Funding for Commercialisation

Funding for

Commercialisation

MCCE 2014

Shah Alam Convention Centre 13-15 August, 2014

Roles:-

• To identify, finance and develop potential

companies in strategic technology areas;

• To focus on commercialisation of public

sector research results; and

• To identify and transfer emerging and

strategic technologies for adoption by

industries.

• Grant Management

• Soft Loan & Hybrid Fund Programmes

• Advisory Services

• Nurturing Services

4 i-CoE FUNDING TECH INCUBATION UNI/RI LINKAGES LOCAL/ INTERNATIONAL COLLABORATION NURTURING ENTREPRENEUR DEVELOPMENT/ Symbiosis

MTDC

COMMERCIALISATION: BRINGING RESEARCH

TO MARKET

An invention remains as invention unless commercialized with economic returns.

MVF Young Graduates Symbiosis _(CRDF Grant & TAF) BSF BGF Others VCs / Loans / Debt Ventures

Cubicle

Garage

Incubators

Enterprise

Training & Consultancy

MTDC’s TECHNOLOGY COMMERCIALISATION

PATHWAY

Appointed by the Government since 1997 to manage

Government (MOSTI) grants under the Technology

Development Programme (TDP).

The type of grants are :

i.

Commercialisation of R&D Fund (CRDF)

ii.

Technology Acquisition Fund (TAF)

Since the 10th Malaysian Plan, MOF has entrusted MTDC to

manage two new funds for further commercialisation support

and business expansion:-

i.

Business Start-up Fund (BSF)- Convertible loans

ii.

Business Growth Fund (BGF)- hybrid fund



Commercialisation of

R&D Fund (CRDF)



Technology

Acquisition Fund

(TAF)

GRANTS

CRDF

CRDF as the name implies, provides funding for commercialisation activities of locally developed technologies/research and development (R&Ds) undertaken by eligible Malaysian-owned companies. The technologies can be those developed by the public/private sectors or they can also be the output of in-house R&D activities by the companies.

Under CRDF, commercialisation refers to a new products or production process by which the results of research projects are converted to marketable products and are commercially produced.

OBJECTIVES

 To leverage on Science, Technology and Innovation (STI) for

national development;

 To increase the commercialisation of STI products & processes

developed by local U/RI/companies;

 To increase wealth creation & technology content of SMEs/large

corporations via commercialisation of R&D done by local U/RI/companies; and

 To foster greater collaboration between universities/research

i. The company is incorporated in Malaysia;

ii. The company must be at least 51% owned by Malaysian;

iii. The proposed technology to be commercialised must be from one of the

Priority Technology Clusters identified by MOSTI, excluding ICT;

iv. The R&D must have been completed successfully and commercial-ready prototype is available;

v. The proposed project must be tangible in nature or can be incorporated

into tangible product;

vi. Significant paid-up capital which commensurate with the total project cost (proof of the availability of the fund to finance the project);

vii. License from relevant authorities must be available for the proposed project; and

viii. Proposed project is recommended by industrial expert.

ADDITIONAL ELIGIBILITY CRITERIA

Start-up SME Non-SME

Source of Technology Public & Private University (IHL) / Government Research Institute (GRI)

IHL / GRI IHL / GRI /

In-House Public Sector R&D Quantum of Funding 90% of eligible expenses, capped at RM500k 70% of eligible expenses, capped at RM500k 70% of eligible expenses, capped at RM4.0 mil. 50% of eligible expenses, capped at RM4.0 mil.

Equipments

i. Cost of the purchase of

equipments for Quality Control and production

ii. Cost of maintenance of equipments

Technology

Cost of technology/ consultation/ training

Administration and Overhead

i. Cost of allowance for management

and technical personnel

ii. Cost of rental at technology centre

iii. Cost of utilities

Services

i. Cost of core raw materials

ii. Cost of advertisement and promotion

iii. Cost of certification and standard iv. Cost of IP registration and protection

v. Cost of production out-sourcing

Equipment

• Cost of the purchase of equipments for Quality Control and Production

Technology

• Cost of technology/ consultation/ training

Advertisement and Promotion

• Cost of advertisement and promotion

Services

i. Cost of IP registration and protection

ii. Cost of product testing and standards

iii. Cost of registration of certification

• Business plan

i. Itemised costing

ii. Manufacturing and operational plan iii. Marketing plan

iv. Financial projection v. Commercialisation plan

• Secretarial documents

• Curriculum Vitae of Management and Technical team

• Audited Account / Management Account

• Supporting documents

• Technology Transfer Agreement with U/RI

TAF

INTRODUCTION

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

TAF’s partial grant enables companies to avoid expensive and often risky technology development stages.

The acquisition of technology could be in the form of acquiring know-how / IP exploitation / rights / blueprints via one of the following

methods:

i. Licensing of technology; and

 To promote technology upgrading through the introduction & utilisation of

technologies in the manufacturing & physical development of existing & new products or processes;

 To enhance the competitiveness level of Malaysian companies to

compete globally; and

 To increase wealth creation & technology content of Malaysian companies

via acquisition of foreign technology.

i. Companies incorporated in Malaysia;

ii. The company must be at least 51% owned by Malaysian;

iii. The technology to be acquired must be a registered Intellectual Property

(Patent/Copyright/Industrial Design) with proven and significant sales volume;

iv. The proposed technology acquisition must be from one of the Priority Technology Clusters identified by MOSTI;

v. The technology provider must not hold any equity in the applicant’s

company;

vi. The proposed project must be tangible in nature or can be incorporated into tangible product;

vii. The company must have already been involved in the production, fabrication and manufacturing of relevant products; and

viii. Significant paid-up capital which commensurate with the total project cost (proof of the availability of the fund to finance the project.

• Funding types

i. Cost of Technology Acquisition; or

ii. Cost of Technology Acquisition + Acquisition of M&E

• Cost of Technology Acquisition

i.e. for Licensing or Outright Purchase of Technology

• Acquisition of Machine & Equipment (M&E)

• Engagement of foreign individual within a specific area of

expertise on process or product improvement

• Training

i. Cost of Technology Acquisition; or

– Quantum Funding of up to of 70% or RM2.8million, whichever

is lower

ii. Cost of Technology Acquisition + Acquisition of M&E

*Maximum quantum to be approved for IP is capped at RM 2.4mil as 70% and M&E is capped at RM 1.6mil as 50% grant.

iii. Additional activity

a. Engagement of foreign experts from abroad or sending local

technical staff(s) for process or product improvement.

Quantum of funding shall cover travelling & lodging of up to RM200,000 per application and period of stay of up to 6 (six) months.

b. Eligible activities for cost of pre-production.

Quantum of funding shall cover of up to RM250,000 or 70% from the total eligible cost, whichever is lower.

• Business plan

i. Itemised costing

ii. Manufacturing and operational plan iii. Marketing plan

iv. Financial projection v. Commercialisation plan

• Secretarial documents

• Curriculum Vitae of Management and Technical team

• Audited Account / Management Account

• Supporting documents

• Technology Transfer Agreement (Licensing / Outright purchase)

i. Amount of Licensing iv. Exclusivity

ii. Market territory v. Payment schedule

iii. Royalty vi. Project milestone

iv. Duration

APPLICATION RECEIVED

PRE-ASSESMENT EVALUATION TC

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

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

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

AC Final approval by Approval Committee (AC) Signing of Agreement To issue Letter of Rejection To issue Letter of Offer Application Returned Client Charter : 45 working days The application will be re-evaluated. Approved?

OPEN A MONITORING FILE The company is to submit a Quarterly progress report. TC Present the status/issue(s)of the project PROGRESS REPORT SUBMISSION MONITORING WORKSHOP The company is to present the progress of the project twice a year Progress Report Submissio n Issue Acknowledgment of Receipt Issue a reminder letter Review the report submitted and highlight the issue(s) to TC /AC if any Company fails to attend 2 consecutive workshop Issues Identified in project implementatio n Presentatio n of the project status Acknowledgment of attendance by MO AC MO to present TC’s recommend ation to AC Final Presentation for project Closure Notificatio n of AC’s Decision to Company

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

Objective

•Accelerate the development of local high technology

companies by providing business funding to qualified

grant recipients companies.

•Provides funding for the “last mile” of the R&D and

commercialisation value chain.

•Ensures that qualified grant recipients are adequately

capitalised during their crucial formative years to build a

business track record.

Objective (cont.)

• Build enough “commercial” value in the company to

make companies attractive for follow-on financing by

VCs & other financing institutions.

• To demonstrate that grant recipients, who received

strong market validation for their products/services are

further supported to become full-fledged commercial

enterprises.

FUND PROFILE

Name

: Business Growth Fund (BGF)

Focus

: High Technology Grant Recipients

Investment Size

Per Company

: Max. RM4.0 million

Fund Structure

: Hybrid of Grant & Equity Funding

- Redeemable Convertible Preference

Shares (RCPS)

Company profile

: Early stage (successful grant recipients)

Exits

: 3 – 5 years via buyback, trade sale, IPO,

FUND STRUCTURE

Partial Grant

 Up to 25% of total funding (or up to RM1.0 million)

 No matching required

 Qualified activities:

i.

product certification, registration, design &

customization

ii.

entrepreneurship development

iii.

business & market development

 Non-qualified activities:

i.

prototypes

ii.

technical enhancements

FUND STRUCTURE

Equity Participation

 Up to RM3.0 million (excluding the grant

portion)

 Subscription instrument – RCPS



Convertible - Capable of conversion into a class of

ordinary share.



Exit

– Redeemable by the Promoters or repurchased

by the company out of distributable reserves or the

proceeds of a new issue, trade sale, IPO, etc.



Internal Rate of Return (IRR) : 15%

BSF is for seed funding of

technology-based start ups.

Definition of BSF:

•

a start-up is an early growth company;

•

involves in technology commercialisation

activities; and

A start-up:-

• New university spin-off companies;

• Companies started and self-funded by

entrepreneurs, but without significant

revenue;

• Companies with high novelty/innovative

products and have potential market; and/or

• New companies set up with collaborative

Name

: Business Start-up Fund (BSF)

Focus

: Technology Based Companies

Funding Per

Company

: Maximum of 90% of total project cost or

RM5.0 million whichever is lower

Fund Structure

: Promissory Notes Convertible to

Redeemable Convertible Cumulative

Preference Shares (RCCPS)

Coupon Rate

: 3.5%

Repayment

:

• Maximum of 8 years inclusive of 3 years

grace period

• Repayment shall commence on the first

month of the 4

_{year on monthly basis}

Name BSF CRDF BGF TAF Source of fund Ministry of Finance

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

Fund tenure period Budget 2011-2012. 10th _{MP 10}th _{MP 10}th _MP

Fund objectives To support and encourage

entrepreneurship and creation of new strategic businesses that are important,

and potentially scalable; and the funding of supporting companies within a technology eco-system. To promote the commercialisation of locally developed technologies (from public and private universities, Government’s Research Institutions and companies) undertaken by Malaysian owned company. To support successful grant recipient companies until they can

generate sufficient commercial value to attract VC

financing and other forms of financing. To facilitate eligible Malaysian companies in the acquisition of foreign technologies for immediate incorporation into the company's manufacturing activity. TAF's

partial grant enables companies to avoid expensive and often risky technology development stages.

Focus sectors Technology

companies. Locally-developed technology companies, except ICT. Technology companies. Technology companies. Subscription instrument Loan with convertible option to equity. Partial, matching grant. Hybrid – a combination of grant and equity.

Partial, matching grant.

PRIORITY TECHNOLOGY CLUSTERS UNDER MOSTI

Machinery and Equipment

Food Processing and Production BIOTECHNOLOGY Agro Biotechnology Healthcare Industrial SEA TO SPACE

Meteorology & Geophysics Oceanography

Remote Sensing & GIS Communication

Space Technology

S&T Core

MTDC’s Technology Centres are developed

and managed under the Technology

Development Clusters (TDCs) programme.

Aimed at developing knowledge-based

industries with the creation of high-technology

companies incubated at the TDCs.

The TDC’s objectives are:-

i. Create closer links and understanding

between universities and industries; and

ii. Designed to encourage the formation

and growth of technology-based

businesses.

Lettable: 260,942 sqft Lettable: 61,130 sqft Lettable: 57,840 sqft Lettable: 47,500 sqft Lettable: 80,000 sqft

Types of Services



Business Matching



Networking Session



Fund Raising



Technology Connection



Market validation



Collaboration



Training



Soft-landing



Entrepreneur

development



Other services

FOR MORE INFORMATION, PLEASE VISIT:

http://www.mtdc.com.my

CONTACT US:

+6 03 2172-6000

CRDF & TAF -

[email protected]/

[email protected]

BGF -

[email protected]