Helena Tenório Veiga de AlmeidaHead of Program Design and Operational Policies Department

Helena Tenório Veiga de AlmeidaHead of Program Design and Operational Policies Department

Information Meeting on Intellectual Property Financing

WIPO, Geneva

March 10, 2009

Information Meeting on Intellectual Property Financing

WIPO, Geneva

March 10, 2009

Presentation Structure

• Highlights of BNDES – 5 min

• IP Financing Strategy – 10 min

• Innovation Numbers in Brazil – 5 min

• Intangible Assets Evaluation Project – 5 min

Highlights of BNDES

Founded in June 20th, 1952

100% state company under private law

Key instrument for implementation of Federal

Government industrial and infrastructure policies

Main provider of long-term financing in Brazil

Emphasis on financing investment projects

Brazilian Export Bank

Equity investor through BNDESPAR

Innovation

Infrastructure

Industry Competitiveness

International businesses of Brazilian

companies.

Exports

Social inclusion

Environment

Areas of Activity

BNDES vs Multilateral Banks

IDB = Inter-American Development Bank

IBRD = The International Bank for Reconstruction and Development (World Bank)(*) Unlike other institutions 12 months fiscal year ends June 30th

CAF = Corporación Andina de Fomento

US$ millon BNDES IDB IBRD CAF

31/12/2007 31/12/2007 30/06/2008* 31/12/2007

Total Assets 114,409 69,907 233,599 12,597

Shareholders' Equity 14,070 20,353 41,548 4,127

Net Income 3,827 134 1,491 401

Loans Disbursements 33,962 6,725 10,490 5,844

Total Loans 92,885 47,954 99,050 9,548

Capitalization 12.3% 29.1% 17.8% 32.8%

ROA 3.8% 4.7% 1.9% 3.6%

ROE 33.2% 0.7% 6.0% 10.5%

Non performing loans 0.11% 0.10% 0.47% 0.01%

Founded 1952 1959 1945 1968

• BNDES Innovation Strategy

The argument

Development in Knowledge Economy = Promote Innovation

Commercial banks don’t support innovation financing

The public bank must be prepared to finance innovation, because: It is political priority for the country Resources must be available and financial instruments

should be appropriate It means an organizational cultural change Risk analysis should be improved Technical competence is essential

The public bank must be prepared!

BNDES ‘s role in promoting Innovation

Support to Innovation becomes one of BNDES highest priorities.

The BNDES’s role is to support investments in projects aiming to transform research into economic value. It’s a broader concept of innovation, not restricted to industry segments technologically sophisticated.

If so, where is the “I” of Innovation in “B.N.D.E.S

initials”?

The Innovation Dimension at BNDES

•Although the answer is not clearly stated in the monogram, it can be found in each letter that forms BNDES’s initials

BANK – Financing is required in order to transform ideas into value. Equity participation is the most proper financial tool to risky investments (usually without tangible guarantee)NATIONAL – Fully harmonized with the Federal Governmental Industrial Policy. Intends to avoid the “brain drain” from Brazil.ECONOMIC DEVELOPMENT – Global Competitiveness imposes to the country's economies constant changes in their technological basis in order to keep the path of growth and development SOCIAL - Innovation should not be restricted to large enterprises with respectable R&D departments. There is a huge number of SMEs and academic research centers full of innovative ideas which may be turned into successful entrepreneurships throughout Brazil, creating income and qualified jobs.

Innovation: Definition

“An innovation is the implementation of a new or significantly improved product (good or service), or

process, a new marketing method, or a new organisational method in business practices, workplace

organisation or external relations.”

(Oslo Manual - Version 3)

Revised definition of innovation, considering economic, organizational and marketing perspectives.

The objective is to better accommodate service industries and non-technological innovation

Innovation can cover:

Research; Science; Technology; Invention; Discovery

Innovation: Concept

It involves a series of scientific, technological, organizational, financial and commercial activities

• acquisition of technologyacquisition of technology

• industrial engineeringindustrial engineering

• industrial designindustrial design

• capital acquisitioncapital acquisition

• manufacturing start-upmanufacturing start-up

• marketing for new or improved productsmarketing for new or improved products

• patent work patent work

• financial and organizational changesfinancial and organizational changes

It is:

Uncomfortable Risky

It helps to:

Enhance economic growth Employment - create new and better jobs Reduce environmental impact Maintain firms’ sustainability

It requires:

Time Knowledge Drive STIMULATION!

Innovation: Characteristics

Observing the companies:Observing the companies:

Need to improve the firm Need to improve the firm innovative capabilitiesinnovative capabilities

Observing the companies:Observing the companies:

Need to improve the firm Need to improve the firm innovative capabilitiesinnovative capabilities

BNDES Experience: BNDES Experience: Discussions regarding the Discussions regarding the projects’ merit and projects’ merit and relevance of the innovationrelevance of the innovation

BNDES Experience: BNDES Experience: Discussions regarding the Discussions regarding the projects’ merit and projects’ merit and relevance of the innovationrelevance of the innovation

Inputs to Design BNDES IP Strategy

The goal is to contribute for the upswing of innovation activities in Brazil and the performance of such activities on a regular basis. 

Data:Data:

Assess of the features Assess of the features of Brazilian innovative of Brazilian innovative firms – PINTEC firms – PINTEC StatisticsStatistics

Data:Data:

Assess of the features Assess of the features of Brazilian innovative of Brazilian innovative firms – PINTEC firms – PINTEC StatisticsStatistics

Governmental Goal 2008:Governmental Goal 2008:

Increase private R&D/GDPIncrease private R&D/GDP

from 0,51% (2005)from 0,51% (2005)

to 0,65% (2010) to 0,65% (2010)

Governmental Goal 2008:Governmental Goal 2008:

Increase private R&D/GDPIncrease private R&D/GDP

from 0,51% (2005)from 0,51% (2005)

to 0,65% (2010) to 0,65% (2010)

New Innovation Financing Policy of BNDES

NON-REIMBURSABLE FUNDS

EQUITY

LINES OF CREDIT

Closed-End Investment Funds and Equity

Direct operation

Seed Money

TECHNOLOGICAL INNOVATION

FOCUS ON STRATEGY

FOCUS ON PROJECT

INNOVATIVE CAPITAL

FUNTEC TECHNOLOGY FUND

support research, development and innovation projects in nationally relevant areas

PROSOFT, PROFARMA, PROTVD, PRO-Aeronautics and Engineering SPECIFIC SECTORS

CREDIT CARD Only for Micro, Small and Medium Enterprises

Among the products: Innovation Services, Certification and IP Applying Costs

Innovative Capital Facility – Focus on Firm’s Strategy

Long-term financing and/or subscription of securities

Support companies to develop capabilities to undertake innovative activities on a regular basis. This includes investments in tangible capitals, including physical

infrastructure, and intangible capitals.

Such investments must be consistent with the companies’ business strategies and be presented as per the Innovation

Investment Plan model.

Lines of Credit

Technology Innovation – Focus on Project

Long-term financing and/or equity participation

Support technology projects aiming at the development of new or significantly improved products and/or processes (at least for the

domestic market) involving technology risk and market opportunities.

Lines of Credit

Funds and Equity Participation

Follow-onFollow-onofferingsofferings

InitialInitialPublic OfferingPublic Offering

“Start-Ups”

Seeds

CapitalCapital

MarketsMarkets

Early stage

companies

Emerging

companies

Establis

hed

companies

Seed MoneySeed Money

Private EquityPrivate Equity

Venture CapitalVenture CapitalCRIATEC

15 New Funds

Governance Funds

Technological Fund – FUNTEC

Part of BNDES’ annual profit

Non-Reimbursable Fund

Beneficiaries:

Technology Institutes and Supporting Institutions

Strategic areas Health

Renewable Energy

Environment (control cars and plants emissions).

 

Support research, development and innovation projects in nationally relevant areas, allowing taking strategic opportunities for Brazil, enabling

it to take leading positions.

IP Negotiation : according with BNDES policies

 

Disbursements to innovation (2008)

FINAME

Lines of Credit 58

Specific Sectors Programs 215

FUNTEC 33

Investment Funds (2007) 85

Equity participation (2007) 150

Machines to SMEs 418

TOTAL 960

US$ MM

• Innovation In Brazil: some figures

Brazil: Highlights

INVESTMENTS IN R&D (%GDP)INVESTMENTS IN R&D (%GDP)

ISRAELISRAEL

SWEDENSWEDEN

FINLANDFINLAND

JAPANJAPAN

SOUTH KOREASOUTH KOREA

USAUSA

TAIWANTAIWAN

GERMANYGERMANY

SINGAPORESINGAPORE

FRANCEFRANCE

CANADACANADA

NETHERLANDSNETHERLANDS

UNITED KINGDOMUNITED KINGDOM

CHINACHINA

4,704,70

3,893,89

3,483,48

3,333,33

2,992,99

2,622,62

2,522,52

2,462,46

2,362,36

2,132,13

1,981,98

1,781,78

1,781,78

1,341,34

SPAINSPAIN

ITALYITALY

RUSSIANRUSSIAN

BRAZILBRAZIL

HUNGARYHUNGARY

SOUTH AFRICASOUTH AFRICA

INDIAINDIA

PORTUGALPORTUGAL

MALAYSIAMALAYSIA

CHILECHILE

TURKEYTURKEY

POLANDPOLAND

MEXICOMEXICO

ARGENTINAARGENTINA

1,121,12

1,101,10

1,071,07

1,021,02

0,940,94

0,860,86

0,850,85

0,800,80

0,690,69

0,680,68

0,670,67

0,570,57

0,500,50

0,460,46

Source: OCDE (2007), Ministry of Science and Technology (MCT,2007), World Bank (2006) and RICYT Source: OCDE (2007), Ministry of Science and Technology (MCT,2007), World Bank (2006) and RICYT (2006).(2006).

MASTER AND Ph.D. DEGREESMASTER AND Ph.D. DEGREES

19901990 19951995 20002000 20062006

STUDENTS GRADUATEDSTUDENTS GRADUATED

MASTERMASTER 5.5795.579 8.9828.982 18.14018.140 29.76129.761

Ph.D.Ph.D. 1.4101.410 2.4972.497 5.3445.344 9.3669.366

NUMBER OF COURSESNUMBER OF COURSES

MASTERMASTER 942942 1.2021.202 1.4901.490 1.9121.912

Ph.D.Ph.D. 445445 635635 821821 988988

Source: MCT (2008)Source: MCT (2008)

Brazil: Highlights

Source: Institute for Scientific InformationSource: Institute for Scientific Information

BRAZILIAN SCIENTIFIC PRODUCTIONBRAZILIAN SCIENTIFIC PRODUCTION

NUMBER OF NUMBER OF ARTICLESARTICLES % WORLD% WORLD

0

3.000

6.000

9.000

12.000

15.000

18.000

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

0,00

0,50

1,00

1,50

2,00

2,50

Brazil: Highlights

Brazil: Highlights in innovation

• Incubators in Brazil (2008)

– 383 incubators: • 339 active, 32 being implemented and 12 projects• 85% attached to universities (64% are public)

– 17 research support foundations

– 5,620 enterprises connected to incubators and responsible for generating 30,000 direct jobs

• The Evaluation of Intangibles Assets Project

BNDES and the Knowledge Era

Knowledge Economy vs Industrial SocietyKnowledge Economy vs Industrial Society

Credit Risk: higher emphasis in the futureCredit Risk: higher emphasis in the future

New Approach for Evaluating and Monitoring of Projects /New Approach for Evaluating and Monitoring of Projects /Enterprises / Economic GroupsEnterprises / Economic Groups

New factors to be observed: intangible assetsNew factors to be observed: intangible assets

Integrated ActionsIntegrated ActionsKnowledge ManagementKnowledge Management

Development of Core CompetencesDevelopment of Core CompetencesIT ToolsIT Tools

Challenges for BNDES’s operations:

● 27 ●

Evaluation System and New Metrics- Focus on Intangible Assets -

• Knowledge, Know-how• Governance• Innovation, R&D• Process• Patents and brands• Design• Reputation• Social and environmental accountability• Human Resources• Partnerships (technological, commercial, integration

with Research Institutes and Universities)• Marketing• Value added products• Export drive

STRATEGICSTRATEGIC

CAPITALCAPITAL

STRATEGICSTRATEGIC

CAPITALCAPITAL

INNOVATION AND INNOVATION AND PROCESS CAPITAL PROCESS CAPITAL INNOVATION AND INNOVATION AND

PROCESS CAPITAL PROCESS CAPITAL

RELATIONSHIPRELATIONSHIP

CAPITALCAPITAL

RELATIONSHIPRELATIONSHIP

CAPITALCAPITAL

CORPORATE CORPORATE GOVERNANCE GOVERNANCE

CAPITALCAPITAL

CORPORATE CORPORATE GOVERNANCE GOVERNANCE

CAPITALCAPITAL

INTELLECTUAL INTELLECTUAL CAPITAL CAPITAL

INTELLECTUAL INTELLECTUAL CAPITAL CAPITAL

FINANCIAL CAPITAL FINANCIAL CAPITAL FINANCIAL CAPITAL FINANCIAL CAPITAL

BNDES’ Methodology for Intangibles

● 30 ●

RATING FOR INTANGIBLE CAPITAL RATING FOR INTANGIBLE CAPITAL

IllustrativeIllustrative

RELATIONSHIP CAPITAL: CUSTOMER SATISFACTION

• Has a good transactional relationship with suppliers and clients

• Develop long term relationships with suppliers and clients, adapting products and processes to maximize value on the entire supply chain

• Develop long-term relationships with suppliers and partners...

• Establish partnerships with companies in unrelated business to capture synergies and growth opportunities

• Develop relationships...• Establish partnerships...• Cooperation and

alliances are at the core of the business model, leveraging competencies of each agent to optimize and maximize returns over the entire network

• Feedback and improvement

RELATIONSHIP CAPITAL: NETWORKS AND ALLIANCES

11 22 44 55

RELATIONSHIP CAPITAL: BARGAIN POWER

INTELECTUAL CAPITAL

INNOVATION CAPITAL

IC Rating:76

IC Rating:76

56 evaluate items

• Has weak relations with suppliers and clients

33

New National Cultural Heritage Treasuries :

Bossa Nova Music

Flamengo’s supporters

Minas Cheese

Innovation and Creativity in Brazil

The Brazilian Development Bankwww.bndes.gov.br

THANKS!