1. LATVIA’S BREAKTHROUGH TO A
HIGH-INCOME ECONOMY: THE ROLE
OF PLATFORM TECHNOLOGIES
Fotonika.lv kolokvijs June 7, 2012

2. Topics
• What science and which innovative technology matters
• History lessons – challenges for Latvia and Europe
• Key enabling technologies (KETS)
• Nanotechnology as the key enabling technology for all KETS
• KETS and EU 2014-2020 R&D priorities
• KETS and R&D priorities in Latvia
• Platform technologies and clusters
• HIPMS as a platform technology
• HIPMS potential with NMP FP7 call
• Steps to develop clusters in Latvia based on HIPMS Platform
• Recommendations
SIA “Kaija Consulting” // FOTONIKA-LV XIII kolokvijs 07-06-2012 2

3. What science and which
innovative technology
matter
• NAP2020 Goal – achieve economic breakthrough to a high income country
by 2020.
• Strategies:
̶ increase R&D investment to at least 1.5% of GDP by 2020, 3% by 2030
̶ significantly expand science and engineering education
̶ Catalyze more innovation
• Given that Latvia spent even 3% of GDP on R&D it may not have desired
results.
̶ R&D by itself is not highly profitable.
̶ To make money and generate economic development
R&D investment must result in new products that sell.
̶ To benefit from R&D production must occur in Latvia or be done in 3d
countries with profits returning to Latvia.
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4. R&D investment must result
in new products that sell.
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5. History lessons
• 1990 - Latvia had over 30,000 researchers, R&D >2% of GDP.
̶ Much of the research was aimed at USSR military needs
̶ A significant share of R&D was related to specific production issues.
Innovation was tied to production.
• Latvian R&D was rated world class in several key fields – wood
chemistry, organic synthesis, magnetohydrodynamics, solid state
physics, electronics, biomechanics, and others.
• Collapse of Soviet Union led to loss of customers for Latvian R&D.
̶ VEF, Alfa, Ellar, Radiotehnika, other industries that used R&D collapsed
̶ Without paying customers R&D became a drag on the Latvian economy
̶ The Latvian government saw no role for the large R&D capability
̶ Scientists attempted to survive in the emerging private economy. Large
numbers of specialists emigrated to the West and to Russia
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6. Current status
• Latvia has about 4,000 researchers, R&D =
.46% of GDP
• Most research is now supported through EU
funding mechanisms.
• Very little research has a customer
• Of the research that has a customer an even
smaller share is oriented towards new
product development.
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7. Challenges for Latvia
• For R&D to have a multiplier effect enterprises must be
found, developed or created that innovate and transform R&D
results into value in Latvia.
• Securing R&D contracts with major foreign firms will not have a
multiplier effect. Even creating a major R&D center in Latvia for
a foreign firm would have little multiplier effect on the Latvian
economy.
• No established R&D based business is likely to move its
headquarters to Latvia.
• Latvia must create R&D based enterprises that innovate in Latvia
• Latvia will be largely dependent on EU funding of R&D
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8. Given that Latvia wins sufficient R&D
funding, does Latvia have critical mass of R&D
entrepreneurs to drive economic
breakthrough?
Does Latvia have the time to develop an
indigenous pool of R&D entrepreneurs in view
of global challenges?
Can Latvia import R&D entrepreurs?
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9. Challenges for Europe
• The EU is now facing growing and overwhelming global
competition from both developed and emerging
economies in particular in North America and East Asia.
̶ Emerging economies such as China, India and others are rapidly
mastering traditional European strengths
• For Europe to remain a “high income region” it must
innovate with products and services that will out-compete
other regions in the future.
• There is no guarantee of success.
• Volvo was bought by a Chinese firm.
• China is emerging a leader in genome sequencing, other technologies
• Major change is on the way...
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10. STRATEGIC IMPORTANCE OF KEY
ENABLING TECHNOLOGIES FOR
EUROPEHorizon 2020 strategy:
 Europe’s
• Industrial competitiveness for growth and jobs as well
as for Europe’s ability to address grand societal
challenges in the coming years.
• The European Commission High-Level Group of
Experts (HLG) identified Key Enabling Technologies
(KETs) as central to strengthening Europe’s capacity
for industrial innovation and the development of new
products and services needed to deliver
smart, sustainable and inclusive European growth.
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11. European Commission’s top
R&D priority
The HLG recommended that an integrated KETs policy
should be implemented --
• KETs should be visibly prioritized in EU policies and
financial instruments
• The European Investment Bank group should pro-
actively support KETs initiatives in Europe
.
“A European integrated initiative to pass the KETs ‘Valley of Death’, High-Level Expert Group on Key Enabling
Technologies, Final Report”, European Commission, June 2011
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12. A THREE PILLAR BRIDGE TO
CROSS THE "VALLEY OF DEATH"
 The HLG has identified the major difficulties Europe
has in translating its ideas into marketable products –
in crossing the internationally recognized "valley of
death". To cross this valley, it recommends a strategy
comprising three pillars:
̶ A pillar focused on technological research
̶ A product demonstration pillar focused on product
development
̶ A production pillar focused on world-class, advanced
manufacturing
Source: Executive Summary; “A European integrated initiative to pass the KETs ‘Valley of
Death’, High-Level Expert Group on Key Enabling Technologies, Final Report”, European
Commission, June 2011
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13. Addressing grand social
challenges
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14.  Some may feel that addressing societal
challenges may distract ETPs from their focus
on industrial competitiveness.
 In reality, societal challenges provide the
largest growth markets for businesses.
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15. Key Enabling Technologies
(KETs)
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16. Should KETS be the priority
for Latvia?
• The HLG is a committee of experts making educated guesses
about the future.
̶ Experts can be wrong...
̶ Success with KETs may not lead to products that dominate global trade.
̶ In fact – some market leaders do not have superior technology.
• Some R&D frontiers that fall outside of KETS may have greater
economic development potential for Europe than KETS.
̶ Stem cells, genome sequencing, space industrialization , quantum
computing, robotics
• Nanotechnology appears to be driving change in the other KETs
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17. Nanotechnology drives the
other KETS
Electronics
Photonics
nano Materials
Manufacturing
Electronics
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18. Topic areas to address with
nanotechnology
commercialization
 - Safety Research
 - Industrial Safety Strategy
 - Standardization
 - Technology Transfer & Innovation Financing
 - Regulation
 - Industrialization & nano-Manufacturing
 - Skills and Education
 - Networking
 - Communication
 - Research & Technology
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19. KETs and R&D priorities for
Latvia
• KETS should be a priority area for Latvian R&D because EU
funds appear to be directed towards KETS,
• but all opportunities need to be approached with an open mind. The
next globally significant product may have nothing to do with KETS.
• Regardless the topic of research, R&D must have a
customer to lead to innovation and to generate value.
• Latvia now has few research-intensive firms that can be
customers for university R&D
• IMPLICATION – THE PRIMARY GOAL MUST BE TO BUILD
RESEARCH-INTENSIVE NEW BUSINESSES IN LATVIA
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20. Innovation cycle:
Money Knowledge Money
R&D
Profits & New
investment Technology
Marketing New
& sales Products
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21. How to build research
intensive firms in Latvia
• Doing contract research for others will add capabilities and good
salaries for a few but will do little to achieve economic
breakthrough.
• In most fields Latvian research is too weak to support new major
developments
• Latvia’s strengths include geostrategic position and history:
̶ Latvia is part of the EU with its increasingly favorable climate for
innovation and technology commercialization.
̶ Most Latvian researchers are fluent in Russian and many still have ties to
scientists at research centers in the former Soviet Union.
̶ Russia, Ukraine, Belarus and other FSU republics have poor environments
for innovation and technology commercialization.
̶ Latvia can offer a entrepreneurial haven for Russian and other FSU
scientists to commercialize breakthrough technology.
 “Naco Technologies” SIA is one example of what is possible
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22. History can be important
• Latvia was a center of innovation for Russia prior to 1918
• Latvia emerged as a major center for electronics, machine
tools, pharmaceuticals, biomechanics and other fields during the
Soviet period.
• The Soviet Union developed strong R&D capabilities relating to
several KETs, especially advanced materials. These capabilities
have been weakened but Russia, Ukraine, Belarus and other FSU
republics continue to be strong in key disciplines.
• Despite having large resources for investment, the climate for
technology commercialization in Russia and other FSU republics
is poor.
• Russian scientists and specialists from other former Soviet
republics are familiar with Latvia
• Welcome to Latvia! Добро пожаловать в Латвию!
SIA “Kaija Consulting” // FOTONIKA-LV XIII kolokvijs 07-06-2012 22

23. Repeating the Naco
Technologies success
 Formula for success:
Researcher with commercializeable idea
+ Entrepreneur and management team
+ Investment
+ Innovation environment
Successful R&D-based enterprise
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24. LATVIA’S RESPONSIBILITY:
• Become one of the best places in the world to start a
business
• Create and nurture the innovation environment
 Openness to creativity and change
 Locations such as TechnoHub where new stuff can be attempted at
modest cost
 Multiple sources of investment
 Availability of mentors
 Mobility of people
• Attract and keep R&D talent capable of developing
commercializeable technology
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25. Funding vehicles for 3
pillar strategy for Latvia
• Must be market focused but cannot be purely commercially
driven
• Use EU funding to develop R&D infrastructure, educational
capabilities
• Focus funding on high potential areas with global potential
• Key to achieve breakthrough - Fund R&D based startups and
growth of R&D based companies in Latvia
̶ Properly fund Eurostars program. Latvian projects should be funded like
projects in other EU countries – 1.5 million Euro.
• Develop alternative funding sources to accelerate development
beyond what is possible with EU funding which will be focused on
KETs.
̶ Latvia’s Future bonds sold to the public with long term maturity
(pensions, education costs for children) to fund startups. Risk managed
through portfolio diversity.
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26. Attract and keep R&D talent
 Scientists are needed, but absolutely essential are innovators
and entrepreneurs.
• Good wages and good living conditions are essential to attract
R&D talent whether of Latvians who have left the country or of
highly qualified foreigners looking for opportunity.
• Entrepreneurial opportunity – the chance to own a stake in a high
potential business is key to attract potential entrepreneurs
• Given that Latvia has developed a package to offer then the
package needs to be marketed.
• Programs such as Eurostars are essential to allow creative talent
to develop equity in high potential businesses
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27. Marketing Latvia to
researchers in labs across
the FSU
• ICST - International Center for Science and
Technology is set up to help FSU researchers to
commercialize their technology.
• ICST works with Virtual CEO, a Latvia-based
company, to organize “Commercialization Reactors”
to bring together researchers, entrepreneurs and
investors.
̶ Naco Technologies resulted from a “Commercialization
Reactor”
̶ 5th Reactor concluded on May 16
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28. Naco Technologies in brief
• Headquartered in Riga, Latvia, a major city of the European Union
• Naco HIPMS technology is the culmination of 30+ years of R&D at leading Institute
of Material Science (Moscow)
̶ 4+ years of production coating of aerospace, automotive, electronics and nuclear industry
parts
̶ technology strategy - move faster and smarter than competition. Stay at least five years
ahead
• Support from ISTC and JEREMIE Programs with financing from two Latvian venture
capital funds in 2011
• Two businesses
̶ Production operation: coating and surface engineering services to firms in the
aerospace, automotive, tools, electronics, medical device and other markets
̶ R&D equipment sales: develop and sell Naco Process HIPMS equipment to research
organizations
SIA “Kaija Consulting” sagatavots Pārresoru koordinācijas centram 28-05-2012 28

29. KETs and Latvian R&D
potential
KET Latvian R&D Logic
potential
Nanotechnology High
Micro and High Process can be applied to electronics
nanoelectronics manufacture
Industrial High Organic synthesis institute
biotechnology
Photonics High Application to improve optical quality, life,
durability and reduce manufacturing costs
Advanced materials High Solid State Physics Institute, Naco process
Advanced High HIPMS process speed lends itself to
manufacturing integration with high volume manufacturing
systems
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30. Need a KETs roadmap for
Latvia
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31. Roadmaps link applications
to technical challenges
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32. HIPMS potential with NMP
FP7 call
 NMP-3 2013.2.2 - Wide band gap semiconductor materials and structures for power electronics in energy
technologies
 NMP. 2013.1.1-1 - Exploration, optimization and control of nano-catalytic processes for energy applications
 NMP-2 2013.1.1. - Self-assembly of naturally re-occurring nanosystems
 NMP 2013.1.2-1. - Nanotechnology-based sensors for environmental monitoring
 NMP 2013.2.1-1. - Developing new next, fictionalizations and processing routes for carbon fibers
 NMP 2013.2.2-4. - Materials solutions for durable energy collectors
 FoF NMP 2013-2. - Innovative re-use of modular equipment based on integrated factory design
 FoF.NMP 2013-5. - Innovative design of personalized product-services and of their production processes
based on collaborative controls
 FoF.NMP 2013-6. - Mini-factories for customized products using local flexible production
 FoF.NMP 2013-7. - New hybrid production systems in advanced factory controls based on new human-robot
cooperation interactive
 FoF.NMP 2013-10. - Manufacturing processes for products made of composites or composite metallic
materials
 FoF.NMP 2013-11. - Manufacturing of highly miniaturized components
 NMP 2013.4.0-1. - CNRS production technologies manufacturing graphene
 NMP.2013.4.1-1 Development of new materials with a reduced critical metal content – coordinated call
with Japan
 GC.NMP.2013-1 Improved materials for innovative ageing resistant batteries
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33. HIPMS can multiply FP7 impact
FP7 Project -NMP.2013.4.1-1
Latvian R&D Japanese
More
R&D
IP for alternative materials
Replace lithium?? Substitute rare earth metals
Commercialization
Companies in Latvia Companies in Japan
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33

34. Steps to develop clusters
in Latvia based on HIPMS
 Secure HIPMS equipment for R&D use
 Identify high potential FP7 projects
 Prepare winning FP7 proposals for 2013
 Develop 2014-2020 technology roadmap
leading to multiple clusters by 2020
 Implement Platform Technology Strategy
Footer 34

35. Recommendations
1. Develop a platform technology roadmap for Latvia.
A. The roadmap process builds market awareness for R&D and for
marketing / production awareness of the potential benefit of R&D.
B. The roadmap provides policymakers an overview of the market
potential of R&D that is being undertaken.
2. Import technologists with great ideas
A. Facilitate the return of Latvian researchers to Latvia interested in
launching research-based businesses in Latvia.
B. Attract Russian, Ukrainian, Belarusian, Kazakh and other scientists to
join with Latvian entrepreneurs to develop research-based EU and
global market oriented businesses in Latvia. Consider India, China
other emerging markets.
3. Infrastructure
A. Use EU funding for KETs to develop infrastructure and R&D
capabilities to support Latvian KETs with entrepreneurial
development driving further R&D
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36. Recommendations
continued...
4. Innovation culture / systems
A. Very strong industry-university cooperation – RIDEON Model
B. Constant circulation of people between industry and university
C. Innovation education starting from preschool through university
D. Support for new business formation by Commercialization Reactor, Techno-
Hub, incubators, technology parks, seed capital network
5. Platform Technology focus
A. Public / private partnership process
 Role for public investment to lead to IP
 Private investment to commercialize IP
B. Priority – nanotechnology as the driver of KETS
 Biomechanics / biomaterials cluster based on historical capabilities, technology and market conditions.
Latvia can be a center for advanced joint implants and related technologies – 25+ billion USD market
 Advanced materials cluster – Naco Technologies, Sidrabe, GroGlass, others
 Wood chemistry , forest products cluster
 Synthetic biology cluster
 Herbal medicine cluster?
SIA “Kaija Consulting” // FOTONIKA-LV XIII kolokvijs 07-06-2012 36

37. Vidvuds Beldavs
Director – “Kaija Consulting” SIA
Phones:
US - +1-812 -320-3161 / Latvia - +371-27862021
vidbeldavs@gmail.com
Skype - vidbeldavs
© 2012 “Kaija Consulting” SIA