PRESENTATION TO PORTFOLIO COMMITTEE ON SCIENCE AND TECHNOLOGY IN REGARD TO THE TECHNOLOGY INNOVATION AGENCY (TIA) BILL by Dr Charles Dettman eGoli BIO Life Sciences Incubator 15th January 2008

eGoli BIO: Illustrating the Importance of the Incubation Function in Innovation

This presentation is not intended to market eGoIi BIO as an organization, but rather to use the eGoli BIO 'experience' to illustrate the crucial importance of the incubation function in ensuring an effective national innovation system.

eGoli BIO is a not-for-profit agency that was created to supplement and complement all initiatives aimed at building a South African bioeconomy, in particular those of the National Biotechnology Strategy (NBS). eGo Ii BIO's contribution to these efforts is intended to be delivered specifically through incubation-related activities, including:

•	Promoting the creation of new bio-based commercial ventures;

•	Helping the founders of such ventures to manage the innovation process ;

•	Helping young bio-based companies to establish sound business management practices

Since its launch in February 2003, eGoli BIO has contributed substantially to promoting the development of the South African biotechnology sector. Numerous entrepreneurs have received various forms of support, including:

•	Guidance on technology commercialization strategies;

•	Business case development and concept viability analysis;

•	IP management strategies;

•	Preparation of business plans;

•	Legal guidance;

•	Project management;

•	Raising capital;

•	Financial management;

•	Access to service providers and potential partners;

•	Networking opportunities;

•	Office facilities and infrastructure

At the heart of eGoli BIO's offering is a commitment to providing 'customized', management level support to entrepreneurs engaged in building new bio-based businesses. In contrast to the Biotech Innovation Centres (BICs), Innovation Fund (IF) and other such funding agencies, which have to-date typically maintained 'arms-length' relationships with their clients (e.g. Board representation), the Incubator strives to become integrally involved in assisting its clients with their business development and management challenges.

This usually entails meeting with the entrepreneurs on a regular basis and helping them with practical, day-to-day issues - in short, providing the kinds of hands-on guidance and support that keeps them focused and moving forward. The nature of the input provided and the frequency of engagement is 'customized' according to the stage of venture development and the capabilities of the respective entrepreneurs. In this way, the Incubator serves to temporarily fill the team gaps which are perhaps the greatest weakness of start-up companies, especially those created by technologically-biased entrepreneurs. While there is no doubt that the specific forms of support, as listed above (e.g. office facilities, help with fund-raising, access to specialized service providers, etc), are in themselves highly valuable, experience has shown that their value is best realized in the context of an ongoing coaching relationship between Incubator and client.

From the perspective of both public and private-sector funding agencies, Incubators like eGoli BIO represent a crucial investment-protection partner. By staying close to the management of the new ventures that it supports, the Incubator not only helps to enhance the overall chances that these ventures will succeed, but can also detect possible threats to success before they become excessively damaging.

At a broader level, eGoli BIO believes that Incubators can help to accelerate the development of the South African biotechnology sector by focusing on three complementary strategies:

•	Supporting the work of the BICs and other instruments of the national system of innovation (NSI);

•	Supporting life science start-ups that fall outside the reach of the BICs and other NSI instruments;

•	Facilitating the creation of new ventures based on inward technology transfer.

Although eGo Ii BIO does, in most instances, require some form of financial return from the ventures that it supports, this is typically structured on a deferred basis (Le. subject to the success of the venture) and is never onerous. The emphasis of the Incubator's work is on promoting the establishment of viable, sustainable bioscience businesses, as a public-good endeavour, rather than on making money from them. In a directly related vein, eGoli BIO places the principles of promoting equity for and economic development of previous disadvantaged individuals at the core of its value system.

There are presently only 3 Incubators active in the high-tech science arena in South Africa, namely eGoli BIO (life sciences I biotech), Acorn Technologies (medical devices I biotech) and Chemin (chemicals & related industries). All 3 of these Incubators receive their operational funding from the Department of Trade and Industry (dti), through the seda Technology Programme (STP). However, as a dti-funded agency, with a firm focus on short-term deliverables, STP has stated clearly that the financial support they provide to Incubators may not be used for what may be categorized as 'sector development' activities.

Consequently, the ability of eGoli BIO, Acorn and Chemin to provide incubation support to scientific entrepreneurs during the pre-commercial phase of the innovation process, and thus to facilitate the promotion of innovation in the sectors within which they created, has been severely curtailed. It is vital to ensure that these Incubators be integrated into the array of instruments that will constitute the functional units of the TIA, because they provide an established foundation of skills, experience and expertise upon which the incubation infrastructure for the entire TIA could be built.

Conclusion: The reality is that the vast majority of scientists have little, if any, knowledge of innovation, Le. how to determine whether or not there is a business case for their new technology and what it really takes to convert a new technology into a commercially-viable product or service. And they typically have even less knowledge of what it takes to run a business. The current innovation system in South Africa falls far short in addressing these crucial issues.

Providing funding for innovative research is not enough. Investing large sums of money into a national innovation system, without also providing the would-be scientific entrepreneurs with the essential complementary support services and facilities, across the entire innovation value chain (i.e. coaching & mentoring across all dimensions of innovation and business management; laboratory & office infrastructure, etc) is a highly dubious choice! Incubation addresses this risk - we cannot afford not to provide for the incubation function within the TIA! In terms of the total amount of money that has been and will continue to be invested in innovation in South Africa, the cost of providing effective incubation support will be relatively small. In terms of return-on-investment, the benefits will be substantial.

There are presently 3 established Incubators with experience and expertise in the incubation of new high-tech enterprises, namely eGoli BIO, Acorn Technologies and Chemin. They are not currently funded by the DST, but should be integrated into the TIA infrastructure as the foundation upon which to build the incubation function within the TIA.