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Financing for innovation

Innovation is a complex process of adaptation in which factors such as knowledge, creativity, experience and willingness to solve a problem in a different way are combined in order to obtain a product or service that is susceptible to a commercial launch.

In México, an important factor to measure the innovation is the patents filed and granted to the Mexican Patent Office (IMPI), according to the same office[1], from January to September 2016, 319 Mexican[2] patents were granted, which represents 5% of the whole patents granted. For filing patents, only 6% out 12,938 were Mexican.

The previous information shows that Mexican innovation corresponds to a percentage lower than 10%, confirming that the “culture of innovation” is still emerging in Mexico and, on the other hand, the dependence with foreign countries on technology and innovation is solid.

One of the main reasons Mexicans barely consider innovation as a mechanism to develop and launch their products/services to the market, is the lack of financing; however, there are different means for obtaining funds dedicated to this activity that sometimes are unknown to innovators. Some forms of financing innovation projects are the following.

Government funding

The Mexican government, through its National Council of Science and Technology (CONACyT), launches federal and state calls for funding access with programs oriented to different economic activities to face sectoral, national and/or regional problems; the characteristics of these amounts vary according to the call and may cover the complete project. The most remarkable call is the Innovation Stimulus Program (PEI), which encourages the triple-helix scheme academia-industry-government when considering links between universities and research centers for the integral project realization.

Internal financing

For consolidated or developing companies, having an internal technology/knowledge management system can be a way of financing innovation. This requires planning and strategy that includes protection of intellectual property (trademarks, patents, industrial secrets, etc.) and technology transfer schemes (licensing, marketing of technological packages) to identify and increase its competitiveness. In other words, the purpose of innovation is to benefit the society while achieving an economic profit. Hardly investing in innovation and ignoring its benefits, can conduct to the loss of growth opportunities and business development.

Awards

In Mexico, there are different institutions that reward innovation in a wide variety of fields. Various public and private institutions give these recognitions continuously. The prizes are awarded in monetary form and/or with a package of benefits and complementary advice depending on the call. Some relevant awards are the National Award for Technology and Innovation (PNTi) and the National Entrepreneur Award (PNE). These competitions recognize innovators in several categories such as product innovation, processes, marketing, technology management, innovative idea, entrepreneurial women, high impact entrepreneurship, and entrepreneurial student, among others. To participate in them you must be aware of the calls and the requirements depending on the category.

Other

Funding can also come from banking institutions, examples of these incentives are those granted by Nacional Financial (Nafin), National Bank of Foreign Trade (Bancomext) and Trust Funds for Rural Development (FIRA), which, through a development banking system, grant financing to innovating individuals or companies. These funds are granted on a continuous basis and at the user request. The amounts can be adjusted according to the needs and the program in which they participate and include financial advice throughout the innovation process, but mainly are aimed at entrepreneurs and SMEs.

In addition, there are international programs to promote innovation (Trejo, 2016), which are applied in alliance with other countries or regions such as the United States, Chile, Germany, Uruguay, Canada, Israel, United Kingdom, Italy, among others, in addition to institutions such as the Inter-American Development Bank; These programs promote innovation through technical bilateral cooperation that benefits both nations. These incentives are granted depending on the country by means of calls or on an ongoing basis.

In Mexico, facing adverse scenarios, it is increasingly important that people/companies are aware of the financing procedures and benefit from innovation in all productive areas. As part of the double- and triple-helix linkage, CONACyT certified from the year 2012 to 2014, 117 knowledge transference offices (OTC) which have the competencies to encourage innovation and linkage between academia and companies. In addition to providing advice, in some cases facilitate financing.

With the use of these resources, it is possible to reduce economic dependence with foreigners, strengthen the economy and guarantee the positioning of Mexican innovative products or services in national and international markets.

References

Trejo, B. A. (2016). Catálogo de programas para el fomento a la innovación y la vinculación en las empresas 2016. México: Fondo Consultivo Científico y Tecnológico, AC.

[1] http://www.gob.mx/cms/uploads/attachment/file/170914/IMPI_en_CIFRAS_ene_sep_2016.pdf

[2] Mexican patents are considered if the assignee’s nationality is Mexico