Ukraine: shaping the tradition of relations between inventor and capital
Investments or innovations? Ukraine needs to lay the foundations of future economic growth today. Otherwise, global instability, which will only increase in the near future according to the experts’ forecasts, may not just deal a devastating blow to Ukraine’s economy, but turn our country into a raw material supplier and a market for imported goods. The ways to change the situation were discussed at the International Forum “Ukraine: Development Project” on October 23.
During the 20 years of its independence, Ukraine has been through a number of waves of increased interest on the part of foreign investors. Our economy became a recipient for investments running into billions. However, for investors, our country is a story of unrealized success, said Yevhen Chernetsky, head of the Association for the Protection of Entrepreneurs’ Rights.
Experts say that it is only possible to change the situation by adapting domestic production facilities to the World Trade Organization routine. First of all, a favorable climate for business and investments is required. And one of the main ways to attract investment into real economy is the development of innovative capital.
344,000 HRYVNIAS FOR AN IDEA
According to the data provided by the State Statistics Service of Ukraine, in 2011, 14.3 billion hryvnias was spent by enterprises on implementation of innovations in general, of which 0.3 billion was spent on purchasing new technologies. Overall 195 enterprises bought a total of 872 technologies, 200 of which were purchased abroad. More than a half of operations (474) related to joint purchases of technologies and equipment; 154 were a result of own research and development; 124 involved purposeful employment of qualified experts; 70 were conducted according to contracts of purchase of inventions, patents, industrial prototypes, useful models; 37 – according to contracts of purchase of technologies and know-how. Overall, in 2011 the amount of implemented innovative production was equal to 42.4 billion hryvnias.
It means that in general an enterprise paid about 344,000 hryvnias for one technology. According to market participants, with some qualifications, this cost could be considered as an average. “If we talk strictly about technologies, without taking the cost of equipment into consideration, this price is quite adequate. It is not excessive. In my practice I have to deal with estimation of intellectual property and technology with the price of 10 million dollars or more, but such cases are rare. More often, we have to deal with innovations worth hundreds of thousands of hryvnias,” says Olena KYIASHKO, independent intellectual property appraisal expert, patent attorney of Ukraine.
Industrial enterprises and commercial companies offer inventors royalties that make up 1 to 10 percent of the profit gained from the sales of the product manufactured with the use of the technology. The key criteria for estimation of the payment are the total amount of produced goods, the sphere of implementation, and most importantly, the economic value of the innovation. In fact, Ukrainian legislation does not limit royalty rates. Inventors’ reward can be written off as the enterprise’s expenses. The technology’s market value can start at 300,000 hryvnias and go higher, depending on the research and production sphere and the measure of rights that are put up for sale. This is the amount of reward an inventor can expect if their innovation attracts investors.
67 PERCENT OF APPLICATIONS ARE PATENTABLE
About 50,000 inventions are registered in Ukraine every year. More than a half of them (67 percent) are patentable. The solutions they offer are considered to be innovative and applicable in production. However, less than two percent of patents receive funding. Why does it happen this way? It is a tricky question. The rules of patent acquisition, as well as budget financing of domestic scientific research, can be a topic of a whole separate investigation. But if we abstract from the notions of “kickback” and “science imitation,” the implementation of some truly worthy ideas is impeded in Ukraine.
“The success of a project depends primarily on its creator. Brilliant ideas are implemented by enthusiasts who are ready to work day and night on their projects, and that is why they have a perfect knowledge of innovation and usefulness of their inventions, and therefore they can explain it to others and convince them. Investors don’t just come over and say: ‘Here is the money, please, create something interesting,’” explains to The Day Anton STEPANOV, one of the creators of the interactive glove that converts gestures into sounds. This very project, which was developed by the Computer Academy “Krok” students, won the first prize at the prestigious IT contest Microsoft Imagine Cup in Sydney this summer (“The future belongs to union of modern technologies and social sphere,” Den, July 17, 2012).
However, scientists emphasize the need for additional platforms that would promote quality dialog between science and business. This would give active inventors a specific place where they could find investors, and the latter, in their turn, would know where they could learn about the latest technologies. “A scientist has to develop technologies, create something new, but further promotion is not their field. There should be some sort of bridge that would help implement new technologies in production. If this is a go-getting scientist, they might propagandize the invention at conferences or seminars. But this is totally out of their sphere, they have a different calling and kind of job,” explained Vadym KOVALENKO, Ph.D., doctor of technical sciences, associate professor at the Ukrainian State Chemical Technology University. He has curated a project carried out by two high school students from Dnipropetrovsk, Anastasia Ruda and Maria Leonova. They have been working on a simple technology of dispersed powder production. This year, their project “Popcorn Effect: New Method of Obtaining Highly Dispersive Powders by Microwave Treatment” won the bronze at the GENIUS (Global Environmental Issues For Us) Olympiad, which took place in the United States. Kovalenko thinks that there are a few ways to establish connection between inventors and investors. Special technology parks or other organizations could be created, and they would accumulate developments and spread information about them. Also, this task can be carried out even on the governmental level by specific departments at research institutions or universities.
“Concerning the microwave technology, there is some interest in it, but for right now we are planning to apply the basic technology in industry. I started developing it back in 2005, and throughout the whole process I was greatly aided by my students,” Kovalenko says. According to him, the university is negotiating serious cooperation with the Luhansk Accumulator Plant in the matter of application of the basic technology.
IN PLACE OF AN AFTERWORD
But in general, the scientists think that the tradition of cooperation between researchers and business in Ukraine is only taking shape, that is why some mechanisms do not work well yet. “It is common thing abroad for business to be interested in developments and innovations in the first place. But this process was long too: ever since Silicon Valley originated, it has changed and been through numerous transformations. We still have this path in front of us. But a lot of IT developers communicate with Western investors; and there are places in Ukraine that train young researchers for meetings with investors and teach them how to interest investors and persuade them to invest money in projects,” Stepanov sums up.
The process of establishment of strong and effective cooperation between scientists and business requires active participation on both sides. Implementation of innovations is essential for a company that wants to be a leader in its sphere. And so is the communication with investors for a scientist who wants to materialize his idea. In other words, if you want to react in a right way to the future’s challenges, you have to create this future. You have to be ready to face the changes if you want not merely to stand on your own two feet, but move forward.
