1 August 2006Optibase proprietary EC R&D funding September 2006 Danny Lustiger CFO Optibase Ltd.

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1August 2006 Optibase proprietary

EC R&D fundingSeptember 2006

Danny Lustiger CFOOptibase Ltd

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Agenda

What is the EC program

Case study - Optibase

Who are we?

What do we do in the EC Programs

How we did it?

Strategy, Tactics and Tips

How the government can contribute to increase the Israeli companies participation?

How the CFO forum can contribute to this initiative?

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The EC R&D program

Support European R&D innovative activities.Central control and budget.Large budget. (17 Billion for the 6TH Program and 49 Billion for the 7th program)Very generous in terms of funding and support (75% funding).Work mainly in consortiums. (Few partners from different countries)All the major player in the European Industry participate in this program.Great opportunity to establish strategic and business relations with the main players in Europe.Long terms programs (4-7 years)Variety of topics. Touches almost every subject.Israel is a full member since the 4th Program (1997)So far the Israeli Industry wasn’t exposed enough to the huge opportunity. The returns are good but can be much better.

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FP7 – The seventh program

2007-2013

Suggested budget of 49 Billion EuroCooperation – total 32.2 Billion Euro

Health 5,984 MillionFood, Agriculture and Biotechnology 1,936 MillionInformation and Communication Technologies 9,083 MillionNano-sciences, Nanotechnologies, Materials and new Production Technologies 3,467 MillionEnergy 2,236 MillionEnvironment (including Climate Change) 1,886 BillionTransport (including Aeronautics) 4,150 MillionSocio-economic Sciences and the Humanities 607 MillionSecurity and Space 2,855 Million

Ideas 7,532 MillionPeople 4,577 MillionCapacities 4,121 Million

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Why participate?Finance:

Grants Vs. “Loans” (No need to pay royalties).

Funding of 75% of the total R&D expenses for small/medium enterprises

No limit on expenses. (Reasonable marketing and administrative expenses are permitted, allow high overheads and no limit on level of salaries).

Long term planning (4 years in FP6, 7 years in FP7)

Huge budgets (17 B in FP6 and 49 B in FP7) over variety of subjects.

Technology:

Exposure and visibility to innovative cutting-edge technology

Support in high-risk projects and technology development

Marketing:

Strategic contacts and closer ties with European industry, business and research institutes. Open doors to European companies.

Early and better view of the market and its trends.

IP

No Intellectual Property rights for EC (Vs Chief Scientist).

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CASE STUDY - OPTIBASE

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About Optibase

Founded in 1990

Public since 1999 (NASDAQ – OBAS)

Provider of standard video encoding and streaming solutions

Worldwide sales and support presence

Strong Intellectual Property

Financially sound position

~ 150 people in Israel

Experts in Digital video and IPTV technology.

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Optibase

Core Competence:Video/Audio

EncodingTranscoding Streaming

Streaming / Networking Protocols over IP, ATM, DVBDVB to IP conversions

Multiplexing, splicing technologies

Product Portfolio: Solutions for providers of IPTV and broadband TV servicesEquipment for broadcasters, content providers and other video applications

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Optibase “Track – Record” in EC

Active in EC programs since FP4 (1997)

Participation in 16 projects over the last five years

Coordinators of three projects

Ongoing projects

Participant in four projects.

Over 5M EURO net over the years (FP4-FP6) to support R&D activities)

Established business relations with major players in the EC.

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Optibase’ Projects

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Optibase Partners in EC projects (partial)

T-system Nova (Deutsche Telekom )

TILAB (Italia telecom)

Philips Research

Telediffusion De France (France Telecom)

Telefonica I+D

Thales Broadcast and Multimedia

ALCATEL

Portugal Telecom Innovacao

IRT

Fraunhofer IIS

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Our Strategy to Win ProjectsStudy the process inside / out (Good feasibility check)Commit Management (time & resources)Allocation of resources (the first attempt might be expensive….)Appoint Champions (R&D, Marketing and Finance)

Top people for the whole processStick to the company road mapPlan to be a coordinator. (Participation is also good but being a coordinator leaves the control and major budget within our hands)Use a professional consultant. (At list for the first time)Take advantage of the government support. (funds, institutions, ISERD)Maintain relationships with project partnersNurture your branding in the community

Workshops, concertation, documents and reportsOnce you “joined the club” things are much easier…

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Tactics

Tailor Project to Company’s road mapFind and select the right partners.

Establish contacts – The past perpetuates itselfUse professional experts for:

Support good feasibility checkFinding partnersSupport in writing Project DocumentProject negotiationProject administrations

Maintain close ties with the EC project officersEC and local Workshops and events

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Tips (1) – The Idea

Good, interesting, innovative ideas

Good fit to Strategic Objectives and EC goals

Attached to the company road map

Have clear vision of the goals, workplan and results

Balanced construction of the consortium (type, geography, size)

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Tips (2) – The planning

Define and keep proposal preparation workplan towards deadline

Early stage – partners’ roles and budget

Use common project structure

Plan the work as in any real project (Gantt) with early deliverables for the specification and design stages

Build a well-structure proposal

Sound Work-Packages

Spread resources evenly between Work-Packages

Build a balanced consortium.

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Tips (3) – The writing

Writing the proposal – clear, readable, promising, outstanding

Respect the auditors - don't submit a proposal that you wouldn't accept

Capture the auditors in their first 10 minutes

Nock-out introduction

A picture worth 1000 words

Make it clear where is the advance over state-of-the-art

Address all parts of the template (management, workplan, dissemination and exploitation and others)

Don’t hesitate to use professional experienced writers

Assign writings tasks to all partners but be ready to edit and write most of the proposal

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Points to Consider

Project acceptance rate of ~ 25% Nothing is guarantied.

The evaluation criteria are very objective. There is no room for any involvement of the company. You should address and explain all the requested issues within the proposal.

Evaluation is not anonymous, the submitters’ names play a role

Entering the club looks difficult (at the first attempt).

Long term planning – between submission and project start

Large and long projects – require long term vision and innovation

Management overhead

The more you wait - it’s getting harder, and FP7 is coming…

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How the government can support ?

Decide to accept the European invitation and join the program.

Keep the Israeli status as FULL MEMBER of the program.

Allocate the necessary budget for the Israeli participation.

Maintain the Israel Directorate for the EU programme (ISERD). (There is a need to improve its reach to the Israeli Industry)

Establish a fund to support the participation of the Israeli Industry:

Support the preparation of proposals by funding a fraction of the first attempt. (There is a good start by the OCS)

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What CFO forum can contribute?

Support the Israeli participation in the European program. Help to convince the government to accept the European invitation and join the program.

Lobby to increase the support in Israeli participation, mainly the government support in proposal preparation. (Having a fund similar to the old marketing fund).

Increase the Israeli Industry awareness for the huge business and funding opportunity

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Thank you !!

Danny LustigerOptibase Ltd.

Phone: 09-9709210Cell: 054-4563666

Email: [email protected]

1 August 2006Optibase proprietary EC R&D funding September 2006 Danny Lustiger CFO Optibase Ltd.

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