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Return on investment

Evaluation reveals the level of efficiency of four FAPESP programs

brazFour major research programs offered by FAPESP were evaluated for the first time, in general revealing a high level of efficiency in the support of small technology-oriented companies, the encouragement of partnerships between companies and universities, support for the creation of relevant public policies and aid for the professional development of young researchers with good careers. The evaluation was conducted by Geopi, the Group of Studies into Research and Innovation Organization, connected to the DPCT, the Department of Scientific and Technological Policy of the Geosciences Institute of the State University of Campinas (Unicamp), based on the initiative of FAPESP’s Technical and Administrative Council. “The study shows not only the main results of each program, but also the impact; in other words, the effects of these results upon several areas, such as the economic, social, industrial and human resource training areas,” said Sergio Salles Filho, professor of the DPCT and project coordinator. “For example, we estimate that small technology-based companies which have benefited have already paid as much in taxes as the sums invested by FAPESP,” says Salles. Data was obtained from those responsible for research projects completed by 2006 and concerned four programs: Pipe (Innovating Research at Small and Very Small Enterprises), Pite (Research in Partnership for Technological Innovation), Program for Research into Public Policies and Aid to Young Researchers. The group’s work will continue. On one hand, the data surveying methodologies will be improved, so that the evaluation process becomes a FAPESP routine. On the other hand, evaluation of the other FAPESP programs will be carried out. Below, the main results of the evaluation:

Small companies
The evaluation of the Pipe program (Innovating Research at Small and Very Small Enterprises) shows that approximately 60% of the evaluated projects created technological innovations, a ratio that is considered fairly satisfactory. “This represented 111 innovations, of which 59 are seen as new in the country, and 17, as new worldwide,” said Sergio Salles Filho. “These innovations essentially concern products, followed by software and processes. They are technology-based innovations, in line with Pipe’s initial proposal.” In total, 214 projects were assessed – 63% of the total concluded by 2006. They received R$ 52.9 million, an average of R$ 247 thousand per company.

Pipe was launched in 1997, to aid the development of innovative research in companies with growth potential. The rate of closures found among these companies at 8% was far lower than the Brazilian standard: 70% of small and medium-sized companies disappeared within five years. The average revenue of most companies is still small “R$ 480 thousand each, per year – but there is a constant growth trend. The studied sample, collectively, had revenue of R$146 million, but 11 projects concentrate 90% of this sum. Ten percent of the companies have obtained new capital, of which eight got seed capital (small investments to transform the idea into a product) and seven got risk capital (investments to expand production capacity). Only five posted revenue growth due to exports.

One of the evaluation’s highlights was identifying the common characteristics of the most successful companies. In general, these companies are spin-offs of other companies (and thus inherited entrepreneurial competence), were not incubated (a certain weakness characterizes companies that use the protected environment of the incubators), and had coordinators with graduate degrees who became partners in the company.

According to João Furtado, a professor from the School of Engineering at USP and one of the Pipe coordinators, the superior performance of those companies whose coordinators hold graduate degrees is due to the significant experience that a master’s degree or PhD adds to one’s professional profile. “Those that went to grad school have an advantage, namely, the experience of complying with deadlines, achieving targets and being committed to results – behavior which makes a difference in a company,” says Furtado. He believes that one of the key pieces of information concerns these companies’ constant revenue growth. “The market acknowledges that what these companies produce is worth money. Many of these products have huge potential,” he says. These companies’ staffs increased by 29% during the program, but the evaluators found negative information: a significant percentage of the project coordinators (40% of the total) left the companies after the project ended. There was also a curious piece of information about the assessment of the projects that received aid during Pipe’s first phase, but that were not approved for the second phase. No less than 20% of the projects that were turned down had achieved innovations, a clear sign that the strictness of their evaluation did not keep them from moving ahead.

Partnership for innovation
Pite, the Research in Partnership for Technological Innovation program bore lasting fruit. An important piece of information: 69% of the companies and 76% of the research institutions entered into new partnerships after Pite and said that the experience that FAPESP had provided was the main driver of this repetition. Pite was launched in 1995, to finance studies in academic or research institutes in cooperation and co-financed by companies. The idea, which was a pioneer at that time, was to encourage a certain type of partnership targeting innovative research based in the universities but that also ensured the commitment of companies to the process of the transfer of knowledge , through financial contribution and participation in the project risks.

Sixty-five projects concluded by 2006 were assessed. In general, partnerships involve universities and public institutes (95%) and large Brazilian companies (67% with more than 500 employees; 82% based on Brazilian capital). The initiatives came from universities in 70% of the proposals, while the remaining 30% came from the companies. FAPESP invested R$ 43.1 million in them, or an average of R$ 525 thousand in each. With the contribution of the companies, the total sum invested increased to R$ 1.1 million. Data shows that 60% of the projects resulted in the development of new technologies and knowledge, with no immediate application, while 30% resulted in national and worldwide innovation and 10% in corporate innovations.

Based on this information, evaluators concluded that the number of companies that effectively produced innovation, 26 out of 65, was lower than expected. “Some 60% of the Pite projects didn’t yield innovations, and we must therefore investigate the reasons behind these results further,” he said. “This indicates that Pite, beyond being an innovation program, is aimed at partnerships that result in long-tem technological development,” he stated. According to Sérgio Queiroz, a professor at the Department of Scientific and Technological Policy at Unicamp and one of the Pite coordinators, the interpretation of this information can lead to a misunderstanding. “One can’t state that the objective was not met in the case of the projects where Pite made advances in knowledge , but not in innovations,” says Queiroz. “Many companies need these advances in order to bridge gaps and this will then enable innovation. In general, 20% of companies’ R&D budget is spent on research and 80% on development. In many cases, companies establish partnerships in order to solve research-related obstacles that, once overcome, make it feasible to improve the development teams,” says Queiroz. The professor furthermore recalls that the Pite projects are classified into three categories (Pite 1, 2 and 3), according the technological risk involved in the proposal “FAPESP’s return is largest in Pite 3 projects, which involve greater risks. “It is natural that in high-risk projects innovation production should be more modest than in low-risk projects,” he affirms.

The perception of the partners – universities and research institutions – shows significant satisfaction with Pite. From the research institutions’ point of view, the main competence cited was R&D, but there was also some impact on issues such as project management and the identification of corporate needs. From the companies’ point of view, in addition to R&D, the highlights were improved competence in negotiating with government institutions and awareness of sources of financing.

brazPublic policies
In the Public Policies Research Program, which finances partnerships between researchers and institutions aimed at meeting social needs, 75 projects were analyzed from 1999 to 2006, which is 85% of the projects concluded in this period. FAPESP invested R$ 10.2 million in the assessed sample, or an average of R$ 137 thousand per project. A major result was the establishment of an innovation culture within the agencies that carry out public policies. Fifty-four projects reported achieving a total of 180 results, of which 89 were technological innovations. Eighty-nine percent of these results were fully or partially implemented as public policies by the partner institutions.

FAPESP created another program in 1998 to aid research capable of producing and standardizing relevant knowledge for the establishment and implementation of public policies. The projects were required to be conducted by partnerships between researchers and a governmental agency or institution, or with organizations that work in the public policies field. The idea is to ensure that research results are put into practice. In relation to the assessed sample, most partners were institutions directly managed by the government, of which 48% were part of local governments and 38% of state governments, while 12% of the partners were private sector organizations.

3.8 master’s degree theses and 2.2 doctoral dissertations were generated per project in this program. “More than 80% of the projects conducted some sort or training program, most of which were for representatives of the partner institutions that formulated and executed policies, which furthered the mutual transfer of knowledge. And all of this does not take into account that 89% of the project results were implemented as public policies by the partner institutions,” said Salles Filho.

The evaluators’ conclusion is that the program fosters interaction between research institutions and public policy development organizations, and that research is re-fuelled thanks to contact with real policies. The suggestions to improve the program include ideas such as encouraging more initiatives from partner institutions – most projects were submitted by researchers – and proposals that are richer in substance regarding resources and partnerships.

Young Researcher
FAPESP’s Young Researchers Support Program was launched in 1995 with the pioneering proposal of encouraging the independence and maturity process of PhDs, during the career stage in which they face obstacles such as no formal employment and material difficulties to lead major projects. The objective was to create job opportunities for researchers or groups of researchers with significant potential, preferably in emerging centers. “Among the main advantages of this program are the establishment and grouping of new research groups in places that these young researchers have been through,” said Sergio Salles Filho. Three hundred and forty projects were analyzed, i.e., 86% of the studies conducted from 1996 to 2007. FAPESP invested R$ 64.6 million in this sample, or an average of R$190 thousand per project. The beneficiaries were people with strong professional experience – 72% have post-doctoral degrees and their mean age is 42. Despite the program’s name, proponents face no age limits.

Evaluators found that several of the program’s objectives were achieved. One was to create new centers of researchers. Data shows that 70% of the young researchers created or provided for the creation of active research groups, most of which are still working today, especially in private institutions away from large cities. The areas in which the largest number of research groups emerged were Physical and Earth Sciences, Biological Sciences and Engineering. In total, 87% of the people had been hired during the period in which the survey was carried out. Roughly 26% of the researchers with grants from the program were already employed by the institutions, 42% were admitted during or after the period covered by the grant and 19% were hired by other higher education institutions.

Seventy percent of the interviewed researchers and institutions stated that the grants affected the graduate programs, especially where creation of new subjects is concerned. The average productivity of the young researchers, measured by the number of publications in scientific periodicals, also increased considerably after they received the FAPESP grant. However, according to the evaluators, some of the program’s objectives were not achieved. For example, most of the young researchers became tied to government institutions that already had graduate programs, suggesting that the objective of encouraging the creation of emerging centers was not fully achieved. This conclusion resulted in a debate during the presentation of the evaluation data, on April 16, at FAPESP’s auditorium. During the presentation, professor Rogério Meneghini, one of the creators of the Young Researchers program, said that the initial idea was not only to create new centers, but to also strengthen institutions that are still building a tradition of research. “The program was successful from the start, for the universities with a stronger background, such as USP and Unicamp, understanding the proposal of the initiative, submitted fewer proposals than Unesp, for example, which needed to develop research centers more,” said Meneghini. The suggestions submitted by the evaluators to improve the program included defining emerging centers better and funding proposals from non-traditional research institutions.