Innovation Norway is committed to

Faro, 11th October 2012.
Expert Meeting – Commercialization of
Marine Biotechnology
Håkon Hauan
Director Innovation Norway, Madrid
Industrial Research and Development Cooperation between
Norwegian and Foreign Companies
Innovation Norway is a government
agency uniquely empowered to unleash
entrepreneurship and cultivate a thriving
culture of productive innovation.
This presentation highlights the purpose
and scope of the financial program
designed to foster Industrial Research and
Development (IRD) cooperation between
Norwegian and Foreign Companies
Guidelines for Foreign Companies acting as demanding customers
1. Introduction
This guideline is addressed to foreign companies
interested in becoming the demanding customers of
Norwegian companies with new products or solutions not
yet available on the market.
Innovation Norway offers a support program that makes grants available to
Norwegian companies, especially small and medium sized enterprises (SMEs)
that are developing new products or services for foreign or other Norwegian
companies. The support program may cover up to 60% of the development costs
incurred by the Norwegian companies.
The support is based upon a contractual cooperation (IRD contract, see
explanation below) where the foreign company acts as a demanding customer to
the Norwegian company. The foreign company must have a need for the new
product or solution and the Norwegian company must meet the requirements set
forth by the foreign company. The product or solution to be developed should
demonstrate a high level of innovation and represent a novelty in the market.
The cooperation must be a real partnership where both parties contribute
with the resources and competence necessary to successfully carry out industrial
development projects. To qualify for an IRD project, the project contribution of
the demanding customer in terms of workload and funding must be at least 20%
of the total eligible project costs.
In order to obtain an IRD contract supported by Innovation Norway, the foreign
company should look for a Norwegian company with competence and ability to
develop the products or solutions the foreign company seeks.
The benefits for foreign companies entering into IRD projects with
Norwegian SMEs are two-fold:
- significant reduction of project cost and financial risk
- opportunity to collaborate with Norwegian SMEs with unique skills and
knowledge in the relevant product areas
Furthermore, if the foreign company is a supplier of defence equipment to the
Norwegian Armed Forces and has incurred offset obligations, contributions to
IRD projects may qualify as offsets if the product or technology to be developed
is covered by the technology areas included in the Norwegian offset guidelines.
IRD contracts between foreign companies and Norwegian SMEs are
implemented as grants to the latter. The grants are calculated as a
percentage of the project cost of the Norwegian SME.
There are no contractual relationships between Innovation Norway and
foreign companies in connection with IRD projects.
The support program is called Industrial Research and Development
Program (IRD). It is a market and demand driven innovation program aimed at
Norwegian companies looking for opportunities to develop new products,
processes or services for demanding customers, Norwegian or foreign.
In 2012 alone, Innovation Norway will spend about NOK 300 million on
new IRD contracts.
2. Industrial Research and Development Contracts
An Industrial Research and Development Contract is a
contractual agreement between a Norwegian company,
preferably a SME, and a foreign or Norwegian company
to collaborate on development of new “state-of-the-art”
products, processes or services.
The partners in an IRD contract are:
• Supplier company - which should be a Norwegian SME (small or medium
sized company)
• Client company (customer) - which may be either a foreign or Norwegian
The role of the supplier company is to develop a new product or service
that the client company needs. The client company shall not only be a
demanding customer but also participate in the project to enable the supplier
company to develop the product or service that would satisfy the requirements
of the client partner.
The IRD program provides support (cash grants) to Norwegian SMEs
(supplier companies) with the skills, abilities and capacity to solve development
needs of a demanding customer.
To qualify for a grant, a project must represent an innovation in its business area
and the end result must have a significant market potential beyond delivery to
the client. Projects with either limited technology, product development or
market prospects, will not be eligible for the IRD program.
The outcome of an IRD project may vary, but these results are typically:
 A product or prototype as the first version of a unit that can either be
marketed as a product in its own right or as a component of a larger system.
 Software for which there is an independent business idea and that can be
marketed as a separate product or service.
 A system integration, with significant new capabilities.
 A new production process.
Norwegian SMEs in any industry sector can apply to Innovation Norway for IRD
support. However, Innovation Norway will give priority to business areas where
Norway is especially well placed to succeed. Important priority areas are offshore
oil and gas, environment, maritime business development, as well as marine
business development and energy. There is also a considerable focus on the
health sector and other areas that involve large-scale public procurement,
including industrial development linked to defence procurements and offsets.
3. Supplier Company (Applicant)
The supplier company is responsible for submitting the
application to Innovation Norway for IRD support on
behalf of the whole project. The grant is given to the
Norwegian supplier company to cover up to 45%, or if an
EEA bonus is applicable, up to 60% (see explanation
below) of that company’s development cost.
Companies eligible for grants are normally Norwegian SMEs with the
competence and ability to develop new products or services not
currently available in the market.
Size of supplier
• The Norwegian companies must fulfill the SME criteria as defined in the
state aid regulations of the European Economic Area Agreement (EEA).
Norway is a signatory to the EEA Agreement
• The maximum amount of government support to companies is limited
according to the EEA Agreement - which applies the same state aid and
public funding rules as in the EU.
• The European Union (EU) state aid rules define an SME as an enterprise
having less than 250 employees.
• The EU applies three categories of enterprises: small, medium-sized and
• Small enterprises have fewer than 50 employees and an annual turnover
or balance of no more than EUR 10 million. Medium-sized enterprises have 50250 employees and an annual turnover of no more than EUR 50 million, or a
balance of no more than EUR 43 million. Large enterprises have more than
250 employees.
No. of
50 - 250
Max. annual
Max balance
EUR 10 million
EUR 10 million
EUR 50 million
EUR 43 million
Support levels
Grants are calculated as a percentage of the project cost of the supplier company:
Size of supplier company
(no. of employees)
50 - 250
IRD projects
EEA bonus, 15% addition
As an exception, IRD grants may be given to a large supplier company if the
project involves Norwegian SMEs and they benefit from sharing of competence,
transfer of technology or new market opportunities.
An EEA bonus provision may increase the support level by 15 % if the project
involves a collaboration between at least two independent companies of which at
least one is a SME (< 250 employees) or the R&D-activities are carried out in at
least two different EEA-countries. Moreover, to qualify for this EEA bonus, neither
the supplier company nor the client company may incur more than 70% of the
total eligible costs.
4. Demanding Customer
As a demanding customer to the supplier company, the
client partner is expected to participate actively in the
development project by contributing to the
specifications, being an important reference client and
strengthening the market potential for the product
developed by the IRD project. This means for example
access to new market channels and strategic partners.
The client partner must have sufficient resources (competence and financial) to
manage its part of the IRD project.
Foreign suppliers of defence equipment to the Norwegian Armed Forces are
well positioned to gain significant benefits as client partners in IRD projects.
When a defence contract exceeds NOK 50 million, foreign suppliers have to
accept offset obligations. If they enter into IRD contracts as client partners, the
investment they make in the IRD projects may be deducted from their offset
obligations provided that the technology area of the project is included in the
offset guidelines of the Norwegian Ministry of Defence (MoD).
The benefits will be two-fold:
1. Offset credits with factor up to 7,5 (subject to approval by the MoD)
2. Benefits accruing to client partners in IRD projects (as described in this
5. Duration of IRD projects
The IRD program can support development projects from the pre-study phase
up to and including the industrial prototype/pre-commercial phase. It may also
include testing and monitoring of whether the prototype meets specifications,
including a 0-series production. This is in accordance with European Union (EU)
regulations for research, development, and innovation.
5. Commercialization of the Products/Services from IRD Projects
The aim of the IRD program is not only to develop new
products or services, but also to ensure that the
product/service will be properly and professionally
marketed. Consequently, it is of no interest to Innovation
Norway to support projects that do not have clear
market objectives.
Market opportunities in addition to the business of the client partner is
of great importance while considering support to IRD projects.
The supplier company is expected to submit a business plan that shows how
marketing and sales will take place, including the resources and marketing
expertise the company possesses. The client partner may contribute both as a
marketing channel and as an important reference for the supplier, as illustrated
in the figure:
Also with respect to dependency between supplier and client
partner we must follow national and EU-regulations
7. Independence –
Supplier and Client Partner
Normally, there is no mutual ownership between the supplier and
the client company in IRD projects. It is acceptable, however, for
the client company to control up to 25% of the share capital or
voting rights of the supplier company.
Thank you for your attention

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