This presentation was prepared by EIF. Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct.

European InvestmentFund

European Investment Fund in Support of Tech Transfer

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EIF at a Glance

EU specialised institution for SMEs, risk financingVenture Capital and Mezzanine (fund of funds)

Structuring and Guaranteeing portfolios of SME and microfinance loans/leases

Authorised Capital EUR 3bnEIB: 61%EU: 30 %

Fin. institutions: 9 %

Geographic Focus /IntermediariesEU 27, EFTA,

Candidate CountriesDistributing through

Banks and Funds AAA rated

Dual Objective of meeting EU Policy Goals & Generating a Satisfactory Return on Equity

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EIF’s Shareholders

EIB: Main shareholder (61%)European Investment Bank’s shareholders: 27 EU Member States

European Community represented by the European Commission (30%)

28 public and private financial institutions from 17 countries (9%) including:

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VENTURE CAPITAL

PRIVATE EQUITY

StockExchange/PublicEquity

EIF INVESTMENT FOCUS

Later-stageBuy-outMid-Market

ExpansionDevelopment Capital

EarlyStage

SeedStage

Business Angels, Side Funds,Pre-Seed

TechTransfer/Incubators

The PE/VC Market Covered by EIF

INNOVATION

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Technology Transfer - Converting Research into Products for the Market

MarketUniversity / Research

OrganisationSpin-out

Licensing

Collaboration (contract research,…)

IP / Idea

“technology IP” “prototype IP”

R&D Technology Transfer Marketable Product

Technology Transfer can take different forms to convert scientific findings from research organisations into

commercial products for the market

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IP / knowledge transfer interlinked

Tech Transfer Dissected – a Continuum

Scientificdiscovery

Stag

esSt

akeh

olde

rs

Evaluation of

invention forIP protection

IPprotectiondecision

Marketing oftechnology

to firms

Inventiondisclosure

Universityscientist/researcher

-University

scientist/

researcher-TTO staff

University

scientist/researcher

TTO staff

Universityscientist/

researcher

TTO staff

Universityscientist/researcherTTO staffFirms/

entrepreneur

Activ

ities

Originationphase

Concept and opportunity testingphase

Exploitation and start-upphase

■ Opportunity identification

■ Opportunity selection

■ Proof of concept testing-

■ IP protection testing■ Business concept testing■ Selection and market confirmation

■ Internal advising

■ Network support■ Compensation schemes

■ Exploitation decision

Licensingagreement

IP transfer

existing firms

Spin--offdecision

Creation ofthe spin- off

to

Universityscientist/researcherTTO staffFirms/entrepreneur

Universityscientist/researcherTTO staffFirms/entrepreneur

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The Knowledge Transfer Challenge

Knowledge or Technology Transfer takes different forms of transforming research into concrete products and services:

Proof of concept, prototypes

Contract research with industry

Creation of start-up and spin-off

New financial instruments to accelerate / facilitate Knowledge Transfer are an increasingly important area: IP markets, IP funds are two key models

All of the above are important to build a healthy, sustainable European Knowledge Transfer ecosystem

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Since 2005, EIF has been able to invest resources into Tech Transfer, to create awareness and to develop new TT initiatives with leading research universities

Focus is on research organisations which are leaders in their respective fields and act in an entrepreneurial environment

Accelerated process through framework agreements (covering issues such as company valuations, shareholder structure,…)

Several transactions already, in which EIF played a key role

ElF's Tech Transfer Experience

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IP venture fund UK• GBP 31m fund • Signed September 2006• Fund invests 25% of all

financing rounds of IP group spinouts, originating from more than 10 UK universities

UMIP Premier Fund• GBP 32m fund• Signed April 2008• Fund, managed by MTI, invests

in university spin-outs originating from the University of Manchester

Chalmers Innovation• SEK 170 m• Signed July 2008• Investing in start-up companies

originating from Chalmers University and incubated by the Chalmers Innovation incubator in Gothenburg

Leuven CD3 (Centre for Drug Design and Discovery)• EUR 24m fund• Signed 2006, extended 2010• Financing early stage drug

development projects originating from Leuven and elsewhere in EU

Imprimatur Capital• (JEREMIE: development

objective)• EUR 20.4m• Signed 2010• Seed & Start-Ups / Tech

Transfer in Latvia

Karolinska Development• EUR 26.7 m• Signed Nov 2009• Co-investment fund, investing

alongside KarolinskaDevelopment in life science spin-outs throughout Scandinavia

3T (“Télécom Technologies Transfert”)

• EUR 20.5m fund• Signed 2010• Early stage TT fund, investing

into start-up companies originating from the InstitutTélécom and its incubators

EIF Tech Transfer Transactions

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■ 10 year Limited Partnership. ■ Managed by VC firm: MTI partners■ GBP 32 m raised. 18 months between

first pitch to EIF and first closing in 4/2008

Manchester: the Largest UK University Research Budget

Manchester University / UMIP Premier Fund

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IP Group: Bringing together 12 Universities -26 Spin-Outs in Three Years

■ Co-investment fund (seed, post-seed financing)

■ Critical mass reached through a network of universities

■ Liquidity vs listing

Deal flow and critical mass

IP Venture Fund UK

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CD3 PHARMA/BIOTECH COMPANIESUNIVERSITIES

CD3 (K.U.Leuven) - Next Generation Licensing Empowering Universities

Drug development process steps

CD3 portfolio •Chemical libraries

•Structural biology

•…

•Bench synthesis•Parallel

synthesis•Early toxicology•…

CD3 addresses a demand from both ends of the chain■ from Universities: be able to offer more finished drug candidates to the industry■ from the Industry: enrich their pipeline with more proven candidates

■ Partnership with university■ Managed by TTO■ Invests in drug development projects

Target ID Target validation

ScreeningLead ID

Optimisation Pre-clinicaldevelopment

Clinical I Clinical II Clinical III

Leuven CD3 (Centre for Drug Design and Discovery)

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Chalmers Innovation: Secondaries or how to Reduce J-Curve

Co-investorsEIF

Pre-Incubation Incubation Alumni companies

“Fund”•Investments at commercial terms•Investments in existing TTO start-ups and new start-ups (both university IP based spin-outs as well as start-ups attracted and grown by the incubator)

Indicative amounts

EUR ~50k EUR 200-500k EUR 1-3m

“Pre-seed funding” “Seed funding” “Post-seed funding”

Seed Investors

Federal fundsRegional funds

Other public/private fundsBAs, VCs, …

Tech Transfer process

Management team•Professionals from the incubator

•Investment professionals•Maximum autonomy

Chalmers Innovation

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Lessons Learnt after Five Years of TT Activity

Clear funding gap

Tech Transfer is different to VC and has its own set of rules

Not just spin-outs but also licensing

IP management required to achieve optimal allocation across IP lifecycle

Long-term partnerships with research centres: build trust, no individual entry valuations, ex ante agreements, no dilution -- Privileged access to deal flow and “Bears’ hug”

Increasing interest from private co-investors but still room for improvement

Longer time-horizon for business development and lead-time

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EU 2020 Agenda: a Vision of Europe's Social MarketEconomy for the 21st Century

■ Turn the EU into a smart, sustainable and inclusive economydelivering high levels of employment, productivity and social cohesion

■ Promote the Innovation Union and improve conditions and access to finance for research and innovation, ensure that innovative ideas can be turned into products and services that create growth and jobs

Objectives

Plan for Action

Remove obstacles to knowledge transfer (excessive risk, lack of financial resources, lack of qualified human resources) by facilitating access to adequate financial resources, financial structuring, technology risk assessment & encouraging the private sector to do more

Active EIF support of EU core objectives through Tech Transfer initiatives

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non-SMEs

final beneficiary

Scal

e

Corporate venturing & other types of large

commercial transactions

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Extend current activities1

Licensing operations

IP funds

…

Large royalty funds

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Licensing operationsCD3 II (Leuven)

Development focus Commercial focus

EIF Tech Transfer : Where to Next?

+

-

JEREMIEJoint European Resources for Micro toMedium Enterprises

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SMEs

Current TTA activitiescommercial operations with leading research institutions

University seed fundsSupport larger number of

university seed funds (development objective)

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Knowledge Transfer Strategic Partnership

Signed in Rome - 16 June 2010

First initiative to address challenges and widen the reach and scope

Creation of joint Working Group between EIF/EIB, CDC (France), (CDP – Italy), (CDTI - Spain), Innovationsbron (Sweden), KfW-Bankengruppe (Germany) & Veraventures (Finland)

Aim of like-minded Partners is to:

Support the emergence of European and national Knowledge Transfer Infrastructures

Accelerate transfer of European research and technology to the market

Facilitate a well functioning Knowledge Transfer and Intellectual Property economy

Encourage more open and transparent marketplaces for Intellectual Property

Exchange best practices and potentially to analyse investment opportunities jointly

Partners

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Invention consumers

Invention suppliers

Invention consumers

Invention suppliers

Efficient IP Market

CURRENT FUTURE

European IP Fund (EIPF)– Market Mechanisms

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EU public researchinstitutions EU SMEs EU corporates

Sell or licensepatents to fund

EIPF■ EUR 400m launch early 2012

■ Establishes portfolio along market / technology themes

■ Pilot reaches 10-15k patents

■ First milestone early 2014

■ Prioritises SMEs

■ Corporates

Small management team (10-15) Uses specialist services (technology, legal, business development

EIPF – How could it Work?

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Contact

European Investment Fund

96 boulevard Konrad Adenauer

L-2968 Luxembourg

Tel.: (+352) 42 66 881

Fax: (+352) 42 66 88 200

www.eif.org