BiRNet Investment Model

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Proposed BiRNet Investment Structure

Background

Up to 50 percent of the global markets for chemicals and materials may be derived from biomass by 2050. This will be driven by breakthroughs in genetics, chemical sciences, materials sciences, and engineering plus a rapidly-growing consumer demand for sustainable alternatives to existing products. Canada has only achieved 5 percent of its bio-based resource transformation potential due to challenges with feedstock conversion, functionalization to market needs, and optimization of materials flow through the value chain. It is critical that Canada overcome these barriers since a world-leading bioeconomy will actively leverage synergies between climate change mitigation, market demands for carbon-efficient products, and job retention/creation in rural communities.

BiRNet will actively address these and other challenges with its collaborators, partners, and stakeholders, including promoting industry investment and stakeholder engagement, to generate high-value products for the Canadian circular bioeconomy. BiRNet’s team of world-class researchers and world-leading partners (20+ universities and colleges, 60+ academics, 25+ industry partners and stakeholders, and four not-for-profit groups) will champion initiatives to support the creation of a cost-competitive bio-economy focused on renewable and recyclable products derived from Canada’s abundant and sustainable forestry and agricultural natural resources.

Network outcomes will offer critical deliverables for the creation of new commercial and investment opportunities for our partners. Three broad sector opportunities are being targeted:

BiRNet has been short listed for a significant funding opportunity (NCE Networks Centre of Excellence) that would provide $20M in federal funding over the next five years. The Network Leadership Team is now preparing the full proposal to secure this funding.

Investment options

A critical element of the full proposal is stakeholder commitment to support the Network. Active investment in BiRNet will allow our stakeholder partners to leverage their investment in Network research – gaining matching funding or better – and provide the projects supported by this investment to have access to high quality resources, such as leading-edge academic staff, state-of-the art research infrastructure, access to third party applied research partners, and co-funded internships.

BiRNet has structured its investment needs around two funding avenues:

Baseline funding

An initial cash contribution will be required from all stakeholder partners in BiRNet. The relative contribution is determined by the size of the partner:

  • Baseline funding (<50 staff):  $10,000 per year
  • Baseline funding (>50 staff):  $20,000 per year

Baseline funding for the Network will be matched 1:1 by NCE funds and will provide support and access to the following BiRNet’s common-good research activities:

  • Selected projects within Theme 4 (Capturing Value) – This recognizes that the majority of the Theme 4 research is cross-cutting and will benefit our partners across a broad range of business activities.
  • Annual white papers – These deep-dive, objective analyses of bioeconomy market conditions, international research activities and policy trends will be invaluable to business decision-making.
  • Decision support tools – BiRNet will develop and provide access to a series of on-line tools that will support your investment decisions:
    • BiRPAL – an online portal where academic and stakeholder partners can submit proposals, allocate funding, monitor project delivery and upload Network outputs.
    • BiRBASE – a searchable database that will provide information on available testing services, research capacity, and infrastructure (pilot plants, processing equipment, prototyping systems).
    • BiRMAP – a data analytics system that will use AI principles to scan the global bioeconomy space with respect to commercial investments, patenting activities, research programs and peer-reviewed science.

Core funding

The majority of the investment within BiRNet will be allocated to Core Funding activities. Core Funding projects may target the full bio-economy value chains related to Green Communities, Sustainable Transportation, and Healthy Living, including innovative approaches to feedstock recovery, biomass conversion, product design and market performance.

Opportunities will also exist to look at the social, environmental and economic factors impacting bio-based business or focus on development of co-products, such as biochemicals, biofuels, and bioenergy.

The level of investment from each Stakeholder Partner will be self-defined after negotiation with the BiRNet lead team. Both direct cash and in-kind contributions are eligible for matching NCE funding.

To ensure all parties have an opportunity to inform and support projects, BiRNet will be using an Open Innovation approach to proposal generation and a Token Allocation approach to investment selection.

The BiRNet token system has been used successfully elsewhere. It ensures a transparent project selection process where options are based proportionally on the partner’s investment capacity. The token system will encourage multiple partners to work together on common interest projects or project portfolios.

Investment within the Core Funding space will be undertaken in a defined annual investment cycle:

Step 1: Proposal generation

·         Academics submit short-form Project Proposals to BiRPAL

·         Stakeholder Partners submit high-level Expressions of Interest

·         Proposals pre-filtered to align to the broader strategic outcomes of the Network and meet NCE investment criteria.

 

Steps 2-3: Portfolio construction

·         A Selection Committee (comprising academics and Stakeholder Partners) will allocate the pre-filtered proposals across the BiRNet research themes and (as required) consolidate them into either individual projects or larger programs.

·         The investment selection capacity of each Stakeholder Partner will be pre-defined according to their contribution to Core Funding:

o    Cash contribution – 1 Token per $5,000

o    In-kind contribution – 1 Token per $20,000

·         Stakeholder Partners contributing > $250,000 per year to the Network will be able to allocate up to 20% of their contribution to specific proprietary projects.


Step 4: Project selection

·         Using BiRPAL, Stakeholder Partners will allocate their tokens across the research portfolio.

·         For selection, a Core Funding project must receive 10 Tokens.

·         If a project receives less than 10 Tokens, then Tokens must be re-distributed to other projects

·         Stakeholder Partners who have >10 tokens to allocate will be encouraged to pool their tokens into specific projects or add tokens to a selected project.

·         A partner (or group of partners) may be exclusive participants in projects by allocating at least 10 Tokens to proposals they submitted via the EOI process or via negotiation with academia.

 

Step 5: Portfolio approval

·         Projects meeting Token allocation criteria will receive matching NCE funds equivalent to partnership investment.

·         Full proposals will then be completed and submitted for final approval by the Selection Committee and the Theme Leads.

·         All parties to an approved project will complete negotiations and contracting between themselves with the assistance of the BiRNet administration team.

Investment

Investment Benefits

BiRNet has selected an investment model that best accommodates the perceived needs of our Stakeholder Partners. It provides substantial leveraging of investment as BiRNet will ensure that 50% of Core Funding is under the direct control of industry partners. Partners can expect a minimum 1:1 return from both cash and in-kind investment in BiRNet. On a token basis ($5,000 unit contribution) the leverage for partners will be 19:1, representing a unique opportunity to turn a relatively low investment into a significant deliverable.

BiRNet is conscious that intellectual property issues can often be a barrier to investment in academic research. To avoid constraints in this space, BiRNet will pre-defining the general principles of IP access across all of its operations. This will ensure all parties are aligned during the portfolio creation process and can thereafter negotiate by exception on individual projects.

BiRNet is currently exploring opportunities to provide leveraged benefits to our partners who choose to affiliate existing academic projects to the network. The expectation is that affiliated projects will be determined to be in-kind contributions and, therefore, eligible for Tokens that will allow them the opportunity to compete for matching BiRNet funding.

For more information contact:

Alexandra Stuthridge

BiRNet Innovation & Strategy Advisor

alexandra.stuthridge@ubc.ca