousand and over PLN 5 million. Their investment targets are mainly young enterprises, preferably already operating on the market in the start-up phase (29%). Such enterprises have already been initially verified on the market, but at the same time they are still in the phase of the fastest growth in value. In the second place, business angels are willing to invest in seed enterprises 23%, followed by enterprises in first and later stage of development 24% each. Chart 1. Preferred investment phases later stage 24% seed 23% first stage 24% start-up 29% 131

132 In terms of industry, business angels focus their investment on new technologies. Representatives of networks specified these preferences in the following way: Table 2. Industry-specific preferences of business angels networks. Industry % of networks with such preferences Telecommunications 100% 86% 100% Media and multimedia 100% 100% 83% The Internet 100% 100% 100% Biotechnology and pharmacy 100% 86% 83% Health protection 86% 71% 67% Environment protection and ecology 86% 86% 100% Energy industry 71% 43% 67% Software 71% 100% 100% Computer industry 71% 57% - Automation and robotics 71% 57% 67% Knowledge-based services 71% 71% 83% Chemistry 71% 57% 50% Food industry 29% 57% - In comparison to previous years, a lower emphasis on software and food industry projects may be observed. Media and multimedia, and the Internet still hold a stable position among the top, most desired industries. An increased interest has been observed in telecommunications, biotechnology and pharmacy, health protection, energy and computer industry, automation and robotics, as well as chemistry. Business angels often perceive their investment as a form of diversifying their investment portfolios, therefore, they are willing to engage their equity in syndicates with other investors. Out of networks surveyed, 40% declared that the associated investors have no preferences as to the kind of investment. 23% of business angels are willing to share the risk with other private investors, and 23% are willing to share it with funds, including mainly seed capital and venture capital funds. Only 15% of business angels prefer individual investment. 132

133 Chart 2. Investment preferences of business angels Individual investors engage their private resources in very risky ventures, originated very often by young people without business experience. Networks representatives assess that in order to keep control over the decisions made in the company, business angels most frequently want to become a member of the supervisory board (3.8 / 5), an observer (3.5 / 5), or an advisor (3.2 / 5). Investments resulting in the investor becoming a regular employee or a member of the management board of the enterprise are rare. Exits are an inherent element of the transactions. Exit refers to a point in time when the investor acquires profit by selling his shares. The surveyed networks identified the exit routes they would recommend. The most desirable one is the sale of shares to another private investor (4 / 5) or venture capital / private equity (3.8 / 5). Listing on a stockexchange (3 / 5) and management buyout are also viewed positively. Although the Polish market of investments by business angels is immature, 2 exits have already been recorded by one of the networks. Objectives of business angels networks The major objective of business angels networks is to help an entrepreneur with a promising project to find an investor who will provide the enterprise with the capital it needs in exchange for its shares. To that end, all networks are actively involved in seeking affluent investors and entrepreneurs with promising ideas. However, before the two parties are matched, they are trained and prepared to cooperation by networks. Frequently this situation is new both for the originators of ideas and for investors, and it requires them to find their way around and to appropriately protecting their interests. Before the meeting takes place, networks are obliged to assess investment projects and make their initial selection. Each of the surveyed networks has also declared that it actively contributes to raising the public awareness of this form of funding. Only 43% of business angels networks are involved in establishing syndicates for specific projects. 133

134 Business angels networks in Poland Currently, there are 11 business angels networks operating in Poland; 3 have their head offices in Katowice, 2 in Warsaw, 2 in Wrocław and per one in Szczecin, Łódź, Lublin and Cracow. Three networks operate in a dispersed structure and have their offices in several regions, thus making their services more accessible to potential customers, and being able to focus to a greater extent on operating within local communities. Such a construction is used by Secus Łowcy Biznesu (Business Hunters), having their branches in 5 voivodeships, by Polban Business Angels Club operating in 2 voivodeships, and by Ponadregionalna Sieć Aniołów Biznesu Innowacja (Supraregional Business Angels Network Innovation) with offices in 5 voivodeships. The operation of most networks covers the whole country. Only one network declared operating at the regional level. Map 1. Business angels networks in The activity of all the surveyed business angels networks active in Poland is noncommercial. This is mainly the effect the requirements of the EU projects they implement. Three of them have declared plans to commercialise their activity after the EU funding ends. Their non-commercial activity results also from the fact that a significant part of business angels networks belong to a larger organisation which provides them with information and contacts and guarantees the quality of their service and stability of their operation. On the 134

135 other hand, this organisation may effectively block ambitious plans of the networks if they are not in line with the overall strategy. The development of these business angels networks depends fundamentally on the following institutions: Polish Confederation of Private Employers Lewiatan, Łódź Agency of Regional Development, Satus Venture Sp. z o.o., and the Institute of Economic and Social Sciences Foundation. In terms of formal and legal structure of other business angels networks, the following can be identified: commercial companies (joint-stock company and limited liability company), institution of economic local government, and foundation. Since the operation of business angels networks in Poland is non-commercial, they do not charge for admission to the network or its membership, for the possibility to present a project to investors or for training; they also do not collect the success fee, all of which in numerous similar foreign institutions are standard and often the main source of their income. Polish business angels networks employ on average 8 people per network, however, there is a distinctive disproportion between them in this respect. In the case of institutions with one office, the average number of employees is 6, and in the case of institutions with regional structure it is 14. Although business angels networks run non-commercial operation, their operational budgets are relatively high. This results from their access to the EU funds. Out of all networks surveyed, only 3 revealed their budgets for They amount on average to PLN 2.3 million. In all 3 cases, domestic grants and projects made up 100% of the budget. A very important phenomenon in this environment is networking entering into close cooperation with similar institutions in other regions and countries. Four business angels networks have appreciated these opportunities and became members of the European Business Angels Network (EBAN), the membership of which proves the quality of performed operations. One of the networks was its member in At the same time, 5 networks have declared being members of other institutions connected with the operation of business angels, including the Association of Business Angels Network ABAN, Business Centre Club and American Chamber of Commerce. The main benefits of such cooperation, indicated by representatives of business angels networks, include: increase in network reliability, promotion opportunities (4.7 / 5), possibility to implement joint projects (4 / 5), and access to knowledge, contacts and experiences (3.7 / 5). Networks appreciate the opportunities coming from cooperation with other business environment institutions, and thus conclude many cooperation agreements. Such agreements provide the source of projects and also of partners who, on one hand, support effective operation of the networks and, on the other hand, offer opportunities for exit and help finding investors for another funding round. The networks declare cooperation with seed capital funds, with other business angels networks, technology parks, chambers of commerce (Polish and foreign), stock exchange, legal offices, media, regional development agencies, higher education facilities and with venture capital funds. 135

136 Projects The business angels networks surveyed receive on average 26 projects monthly, 20% of which, according to networks managers, are worth closer consideration. In this respect, the Guild of Business Angels is to be distinguished, with 100 projects received monthly, as well as Silban, with as much as 50% of the received investment proposals are worth consideration. An upward trend can be observed, compared to 2009 and 2010, when the number of projects received amounted to 14 and 12, respectively. This is due to the fact that entrepreneurs are getting more aware of this form of funding. At the same time, a downward trend is observed in the quality of received investment proposals, which decreased from the level of 40% in 2009 to 26% in 2010, and 20% in Supporting the investment process Business angels networks must spare no efforts in seeking promising projects and in adequately preparing originators of ideas to cooperate with investors. When networks are approached by scores of entrepreneurs with hardly ambitious projects, and even with projects completely unjustified from the business perspective with no prospects for achieving the expected return on investment, it is crucial to make good use of those sources of projects that are truly valuable. A significant part of the projects obtained are still submitted individually to the networks and result from their promotional activities. Investment meetings, workshops, seminars and conferences create a good opportunity to meet with entrepreneurs, who then submit their ideas to networks. Searching for projects in the Internet and using themed portals and websites is also a stable position in the summary. It has been recently observed that, in comparison to the assessments made in 2010, networks started to focus more attention on cooperation with technology transfer centres and with business incubators. This proves that innovation centres are seen as partners able to become a source of lucrative innovative projects. However, it seems puzzling that over time, the cooperation with technology incubators and parks is becoming less significant, when such institutions should be the source of technologically advanced and business-targeted projects. Table 3. The sources of projects received by business angels networks. Sources of projects projects individually submitted to networks investment meetings, workshop, seminars, conferences the Internet technology transfer centres, business incubators forums and investment fair business incubators technology incubators and parks *Assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. **The survey did not include this category in the list of possible answers in a given year. 136

137 Business angels networks offer a range of services supporting the investment process. In the current survey, it has been stressed that business angels networks are highly engaged in training entrepreneurs and in promotional activities. Clearly, for several years a growing need has been observed to seek originators of ideas with promising projects and to appropriately prepare them for cooperation with individual investors. There has also been a growing pressure to collect investment projects and analyse them initially, thus raising the standards of business angels networks. A network is becoming an institution the cooperation with which is valuable and sought, whereas the projects under its care are recognised to be of high quality. Networks have recently started creating their own databases of projects available to investors who are not always able to participate in pitching sessions 63, yet voice their will to invest. In comparison to 2010, the assessment of investment projects, as well as presenting projects of large market potential, and mediation in meetings with advisors, analysts and experts, and also support in negotiations and legal assistance, have decreased in importance. This proves that networks have become more focused on the main area of their operation, and put additional services to the background. Networks representatives have also indicated some additional, equally important forms of investment process support, namely training of investors and assisting them in drafting business plans and presentations. It seems that networks will start building their own information and educational infrastructure in the nearest future, closing thereby the process of obtaining, processing and investing within one institution, thus changing the nature of cooperation with other support institutions. Table 4. Ways of supporting investment process by business angels networks. Type of support training of entrepreneurs promotional activities (fairs, lectures, seminars, conferences) collection of investment projects and their initial analysis creating database of promising projects assessment of investment projects presenting projects of high market potential mediation in meetings with advisors, analysts, experts assistance / mediation in negotiations legal assistance, drafting sample contracts *Assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. **The survey did not include this category in the list of possible answers in a given year. 63 Pitching sessions meetings in which entrepreneurs present their ideas to investors in line with a required form of presentations. 137

138 Implemented investments Since the beginning of their existence, an average Polish business angels network has implemented 8 investments in start-up companies. A quite significant increase of this indicator has been observed, compared to 2010, when it equalled 3.5. The SATUS Network of Private Investors stands out here, having made 21 successful investments in its 3 years of operation. It should be noted that some networks have made only 1 4 investments, although they have been operating in the market for 5 6 years. Enterprises that obtained funding through Polish business angels networks operate mainly in the field of new technologies, including ICT, mobile technologies, electronics, renewable energy sources, biotechnology and biomedicine, as well as with health protection, education, jewellery, construction, knowledge-based services, automation, film production, publishing, chemistry, finance, insurance and energy industry. Only 3 business angels networks revealed the amount of the overall contribution of their members in 2011, with the average of PLN 6.24 million. The year 2011 can be considered abundant in business angels transactions. During these 12 months, the investors of Polish business angels networks made 33 capital investments in start-up companies, which accounts for nearly half of all the transactions made by networks to date. The SATUS Network of Private Investors is the leader here, with as many as 16 transactions made. Investors A statistical Polish business angels network associates on average 77 individual investors. However, a clear disproportion can be observed in this respect; some networks have as many as 120 or even 164 business angels, while some have only 16 of them. It is a real challenge to find wealthy individuals willing to become business angels. To respond to this challenge, networks operate in a diversified way. The most important way indicated to seek potential business angels are networks website and newsletters. Another very important way is word of mouth marketing, and applications individually submitted to networks. In such a distinctive environment, recommending this form of investment proves most effective. In this context, an increase has been observed in recent years in the role of the Internet, the use of information channels of affiliating institution, the cooperation agreements with partners, as well as events and information fairs. The level of regional press trustworthiness returned to its level from 2009, and the role of chambers and associations of employers remains on a relatively steady level. In practice, networks representatives also invite individual persons, selected on the basis of criteria developed by network, to join the network. 138

139 Table 5. Methods of seeking potential business angels by network. Method website, newsletters word of mouth marketing individually submitted applications to networks the Internet information channels of affiliating institution agreements on cooperation with partners events and information fairs chambers or associations of employers regional press *Assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. **The survey did not include this category in the list of possible answers in a given year. Barriers to effective operation Although entrepreneurs seeking funds are aware of the opportunities offered by business angels networks, these institutions still face a lot of barriers which make it difficult for them to operate effectively. Network representatives are of the opinion that the greatest barrier is the limited amount of projects worth the investors interest. This factor has significantly increased since 2010 (by 1.5 point). This results from the increased number of submitted projects, accompanied by a decrease in their quality; this is also confirmed by a much higher increase (by 2.8 point) of the indicator concerning the low quality of projects submitted. The significance of the lack of knowledge on this form of funding has also been indicated more frequently. This may seem strange in a situation when nearly every region organises free-of-charge training regarding business angels. The problem, however, consists mainly in the lack of specific knowledge streamlining cooperation and extending beyond the information that there is someone who offers capital in exchange for shares. Every year, network representatives face a growing mistrust of entrepreneurs towards business angels funding. A greater selection of capital sources makes entrepreneurs more sceptical, cautious, and sensitive to the possibilities of being deceived, and thus more discriminating in selecting institutions and people to cooperate with. Representatives of business angels networks are also affected by legal constraints and by the lack of technology transfer procedures. There are still many loopholes in the Polish law which make it difficult for business angels to invest effectively. What Polish individual investors desire are also foreign fiscal incentives which could help mobilise this market and increase the number of transactions. The lack of transparent technology transfer procedures and of institutions which would be able to effectively help to solve complicated situations is also a problem. A barrier consisting in a low network budget remains at the same level. Currently, the majority 139

140 of networks are supported by the EU funds, however, due to the fact that the funding period is coming to an end, there is a question "what next?". Most business angels networks are not able to shift smoothly to commercial operation and will seek other possibilities to obtain external support. Some still face difficulties in cooperation with regional and local institutions, with their lack of support, as well as with a difficult situation in the region. Other barriers indicated by representatives, which significantly inhibit effective operation of networks include funding in the form of partial financing of projects the lack of continuity of funding after their completion, the lack of co-investment funds/mechanisms, as well as the lack of tax reliefs for investors in start-up enterprises. On the other hand, barriers such as low interest in network services, the lack of people willing to set up their own enterprise, and the narrow organisational framework of business angels networks have decreased in significance. Table 6. Main problems in business angels networks operation. Barrier limited amount of projects worth the investors interest lack of knowledge on this form of funding low quality of submitted projects lack of trust among entrepreneurs in this form of funding the 3.4 undertaking legal constraints and lack of technology transfer procedures low budget, lack of financial support problems in cooperation with local and regional institutions, 2.5 lack of support difficult economic situation in the region, malaise and 2.1 stagnation *Assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. **The survey did not include this category in the list of possible answers in a given year. There is a range of elements, besides those of the standard network operations, that inhibit the investment process. The most significant indicated in the survey are low market potential of projects and the lack of trust in cooperation with partners. The assessment of these parameters revealed an upward trend, which proves that the quality of submitted projects keeps decreasing while the need for cooperation with partners is growing, which, however, does not make cooperation effective. The problem which may be also observed is the lower determination of entrepreneurs, who sense that the market is saturated with money coming from external investors. The number of business angels networks and of seed funds, supported by resources from the EU funds which are directly available to entrepreneurs, is increasing steadily and rapidly, thus giving entrepreneurs the feeling of comfort and confidence that if their project 140

141 is really good, the funding institutions will compete for the possibility to cooperate with them. What we slowly start to deal with is the market of capital recipient. However, the institutions which had their operations supported and investments funded by the EU, committed themselves to meet certain indicators requirements. In the period determined for spending the money obtained, they have to make the required number of transactions. When the quality of projects is decreasing, meeting the requirements in terms of indicators may be at the expense of attention to high standard of enterprises supported. The level of economic knowledge and of business basics among people seeking external investor remains at the same low level. This is not a surprising result, such changes require many years of work and bottom-up changes in education. This also results in the lack of knowledge on legal and administrative procedures of establishing and running an enterprise, the effects of which are becoming more perceptible than in previous years. A moderate decrease in the role of intellectual property issues has been observed, resulting from the fact that institutions dealing with IP protection and technology commercialisation became more accessible and professional. What is more, the representatives of surveyed networks indicated that perceiving business angels as sponsors, as well as reluctance to share the risk, and inadequate communication, and also lack of knowledge and experience as regards the investment process are further barriers, significantly inhibiting the effective operation of business angels networks. Table 7. Main problems with implementation of investment projects Barrier low market potential of projects lack of trust in cooperation with partners low determination of potential entrepreneurs lack of economic knowledge/business basics lack of knowledge on legal and administrative procedures of 2.6 establishing and running an enterprise problems connected with the issues of intellectual property *Assessments were made with the use of the 5-point grading scale, where 1 means the lowest grade, and 5 the highest. **The survey did not include this category in the list of possible answers in a given year. Plans for the nearest future In the nearest future, business angels networks are going to focus on developing their current operation. In this context, they list the following objectives: development of co-investment instruments (capital and debt instruments); lobbing in the area of beneficial legal and fiscal solutions for the investors; active support for projects funded; 141

142 increasing the number of investors; keeping the pace of development; commercialisation of operation; increasing network recognition; promoting investments with business angels involvement; integration with other business angels networks; closer cooperation with technology transfer centre. 142

143 LOCAL LOAN FUNDS (Marek MIKA) Loan funds, operating in Poland for twenty years, have become a permanent feature of Polish financial system. They are non-profit institutions that allocate all generated profit to the achievement of their statutory objectives. They are separate organizational and financial entities within the meaning of applicable law, and their core business is focused on providing financial services in the form of granting loans. The main objective of a loan fund is to provide financing sources and possibilities for entities from the sector of micro, small and medium-sized enterprises, and to facilitate this group s access to external sources of financing (outside capital). During the economic downturn, when the effects of the global financial crisis are felt and when access to other forms of external financing, including bank loans, is limited, loan funds are often the only source of financial support for companies seeking external funding sources. In addition to direct financing of current and investment needs of SMEs, loan funds support local development (by providing advisory and training services); their impact is particularly positive in terms of improving the activity of the local labor market. These actions contribute favorably to the competitiveness and innovativeness of the economy not only on the local or regional level, but also nationally. The acquired funds are used to finance current operations and investment needs, in particular in the early stages of development of enterprises. Loans can be applied for by entrepreneurs who cannot rely on financing from traditional banks nor have a limited access to it. Loan funds are based on well-designed and systematically implemented organizational standards and procedures for the provision of loan services. They operate on the basis of individual lending regulations and follow the rules of professional ethics. Characteristics of this group of financial institutions include the following aspects: - they are local institutions and conduct their business in a specific (territorially limited) area, - the range of products and services they offer is tailored to the needs of businesses and individuals operating in a particular area, - they focus on providing financial services to a specific group of clients - mostly to micro, small and medium-sized enterprises, - they apply simplified principles and rules for evaluating the creditworthiness of clients, making loan-granting procedures less complicated and more user-friendly for the potential clients. At the end of 2011, 86 institutions engaged in lending activities were in operation, 12 of which did not disclose the results of their operations or do it only occasionally, which may be due to the negligible value of these services in the context of their activities. Although only a slight alteration has been observed in the number of loan funds as compared to 2010, significant changes have taken place. In the present analysis, local branches and subsidiaries are not 143

144 regarded as separate funds64. The study was, however, based on data relating to funds that have appeared on the market or those that provided the results of their activities. The collected data and information gathered through telephone interviews indicate that nine funds stopped or temporarily suspended their lending activities, while one has been liquidated as an institution. An important change in the market is the transformation of the largest loan fund to date - Fundusz Mikro sp. z o.o. based in Warsaw into a bank. The exclusion of this organisation from the sector of loan funds resulted in substantial changes in values as regards a variety of information characterizing the loan fund industry in Poland. The majority of loan funds which presented the results of their activity (66) are members of the Polish Association of Loan Funds (40). Map 1. Loan funds in Poland in Source: own study 64 Their results are presented in summary data of the institutions running them, for example, data on Polish Entrepreneurs Foundation (PEF) outlines all the results of sub-regional loan funds established and managed by the PEF as branch offices, such as "Gryf", "Kujawiak", "Odra" "Pomeranus" etc., or the Canadian Loan Program. 144

145 The largest number of funds are located in Śląskie Voivodeship (10), while the smallest number (2) operate in Opolskie Voivodeship. Between five and seven loan funds function in the remaining voivodeships. Figure 1. Number of loan funds in Source: own study Table 1. Number of loan funds per voivodeship in Source: own study Territorial distribution of loan funds Voivodeship: Dolnośląskie Kujawsko-Pomorskie Lubelskie Lubuskie Łódzkie Małopolskie Mazowieckie Opolskie Podkarpackie Podlaskie Pomorskie Śląskie Świętokrzyskie Warmińsko-Mazurskie Wielkopolskie Zachodniopomorskie Total:

146 Organizational and legal forms The change in the number of funds in 2012 had no impact on the structure of their organisational and legal forms. The majority are association and foundations, although the number of commercial companies is steadily growing. Figure 2. The structure of loan funds, broken down by their organisational and legal form, in (in %) Source: own study The period between the previous and the current study was one of relative stability in relation to organizational change and the number of entities whose main focus of activity is the provision of loans. Loan funds have started the process of creating and developing a network of regional branches, subsidiaries or local offices providing services to clients. According to the available data, more than 50% of the funds do not have branch offices. The majority of them started their lending activities relatively late, or their accumulated equity value qualifies them as small and very small (and, consequently, they do not need to set up local branches). Entities holding a large loan capital and with broader experience in the market have been developing a network of regional branches. More than 49% (49.2%) of loan funds have at least one regional office. 31% of the total number of loan funds have one regional office, while 7.4% have more than five offices. This confirms the tendency of the disappearance of a clear division between local and regional loan funds (in terms of their reach and significance), which to a large extent was an artificial division, in a way dictated by political considerations, for instance by the "Capital for the entrepreneurial" governmental project. The latter provided for the construction of a loan fund system which consisted of 16 regional/ provincial funds (by definition, voivodeship authorities were to hold equity in the latter) and 100 local funds. According to the rules of the program, this division naturally entailed variety 146

147 in the value of fund recapitalization. The need of finding new sources of capital and of implementing projects on schedule, and also ensuring a timely distribution of available financing meant that the funds focused on activities that were far removed from their original area of operation. This expansion was typical of funds with large and very large loan capital. Such local funds (operating within the area a poviat(s) or one voivodeship) were transformed into regional funds (operating on the level of a voivodeship(s)) or nationally (the entire country). Notwithstanding the above, loan funds have retained their characteristic features outlined at the beginning of this paper. Table 2. Percentage structure of loan funds according to the number of local branch offices Source: own study Number of local branch offices Percentage structure No branch office 50.8% One branch office 31.5% Two branch offices 2.9% Three branch offices 7.4% Over five branch offices 7.4% Total 100% Size and structure of capital At the end of 2010, total capital held by loan funds amounted to PLN 1,565,958,869.27, whereas on , total capital of loan funds amounted to PLN 1,656,943, This very large increase in capital, totalling over PLN 978 million, was the result of acquiring capital from Regional Operational Programmes (in 11 voivodeships, funds were recapitalized as part of ROP and in 5 voivodeship the JEREMIE initiative was introduced) 65. The analysis provided for the following classification of funds operating in the market: up to PLN 3 million (very small), PLN 3-10 million (small), PLN million (medium), PLN million (large) and over PLN 40 million (very large). Although at the end of 2011, the funds with less than PLN 3 million of capital accounted for more than 14% of the total number of entities, their share in the total amount of capital was just over 1%. 65 The JEREMIE program is a joint initiative of the European Commission and the European Investment Bank. The abbreviation comes from "Joint European Resources for Micro to Medium Enterprises". The idea behind this initiative is to increase the competitiveness of the European economy in the global market. The JEREMIE Investment Fund offers assistance in creating or improving the system of financing and development of SMEs through the use of financial instruments, such as loans or guarantees. These instruments may be used continuously and on a revolving basis, as opposed to aid in the form of a grant, which can be used only once. 147

148 Figure 3. Number of loan funds in the market according to the value of capital held by them at the end of Source: own study The distribution of the number of institutions running loan funds according to value of capital held by the funds is relatively uniform. However, the structure of the value of their capital has changed considerably. Table 3. Structure of the number of funds according to the value of their capital Value of the capital up to 3 million 14.3% 3-10 million 22.7% million 22.5% million 20.2% over 40 million 20.3% Total 100% Source: own study Percentage structure of the number of funds Table 4. Structure of loan funds broken down by the value of the loan capital held by them Percentage share of groups of loan fund broken down by the value of loan capital Very small (<PLN 3 million) 38.60% 30.80% 17.10% 1.11% Small ( PLN 3 million <10 million) 34.30% 27.70% 20.00% 5.58 % Medium ( PLN 10 million<20 million) 18.60% 20.00% 22.90% 12.64% Large ( PLN 20 million<40 million) 2.90% 15.40% 24.29% 22.23% Very large ( PLN 40 million) 5.70% 6.20% 15.71% 58.44% Total % % % % Source: own study 148

149 Over the last four years, significant changes have taken place in terms of the amount of capital held by each fund category. At the end of 2011, the share of very large funds, holding more than PLN 40 million of capital, amounted to nearly 60% (58.4%) and, in comparison with the data from the end of 2010, it had increased more than threefold. Target groups of funding services The main target group (beneficiaries) of loan funds are micro, small and mediumsized enterprises from the region (voivodeship) in which a given fund s seat is located. The target group of loan funds has not changed recently: it consists of micro, small and mediumsized enterprises. Given the change in the maximum amount of the loan (up to PLN 500,000), small and medium entrepreneurs are a growing group of service beneficiaries. In 2011, there was a decline in the share of micro enterprises (from 93% to 77.3%) to the benefit of small businesses (from 6% to 17.8%), as well as in the share of medium-sized enterprises (nearly 3.8%) in the total number of clients of loan funds. Some of the funds implementing the Jeremie initiative can provide loans of up to PLN 1 million. Data collected through the questionnaires submitted by the participating funds shows that 22.2% of the total number of loans goes to start-up companies, but only 15.7% of loan capital is used to finance these loans. The remaining 84.3% is granted to companies operating in the market for more than 12 months. Figure 4. Structure of the number of loans broken down by the types of enterprises Source: own study If for the sake of comparison of loan funds with other financial institutions, we assume that start-up companies (for example, as defined by banks) are companies operating for no more than two or even three years, then nearly 40% of all clients of loan funds are start-up companies. This would confirm the belief that loan funds remain the closest business partners for start-ups. 149

150 Figure 5.Structure of loans broken down by categories of enterprises Source: own study A very important element in the development of loan funds consists in building solid relationships with clients. It turns out that more than 35% of borrowers are returning clients. This is a proof of client's satisfaction with the service, of the fact that their expectations are met, and that the services provided meet their needs. Returning clients are the best evidence confirming that the funds perform their task well. Loans granted Since their beginning until the end of 2011, loan funds granted more than 71 thousand loans with a total value of nearly PLN 2,881,000,000. The average value of a loan amounted to PLN 65,500, and it increased significantly as compared to the average value of a loan in 2010, which was PLN 38,900. A significant decrease in the number of loans serviced was observed - from 900 to 332, and the average number of newly granted loans dropped to 132. This is a result of changes in the strategy of operation of the funds and of their offer. Acquiring considerable funding from ROP and from the Jeremie initiative, increasing the maximum loan amount, and extending the period for which it is awarded (up to 96 months), allowed loan funds to grant fewer loans, but with much higher amounts and for significantly longer periods of time. Securities Loan securities remain the same as compared to previous years: the most popular forms are bills of exchange or civil law guarantee (considered sufficient in case of small loan amounts, along with mortgages). Cooperation between loan funds and guarantee funds has not improved; the main reason is that guaranteeing a loan provided by a loan fund by a guarantee fund from the same region is regarded as unacceptable double financing. Cooperation between loan funds and guarantee funds from different regions, if they use ROP funds, is prevented by the impossibility of transferring funds outside of a given voivodeship. 150

151 However, cooperation can and does take place when funds finance their operations with their own capital. The lowest interest rate amounted to 5.93%, even though, for example, funds implementing the Jeremie initiative provided loans with much lower interest rates (with the use of public aid). Own contribution amounted to 20% of the value of a project. Purpose and value of loans The majority of loans were granted for investment purposes (62%), investment and current operations (15.7%), as well as current operations (22.3%), with respective values of 63.7%, 15.7% and 20.6% (in the percentage structure). It is worth to mark that 65% of the funds have innovative companies in their loan portfolios. Figure 6. Structure of the number of loans broken down by their purpose Source: own study Figure 7. Structure of the value loans granted broken down by their purpose Source: own study 151

152 Loans with a value of over PLN 50,000 were the most popular group and accounted for over 78% of all loans disbursed in The value of 60% of loans range between PLN 50,000 and PLN 300,000; the value of the greatest number of loans granted ranged between PLN 120,000 and PLN 300,000. The smallest number of loans had a value of up to PLN 10,000 - they accounted only for 1% of all loans. Figure 8. Structure of loans broken down by their value Source: own study Servicing the funds A statistical loan fund employs an average of 6 staff in charge of direct servicing of the borrowing process. Some of the staff employed in the fund is also involved in other services provided by the institution running the fund, such as: advisory services (45% of institutions operating loan funds), educational services (50%) and consulting services (38%). Additional proceeds from the provision of these services supplement the budget of loan funds. The average operating budget of a fund amounts to PLN 1,168, Figure 9. Structure of financing the operating budget of funds in 2011 Source: own study 152

153 As demonstrated above, loan funds rely on grants and project subsidies in the financing of their budgets to a relatively small extent, as compared to other types of institutions. Barriers to development Data analysis allowed to identify three main barriers which, in the opinion of management team members, remain the essential elements hindering the activities of loan funds. Table 5. Barriers to the development of loan funds Type of barrier Weight disadvantageous economic situation in the region, apathy and stagnation 3.1 insufficient capital 2.9 imprecise legal regulations 2.7 seekers of "easy money" 2.3 shortage of persons willing to start their own businesses 1.9 limited interest in services provided by loan funds 1.7 problems in co-operation with local and regional institutions, lack of support 1.6 difficulties in appointing a team in charge of evaluating business ventures 1.1 adverse attitude to loan funds 0.9 Source: own study Disadvantageous economic situation is considered to be the main barrier, which is a significant indication of the slowing down of the future development of companies; finding new sources of capital remains an important problem for loan funds, considered by them to be an important barrier to their development. Legal regulations ranked third, as they are still not adjusted to the specific type of activity typical of loan funds. 153

154 Loan Guarantee Funds (Marek MIKA) Loan guarantee funds (LGF) are business environment institutions whose main task consists in supporting businesses through the provision of support in obtaining funding for their activities. They provide financial assistance in the form of guarantees - primarily for small businesses that do not have sufficient credit history or guarantees that are required by commercial banks66. Loan guarantee funds are defined as non-profit financial institutions, supporting local socio-economic development67. Map 1. Loan Guarantee Funds in 2011 Source: own study 66 The principles of organization and operation of loan guarantee funds are outlined in the following publications: M. Gajewski, Dokumenty organizacyjne funduszy poręczycielskich, Katowice 1995; M. Gajewski, Lokalny Fundusz Poręczeń Kredytowych, Katowice 1995; M. Gajewski, T. Kiliański, J. Szczucki, Zasady organizacji i funkcjonowania funduszy poręczeń kredytowych, PFPiR MSP, Warszawa K. B. Matusiak, Innowacje i transfer technologii. Słownik pojęć, PARP, Warszawa 2008, p

155 So far, the location of funds depended primarily on the activities of local and regional organizations and institutions, including in particular local authorities and NGOs that make up the infrastructure of entrepreneurship support. Organizational and legal forms In mid-2012, 55 loan guarantee funds were operating in Poland. In terms of organizational and legal forms, the majority are capital companies (75%), followed by nongovernmental organizations (associations and foundations) - (21%). Figure 1. Organizational and legal forms of loan guarantee funds in (percentage share) Source: own study Over time, LGF take legal forms that are better suited to the specific nature of their operations in terms of supervision and security of capital (joint-stock companies and limited liability companies), which is often due to the requirements imposed by institutions that supply funds to LGFs. Guarantee capital Data collected from the funds and from the National Association of Guarantee Funds 68 indicates that their total guarantee capital amounts to over PLN 1 billion (PLN 1,035,000,000), which means an increase of PLN 80 million as compared to 2010 (PLN 955 million). The study shows that 75% of funds consider their level of capital to be sufficient in relation to the needs of the market. 68 Data from the annual report of the National Association of Loan Grant Funds was also used for the drawing up of the present study: RAPORT o stanie funduszy poręczeniowych w Polsce stan na dzień 31 grudnia 2011 r., KSFP, Warszawa

156 Figure 2. Structure of loan guarantee funds broken down by their capital Source: own study Activity of funds In 2011, the funds granted a total of over 6,100 guarantees totalling PLN 967 million. The structure of fund activity during the examined period, just as in the case of loan funds, changed significantly. The number of guarantees fell by about 14%, while their total value increased by 15%. This is due to the fact that the funds received significant financial resources in the framework of ROP and the JEREMIE initiative, which were used to raise their guarantee capital, and expanded their target group by including medium-sized enterprises. Thus, they could raise the maximum amount of guarantees and their services became much more interesting. In this way, the number of guarantees decreased (a drop in the number of smallamount guarantees), and their value increased (for the benefit of guarantees whose amount exceeds PLN 500,000). Therefore, the average value of guarantees rose; in 2011, it amounted to almost PLN 160,000, which was a significant increase as compared to 2010 (PLN 117,000). The decline in the number of guarantees was also due to the fact that the market was significantly affected by the impact of the economic crisis, which strongly influenced the lending activity of banks. Also, entrepreneurs themselves were more careful in making decisions about incurring liabilities. The above figures show that even though the largest number of funds are very small and small (up to PLN 20 million), the majority of capital is held by large and very large funds (over PLN 60 million) - almost 36% of the total capital held by LGF. However, the funds whose capital ranges from PLN 10 to 40 million prove to be most active and efficient, which is indicated by the ratio of guarantees to capital: in 2011, funds from the million group granted guarantees amounting to nearly PLN 300 million, while the value of guarantees granted by funds from the million group totalled over PLN 295 million. In 2011, the 156

157 guarantees granted by the six largest credit guarantee funds, holding a total of nearly PLN 370 million, exceeded slightly the value of PLN 200 million. Target groups The main target groups for loan guarantee services were SMEs, in particular micro and small companies, but to a certain extent also medium-sized companies. On average, 37 entrepreneurs (including 6 women) contact loan guarantee funds every month; guarantees are granted to an average of 34 applicants, including 5 women. 10% of entities that benefitted from the funds' support are innovative enterprises. The study showed that the funds have their preferences in providing support to their clients. Companies that are already present in the market are most likely to receive guarantees. The unemployed are least likely to be provided with guarantees, while none of the funds that provided information on their activities takes into account the provisions of guarantees to graduates. It is not an optimistic prospect, given the expected economic downturn. Table 1. Percentage of funds providing support to selected groups of clients in 2012 Target group percentage of funds small businesses with high growth potential 53% companies employing the unemployed 53% companies recognized as crucial for the development of their region 53% economic activity in rural areas 53% companies implementing new products and technologies 53% no formal restrictions beyond the economic aspect of the undertaking are applied 47% companies operating in selected industries 33% economic activity in the areas covered by restructuring programs 33% other - SMEs 33% unemployed persons setting up new businesses 27% graduates 0% Source: own study Guarantees were granted mainly to banks and only a small percentage were guarantees for loan funds. Cooperation with the latter remains limited due to regulations, in particular the interpretation of provisions on unauthorized double funding. The highest value was represented by guarantees granted to working capital facilities (75%), followed by investment loans (19%). Guarantees were granted most frequently to companies from the transport sector (40%) and trade (32%), and least often to companies from manufacturing and construction sectors (12% each). 157

158 Figure 3. Structure of guarantees broken down by sectors, in 2011 (percentage share) Source: own study Figure 4. Structure of guarantees broken down by their value range (percentage share) Source: own study 57% of entrepreneurs apply for guarantees whose value does not exceed PLN 100,000; at present, this amount does not represent a large amount of capital for a new company. It should be noted that the vast majority of guarantees apply to working capital loans. 158

159 Figure 5. Structure of guarantees in individual value ranges (percentage share) Source: own study Figures 4 and 5 indicate that the majority of guarantees remained in the range of up to PLN 250,000, including up to PLN 50,000; guarantees in the range between PLN 100,000 and 250,000 and higher represented the highest value of guarantees, although their number was limited. Operations On average, the fund's operating budget in 2011 stood at PLN 1,131,847; they employed an average of 6 persons on the basis of an employment contract and two on the basis of a civil law contract. The structure of financing of the funds' current expenditure was as follows: revenue from guarantee granting fees % revenue from own activities % revenue from interest on capital % subsidies, grants, donations % More than half of the funds provide complementary services in the form of assistance in obtaining loans, financial engineering, preparing applications for subsidies and grants, while only a small number provide advisory services (about 20% of the funds). Barriers to activity According to managers, the main barriers to the activity of funds are the deteriorating economic situation of the country and the problems in cooperation with banks, which seems natural given the current economic crisis. Difficulties in employing a team of qualified staff to run the fund were considered to be least problematic. 159

160 Table 2. Main difficulties and barriers to the development of LGFs in Poland in 2012 Barrier disadvantageous economic situation in the region, apathy and stagnation 3.4 problems with local and regional financial institutions (banks) 3.2 insufficient amount of capital, impossibility of fund recapitalization 3.1 imprecise regulations 2.9 limited interest of potential beneficiaries 2.7 negative approach to loan guarantee funds 2.5 falling interest rates on bank deposits 2.5 problems with financing current activities of the fund 2.3 insufficient support from local government 1.9 difficulties in employing a team of qualified staff to run the fund 1.0 other 0.1 Source: own study Weight Plans for the future Loan guarantee funds remain fairly optimistic about the future. Over 60% of them consider future prospects as good, while other funds rate them as average. Their most immediate plans involve: - participating in the next call for proposals organized in the framework of the JEREMIE initiative, - increasing their guarantee capital, - establishing new contacts with financial institutions, - providing advisory services to entities the preparing their loan applications, - expanding their range of services to include leasing guarantees, factoring, bank guarantees and performance bonds or deposit payments. 160

161 POLISH TECHNOLOGY PLATFORMS (Andrzej SIEMASZKO, Małgorzata SNARSKA-ŚWIDERSKA) Definition Technology Platform (TP) is a consortium of enterprises, scientific units, innovation and entrepreneurship centres, financial institutions and economic self-government. It is led by the economic entities and intended to devise a medium- and long-term vision for technology development in a given economy sector, but also for setting up of a strategy for its implementation and for preparing a coherent plan of actions 69. Concept and the beginning of ETPs The first batch of European Technology Platforms (ETP) was established in 2003 as an important element in the process of laying down the research priorities for the 6 th EU Framework Programme for Research and Technological Development. Originally, there were 30 ETPs, usually comprising of a group of between 30 and 50 key leaders of a given sector, i.e. industrial concerns, enterprises, European associations and R&D units with expertise in a particular sector of economy. Currently, there are 36 technology platforms operating in Europe, in virtually all key areas of the European knowledge-based economy. ETPs have undertaken to devise a development strategy for their respective economy sectors and to define the future technologies jointly with the European Commission, the decision-making groups, but also with the society. ETPs have become a basis for mobilisation and organisation of technological initiatives and funds raising at the European level and for implementation of those initatives. ETPs define research programmes in the form of Strategic Research Agendas (SRA) which are submitted to the European Commission. Research topics laid down in SRA are reflected in the work programmes of the 7 th Framework Programme. ETP work is reinforced through cooperation with Mirror Groups which consist of the representatives of all governments of Member States. Financing sources For the implementation of large technology undertakings generated by ETP, which are vital for the development of a given industrial sector, a special instrument has been prepared in the form of other research and technology initiatives, based on Article 171 of the Treaty in the form of Joint Research Initiatives (JTI Joint Technology Initiatives, JU Joint Undertakings) or Article 169 of the Treaty. These initiatives include ARTEMIS, Clean Sky, GMES, Green Cars Initiative, Energy Efficient Buildings. In the area of energy Strategic Energy Technology Plan (SET Plan), which triggered a number of European Industrial Initiatives (EII) 69 K.B. Matusiak, Innowacje i transfer technologii - Słownik pojęć [Innovation and technology transfer, Glossary], Polish Agency for Enterprise Development, Warsaw

162 and programmes, was prepared. This includes CCS Demonstration Programme. These Technology Initiatives are implemented in the form of public-private partnerships (PPP). Thus, there are now two main implementation paths for the developed ETP Strategic Research Agendas and the related projects in the form of joint research and demonstration initiatives: the 7 th EU Framework Programme 54 billion budget; Joint Technology Initiatives (JTI, JU, PPP, EII) budget of 30 billion budget. For the period EC presented its new strategy - Europe One of its flagship initiatives is called "Innovation Union". It is intended to be a stimulus for recovery from the economic crisis, but also it is designed to improve the EU economy s competitiveness through an increased expenditure on research and development of new technologies. The basic assumption of Europe 2020 Strategy is to achieve allocation of 3% of GDP on research and technology development. These activities will be supported by means of the Framework Programme - Horizon 2020 as 80 billion from its budget will be provided for actions contributing to technological transformation and economic recovery. The European Technology Platforms will again play a key role in the implementation of these strategies because they will define the Strategic Research Agendas (SRA) and other documents related to the vision of sector development in terms of technologies, such as Vision Papers, Deployment Agenda, and Road Maps. The analyses will be conducted for the perspectives 2020, 2030 and in some cases to even These documents define development scenarios for different social and economic sectors; they also identify research and development needs, implementation capacity and the necessary legislative actions as well as actions for communication and social acceptance necessary for the purpose of commercialisation and dissemination of innovative technologies. Poland - beginning The Polish Technology Platforms, as in the case of EU-wide TPs, should play an important role in redirecting Poland to the innovative economy based on high technologies. The majority of those platforms was established in Initially, they focused mainly on active participation in ETP structures and on defining and implementing Strategic Research Programmes as well as on active participation in the EU Framework Programmes (FP7 and CIP - Competitiveness and Innovation Programme). System requirements Despite the creation of a system of Polish platforms, which is analogous to the one operating at the European level, the Polish Technology Platforms have not won full recognition as an important economic partner. The platforms were omitted in the Act on the National Centre for Research and Development and could not directly be involved in initiatives and play a significant role in creation of the National Programme of Research and Development (2008), or the current National Research Programme (2011). Ministries seldom 162

163 invite the representatives of PTPs to participate in the expert committees and teams which work on the Polish economic strategy as well as on strategic research initiatives and strategic research programmes. However, the Ministry of Science and Higher Education supported the European part of PTP s activities through co-financing of the Sectoral Contact Points that operate within some platforms and intended to strengthen the platform partners through the 7 th Framework Programme. The situation changed significantly in 2011 when the National Centre for Research and Development opened negotiations with the Polish Technology Platforms on the establishment of Sectoral Research Programmes. The first agreement on the programme, worth PLN 500 million, has already been made with the Polish Aerospace Technology Platform. Negotiations on further programmes are in progress. Coordination of activities Currently, there are 30 technology platforms in Poland. They involve key industrial partners, enterprises, chambers and agencies of commerce, research institutes and academic units. The National Contact Point for Research Programmes of the European Union is a partner of all previously established PTPs and acts as the General Secretariat of PTP (coordinating PTPs, representing PTPs in contacts with political authorities, ministries, economic organisations, supporting PTPs in collaboration with ETPs, promoting PTPs in the country and Europe). PTPs do not have legal personality - they operate in the form of consortia under civillaw contracts as agreements between the institutions forming the platform. The key activities under the PTP consortium involve development and preparation of the Strategic Research Programme for the sector represented by the platform. The programme should become a basis for the research and development projects designed to solve the key technological problems of the particular industrial sectors. The operating PTPs are coordinated by various institutions. Thirteen platforms are coordinated by the research institutions, 6 by universities, 6 by enterprises, 3 by chambers of commerce and 2 by associations or foundations. The fact that academic institutions and research institutions are appointed as leaders of PTPs usually results from their scientific position, good contacts abroad, assurance of PTPs activities neutrality and adoption of integration function as well as declaration of a significant contribution to the development of strategic research programmes. 163

164 Chart 1. Structure of PTPs according to the coordinating institution in 2012 Source: own study In case of 15 (out of 30) platforms the coordinators have their head offices in Mazowieckie Voivodeship (14 in Warsaw). However, the scope of their activity is usually nationwide due to the location of particular member institutions. Map 1. Coordination centres of PTP in Source: own study 164

165 PTP s objectives: integration of industrial and scientific environment of a given economic sector for the purpose of joint research work and technology development; participation in decision-making groups of the European Technology Platforms (Advisory Board, Steering Committees, Working Groups and Mirror Groups); participation in the European Technology Initiatives JTI, JU, PPP, EII, Article 169, ERA-Net, Joint Programming Initiatives; participation in the 7 th Framework Programme and in Horizon Thematic areas Polish Technology Platforms participate in 7 thematic priorities such as: transport, information technology, energy, advanced materials, metals, biotechnology-agriculturemedicine, and safety. The following chapter is a brief description of thematic areas of PTPs. Technology Platforms in the transport area The Polish Aerospace Technology Platform invests the majority of its potential in southern area of Poland also referred to as Aviation Valley (Rzeszów-Mielec-Świdnik) and the Silesian Aviation Cluster (Bielsko-Biała). Its strong scientific partners are Warsaw University of Technology, Rzeszów University of Technology, Military University of Technology, Institute of Aviation, Institute of Fundamental Technological Research of Polish Academy of Sciences and Technology Partners Foundation. An example of close cooperation is a construction of joint laboratories by AVIO Polska Company, Warsaw University of Technology and Military University of Technology for testing the latest generation of aircraft engines near Warsaw. The platform cooperates closely with Advisory Council for Aeronautics Research in Europe ACARE. Platform s members implement projects in FP7. Polish Road Transport Technology Platform brings together a number of institutes and enterprises as well as associations and chambers of commerce. It is coordinated by the Road and Bridge Research Institute. It should be noted that the Polish Technology Platform for Green Transport, established in March 2012, is coordinated by the Polish Chamber of Automotive Industry). It focuses on the issues related to the construction of electric cars and alternative fuel powered vehicles. One of the leaders of that platform is Solaris electric bus manufacturer. Establishment of a taxi network of electric cars in Warsaw is an example of the Platform s successful activities. The platform is going to develop smart cities i.e. cities that use green transport. The platform works closely with the European Road Transport Research Advisory Council ERTRAC. Polish Technological Platform of Railway Transport brings together key manufacturers of rolling stock, scattered throughout the country. The platform includes research centres the Railway Institute, Warsaw University of Technology and central institutions of the PKP Group Polskie Linie Kolejowe, Inter City and PKP Cargo. Tramwaje Warszawskie is also an important partner. A number of research projects, in which PESA Bydgoszcz has worked for 165

166 PKP, Koleje Mazowieckie, WKD and Tramwaje Warszawskie can be regarded as effective cooperation. The platform cooperates closely with the European Rail Research Advisory Council ERRAC. Due to the decline of shipbuilding industry the Polish Technology Platform of Water Transport suspended its operation. Currently, Ship Design and Research Centre in Gdańsk acts as its coordinator. The partners are monitoring the situation in the sector and plan to rebuild the platform and prepare a new Strategic Research Agenda. Polish Space Technology Platform consists of enterprises and units that work closely with Space Research Centre of the Polish Academy of Sciences in Warsaw. The platform brings together the enterprises operating in the field of satellite communications technologies, GIS, information processing, environment monitoring with the use of GMES system. The platform cooperates closely with the European Space Technology Platform ESTP. Technology Platforms in the information technology area Polish Platform of Information Technologies, which was coordinated by the Polish Chamber of Information Technology and Telecommunications suspended its activities. Polish Platform on Mobile Communications and Wireless Technology is coordinated by the MOST Foundation. Enterprises and scientific units from Warsaw constitute a significant part of the Platform s participants. The platform has a strong representation in the European Mobile and Wireless Communications Technology Platform emobility. Polish Technology Platform for Opto- and Nano-electronics is currently in the process of reorganisation. It is coordinated by the Institute of Applied Optics in Warsaw. Warsaw is a centre of optics and nano-electronics Opto-electronics Cluster operates here. The platform works closely with the European Technology Platform Photonics21. Technology Platforms in the energy area Polish Technology Platform for Clean Carbo-Energy brings together all major enterprises of the Polish energy sector. It was coordinated by Vattenfall Polska. The platform works closely with the Ministry of Economy and Ministry of Environment on the implementation of Carbon Capture and Sequestration (CCS) programme and clean cargo-energy technologies. The platform cooperates closely with European Technology Platform for Zero Emission Fossil Fuel Power Plants ZEP. The authorities of ZEP (Advisory Council) include the representative of PGE and Tauron. Polish Nuclear Technology Platform brings together scientific units and enterprises from the nuclear energy sector. In this case, Mazowsze Region has the highest number of representatives as the National Centre for Nuclear Research is located in Świerk. The platform cooperates closely with the Sustainable Nuclear Energy Technology Platform - (SNE-TP). 166

167 Polish Technology Platform for Biofuels has a strong base in Mazowsze Region. One of its leaders is PKN Orlen based in Płock. The platform works closely with the Ministry of Economy on the introduction of biofuels in Poland. The platform maintains a close relationship with the European Biofuels Technology Platform Biofuels. Polish Technology Platform on Hydrogen and Fuel Cell brings together scientific centres and enterprises mainly from Warsaw and Krakow. The platform works closely with ETP Hydrogen and Fuel Cell Platform HFP. Among the Polish Technology Platforms in the energy area 3 new platform initiatives have emerged that are currently negotiating the terms of their founding agreements. These are: Polish Technology Platform for Green Electricity (under construction) will associate enterprises manufacturing machinery and equipment to generate electricity and thermal energy being used in the zero-energy buildings. The second pillar of Platform consists of clusters operating in the field of renewable energy sources and distributed energy devices. The platform takes steps to create zero-energy cities and local communities for example energy-autonomous municipalities. The platform will work closely with the European Industrial Initiative Programmes such as Smart Cities and Communities. The European Covenant of Mayors association involves a number of Polish cities such as Bielsko-Biała, Warsaw and Piaseczno. Polish Technology Platform for Unconventional Gas (under construction) consists of enterprises that have exploration licences concerning shale gas and are interested in gas exploration (for example PGNiG, Lotos Group). Polish Technology Platform for Green Mining (under construction) includes enterprises from Upper Silesia (for example KHW), but also enterprises and scientific centres from Warsaw. Technology Platforms in the advanced materials area Polish Construction Technology Platform includes a number of construction enterprises. Its coordinator is ASM-Centrum Badań i Analiz Rynku. Another important partner of this group is Mostostal Warszawa, which is also an active participant in the European Construction Technology Platform ECTP. Polish enterprises participate quite actively in E2B Association which runs a key European Energy Efficient Buildings programme as public-private partnership. Zero-energy buildings are one of the issues to be dealt with by the platform. Polish Technology Platform of Production Processes is coordinated by Wroclaw University of Technology. The platform works closely with the ETP Future Manufacturing Technologies MANUFUTURE. The platform members very actively participating in the implementation of research projects. Polish Technology Platform for Textile Industry cooperates closely with Future Textiles and Clothing - FTC, it is coordinated by Łodz University of Technology. 167

168 Polish Technology Platform for Sustainable Chemistry is led by the Polish Chamber of Chemical Industry and associates mainly major chemical industry s actors i.e. ZAT, Anwil, ZACHEM, PKN Orlen, ZAK. The platform cooperates closely with the ETP Sustainable Chemistry SusChem. Polish Technology Platform for Advanced Materials is based in Warsaw. This platform includes Warsaw University of Technology, Institute of Fundamental Technological Research of the Polish Academy of Sciences, Institute of High Pressure Physics of the Polish Academy of Sciences, Institute of Physics of Polish Academy of Sciences and many other Research Institutes. The platform cooperates closely with the ETP Advanced Engineering Materials and Technologies EuMaT. Technology Platforms in the metal area This priority area involves 4 active platforms: Polish Technology Platform for Non-ferrous Metals, Polish Steel Technology Platform and Polish Platform of Foundry Technology that operate mainly in southern Poland and are coordinated by research institutes. The members cooperate on the foresight, R&D and International projects. Polish Technology Platform on Mineral Resources is highly integrated with the ETP Sustainable Mineral Resources coordinated by the representative of KGHM. It is one of the youngest platform initiatives and established in It is currently developing the Strategic Research Agenda for the mineral resources in the area, including problems of rational use of natural resources. Technology Platforms in the area of biotechnology, agriculture and medicine Polish Technology Platform of Biotechnology brings together several scientific units and enterprises from Łódź, Warsaw and Krakow. The platform maintains contacts with the ETP Sustainable Chemistry and ETP Plants for the Future. It is currently looking for a new coordinator due to the rfact that Jagiellonian Centre of Innovation resigned. Polish Technology Platform for Innovative Medicine brings together a number of research units, including research centres of enterprises operating in the area related to the production of medicines as well as advanced diagnostics. The representatives of this platform are involved in negotiations with the National Centre for Research and Development concerning the launch of strategic research programme. The platform cooperates closely with the ETP Innovative Medicines for Europe IME. Polish Technology Platform for Food brings together a number of scientific units and enterprises. The platform consists of 56 partners. The platform cooperates closely with the ETP Food for Life Food and ETP Global Animal Health GAH. The Polish representatives work in the Working Parties. The main research areas involve healthy food, biological progress in agriculture and veterinary public health. The platform s work also covers various environmental health hazards (chemical, biological and physical). 168

169 Polish Environmental Technologies Platform is coordinated by the Institute for Ecology of Industrial Areas in Katowice. It works closely with Water Supply and Sanitation Technology Platform. The Polish representatives are in Mirror Group and High Level Working Group. The platform members actively participate in the Competitiveness and Innovation Programme Ecoinnovation. Polish Technology Platform for Forestry and Wood Sector cooperates closely with Forestbased Sector Technology Platform and is coordinated by Wood Technology Institute in Poznań. The platform brings together about 20 enterprises from this sector; the key partners are Lasy Państwowe, Warsaw University of Life Sciences, Forest Research Institute, a number of industry associations and organisations. Currently, the platform is trying to establish a Green Electricity cluster. Technology Platforms in the safety area Polish Technology Platform of Security Systems brings together a number of enterprises across the country. BUMAR Group and a number of companies belonging to that group is an industrial leader. The platform is coordinated by the Military University of Technology. The platform implements many strategic projects related to the country s defences. Polish Platform for Homeland Security consists of several scientific units and enterprises from the entire country. It is coordinated by the Bialystok University of Technology. The key partners are the central State authorities responsible for the security of the State and its citizens. The platform implements many strategic projects related to internal security and judiciary. The platform maintains close contacts with European Security Research and Innovation Forum. Polish Technology Platform on Industrial Safety is coordinated by the Central Institute for Labour Protection in Warsaw. The platform cooperates closely with the European Technology Platform on Industrial Safety (ETPIS). The concept of Polish Technology Platform on Industrial Safety involves joint activities aimed at improving occupational health, ergonomics of processes and products as well as reducing the number of accidents occurring at work, occupational diseases, serious industrial damages and disasters and adverse impact on the environment. The platforms have gone through the initial stage of development the first agreements on PTPs structures date back to Further agreements were signed in 2005, 2006 and In 2009, PTP for Clean Carbo-Energy was established, which had only 9 members at the beginning. PTP on Mineral Resources was established in 2011, while the youngest platform i.e. Polish Technology Platform for Green Transport, established in 2012, is currently developing Strategic Research Agenda the coordinator of which is the Polish Chamber of Automotive Industry. 169

170 New initiatives The National Contact Point for EU Research Programmes registered a number of new initiatives which are negotiating agreements on cooperation but none of them have been formally signed so far, thus they are not included in the analysis and did not take part in the survey. This relates to the initiatives in the ENERGY thematic area: Polish Technology Platform for Green Electricity (under construction), Polish Technology Platform for Unconventional Gas (under construction), Polish Technology Platform for Green Mining (under construction). Organisation and participants Various platforms have declared a different number of members at the time of establishment between 8 and 52 members within the platform. During the platform s operation, new members were joining and now their number ranges between 15 and 165 institutions involved in this kind of industrial partnership. A large variety of entities under PTPs has been identified. Enterprises, academic institutions and independent research units constitute a significant majority of members. Another important group consists of representatives of business environment institutions. The representatives of enterprises development units and innovation centres form a small group. There was a significant increase in the involvement of government and local government entities in PTP activities compared to the 2010 survey. Such involvement was declared by 6 PTPs. Previously, this sector was represented only by the Polish Platform for Homeland Security. This means that PTPs as well as state and local government authorities recognise the need for cooperation. A vast majority of PTPs declare the involvement of full-time employees in the platform coordination. On average the level of involvement ranges from 0.2 to 3 employees in terms of FTE. Most platforms are supported in their activities by Advisory Committees, mainly Steering Committees about 80 % of platforms, the rest of respondents declare cooperation with panels of experts, coordination committees or support groups. Only few platforms do not have their advisory bodies. 170

171 Chart 2. The structure of institutions involved in PTPs in 2012 (in %) Source: own study The enterprises are a dominant group in PTPs, as the number of their participants constitutes about 56.6 %. The two other biggest groups of representatives consist of scientific and research units % and academic institutions (universities, universities of technologies) %. As the chart above shows, the vast majority of enterprises are the key actors in the sector, able to conduct surveys or carry out research work 42.6 % (40 % in 2010). SMEs constitute 52% of total number of enterprises operating within the platform (in the 2010 survey they accounted for over 53 %), while micro enterprises constitute only 5.4 % (a decrease of 1.3 % compared to the 2010 survey). It is confirmed by the lack of maturity of this sector to cooperate and invest in research and development work. The vast majority of PTPs (over 90 %) declare that they have Strategic Research Agendas ready. Institutions operating within platforms declare to have foreign partners while at the same time the number of their partners is significantly diversified from 1 to

172 Chart 3. Structure of enterprises operating in PTPs broken down by the number of people employed in 2012 (in %) Source: own study Activity The PTPs activity was divided into 7 priority technology areas. However, within each area from 3 to 5 PTP structures have been established that cover specific topics under the selected area. Regardless of the fact that PTP structures tend to be cross-regional and even national due to the head offices of the platform members, the economic specificity of the region is also very significant, as the concentration of sectoral enterprises and research facilities related to the sector show. Polish Technology Platform for Food may be an example of a regional platform the location of the platform s coordinator as well as of key institutions is naturally related to Warmińsko-Mazurskie Voivodeship. A strong regional tendency is also shown by the Aerospace Platform due to the traditions of this sector in Podkarpackie Voivodeship. The issues related to establishing cooperation with the European Technology Platforms as well as foreign partners of PTPs indicate that the platforms should operate at the European level, or even at the global level. Currently cooperation is both formal and informal. The latter is based mainly on personal contacts with the platform members and their staff. Regular meetings of members and the possibility to use the joint communication platform are referred to as the most important issues of internal communication within the platform (respectively 50 % and less than 40 % of responses). There has been a significant decrease in these percentages compared to the 2010 survey, where the values amounted to 90 % and 83 %, respectively, while the majority of respondents indicated meetings depending to the current needs (about 50 %). Priority areas of activity Priority areas of PTPs involve: cooperation with ETPs and active participation in expert committees (77.8 %), more intensive search for external sources of research financing 172

173 (55.5 %) and conducting scientific and research projects at the highest global level (55.5 %). The second relevant group of activities that was indicated in the survey involves development of innovation production (50 %), development of cooperation network between economy and science (50 %) and issues related to technology transfer and knowledge commercialisation (44.4 %). The less important activity of the technology platforms is related to the participation in the European initiatives associated with creation of research and development centres potential in the industrial units as well as with establishment of spin-off knowledge-based enterprises and development of specific proinnovation services. None of the platforms indicated the area associated with attracting investors to Poland. The priorities of the current activity are shown on the chart below. Chart 4. Priorities of the current activity of PTPs in 2012 (in %) Source: own study Development barriers The PTP coordinators indicate the following development barriers 70 : lack of funds for joint investments 3.87 limited funds for research 3.43 lack of partnership and business-oriented cooperation 3.43 between science and enterprises lack of government innovation policy 3.18 problems in cooperation with local and regional institutions, lack of support lack of understanding of the idea, unfriendly climate in the platform low level of trust among institutions and enterprises 2.0 other (lack of platform dedicated support, lack of 2.0 ecoinnovation policy) bad situation in the region, malaise and stagnation the level of influence of a given feature: 0 none, 1 insignificant influence, 2 minor influence, 3 medium influence, 4 large influence, 5 decisive influence. 173

174 The main development barrier for platforms is the lack of funds for joint investments and limited funds for research. PTPs have not received any public funds for supporting the created organisation structures so far. Currently, the possibility to prepare and finance the projects for development of Strategic Research Agenda is the only record in the Operational Programme Innovative Economy, but most of platforms have prepared subject strategies on their own. The platforms indicate that a major barrier to their development is the lack of partnership and business-oriented cooperation between science and enterprises as well as lack of government innovation policy. In the respondents opinion the lack of support and poor cooperation with local and regional institutions are very frustrating. Issues related to the level of trust among institutions and enterprises as well as issues related to the generally bad situation in the region are less problematic. In the opinion of interested parties, the activity of Polish Technology Platform is more visible at the European rather than at the national level, especially in expert committees. The platforms are ready to get more involved in creation and implementation of strategic technological programmes, especially in the field of clean coal technology (underground carbon gasification, coal methane drainage, clean technologies of shale gas), energy from renewable sources (deep geothermy, photovoltaics) and modern transport (small aircraft, regional aircraft and rotorcraft, aircraft engine and high-speed train) and advanced materials (critical metals). Such programmes should be implemented according to the public-private partnership rules and European standards i.e. in the form of Joint Technology Initiative. The analyses conducted by the National Contact Point for EU Research Programmes show that areas with high Polish participation in FP7 and stronger Polish position, such as research in the field of advanced materials, construction, aviation and security, overlap with the operation areas of Polish Technology Platforms. It is possible to identify dozens of programmes that were prepared by PTPs, lobbed at the ETP level and are now successfully implemented. These projects include several projects coordinated by the Polish teams. It seems that PTPs contributed to a significant increase in the participation of Polish enterprises in FP6 and FP7. Based on the survey and the current cooperation with the Polish Technology Platforms the following recommendations can be offered: as representatives of economic sector the PTPs should be an important partner in the creation of the state policy in terms of R&D; PTPs should really participate in defining the National Research Programme; PTPs should have a possibility to initiate and negotiate sectoral research programmes and technological initiatives with National Centre for Research and Development (the socalled Polish JTI); 174

175 dedicated programmes for PTP supporting measures under Structural Funds should be launched in the coming programming period (joint investments, research programmes, implementation of research results and development work); there should be special training activities preparing for participation in the Horizon 2020 Programme. 175

176 CONCLUSIONS AND RECOMMENDATIONS The survey shows that the activity of innovation and entrepreneurship centres is quite well developed and organised. However, its level of professionalism remains insufficient to support effectively the innovative economy. The analysis of collected data, backed with a number of discussions with representatives of business environment institutions, has revealed several deficiencies in the functioning of individual groups of centres as well as of the whole system. In the course of preparing the report, experts have formulated the following conclusions: 1. The number of centres having at their disposal several elements of entrepreneurship development support infrastructure keeps increasing, making them increasingly professional and multifunctional, and at the same time allowing them to optimise the use of professional resources for the purposes of various types of activity they pursue. 2. Numerous infrastructure investments have brought about an increase in the number of professionally equipped centres practically in all regions of the country, although saturation in particular groups of centres does not always correspond to the demand for their services. 3. The activity of academic business incubators is definitely shrinking; it seems that the majority of universities contented themselves with initiating the process, without investing time or resources in operation of academic business incubators. From the point of view of the environment to which their services are addressed, leaving operational centres that carry out trace activity brings more damage than benefit. 4. Activity of business incubators, being currently subject to market forces to a great extent, aims at professionalization and ensuring self-financing. Increasing of infrastructural and professional potential permits some of incubators to leap in the future and will enable their operation also in the period when no external financial contributions are available. However, due to their limited resources, numerous incubators will need continued support of sponsors, without whom they will not be able to function. Among major threats to the operation of incubators, apart from a financial gap, will definitely be professionalization of other business environment institutions and mutual permeation of the area of operation, competencies and services. Advanced business environment institutions, such as science and technology parks, technology incubators or academic business incubators, capture individual business projects as well as whole target groups of originators, and will definitely continue to do so increasingly. 5. Regional Operational Programmes and Operational Programme Innovative Economy made it possible for a range of support institutions to construct and equip modern infrastructure. The task for the foreseeable future should be expanding the offer of services, and increasing qualifications of the staff and thus the quality of advisory and training services. 176

177 6. Training and advisory centres are the first and most readily available link for entrepreneurs in the innovation and entrepreneurship support scheme. The survey shows that, despite a large number of such centres, the availability of this kind of support remains insufficient. Strong centres, in providing support to enterprises in the local market, have for some time accounted in their offer for pro-innovative aspects. Thus, it is so important to support, professionally and financially, the creation of new centres (especially in the rural areas and in small towns) and the development of the existing ones. 7. The practical operation of technology parks in Poland shows a decrease in the scope of soft support services they provide. This phenomenon is rather alarming, given the increasing floor area of good and very good standard, offered by property developers. Thus far, the good quality of business support services offered and the broad contacts of technology parks were their unquestionable market advantage. Limiting this area of activity will cease to distinguish them from commercial offers and may cause an outflow of customers who will accept other more attractive offers. 8. The prevailing low level of examining the needs of tenants and customers of such parks is not conducive to their mission and goals. Monitoring demand of customers in terms of service range and way of servicing, as well as their demand for businessrelated services, should become one of priorities for action. This should contribute to the attractiveness of technology parks as places for running a business in the situation of economic downturn and of increasing supply of well equipped floor areas. 9. Further operation of business angels networks is seriously threatened by their lack of readiness for commercial operation, accompanied by exhaustion of the acquired EU funding. 10. It is necessary to evaluate the results of the current support programme for seed capital funds (SCF) with a view to eliminate from the programme those entities that failed to reach the indicators of projects implemented so far. 11. Virtually all centres have pointed economic downturn and problems that enterprises have in staying in the market as a major barrier to development. This is an important signal, not only for the managers of the centres, but also for decision-makers who plan the distribution of subsequent tranches of financial resources, that enterprises may not be able to use the offered instruments. Based on the above analyses and conclusions, the group of experts preparing this report presented recommendations which, if implemented, may contribute to a better use of technical and professional potential of the centres, and help to avert negative effects of the current situation on functioning of the centres. 177

178 Recommendations: 1. Planning the distribution of financial resources in the next programming period should account for the potential and experience of centres that already operate in the market, limiting at the same time the establishment of new departments within the existing entities, merely for the purpose of implementing a given project. This often leads to uncalled for situations when one institution creates new internal and external structures for various projects, needlessly complicating the management processes and making the distribution of resources far from transparent. 2. Support instruments implemented in the new programming period should be adjusted to the level of development of individual centres, accounting for their diversity in terms of potential and capabilities to provide specialist services. For example, seed capital funds, to obtain sustainable results, should be established as part of the existing business environment institutions which are experienced in pre-incubation and incubation of new enterprises. 3. Government agencies, when planning new funding programmes supporting development of networks of innovation and entrepreneurship centres, should ensure that entities implementing individual projects define their activity in accordance with the established definitions (e.g. on the basis of Słownik pojęć, Innowacje i transfer technologii published by Polish Agency for Enterprise Development). This will enable decision-makers and customers to properly identify the activity of individual centres, preventing at the same time a misinterpretation in evaluating the activity of particular entities, as frequently is the case for projects of seed capital funds which describe a part of their activity as technology incubator. 4. The effectiveness of functioning of innovation and entrepreneurship centres is increasingly perceived as having crucial importance not only by their management, but also by local, regional and central authorities. Centres are recommended to develop and implement systems of monitoring their operation and their customers' needs, taking into consideration the impact on local and regional business environment. 5. In order to secure their financial stability, centres are recommended to make intensive efforts to develop and implement methods of generating income from various sources, including introducing charges for some of their services. This entails the necessity to introduce a portfolio of specialist services tailored to the needs of recipients, and to ensure high quality of such services. However, dependence on a single source of financing as currently is often the case may pose a serious risk, should the access to it was limited, and may lead to closing down or significantly limiting the operations of centres which often had received significant amounts from the EU and budget resources. 178

179 6. The analysis of sources of financing investments and running costs of operation of many parks, incubators and innovation centres clearly shows that they are not locally embedded (they receive support neither from local/regional administration nor from local enterprises and institutions). Such a phenomenon may pose a serious threat to their stability and effectiveness of their operation. Active steps should be taken to embrace such institutions in regional systems of cooperation with public administration and with economic self-government. 7. In order to professionalise the centres and develop high quality specialised services, the following measures are suggested: (i) strengthening support for their staff through i.a. educational activities (e.g. trainings, study visits); (ii) horizontal exchange of experience between centres; and (iii) preparing recommendations on standards for operation, accounting also for the needs and capabilities of small centres, especially those functioning in rural areas and small towns. 8. It is necessary that all financial institutions strengthen their cooperation with innovation centres dealing with high technologies, such as incubators, technology parks and technology transfer centres, in order to gain access to promising and innovative projects. It is important, moreover, that programs financed from public funds and aimed at supporting seed capital funds contain indicators showing net benefit of their financing activities for the economy. Therefore, prior to launching the next programming period, it is indispensible to carry out appropriate studies, showing the economic effectiveness of fund support schemes. 9. Even though academic centres have been operating within universities for quite a long time, they have not managed to overcome the barrier of the lack of interest in entrepreneurship in 10. academic environment. It is recommended that their operations are more closely linked to the teaching process, which currently is an occasional practice. Actions should also be taken to ensure closer cooperation between universities and innovation centres they establish and the experienced innovation centres operating in their environment with a view to establish joint academic business incubators or to create strong internal university units, combining the operations of technology transfer centres and of academic business incubators. Moreover, standard procedures for technology transfer processes, for system of exploitation of the intellectual property rights, and for technology valuation system should be developed and implemented promptly in all academic centres. 11. Introducing legislative changes and fiscal incentives for business angels would encourage a greater number of wealthy individuals to invest in new enterprises, thus stimulating this market. Initiatives of financial institutions should be combined, i.a. through expanding the scope of SCF activity with finding professional investors with a 179

180 view to make use of the outlays already made on projects which successfully passed the pre-incubation stage, but have not met with interest of a capital investor. 12. Polish Technology Platforms, as representatives of this sector of economy, should participate in defining National Research Programme, thus being able to initiate and negotiate sectoral research programmes and technology initiatives with National Centre for Research and Development (the so-called Polish JTI). In order for them to develop, in the coming programming period special programmes should be initiated within the frameworks of structural funds, dedicated to PTP supporting measures (joint investments, research programmes, implementation of research results and development) as well as special training activities preparing for participation in the Horizon 2020 Programme. 180