107 CHAPTER IV Data and Findings IV.1. Technology Commercialization in ITB: An Introduction IV.1.1. ITB as Research University Institut Teknologi Bandung (ITB) is the oldest engineering college in Indonesia, established in 1920, which has 12 faculties, 128 study programs, and 111 expertise groups (KK) with national and international reputations. In 2019, ITB received an award as the best national university from the Ministry of Research, Technology and Higher Education (Ristekdikti). In 2015, ITB declared itself as a campus towards an entrepreneurial university which was marked by optimizing the role of Innovation and Entrepreneurship Development Institute (LPIK) and PT Rekacipta Inovasi ITB (RII) in helping ITB academics to commercialize technology. ITB boasts a network of over 300 industry partners, with around 25% of its operational budget being derived from contributions made by these partners (Postiglione, 2020). Recently, this university achieved the top ranking in Indonesia for industry income, as determined by the Times Higher Education (THE) edition, with a score of 88.8 (THE, 2023). On the output side, in total ITB patents from 2001-2023 (data taken on 7 Nov 2023) are 449 patents with an increase occurring since 2017 with 28 patents and peaking in 2020 with 96 patents (See Figure IV.1). Figure IV.1. Patent publishing of ITB (https://www.derwentinnovation.com/, 2023) 108 IV.1.2. Commercialization Initiative and Performance in ITB Innovation and Entrepreneurship Development Institute (LPIK) was established in 2010 to encourage the utilization of ITB research results through innovation and entrepreneurship. Meanwhile PT. Rekacipta Inovasi (RII) was established in 2016 to accommodate the profit side of technology commercialization. Since 2022, ITB operated Science and Techno Park (STP) under management of Institute for Science and Technology Development (LPIT) to support post-incubation of the university startups and spin-off. At the Indonesian level, ITB is a university that has successfully carried out technology commercialization activities. Up to 2022, registered patents managed by the university reached 501 units, and royalties earned by the university so far are more than 1.8 billion rupiahs for 24 patents. ITB has also successfully incubated up to 141 startups, 412 research and commercialization agreements during 2019-2022, and 28 patents have been successfully commercialized (LPIK, 2023). This achievement was influenced by the university's role both at the policy and management levels. According to LPIK (2023), ITB adopts downstream strategy that consists of patent license, joint operation, joint venture, and establishment of startup (Figure IV.2). Figure IV.2. Commercialization strategy of the innovation products in ITB (LPIK, 2023) IV.2. Organization of Technology Commercialization in ITB IV.2.1. Innovation and Entrepreneurship Development Institute (LPIK-ITB) Innovation and Entrepreneurship Development Institute (LPIK) was founded in 2010 with the purpose of promoting the application of research findings in higher education institutions. In 109 order to foster innovation, LPIK aims to implement a range of program activities, including entrepreneurship development programs, intellectual property rights awareness, and the establishment of institutional divisions within the LPIK organization to support the growth of an innovation ecosystem. In the context of technology commercialization, LPIK's performance can be seen from the volume of innovation research, the number of startups incubated, the number of patents produced, the number of innovative products with TRL > 5, and industrial cooperation. LPIK also manages research funds for innovation research types, such as innovation strengthening research originating from internal ITB funds or from external ITB such as Productive Innovative Research of Educational Fund Management Institution (Rispro LPDP) and Kedaireka by Ministry of Education and Culture, whose output is in the form of products. LPIK acts as an innovation research hub, co-creation facility for industry, government, and universities in solving real problems through university R&D activities (LPIK, 2023). Regarding technology commercialization, LPIK primarily has main services and programs consisting of new business development (spin-off development) and technology transfer through licensing. IV.2.1.1. Technology Transfer Technology transfer is carried out by a special division at LPIK. Through this division, services are provided for ITB academics which include legal and intellectual property information services, legal and intellectual property consultancy, assistance with intellectual property registration, assistance with drafting intellectual property implementation contracts, patent tracing, and patent drafting. Meanwhile, the programs implemented are ITB innovation data collection, training and tracking information on intellectual property rights/patents, socialization of law and intellectual property to the ITB academic community, registration of intellectual property rights, licensing of ITB intellectual property/technology rights, and development of provisions and regulations for intellectual property rights. for ITB. The licensing process flow is described in Figure IV.3. 110 Figure IV.3. Licensing process flow in ITB (LPIK, 2023) IV.2.1.2. Incubation Through the incubation program, LPIK's business incubation journey includes three programs. First, Onboarding (2 weeks), the agenda is onboarding session, 1 on 1 consultation for problem- solution finding, mentor & matching, and data & administration fulfillment. Second, incubation program (11 months), includes mentoring, startup class (business recipe), 15F Talks Session, Startup Grant, Networking & events, co-working space, office hours, IPR & legal assistance, e-learning). Third, Pre-scale up (2 weeks), including business valuation, startup assessment, exhibition, pitching preparation, Bandung startup pitching day, and recruitment process with ITB Innovation Park. The incubation stage is showed in Figure IV.4. Figure IV.4. Process to support spin-off development in ITB (LPIK, 2023) 111 Pre-incubation Pre-incubation program in LPIK-ITB consist of Technopreneurship Orientation Program (TOP) and Planned Technology Coaching (PTC), e-learning & coaching, business idea generation (BIG) & internship, bootcamp (See Figure IV.5). Figure IV.5. Pre-incubation journey (LPIK, 2023) Incubation The incubation program at LPIK offers a comprehensive range of services including assistance with business plan development, access to shared office space, opportunities for business networking and partnerships, evaluation of business value, recruitment of tenants, provision of startup grants, legal and intellectual property services, business mentoring and coaching, support for branding and marketing strategies, showcasing of innovative products and services through exhibitions, and organization of various events. Masa inkubasi berlangsung 1-1.5 tahun yang selanjutnya masuk masa akselerasi (See Figure IV.6). Figure IV.6. Business incubation program in ITB (LPIK, 2023) 112 Post-incubation Post-incubation program in LPIK includes inventor & Venture Capital (VC) networking, business, and investment consultancy, holding company (PT RII), and accelerator. IV.2.2. Science and Techno Park ITB Then, the Science and Technology Park (STP), established in 2022, encourages and facilitates Research Centers and Faculties/Schools in ITB to carry out multidisciplinary activities and produce superior scientific, technological, and invention products that benefit the wider community. This institution provides an ecosystem as a downstream anchor from invention products to innovation products. STP provides facilities and programs that become a meeting place for researchers, startups, industry, investors, and the Government so that processes of incubation, acceleration, co-creation, and co-branding can occur. STP functions as a startup accelerator resulting from the LPIK incubation. IV.2.3. PT Rekacipta Inovasi ITB PT Rekacipta Inovasi ITB (RII) is a corporation owned by the university that was founded in 2016. Its focus is on commercializing the manufacture and distribution of research goods from ITB. PT RII specializes in the creation, manufacture, distribution, and marketing of innovative technology products. Additionally, they offer project funding for innovation items (See Figure IV.7). RII's business model includes patent licensing (authorization to use technology) with royalty yields, joint operations (access to market, LKPP/e-catalogue, and network) with buy-sell profit output, in-house development (access to market, developed by RII & partners, legal & licenses) with added value profit outputs, and joint ventures/spin-off companies (access to market, access to experts, authorized to use technology with divident & capital gain outputs (Rekacipta Inovasi ITB, 2023). 113 Figure IV.7. Role of RII (Rekacipta Inovasi ITB, 2023). The RII business model consists of four things. First, Patent license, which is obtained from authorization to use technology in the form of royalties per project. Second, joint operations, namely in the form of access to market, LKPP/e-catalog, and network where the revenue stream is obtained from Buy-Sell profits. Third, In-house development, namely in the form of access to market, developed by RII & Partner, and legal & licenses which produces added value profit. Fourth, Joint venture/spin-off company, namely in the form of share contributions in the form of dividends & capital gains in the form of access to markets, authorization to experts, and authorization to use technology. IV.2.4. Policy Support for Commercialization ITB has also drawn up technical regulations for incentives for ITB researchers who own patents through LPIK (Rector’s Decree, 2018) as well as royalties from patent licenses received by researchers and laboratories where researchers carry out their research activities (Rector’s Decree, 2017). Also, after that, a Rector's Decree was issued in 2018 regarding the number of intellectual property incentives, such as patents. The royalty distribution policy at ITB consists of two criteria. First, royalties for patents resulting from research with the Government funding (APBN) sources follow Ministry of Finance Regulation (PMK) no. 72 of 2015 where it is stated that the royalty value per year is <= 100 million, so the royalty percentage for inventors is 40%, 101-500 million, the percentage for inventors is 30%, 500 million to 1 billion, the percentage for inventors is 20%, and the royalty value is > 1 billion, then the royalty percentage for inventors is 10%. Second, royalties for patents resulting from research with non-APBN funding sources follow ITB Rector's Decree No. 070/PER/I1.A/HKI/2017 where inventors get a royalty percentage of 70% while ITB 30 percent with the distribution being 9% for ITB central office, 10, 5% for 114 LPIK, and 10.5% for units where inventors work, such as faculties or study programs. IV.3. Existing Commercialization Model at ITB Borrowing Karl T. Ulrich (2012), we can describe existing commercialization practice in ITB consists of phase Intellectual Protection Right (IPR) and commercialization (See Figure IV.8). Phase-1: IPR protection. The research results of the ITB researchers and inventor are directed to LPIK through the technology transfer division to be assessed until they are patented. Apart from taking protective steps, marketing efforts were also carried out to find market potential for the technology produced through licensing process. Phase-2: Commercialization process. In this phase, commercialization channels are implemented through licensing and creating new ventures or startups. LPIK also carries out incubation activities to assist startups or new ventures in the early stages of growth. Apart from LPIK, STP is also involved in the post-incubation process by providing funding to new ventures that have been running, and RII, which is involved in the production, joint venture, and distribution processes. Figure IV.8. General mechanism of technology commercialization process in ITB (Author’s elaboration) ITB employs the idea of Technology Readiness Level (TRL) to facilitate the commercialization of research findings. TRL is a structured metric system that evaluates the maturity of a specific technology for market entry (Mankins, 2009). The Technology Readiness Level (TRL) ranges 115 from 1 to 9, with higher values indicating more potential for future technology commercialization. On a scale of 1-5 or more to basic research and development research, ITB's research management is given to the Institute for Research and Community Service (LPPM) with output from scientific publications in leading national or international journals. Innovation research or technology with a 4-9 scale TRL is managed by the Innovation and Entrepreneurship Development Institute (LPIK) with outputs namely the number of patents, number of incubated startups, prototypes, and licenses, while for TRL 7-9, it is managed by the Science and Technology Park (STP) which is now managed by the Science and Knowledge Development Institute (LPIT) with the output of being newly established firms such as startup companies, joint ventures, and licensing (See Figure IV.9). Figure IV.9. Blueprint of technology commercialization in ITB using Techinology Readiness Level (TRL) & Innovation Readiness Level (IRL) concept (RII, 2023) IV.4. Case study of Successful Technology Commercialization Initiatives at ITB We identified seven case studies that we took, which could be categorized into spin-off company (lighting protection, Kazee intelijen, prosthetic arms, Masaro), joint venture (catalyst), joint operation (portable ventilator and NIVA technology), and licensing (lightning protection, Masaro, portable ventilator, and NIVA technology). 4.2.1. Lightning Protection Technology Commercialization Process Tesla Daya Elektrika (TDE) is a company that focuses on the installation and upkeep of lightning protection systems for both external and internal structures, as well as the protection of electric power sources. The services offered include the strategic development and design 116 of protective systems, the installation and execution of these systems, and the ongoing maintenance services for lightning protection systems and power protection. This business provides a comprehensive range of services, including the planning, design, installation, implementation, and maintenance of lightning protection systems and power protection systems. This startup is currently being fostered and provided assistance by LPIK-ITB. A lecturer at STEI-ITB uncovered three patents. This innovation relates to the development of lightning protection systems and electric power systems protection in the form of documentation and preliminary sketches, specifically known as the Isolated Ground Shield Wire.