Proof of Concept Round 10 Application Guidelines

SCOTTISH ENTERPRISE PROOF OF CONCEPT PROGRAMME

STAGE 1 APPLICATION GUIDELINES

January 2013

For further advice:

Please email [email protected], or request the Proof of Concept team on 0845 607 8787. Scottish Enterprise Proof of Concept Programme – Application Guidelines

www.scottish-enterprise.com/proofofconcept

of 9 Scottish Enterprise Proof of Concept Programme – Application Guidelines

1. Introduction

1.1 Background to the Proof of Concept Programme Proof of Concept Programme (PoCP) supports the pre-commercialisation of leading- edge technologies emerging from Scotland's Universities, Research Institutes and NHS Boards. It helps researchers to export their ideas and inventions from the lab to the global marketplace. PoCP applications can only be submitted by the institution commercialisation office and cannot be accepted from individual academics, schools, departments or faculties.

The anticipated outcomes from a PoCP are a licence of all the background and foreground intellectual assets associated with the Project to either an existing Scottish company or the creation of a spin-out company. The purpose of PoCP is to assist existing, or create new, high-growth companies based in Scotland with the potential and capability to grow to companies of scale. For the purposes of this Programme, Scottish Enterprise (SE) defines high growth as having the potential to achieve at least £5 million additional turnover per annum or the attraction of at least £10 million commercial investment within 5 years of trading as a direct result of licensing the intellectual assets which arise from supported projects.

Projects can typically be defined as occurring at the stage after advances have been made during curiosity-driven or strategic research (Technology Readiness Level 3 and 4). The Programme finances projects with strong commercialisation potential and is not another source of research funding. Naturally, many of these projects contain a high element of risk. In funding the projects, SE is committing a significant amount of resource (both in financial and personnel terms) to enable the projects to realise their potential. As such, we have a rigorous assessment process as described in this document.

Full details of the PoCP and application materials can be found on the Proof of Concept section of the SE website: www.scottish-enterprise.com/proofofconcept.

During 2013, applications for potential PoCP projects will only be accepted at specific Call dates (as published on the SE website). The only exception to this will be projects which support the renewables sector – these projects can be brought forward to SE at any time. It is important that potential PoCP applications are discussed at the earliest stage with the Technology Transfer or Commercialisation officers of the applicant’s institution.

1.2 STAGE 1 Application

Question Guidelines Project Title Provide a non-confidential descriptive title of the proposal i.e. which can be published, at SE’s discretion, on the PoCP website without prejudicing IPR. The title should be brief and be worded to engage and enthuse non-specialist readers, i.e. suitable for marketing purposes for the project. (15 words maximum) Lead Organisation If your institution does not have a confidentiality agreement in place with SE, please contact the Proof of Concept team at 0845 607 8787 or [email protected] to arrange for an agreement to be put in place.

Collaborative If the collaborating institution does not have a confidentiality agreement in Organisation(s) place with SE please contact the Proof of Concept team at 0845 607 8787 or [email protected] to arrange for an agreement to be put in place. Collaborations can only take place with Scottish institutions with which confidentiality agreements are in place.

Business Sector Select the relevant Business Sector. If your application cuts across business sectors, please indicate the main initial market here.

Total Amount This at stage 1 is only an estimate and we recognise that it may change prior to Requested a stage 2 application being submitted.

Commencement Please enter the expected commencement date of the project in dd/mm/yy Date of Project format, taking into account the time necessary to build and appraise the proejct prior to stage 2 application and the conclusion of contractual conditions between SE and your institution.

Requested Project Please enter the expected project duration in months. Duration Correspondence Indicate the name, postal address, email, phone and fax numbers of the details commercialisation contact responsible for submitting the application (this person will receive any documents/written communications in relation to the project’s assessment), as well as an additional address for legal correspondence.

Contact Details Enter the name, email address and phone number for the Principal Investigator and any Co-Investigators.

Other SE Support A Principal Investigator may only have one PoCP in implementation at any one time. Confirm here if the PI is currently receiving any other SE support or another proposal is being evaluated.

Resubmission The same technical approach can only be resubmitted once. Note here if the idea has been evaluated in the past.

Project Commercial Potential

Question Guidelines 1. Brief Describe what specific problem it is that your solution solves. Describe the TRL Description of that the technology will have reached when the project begins in ~3 months time Project and what will be achieved in terms of getting it ready for market by the end of the project. Describe what will actually be done during the project. Make clear if there are regulations such as clinical trials or CE marking etc. or legislation that affect your ability to trade or secure further investment. (150 words maximum)

2. Market Size & We are not seeking a top down view of the size of the opportunity. What we economic would like to understand is what segment of the market is directly addressable impact of project by the technology that will be available to be licensed. This question requests that you estimate how many customers globally there are and have a rough idea of what will be the selling price of your product or service. All PoCP projects must have the potential to achieve turnover of £5m or secure external investment upwards of £10m within 5 years of the PoCP concluding. Some technologies address an opportunity that creates a new market. In other cases, there is an existing solution for the problem and the technology proposed has a compelling sustainable advantage that will displace the incumbent. If appropriate, you may mention any existing support for your approach from potential customers. Alternatively and additionally, you may provide examples of companies similar to the company you aspire to create that have achieved high growth addressing this market. At this stage of the application process, we are looking for you to demonstrate that you understand who your competitors are and more importantly who will you be selling to. (150 words maximum) 3. The This is the opportunity to describe the background IP and what foreground IP is Technology anticipated to be created. What is going to be licensed? What underpins the commercial potential of the project? Do not describe the detail of how the technology works at this stage. (100 words maximum) 4. The Team What personnel resources are required to implement the project – have they been identified? Highlight whether any of the technical team have a desire to join the company to which the assets will be licensed. Describe who will champion the commercial development of your PoCP and how you will recruit them. (100 words maximum) 5. The Vision PoCP supports proposals from those with the ambition to grow a large company quickly. This is the opportunity to describe this aspiration and how it will be achieved. (100 words maximum)

Upon submission of your Application, SE will assess the commercial potential of all proposals received at each Call date on a competitive basis. The commercial assessment will be undertaken by a panel (all under confidentiality arrangements) constituting: a) an external investor b) a GlobalScot who has experience of the market into which the proposed product or service will be sold c) a Project Manager from SE’s Commercialisation Team d) a member of the SE High Growth Start Up Unit e) a sector market analyst from SE

This group will meet as a panel to review the completed applications in each sector. A consensus will be required across the panel in order for proposals to more forward to the 2nd phase of development and application.

In the event that the commercial proposition is not supported by the panel the proposal will be rejected and feedback provided. A new application for the same subject matter can be submitted to a future Call. Only one resubmission will be accepted.

If the commercial potential of the approach is evaluated to be of an acceptable level of risk and therefore merits further assessment, the application will proceed into the next stage of development. A significant resource commitment by the institution will be required at this stage of assessment.

A SE Project Manager (PM) and Commercial Contractor will be assigned to work with the project team to help build the project and gather the additional information required to allow a full application to be considered by the published panel date. A Commercial Contractor is someone with substantial background in business and technology who helps to facilitate the commercial outcome of a project.

Due diligence will examine the project in more detail to ensure that appropriate resources and strategies are in place for the completion of the project and the achievement of the expected commercial outcome. This will include:  Commercial assurance, for which SE will provide resources, will ideally be undertaken by someone who will remain with the team during the implementation phase. o If existing members of the proposed PoCP project team are unable to undertake this task or someone with the correct skill set cannot be recruited, it may be possible to undertake the commercial assurance work via a tightly controlled market assessment using a commercial vendor but this should be considered a secondary option. SE will only provide 50% of the cost if an external market survey is required.  SE will require evidence of the institution’s “freedom to operate” in commercialising the proposed technology.  SE will provide resources, where deemed necessary, to an R&D advisor to undertake technical diligence.  The proposal may be terminated at any point during this phase if the PM or Commercial Contractor believe the information gathered does not support the case for a PoCP project.  A commercial champion should ideally be in place, or identified, during the project building phase. If this is not possible, the profile and plan to recruit this person with acceptable timescales should be included in the full application.

The project building phase will result in either a full application being submitted (including project plan, milestones, budget and feasibility assessment) that is fully endorsed by the PM and Commercial Contractor, or a termination. A schedule of project milestones will be agreed during the Due Diligence process. The milestones schedule will spell out specific and, where possible, quantified targets to define precisely what the criteria are, by which a decision can be taken to carry on with the project or discontinue it.

STAGE 2 – Full Application –

On satisfactory progress with the development of your project, your project manager will indicate whether you have sufficient data to submit a 2nd stage application. Where this is the case, the application can be found on SE’s website together with guidelines for stage 2.

STAGE 3 - Panel Assessment - panels will be convened at set times to evaluate the fully worked up. Those proposals that are not ready for this date will have to wait another 3-4 months until the next panel. Where possible, panels will be composed of the same assessors as in Stage 1. The result will be a yes/no decision. Applicants and commercialisation support staff will be invited to attend an interview with the panel. Applicants will be required to give a short presentation on their project. Panel members will have considered the full application, commercial assurance, and feasibility reports prior to the interview.

STAGE 4 – Recommendation for Funding - Projects which result in a recommendation for award will be submitted to the Director of Commercialisation within SE (or higher level approval body if the project cost exceeds £500k) to seek approval for the relevant funding allocation. It is only once approval has been obtained that an offer of grant can be provided and there is no legal obligation on either party in advance of that contract being put in place. On commencement, each PoCP project will be supported by a Commercialisation Contractor and an SE Project Manager who will provide support and is the link between the project team, commercialisation contractor and SE’s commercialisation team.

1.3 Confidentiality

Submissions to PoCP are highly confidential and commercially valuable. Please ensure that all drafts are clearly labelled as confidential.

As part of the PoCP’s application and award process, SE has entered into agreements with various institutions containing obligations of confidentiality in relation to information received at any point during the application, award or project management stages. Any individual involved with the Proof of Concept Programme in the assessment of applications and/or the facilitation of awarded projects has similarly entered into an agreement with Scottish Enterprise which imposes obligations of confidentiality on them. For Scottish Enterprise staff, this is addressed within employment terms which carry a duty of confidentiality; for contractors it is addressed within the terms and conditions of the contract award. Where an external assessor is used out with this group i.e. GlobalScot network, a separate confidentiality agreement will be put in place prior to the individual having sight of any paperwork.

1.4 Eligibility

1.4.1 Key Industry Sector/Other Emerging Technologies

Applications to the Proof of Concept Programme should be submitted against one of the following key sector headings. In general the choice of heading should reflect the key market sector that commercialisation of the proposed innovation is expected to address in the first instance i.e. the industry in which the target purchasers or end- users of the new innovation will be found:

 Aerospace, Defence and Marine  Chemical Sciences  Construction  Creative Technologies  Energy – Oil and Gas  Energy – Power Generation and Renewable Energy  Financial Services  Food and Drink  Forest and timber technologies  Life Sciences – Med-Tech  Life Sciences – Platforms and Therapeutics  Manufacturing

 Technology  Textiles  Tourism  Other Emerging Technologies – for innovative technologies that fall out with these areas

Your application should demonstrate a good understanding of the development priorities in the industry sector you plan to address and also show how the proposed innovative concept and the project will develop a commercial outcome which directly addresses those priorities.

1.4.2 Institutions

Universities, Research Institutes and NHS Boards of Scotland are eligible to submit proposals to the PoCP.

1.4.3 Collaborations

Applications from a collaboration of two or more Scottish institutions are welcomed but the application must make clear which single institution will act as lead institution for the collaboration. Also, a clear collaboration agreement must be in place between the collaborating partners before any project is funded or commences. Collaborations can only be between Scottish institutions, each of whom is eligible in their own right to apply to the PoCP.

1.4.4 Sub-contracts

If the successful achievement of a project would clearly benefit from the involvement of a third party organisation who would not qualify as an eligible collaborator on the project (e.g. a non-Scottish academic institution or a commercial company) then this may be achieved by a sub-contract. The reasonable costs of a sub-contract can be included in the eligible costs for PoCP funding provided that the total value of all sub- contracts does not typically exceed 20% of the total project value, there is full disclosure of any common interests between the project team and proposed sub- contracted suppliers and all applicable rules of procurement and competitive tendering have been followed to ensure that the chosen sub-contractor’s offering is demonstrably the best value for money.

1.5 Approval by Applicant Institution

If your application has not been endorsed by your institution’s local approval process, it will not be considered for the PoCP. Approval must be sought from the Commercialisation or Technology Transfer Office of your institution which is responsible for co-ordinating and submitting applications to the PoCP and from the Principal, Director or Chief Executive of your institution. To enable this, applications should be submitted by a member of your institution’s commercialisation or technology transfer staff, and not by research staff. Any applications received directly from research staff will be returned and you may miss the deadline for a Call as a result.

1.6 Equal Opportunities

Scottish Enterprise is committed to achieving Equal Opportunities. Principal Investigators applying to the Programme may be invited to complete a short

of 9 Scottish Enterprise Proof of Concept Programme – Application Guidelines questionnaire for equal opportunities monitoring purposes after their application has been received. This data will be held securely and anonymously in a separate location from the application and will be used for Equal Opportunities monitoring purposes only.

1.7 State Aids

PoCP funding is provided on the basis that it does not constitute State Aid. Therefore the money must not be used in such a way as to create a competitive advantage for any commercial venture, during the period of the PoCP funding.

This does not prevent a company from acting as a subcontractor in a project provided that no direct competitive advantage accrues to the company and any IP generated as a result of work carried out under the subcontract is owned solely by the Higher Education Institute, Research Institute or NHS Board with no restrictions on how they deal with it. All sub-contracts or any other procurement by a PoCP- funded project must comply with the institution’s rules on procurement and competitive tendering. It is expected that the applicant institutions rules and procedures on these matters will be similar to SE’s own but, for the avoidance of doubt, the minimum standard of best practice in these matters is the equivalent of SE’s own procedures.

If there is any doubt, in the first instance the applicants should contact their commercialisation contact within the institution.