FAPESP’s efforts to disseminate research in the business environment and to bring universities and the productive sector closer together has had a major influence on the innovation scenario in Brazil. The first endeavor of this kind was the Research Partnership for Technological Innovation (Pite), launched by the Foundation in 1995. This program established a pioneering mechanism in the country for collaboration between companies and universities to deal with technological bottlenecks. Fapesp’s investment in each project, developed within the academic environment, requires that the interested company match the funds provided by Fapesp. This requirement not only increases the funds but also ensures that the private sector’s interest is genuine and will generate innovations that may have an impact on the market. One hundred and six projects have already been concluded under Pite, while 68 projects are still underway. In 2010, the program was expanded by the addition of Pite Convênio, which has established partnerships with such major corporations as Vale, Whirlpool, and Sabesp. Up to 2009, an average of 8.4 projects a year had been approved; in 2010, this number went up to 43 projects. Still in 2010, 123 proposals were analyzed under Pite, a number seven times higher than the average number of proposals analyzed in the period from 1995 to 2009 (see charts). “The growth in the number of projects is the result of a significant increase in the interest manifested by the private sector regarding access to innovation. This growth is also the result of Fapesp’s initiative to establish agreements with the big corporations, helping to organize the search for and selection of partners,” explains Carlos Henrique de Brito Cruz, scientific director of FAPESP, who participated in the implementation of the programs when he headed FAPESP from 1996 to 2002.
The FAPESP Program for Innovative Research in Small Businesses (Pipe), also a pioneering program, was created two years after Pite. The objective of Pipe is to invest in research and development in small companies by using non-refundable grants. Pipe supports research projects that involve technological innovations with commercial potential, provided that these small companies have a research team compatible with the proposed challenges. 905 projects have been concluded under Pipe and 93 courses are still under way. The head researcher from the interested company receives the funds allocated by the Foundation. The projects include studies on the technical feasibility of a creative idea (referred to as phase 1) as well as the development of research studies and the prototype of the results ( referred to as phase 2). “Pite seeks to encourage the collaboration between companies and universities, whereas Pipe seeks to encourage a research culture in small businesses,” explains Sérgio Queiroz, a professor at the Science and Technology Policy Department of the Geosciences Institute of the State University of Campinas (Unicamp) and advising coordinator of the Research for Innovation department of FAPESP.
The economic impact of Pipe is outstanding, as described in an article, published in June in the Research Evaluation journal, covering the period from 1997 to 2006. The cost-benefit ratio was favorable: each R$ 1 allocated by FAPESP generated a return of R$10.50. When investments by companies and other sources in projects were accounted for, the ratio was R$ 5.98 to each R$ 1 invested. The creation of jobs is another important result: companies with Pipe projects increased the number of employees by 29%. The number of employees with university degrees increased by 60% and of employees with PhDs by 91%. “The impact of Pipe is substantial and growing,” Sergio Salles-Filho, author of the article and a professor at the State University of Campinas (Unicamp). He is one of the coordinators of the Study Group on the Organization of Research and Innovation (Geopi), linked to the university, which evaluated the program at the request of FAPESP.
The influence of Pipe and of Pite can be measured on three levels at least. On a national level, Pipe is similar to a program on the federal level, the Program for the Support of Research at Companies (Pappe), an initiative of the Agency for the Funding of Studies and Projects (Finep) launched in 2004. In the State of São Paulo, given the existence of Pipe, Fapesp and Finep agreed on a format for the implementation of Pappe with special characteristics. This resulted in the Pappe-Pipe III program. Under this program, companies that had already been granted Pipe funds were granted funds for phase 3 – after developing the idea and the prototype, these enterprises were able to invest in a business plan. “FAPESP’s initiatives broke paradigms and helped motivate a cultural change that has overcome the resistance of universities and companies. This resulted in the enactment of the Innovation Law in 2004,” says Fernando Perez, scientific director of FAPESP from 1993 to 2005, the period during which the two programs were launched.
Changes at the local level came into the relationship between universities and innovative companies. This required a change within FAPESP itself, which was used to evaluate and invest in projects within the academic environment. The State Constitution of 1989 increased the amount of funds allocated to FAPESP from 0.5% to 1% of the state’s tax proceeds and incorporated the investment of funds “in scientific and technological development” into the Foundation’s objectives. In the previous State Constitution – drawn up in 1947 – the wording only stated “investments in scientific research.” Discussions of the best ways to support research in companies were based on the new state constitution.
The format of Pite was based on the United States’ matching funds concept, which requires that public funds be matched by funds from companies. The positive aspect of this format is that it keeps funds from being invested in technological projects with no links to innovation. “The concept was carefully worded, as this was the first time that we included the word ‘company’ in the Foundation’s dictionary. Previously, many projects were called technological projects, but they did not focus on the market. With the new model, companies have to be interested and willing to invest,” says José Fernando Perez.
The success of Pite led to the creation of Pipe, based on a bolder concept, which was to invest directly in the company by providing non-refundable grants; moreover, the companies were not required to provide matching funds. One of the sources of inspiration was the United States’ SBIR (Small Business Innovation Research) program. Established by a law enacted in 1982, which determined the creation of initiatives for the fostering of innovation in small businesses by funding agencies with budgets of more than US$ 100 million, the programs are currently in place at 11 institutions that support research, such as NASA, the National Science Foundation and the National Institutes of Health. At the first call, held in 1997, 80 projects were submitted for evaluation by advisors and 32 projects were selected. “Pipe became consolidated because it was created as a strong program from the start,” says Perez.
The third level at which the impact of the programs can be measured is the business environment itself. An evaluation conducted by Geopi at the request of FAPESP measured the performance of technological partnership and research programs in small businesses concluded up to 2006. Sixty-five projects under Pite were analyzed. Most of the partnerships involved universities and public institutions (95%) and major Brazilian corporations (67% with more than 500 employees; 82% with largely Brazilian capital). FAPESP invested R$ 43.1 million in these programs, an average of R$ 525 thousand per program. Thanks to the matching funds provided by the companies, the total amount invested in research came to R$ 1.1 million.
The data shows that 60% of the projects resulted in the development of technologies and new knowledge, but without immediate application, while 30% of the projects generated innovations within a national and global scope and 10% generated innovations within the scope of the company. It is important to emphasize that 69% of the companies and 76% of the research institutions entered into new partnerships after developing projects under Pite. These companies stressed that their experience with FAPESP was the major reason for establishing new partnerships. One of the earliest approved projects was a partnership between the Institute of Technological Research (IPT) and the Companhia Siderúrgica Nacional (CSN) steelworks, the objective of which was to overcome technological bottlenecks in the development of better energy-efficient steel for building engines, generators and electric transformers, a market in which the company was not a player. In 1996, the Serrana Mineração mining company and a group from Unicamp’s Chemistry Institute established a partnership for the development of pigments based on metallic phosphate ions to replace titanium dioxide used in white paints and create new colored pigments. Natura entered into partnerships with such institutions as the University of São Paulo (USP), the University of Campinas (Unicamp), the Institute of Technological Research (IPT) and the State University of São Paulo (Unesp), with the objective of looking for ways to use gum from cashews and also seaweed as cosmetic products or native Brazilian plants as a source of fragrances and anti-oxidants. The list of participating companies is a long one and includes Petrobras, Dedini and Oxiteno.
According to Sérgio Queiroz, future evaluation of Pite will show a different reality, as the program has gained more impetus, thanks to partnerships established between FAPESP and big corporations. The leading example is last year’s agreement between FAPESP and Vale S.A., according to which FAPESP and Vale allocated R$ 40 million for projects focused on innovations and the application of knowledge to mining processes, to ferrous processes for steel mills, to energy, eco efficiency, and biodiversity, among other subjects. “We want to develop technologies and processes able to change the paradigms at Vale. The issue is not only to obtain incremental or timely gains,” said Luiz Eugênio Mello, director of Vale Technological Institute (ITV), the mining company’s research branch, when the agreement was signed. Another example is the agreement established in 2009 between FAPESP and Sabesp, which provides for investments of R$ 50 million over five years, in projects of interest to the company.
In the case of Pipe, which supports research projects at small businesses, approximately 60% of the 214 evaluated projects have generated technological innovations. This corresponds to 111 technology-based innovations, involving products, software, and processes. Each small business was granted R$ 247 thousand on average. The failure rate of these small businesses, which came to approximately 8%, was much lower than the average business failure rate in Brazil, which is 70%.
The number of requests for Pipe funds has stabilized, a piece of information that will be explored in-depth during the program’s next evaluation. “We would like to get more proposals than we have been getting,” says Sérgio Queiroz. The general opinion, however, is that the program has achieved its objectives, thanks to improvements in the project evaluation system. Four of the program’s coordinators followed up on the projects by visiting the companies that were granted the funding. These visits have allowed progress and bottlenecks to be identified. “When we visit a company that seems to be doing well we sometimes realize that the project does not look very promising. We also see cases that we refer to as ‘successful failures’,” says Queiroz, referring to situations in which companies, in spite of the poor results of a given project, are able to implement a research culture. “We went to visit a company that had been working on a project to remove the smell of recycled plastic waste. The project did not progress, but when we visited the company, we saw that the company’s revenues had increased tenfold, because the research culture implemented at the company had solved other issues,” says Queiroz.
There are hundreds of successful examples under Pipe in different fields of knowledge. Physicist Spero Penha Morato, who presided over Institute of Energy and Nuclear Research (Ipen) from 1990 to 1995, is a partner in two companies that has benefitted from FAPESP’s program. In 1998, he founded LaserTools Tecnologia, a company specializing in laser applications in industry and healthcare. In 2004, he helped to establish Innovatech, a company that developed the stent in Brazil. The stent is a prosthesis used to facilitate the flow of blood in blocked arteries.
To encourage the submission of properly structured projects, FAPESP placed a suggested proposal form on the program’s website. The Foundation also made a list of the most common errors found in previously submitted proposals. “FAPESP has stressed companies efforts and ability to take good care of their intellectual property. These measures have improved the quality of the proposals,” says Carlos Henrique de Brito Cruz. One month before the deadline for the proposals to be submitted, FAPESP organizes a meeting and invites the interested researchers to become better acquainted with the program and to clarify doubts. A project presented at the meeting held in December 2010 summarizes the program’s objectives. Jefferson Garcia, a businessman and a physical therapist, had submitted a project that resulted in an innovative item for wheelchairs. He partnered with a group from the School of Dentistry of Piracicaba (FOP), from Unicamp, to create an inverse propulsion wheelchair prototype. According to Garcia, studies have shown that the way wheelchairs are moved – by turning the wheels forward – puts too much burden on the muscles. If the wheels move backwards, the invalid does not get as tired. The team created a device to invert the movement of the wheels; this device includes a locking key. In this way, the invalid can choose between conventional and inverted propulsion. “The next step is to produce wheels that can be adapted to any kind of wheelchair,” says Garcia.
SALLES-FILHO, S. et al. Evaluation of ST&I programs: a methodological approach to the Brazilian Small Business Program and some comparisons with the SBIR program. Research Evaluation. Jun. 2011.