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A DRIVING FORCE FOR GROWTH
vinnova 2005
VINNOVA INFORMATION VI 2006:08

3
A DRIVING FORCE FOR GROWTH
4 A year of new investments
6 Biomaterial that’s got doctors enthusing
8 Investment for a stronger automotive sector
10 Joint approach sets the cogs turning
12 Some of this year’s success stories
14 Strategy for a strong biotech sector
16 Race-track for digital services
18 VINNOVA 2005
VINNOVA’s activity is multi-faceted, spanning the long and short terms and many spheres of
technology, transport and working life. A range of different investments are used to gain as good
an effect and lead to as large a growth as possible. We have chosen to present some examples of
programmes and projects with which we were involved during 2005. We will also give a summary
of the year’s activities, based on VINNOVA’s 2005 annual report.

5
A YEAR OF NEW
INVESTMENTS
VINNOVA’s fifth year of operation, 2005, brought many
positive events and government resolutions upon which to
build further.
In its research policy bill, the government proposed
to increase VINNOVA’s subsidy by EUR 60 million
until 2008; the equivalent of around a 50 percent increase.
It is most gratifying to see such great confidence
in VINNOVA’s long-term strategic work for sustainable
growth in Sweden. The bill also proposed that the Swedish
EU-R&D Council should be transferred to VINNOVA;
this was implemented on 1 January 2006.
Discussions between the Swedish government and bus i-
ness representatives on drawing up strategy programmes
for the fields of steel and metallurgy, the automotive industry,
aerospace, biotechnology, IT and telecommunications
as well as forestry and wood was concluded during the
year. The goal is for Sweden to achieve a strong interna tional
position in each sector by competing with knowledge,
innovation and renewal. VINNOVA has participated
actively in these discussions. For example, we submitted a
strategy for increased growth in Swedish biotechnology in
which many of the key players in the biotech research and
innovation system took part.
VINNOVA also has responsibility for developing and
running some new R&D programmes, such as MERA and
V-ICT in the automotive sector. Taking into account industry
co-financing, these two represent an investment of more
than EUR 90 million. This investment is most important for
a field which has been severely neglected for many years.
During the autumn, VINNOVA started designing a
R&D programme for small and medium-sized companies,
Forska&Väx, in accordance with the government research
bill’s intentions to strengthen the competitive power of
small companies. The target group is chiefly the researchbased
companies and subcontractors which are increasingly
taking over development responsibility for their own
as well as larger companies’ products and services. In its
autumn budget bill, the government decided to invest a
further EUR 10 million in addition to the EUR 1 million
in the research bill.
During the year, VINNOVA has made several promotions
for strong research and innovation environments
through VINN Excellence Center, VINNVÄXT, Institute
Excellence Centres and Berzelii Centra, some of them in
collaboration with other research financiers.
Globalisation is setting high standards for Swedish
research and innovation policy and currently affecting
all players in industry, academia and political/public
enter prise. VINNOVA has therefore increased its international
investments to strengthen Swedish research
and innovation environments. During the year, we have
collaborated on IT and telecom with Israel, Norway and
Finland. Other collaborations are with Japan, China, the
US and Canada. VINNOVA is also further developing its
co-operation with strong research environments such as
Stanford University in the US.
We believe this year’s investments are vital steps in
Sweden’s development into a frontline growth nation!
Per Eriksson, DG
Karin Markides, vice DG

The cellulose material which Aase Bodin developed with Paul
Gatenholm can replace blood vessels. Despite being 99 percent
water, the material is as tough as the body’s own tissue.

7
BIOMATERIAL THAT’S GOT
DOCTORS ENTHUSING
A new biomaterial produced at Chalmers University of Technology has a number of medical
applications. By harnessing a bacteria which manufacture cellulose, researchers have
managed to mimic the body’s own material.
Finding a substitute material for human tissue is a major
area of research and of particular current interest are synthetic
blood vessels for things like heart operations. With
the support of VINNOVA, Chalmers researchers have
developed a suitable material that has major commercial
potential.
“The current alternative to taking blood vessels from
other parts of the body is to cultivate new tissue from the
patient’s own cells or surgically insert synthetic tubes,” says
Paul Gatenholm, Professor of Biopolymer Technology and
project manager of the research.
ARTIFICIAL VESSELS
The down side is that cultivation takes several weeks and
is costly, whilst synthetic materials are often not accepted
by the body. Doctoral student Aase Bodin has produced a
material by controlling cellulose-producing bacteria which
is cheap and quickly knits together with bodily tissues.
New coronary vessels have been surgically inserted into
pigs with promising results.
Tubes just millimetres thick can also be produced to
replace smaller blood vessels, something which is difficult
with current methods.
“Surgeons who have tried the material are enthusiastic
about it. The fact that it’s soft but still strong enough to
suture means it resembles the body’s own tissues,” says
Bodin.
The unique bacterium which spins thin microfibres
of cellulose occurs in nature. The secret is to be able to
control the growth and to shape the threads into finished
vessels. The cellulose vessels grow about ten centimetres
a week when Bodin feeds fructose to the bacteria in her
bioreactor. The thin microfibres form a sparse network
making the material distinct from the more compact cell u-
lose of plants.
MAJOR POTENTIAL
The prelude to the VINNOVA project was production
of a paper-binding agent in conjunction with the SCA
company. According to Paul Gatenholm, the fact that it
ended up with medical applications instead demonstrates
the value of supporting academic entrepreneurship.
“Having collaborated with many companies, I know it
can be hard to develop completely new products in industry.
We have great freedom in the academic environment.”
So now the fun can start. The research group has a
number of exciting projects to develop the technology
further, including the construction of more complex tissues
in the bioreactor and also binding cartilage cells into the
material.
The group has also started to examine the opportunities
for commercialising the research findings. Apart from
blood vessels, the material can be used for treating burns
or for making peritonea. Aase Bodin will shortly be going
to Stanford in California to learn more about innovations
with four other doctoral students at Chalmers. The trip is
part of a VINNOVA venture to foster exchanges with the
American university.

The national R&D programmes, MERA and
V-ICT represent a broad investment by the
State and industry. According to Lennart
Kallerdahl of Volvo Cars, the idea is to give
the Swedish automotive sector a boost.

9
INVESTMENT FOR A STRONGER
AUTOMOTIVE SECTOR
The Swedish automotive sector has undergone major changes in recent years and is facing
new challenges. The State, industry and the regions are investing in research to strengthen
competitive power within the sector, through an EUR 90 million investment.
Swedish manufacturers of cars, heavy vehicles and
components have been grappling with many of the same
difficulties in their development of new products. Now,
with digital support new manufacturing processes can be
developed where production lines and even whole factories
can be simulated in computers before production starts.
New research can help with this. It is also possible to use
the latest research findings on the shaping of sheet metals,
surface treatments and tempering.
Increased knowledge in these fields is one thing that
should come out of new R&D programmes based on an
agreement at the start of 2005, between the State, regions
and industry, giving a boost to Swedish automotive technology.
SOLID EXPERTISE
“Within production technology companies the problems
are very similar, whether you’re building a Saab or a Volvo,
a lorry or a car. Companies can take the solutions into
their respective businesses and adapt them to their particular
production,” says Lennart Kallerdahl.
He is Volvo Cars’ representative on the programme
board of MERA (Manufacturing Engineering Research
Area), one of the national R&D programmes for which
VINNOVA is responsible until 2008. The other, V-ICT,
relates to vehicle IT and telematics. The aim is to facilitate
the continuation of a competitive automotive industry in
Sweden through the State, regions and industry investing
in research and development.
“The MERA programme arose due to an acute lack of
research and development in production technology for
the automotive industry. To keep this type of industry in
the country is not just a matter of being cheap; you also
need expertise in production technology,” says Kallerdahl.
AMBITIOUS INVESTMENT
VINNOVA has now allocated around two thirds of the
EUR 32 million in the MERA programme. Saab, Scania,
Volvo, Volvo Cars and Scandinavian Automotive Suppliers
will add at least the same amount. So far, 25 projects have
been granted funds and a further ten are under way. The
projects mainly deal with flexible production, production
simulation, shorter lead times and new materials. The
largest project to date has been led by Scania and relates to
cog-wheel technology.
But what is Kallerdahl’s forecast for the results? Will
we continue to have vibrant automotive manufacturing in
Sweden in the future?
“If the programme is extended past its expiry, it will leave
a lasting impression on the international competitive power
of Swedish automotive industry. If it ends, we will gain a
good increase in expertise, but it will be scattered about.
Unfortunately, such investments take a relatively long time.”
One possible future scenario he paints is of permanent
research groups concentrating on automotive technological
production, virtual production processes and production
systems and greatly improved expertise in forming
sheet metals.

Manufacturing cog-wheels is highprecision
work. Ulf Bjarre at Scania
Transmission is leading a project
in the MERA programme to develop
knowledge in the field.

THE MERA PROGRAMME:
11
JOINT APPROACH SETS
THE COGS TURNING
Who trains as an expert in cog-wheels nowadays? Very few people, despite this field of
knowledge being of major importance to automotive manufacture and the whole Swedish
economy. Through the MERA programme, the Nordic countries will now become leaders in
cog manufacture.
Cog-wheels are present in more areas of our day-to-day
lives than we would think. Not just in car and boat eng ines,
but everything from winches and wind farms to cameras,
electric whisks and computer printers.
“The value to society of expertise in manufacturing is
enormous, since cog-wheels are all around us and keep our
daily lives moving.”
So says Ulf Bjarre, leader of the KUGG sub-project in
the MERA programme at Scania Transmission. He points
to some wooden boxes on the floor containing round
pieces of metal piled on top of each other. All of them
will be turned, milled, washed and heat-treated to make
identical cog-wheels.
“Cog-wheels for gearboxes are made here, and it is high
tech. Some of the tolerances can be no greater than a few
micrometres. By way of comparison, a hair is between 50
and 60 micrometres thick.”
HIGH PRECISION
The stiff tolerances reduce noise in the finished vehicle
and mean cogs last longer.
Behind Bjarre, there is feverish activity on the factory
floor. An orange-coloured industrial robot takes hold of a
half-finished piece of metal, dips it into a water bath and
lifts it into the next workstation where it is clamped securely
and has cog-teeth milled on. Yellowish-white coolant
squirts behind a plastic guard as the cutter goes to work.
Similar processes are going on all over the workshop.
“In Sweden, there is a surprisingly number of companies
manufacturing cog-wheels. But even more surprising is the
fact that there is no training at all in the field,” says Bjarre.
One critical field of knowledge applies to the actual
tools for cog manufacture. They must be sharpened, coated
with various surfaces and kept in perfect condition.
“The tools must be totally free of flaws, which is why
we have a special group just to maintain them. But where
do we find more people with the same knowledge?”
BROAD INVESTMENT
VINNOVA’s MERA programme is a perfect form of
collaboration between universities and industry for solving
the problem. Participating alongside Scania are Volvo
Powertrain and GM Powertrain plus a number of automotive
component companies and researchers from the
Royal Institute of Technology and Uppsala University.
“We currently have an industrial doctoral student
employed at Scania. We match-fund every krona we
get from the programme. We’re not just getting help to
improve our production, we’re also getting more people
trained in the field of cog-wheels.”
The project receives around EUR 1.25 million in support
and has an overall budget of close to EUR 3 million.
“This can make the Nordic region into a unique centre
of expertise in cog-wheels,” says Bjarre.

12
Some of the year’s success
FEBRUARY
MAJOR TECHNICAL PRIZE
FOR ENGINE RESEARCH
MARCH
APRIL
Development of a new
diesel engine is awarded
the first Stora Teknikpriset
backed by VINNOVA and
technical news magazine,
Ny Teknik. Lars Tegnelius at
Scania wins for his development
of a diesel engine for
heavy lorries which meets
the Euro 4 emission limits
without after-treatment or
fuel additives. The prize
money of EUR 30,000 is
awarded by Crown Princess
Victoria.
SECURITY RESEARCH
GETS NEW STRATEGY
There is a need for a
Swedish research programme
according to the
strategy being presented
by VINNOVA. The Swedish
Emergency Management
Agency should co-ordinate
the security research and
participants are to be
familiar with European and
American security research
programmes. All told, EUR
20 million per year should
be invested in the field
according to the strategy
being submitted to the government.
RESEARCH MONEY IN
NEW POLICY BILL
The research policy bill
raises VINNOVA’s subsidy
by EUR 60 million until
2008. Among other things,
R&D programmes are augmented
by EUR 19 million
and directed investments in
technical research get EUR
31 million. A new national
organisation for the EU’s
research is also proposed,
with the Swedish EU-R&D
Council being transferred to
VINNOVA.
RESEARCH INTO THE
ESTONIA SINKING
VINNOVA is commissioned
by the government to initiate
research projects to study
the sinking sequence of the
M/S Estonia. VINNOVA is the
authority in charge of the
marine safety programme
whose main aim is to produce
knowledge which can
help improve marine safety
for current and future passenger
vessels. The research
projects start in 2006.
STARTING OF THE VINN
EXCELLENCE CENTER
One of Sweden’s first VINN
Excellence Centers is nominated
in relation to research
at Linköping University into
corporate change processes.
Like other new centres
in logistics, transport
systems and innovative
vehicles at the universities
in Karlstad, Stockholm and
Lund, it will get up to EUR 7
million over ten years. The
idea of the programme is
to build up internationally
competitive research and
innovation environments.
MAY
STRATEGY FOR SWEDISH
BIOTECHNOLOGY
Increased R&D investments
for Swedish areas
of strength, better labour
mobility between academia
and industry and tax
incentives for private R&D
investments. These are
some of the ingredients of a
new strategy for increased
growth in the Swedish
biotech industry which
VINNOVA is presenting to
the government. The aim
is to increase employment
and double Swedish export
revenues.

stories
13
OCTOBER
JUNE
SUPPORT FOR WINNING
INNOVATION COMPANIES
One of the winners in this
year’s VINN NU competition
is the company CapeeGroup,
working in production
optimisation in the pulp and
paper industry. VINNOVA is
handing out EUR 30,000
to 20 winners so that new
companies can realise their
ideas. This year’s winners
operate in such fields as IT
and telecom, biotechnology
and medical technology.
COLLABORATION WITH JA-
PANESE BIOTECHNOLOGY
A Swedish-Japanese
collaborative programme
in bioscience is started
by VINNOVA, the Swedish
Foundation for Strategic
Research and the Japanese
Science and Technology
Agency. A total of EUR 5
million is being invested
over four years to increase
the collaboration between
Swedish and Japanese
research groups. Among
the first to get funds will be
research into RNA and the
mechanisms underlying
malaria.
AUTOMOTIVE INVESTMENT
IN R&D GETS ROLLING
A new software platform for
Saab and other GM product
lines is one of the first
projects to get support in
the new V-ICT programme
aimed at vehicle IT and
telematics. Together with
the MERA production technology
programme V-ICT
is part of an agreement
between the State, regions
and industry, which will
secure employment and
growth in the Swedish automotive
industry. VINNOVA
is responsible for the joint
R&D investment with a total
budget of EUR 90 million.
GLOBALISATION THEME AT
ANNUAL CONFERENCE
How will Sweden become
a winner in the global economy?
This is the theme for
VINNOVA’s annual conference
in 2005. Globalisation
means fantastic opportunities
but also leads to threats of
manufacturing, research
and services moving abroad.
Sweden must be attractive
as an innovative economy
with a favourable business
environment, and speakers
from the world of research
and from companies and
unions are optimistic about
our opportunities.
NOVEMBER
CO-ORDINATION FOR NEW
ERA-NET
VINNOVA is the co-ordinator
for an EU project relating
to public e-services. The
eGOVERNET project will
co-ordinate European R&D
investments in the field with
participants from seven
other countries. VINNOVA is
the first Swedish authority
to be co-ordinator of an EU
project of this kind.
NEW STEEL RESEARCH
PROGRAMME
In collaboration with the
steel industry, VINNOVA is
assigned to propose a forward-looking
and innovative
steel research programme.
The idea is to further
strengthen the competitive
power of the steel industry.
This investment is an
example of what comes out
of the dialogue between the
government and representatives
of some of Sweden’s
central business sectors.
VINNOVA is participating
actively also in other sector
discussions.
DECEMBER
NEW INVESTMENTS IN
VINNVÄXT
Development of a bio refinery
with forest-derived raw
materials is selected as one
of ten new i nitial investments
in the ongoing VINNVÄXT
programme. It develops
strong regions into internationally
competitive research
and innovation systems. The
new investments represent
fields such as the steel industry,
biotechnology, IT, new
materials and energy. The
support is being given so that
the projects will develop their
strategic growth ideas at an
early stage.

World-leading innovations have led to strong growth in Swedish
biotechnology. Knowledge about our genetic material is setting new
challenges for the sector and ongoing successes demand strategic
collaboration between companies and universities.

15
STRATEGY FOR A STRONG
BIOTECH SECTOR
Sweden will go on succeeding in biotechnology. One way to achieve this is the strategy
produced by VINNOVA to lay a foundation for new investments and collaborations in
the promising field.
The biotech industry is one of the fastest growing industries.
In addition to providing export revenues, innovations
in the field are leading to socio-economic gains
through improved health. During the year, VINNOVA, in
close collaboration with industry, has produced a national
strategy in biotechnology. The object of the government
assignment is to point out measures in the research and
innovation system which can promote growth in the field.
ADVICE FROM EXPERTS
Consisting of representatives of academia and industry,
the reference group had an important role in the work.
One of the leading figures was Mats Pettersson, CEO of
the pharma company Biovitrum.
“A strong Swedish research environment is a prerequi -
site if we and other Swedish companies are to go on
developing and winning the first places in our fields that
we need in order to advance ourselves internationally.”
Swedish competitive advantages are the tradition of
close collaboration between research and healthcare, and
all the well-developed patient registers and biobanks
which make it relatively easy to conduct clinical studies of
drugs. As well as its requirements for increased research
investments, the strategy also contains proposals for a
national programme for researchers wanting to divide
their time between academia and industry and seeks tax
breaks for companies with a high proportion of R&D
activity. An overall biotech council to monitor the field is
also proposed.
“To balance the strong competition above all from the
American side requires a climate which stimulates biotech
companies in Sweden; the same as other EU countries
have already introduced,” explains Pettersson.
As part of the preparatory work on the strategy,
VINNOVA conducted a comprehensive survey of the biotech
field. Among the 800 companies in the sector were
many small innovative companies and some global players,
but only few medium-sized companies which could be a
link between them. Biovitrum is one of these and Pettersson
sees the company as important in picking up research
and developing it into products.
INCREASED COLLABORATION
“We Swedes are still world leaders in bringing out ideas,
but too few lead to drugs coming onto the market.
Bringing out more successful products would give small
companies the resources to grow strong.”
The growing collaboration within the sector is necessary
according to Pettersson. Biovitrum is collaborating with
several other companies regarding research investments in
order to make progress more quickly.
The biotech strategy has been an important basis for
the Swedish government in a discussion with representatives
from the biotech sector to secure growth and create
new jobs. In the long run, biotechnology is also important
within technical research through nanomedicine and
within traditional industries such as foodstuffs, forestry
and chemicals.

New kinds of optical fibre with special properties
are being developed by Ingmar Höglund at Acreo
Fiber Lab. Hollow fibres with channels micrometres
thick are produced from a preform which is drawn
out into a ten-kilometre optical fibre.

17
RACE-TRACK FOR DIGITAL
SERVICES
Optical fibres will benefit society, through such things as the creation of a large number of
jobs when new companies move into the Hudiksvall region in central Sweden. Fiber Optic
Valley, a European success story, is located here.
The success of one of the VINNVÄXT winners is continuing.
Its work is in research, development and practical
field trials based on fibre optics; a work which has made
an impression a long way from Sweden. Amongst other
things, the European Commission considers the successes
of Fiber Optic Valley in Hudiksvall to be a textbook
example which the rest of the EU should follow. In purely
concrete terms, it deals with three areas: Fibre access to
households, commercial services to homes and fibre optic
industrial applications.
“Fiber Optic Valley is creating Europe’s largest racetrack
for digital services,” says Ingmar Höglund, head of
the Acreo research institute’s FiberLab and R&D Manager
at Fiber Optic Valley.
So, what is Fiber Optic Valley? Both a physical fibre
network between the neighbouring regions of Sundsvall,
Hudiksvall and Gävle and a laboratory and test site for
various companies.
“The idea of the test site is that it should be a meeting
place for system suppliers, operators, service developers
and researchers. New solutions are tried out here with real
end users as test pilots,” says Höglund.
WINNERS 2004
In 2004, Fiber Optic Valley was one of the winners in
VINNOVA’s VINNVÄXT programme, which paved the
way for success. Today, a large number of partners are
collaborating in the region. The vision is to be Europe’s
fibre optic centre and create several thousand new jobs.
Behind the investment is Acreo, Hudiksvall Näringslivs
AB, Ericsson, Mid Sweden University, the University of
Gävle, the EU plus the county administrative board and
the region’s municipalities.
“We have built up a strong network. The collaboration
with universities and companies is contributing to our abi li ty
to support a range of development projects in the testbed.”
MANY APPLICATIONS
Höglund explains a conceivable form of collaboration. At
Mid Sweden University, there is a laboratory for sensors
which has major development possibilities. At the same
time, there is intensive work under way in Gävle on intelligent
building materials.
“We will be discussing such things as the development
of systems which can inform us when the road surfacing on
a bridge is worn, or if a building has too high a moisture
level. In Gävle, they specify the requirements, in Sundsvall
and Hudiksvall we realise the ideas.”
Most people associate optical fibres with the transportation
of data between computers, but at Fiber Optic
Valley work is taking place on many other applications.
“One application deals with using fibres as fire detectors,
or as an energy supply for welding robots. We are also
developing fibres for endoscopy, in other words internal
examinations with cameras.”
Höglund also talks about trials with fibre access and
e-services.
“Well, in fact the opportunities are limitless and the
fibre lab in Hudiksvall is a gathering point for our national
and international projects and trials.”

19
VINNOVA 2005
VINNOVA – AN IMPORTANT PLAYER IN
RESEARCH AND DEVELOPMENT
Today, international competitive power is more important
than ever and innovations are considered crucial to sustainable
growth. VINNOVA’s special field of responsibility
is innovation of successful products, services or processes
with a scientific basis. VINNOVA’s task is to finance
needs-driven research and to strengthen the networks and
co-operation necessary in regard to the innovation system.
With this systemic view, VINNOVA has grown into an
important player in R&D. It is positive that the systematic
and strategic models of development are gaining broader
acceptance in many areas of society. This means that
needs-driven and curiosity-driven research can be run side
by side with mutual respect and a requirement for scientific
quality. This comes with the realisation that they complement
one another in the work for sustainable growth.
THE RESEARCH BILL
The research policy bill presented during the year proposed
that VINNOVA’s subsidy be raised by EUR 60
million until 2008, an increase in the subsidy of 50
percent. Among other things, there is an enhancement
of EUR 19 million to VINNOVA’s R&D programmes,
and EUR 31 million to directed investments in technical
research. Financing of industrial research institutes gets
EUR 12 million in additional support and the bill also
contains an enhancement of more than EUR 6 million for
VINNOVA’s investments in strong research and innovation
environments.
The government also wishes to continue directed R&D
programmes in collaboration with industry. VINNOVA
is therefore being enhanced by EUR 13 million for R&D
programmes including the automotive field and other
industries vital to Sweden.
A new national organisation for the EU’s research
collaboration has been proposed where the Swedish
EU-R&D Council should be transferred to VINNOVA.
This was implemented on 1 January 2006 in the form of
a secretariat that will promote Swedish contribution to
the EU’s research work through information, training,
advice and legal assistance to companies and researchers at
universities.
AUTOMOTIVE INDUSTRY
During 2005, the government decided to invest in R&D
in the fields of production technology and vehicle telematics,
as part of an agreement between the State, regions
and industry for securing employment and growth in the
Swedish automotive industry. VINNOVA produced a decision-making
basis for the investment and contracts have
been signed for two national R&D programmes; one in
production technology called Manufacturing Engineering
Research Area (MERA) and one in vehicle IT and telematics
(V-ICT). The agreement states that VINNOVA
and the Swedish Business Development Agency (Nutek)
will be contributing EUR 45 million over a four-year period.
Additional to this is co-financing from industry and
contributions from other players, making a total investment
of at least EUR 90 million in both programmes.
VINNOVA’s subsidies for 2003–2005 (EUR millions)
117
126 132
2003 2004 2005

20
VINNOVA is responsible for the programmes and
during the year, there were decisions in the MERA programme
on 20 projects with around EUR 16 million in
public financing. Within V-ICT, there were decisions on
13 projects with around EUR 5 million in public financing.
RENEWAL, GATHERING STRENGTH AND
PROFILING
VINNOVA works from the basis of an integrated innovation
system concept. Its investments focus on opportunities
and weaknesses in the innovation system so that its
efforts become more effective and create increased opportunity
for sustainable growth. This means that important
elements of VINNOVA’s investments are in fields which
have good growth potential.
Each year, VINNOVA implements a range of investments
to instigate, stimulate and support needs-driven
research. Breadth as well as penetration are needed to
create internationally strong research environments. This
also entails VINNOVA collaborating with a large number
of players in various fields nationally and internationally.
A clear expression for the work of renewal, gathering
strength and profiling is the fact that around 400 new projects
have been decided on during the year, meaning that
VINNOVA’s investments 2005 divided into programme areas
Transportation
21%
Advanced manufacturing
and materials
18%
Services and
IT implementation
8%
Working life
7%
Biotechnology
22%
Information and communications
technology
24%
one quarter of the agency’s investments have been subject
to review and new decisions during the year.
PROGRAMME AREAS
To create greater flexibility, VINNOVA reduced its
emphasis on individual growth areas. This has continued
during 2005 by focusing on the major areas of Information
and communications technology, Services and IT
implementation, Biotechnology, Advanced manufacturing
and materials, Transportation and Working life.
VINN EXCELLENCE CENTER
The ambition to renew, gather strength and profile is
shown in VINNOVA’s investment to build up a new
generation of strong environments for multidisciplinary
needs-driven research in close collaboration with industry,
universities and public administration. The programme
VINN Excellence Center has been initiated during the
year and embraces a total investment of EUR 315 million,
including co-financing over a ten-year period. In the fields
of working life and transportation, the establishment of
four centres is already under way. Some fifty consortia of
research groups in other fields have been granted planning
grants and 15 centres are to be financed in a second stage.
An efficiency analysis of VINNOVA’s past investment
in competence centres indicates that the VINN Excellence
Center programme will develop high-quality, internationally
competitive research groups. They will produce
trained researchers who are well prepared for professional
activity in industry and society and the assessment is that
contributing companies will strengthen their innovative
ability and expertise.
VINNVÄXT
During 2005, the work with the VINNVÄXT programme
has continued and has also had a new round of advertising.
The programme will develop strong regions into internationally
competitive research and innovation systems
within 10 to 15 years. A further 10 new growth initiatives
have been given initial grants to develop strategic growth
concepts into complete project plans. VINNOVA is investing
near EUR 7 million per year in VINNVÄXT and in
conjunction with at least as much co-financing from other
players, the total investment over a 10-year period will be
around EUR 160 million.

Follow-up studies show that the programme, through its
focus on competition between regions, is succeeding well
in mobilising resources both in the form of financing and
employment investments from involved players. It has thus
gained a system-influencing effect. Even those regions
which applied but did not get financing are continuing to
drive their initiatives forward. The long-term perspective,
a clear focus on growth and the fact that a common view
of regional strength areas is being strengthened among the
players are vital success factors in VINNVÄXT.
SMALL AND MEDIUM-SIZED COMPANIES
VINNOVA supports R&D in small and medium-sized
companies in several ways – both through directed investments
and as a part of larger programmes. During 2005,
VINNOVA extended the financing of research to small
and medium-sized biotech companies through a declaration
in which companies with five to 50 employees could
apply for funds to further develop new research ideas. So
far, 22 biotech companies have been able to strengthen
their project portfolio with the aid of these funds.
The VINN NU programme is aimed at newly established
technology-based companies. During 2005, a total
of 20 companies received financing of EUR 30,000 each.
Of these, 16 were spin-offs from universities.
SMINT will encourage small and medium-sized
companies to take part in the EU’s technical collaboration
within the EU’s framework programme. The financing is
a maximum of EUR 10,000 and applies to the preparation
of a pilot study which will involve active participation
in the planning of a project which can lead to technical
innovation. During the year, 50 applications were received,
of which 32 were granted.
During 2005, it also became apparent that VINNOVA
was to take charge of new financing of EUR 10 million
for R&D in small and medium-sized companies.
The Forska&Väx programme was introduced in 2006 to
strengthen the small and medium-sized companies’ ability
to increase the knowledge content in their processes and
products and carry out product development.
Recipients of VINNOVA’s investment 2003-2005
Universities
40%
Other
8%
2003
Industrial
research institutes
33%
Companies
19%
Universities
41%
Other
7%
2004
Industrial
research institutes
29%
Companies
23%
Universities
35%
Other
9%
2005
COLLABORATION WITH OTHER FINANCIERS
VINNOVA’s funds comprise around five percent of the
State’s total R&D investments. It is therefore important
to have collaboration and co-financing with other financiers
to effectively contribute to increased returns and
sustainable growth for the total investment. VINNOVA
is working for a good collaboration with other research
financiers and industrial policy authorities, as well as with
industry and other important players in various research
and innovation systems.
VINNOVA’s investments are almost always matched
by funds from other financiers and players involved in
projects. This means that the initiatives are also clearly
assessed as needs-driven by other financiers and that the
initiatives are at least twice as large as they would be had
VINNOVA implemented them with only its own resources.
This lever effect is a strong contribution, augmenting
the added value of the State financing taking place
through VINNOVA.
21
Industrial research
institutes
26%
Companies
30%

22
BERZELII CENTRES FOR EXCELLENT RESEARCH
ENVIRONMENTS
During the year VINNOVA, in collaboration with the
Swedish Research Council, introduced an investment
in strong research environments called Berzelii Centres.
This support goes to excellent basic research and collaboration
with industry and/or public enterprises, so as to
benefit from the research in various ways. All research
environ ments should be on the cutting edge and be able to
compete on an international level.
This investment is being made so that Sweden can continue
to be an outstanding research and growth nation. It
will also lead to more advanced prioritisation in Swedish
research, since learning establishments will have to prioritise
which environments should be involved in competing
for the funds.
Berzelii Centres are part of a major investment in
strong research environments by the State financiers
VINNOVA, the Swedish Research Council, the Swedish
Council for Working Life and Social Research and the
Swedish Research Council for Environment, Agricultural
Sciences and Spatial Planning. It also includes VINN
Excellence Center and two other ventures – Linnéstödet
and FAS-center. The funds in the programme are paid out
over ten years and total EUR 315 million. Decisions about
which environments will receive financing will be taken
during the spring of 2006.
INVESTMENT IN STRONG RESEARCH INSTITUTES
During the year, VINNOVA started the programme
Institute Excellence Centres together with the Swedish
Foundation for Strategic Research and the Knowledge
Foundation. In collaboration with universities and industry,
the industrial research institutes will create international
frontline environments for research, development
and innovation in areas of major significance for Sweden’s
future competitive power and growth. The investment is
for six years and 17 applications received planning grants
in 2005 under the programme.
Industrial research institutes are a vital resource base for
Swedish industry. They codify industrial knowledge requirements
in scientific form and see industrially appealing
applications in university research. VINNOVA supports
industrial research institutes through direct grants, known
as expertise development funds.
INTERNATIONAL WORK
R&D is largely an international activity. VINNOVA’s goal
is to integrate international collaboration in all initiatives
– national, regional and sectoral. VINNOVA has
strengthened its initiatives by using international comparisons
to build up knowledge on policy and initiatives in
other countries. Thus, the individual initiatives can better
be linked to collaboration with good research and innovation
environments in other countries.
VINNOVA’s grants to industrial research institutes during 2005 (EUR millions)
ACREO
75.3
IFP/SICOMP
11.4
IVF (incl. SCI)
24.7
KIMAB
11.6
MEFOS
SGF
5.6
5.1
SICS
19.5
SIK
13.0
STFI/Packforsk
39.4
SP (incl. Trätek)
54.2
YKI
8.1
Total support EUR 30 million, of which EUR 1.6 million to the holding company IRECO.

23
FRAMEWORK PROGRAMMES
The EU’s framework programme is an important instrument
for strengthening the competitive power of European
industry. During the year, VINNOVA has been working
to prepare for the EU’s Seventh Framework Programme
and produced strategic viewpoints on the European
Commission’s proposals for a new framework programme.
Work has also taken place in the Sixth Framework
Programme within the priority areas: Information society
technologies, Nanotechnologies, multifunctional materials
and new production processes, Aeronautics and space, Sustainable
development and Research and innovation. During
the year, VINNOVA co-financed 18 projects totalling
more than EUR 2 million. Co-financing of EU projects is
assessed on the basis of whether its content is in line with
the main emphasis of other Swedish investments so that
added value can be created for both the EU and Sweden.
PARTICIPATION IN ERA-NET
VINNOVA is also participating actively in something
known as ERA-NET, which the European Commission
established for increased collaboration between different
European research financiers. The investment is intended
to strengthen R&D and contribute to effective initiatives
within Europe. VINNOVA is taking part in 16 ERA-
NET collaborations. During 2005, VINNOVA has been
appointed as co-ordinator for a project relating to public
e-services on the theme of Information society technologies.
The project is called eGOVERNET and will create,
promote and co-ordinate national research programmes
within the field. It will comprise a basis for a future
European Research Area. Seven other countries besides
Sweden are participating. VINNOVA is the only State
authority in Sweden which is co-ordinator for an EU
project of this kind.
BALTIC SEA INITIATIVE
Baltic Sea Initiative is a collaborative organisation for the
Baltic states. The initiative aims to strengthen the innovation
capital and competitive power of the Baltic region
with its eleven countries including Iceland and Russia.
VINNOVA is one of the driving parties in the Baltic Sea
Initiative and has collaborated with the Baltic Development
Forum. Two development conferences have been
arranged to formulate and agree on an action plan.
BILATERAL WORK
Bilateral collaboration and networking with selected
countries are vital tools for bringing knowledge to Swedish
R&D projects and for knowledge from Swedish
research to be disseminated internationally. During the
year, research collaborations in the ICT field have been
commenced with Israel, Norway and Finland. There is also
a programme with Tekes, the Finnish technological funding
agency, in Wood Material Science and Engineering.
Another international initiative is the collaboration
being run with Japan Science and Technology Agency and
the Swedish Foundation for Strategic Research in a joint
programme for collaborative projects between Japanese
and Swedish biomedical researchers. The assessment is
that this could lead to an increased exchange of knowledge
between the researchers of both countries. There is also
a new agreement on technological scientific collaboration
between Sweden and China for which VINNOVA is
prioritising information and communication technology,
new materials and biotechnology. During the year, a seminar
on materials technology has been arranged in Beijing
with VINNOVA and the Chinese Ministry of Science
and Technology as financiers.
VINNOVA AS A STRATEGIC PLAYER
VINNOVA will use analyses, research and proposals to
increase knowledge about innovation systems and thus its
ability to successfully fill its key role in R&D financing
and industrial policy. During 2005, the Swedish government
and business representatives carried out a discussion
on drawing up strategy programmes in the fields of
aerospace, automotive industry, steel and metallurgy, biotechnology,
IT and telecommunications and forestry and
wood. VINNOVA took part in all these discussions on a
secretariat, strategic and leadership level. The discussions
resulted in strategies and action plans for each sector.
NEW STRATEGIES THROUGH GOVERNMENT ASSIGNMENTS
During 2005, VINNOVA’s analysis work was linked to
a number of government assignments. One example was
the innovation system analysis supplied as a basis for the
government’s work with a strategy for the field of safety
research. The research strategy was worked out under
VINNOVA’s leadership in collaboration with the Swedish
Armed Forces, the Defence Materiel Administration, the

24
Swedish Emergency Management Agency, the Swedish
Defence Research Agency, the Swedish National Defence
College and the Confederation of Swedish Enterprise.
During the year, VINNOVA has also drawn up a national
strategy in the biotech field. The goal of the strategy
is to produce measures for the Swedish biotech innovation
system to advance sustainable growth.
A third example is the analyses conducted in conjunction
with the design of the new R&D programmes in
the automotive sector. The result is major investments,
with industry and public sector players contributing to
a strengthening of the Swedish research and innovation
system in the field.
WORKING LIFE
VINNOVA’s starting point for investment in the field of
working life is that growth through innovations and competitive
production also assumes an effective and sustainable
supply of expertise. Innovations are created by people.
Regardless of whether innovations are fed by the needs
of technical R&D or the market, all innovation processes
are dependent upon involvement, leadership, creativity,
initiative and collaboration. For this reason, VINNOVA’s
initiatives in the field are aimed at various innovation processes
and the leadership and working life questions which
are brought to the fore by such an emphasis.
One example of an initiative is the R&D programme,
Dynamic labour market and regions (DYNAMO) which
concentrates on the players in the local and regional
labour market, in particular the connection between labour
mobility, individuals’ and organisations’ development and
the opportunity to create a healthier working life through
labour mobility.
INCREASED LABOUR MOBILITY
Several of VINNOVA’s programmes and other initiatives
have consistently worked on advancing labour mobility
between research, industry and policy/public enterprises.
This mobility is an important part of VINNOVA’s work
in supporting the growth of strong innovation systems
which can contribute effectively to an increased exchange
of knowledge between research and society.
This takes place chiefly through VINNOVA’s programmes
being designed to promote increased labour mobility
between different spheres in society and between different
employers, as is the case in VINNVÄXT, industrial
research institutes and DYNAMO.
The VINNVINN programme focuses entirely on
mobility amongst technicians and people with research expertise.
This is an initiative dealing with expertise mobility
and expertise supply. Its purpose is for innovation-based
small and medium-sized companies to be able to exploit
untapped business and product ideas. The target group is
unemployed technicians with research expertise. VINN-
VINN started in Gothenburg, and during 2005 expanded
to Skåne, Kalmar, Karlstad, Jönköping and Uppsala.
GENDER EQUALITY
VINNOVA regards gender equality as a vital factor in
sustainable growth. Among other things during the year,
projects have received support under a call relating to gender
perspectives on innovation systems and equality. The
investment will strengthen VINNOVA’s opportunities for
developing activities when it concerns gender perspectives
in innovation systems and equality aspects in various calls
and for working for equality in society. The call resulted in
38 applications of which 13 were granted financing.
When it concerns VINNOVA’s programmes, female
applicants did not seem to be disadvantaged in the assessment
process. Of the total number of applications in 2005,
22 percent had female project managers. The proportion
of women granted project funds was 27 percent and thus
somewhat larger than the proportion of applicants. The
proportion of women receiving project funds has steadily
increased since 2002, when it was 16 percent. The proportion
of funds granted to women is 25 percent.

VINNOVA’S PUBLICATIONS IN ENGLISH 2005
For more information or to view other publications, please see www.VINNOVA.se
25
VINNOVA ANALYSIS
VA 2005:
01 Wood Manufacture – the innovation
system that beats the system.
03 Innovation policies in South
Korea and Taiwan. Only available
as PDF.
05 Impacts of neck injuries research
at Chalmers University of Technology
– Summary
VINNOVA INFORMATION
VI 2005:
06 VINNOVA – For an innovative
Sweden!
07 VINNOVA’s activities within
Biotechnology
08 Swedish research for growth. A
VINNOVA magazine
VINNOVA POLICY
VP 2005:
01 Knowledge to safeguard security.
Proposals for a national strategy
for security research.
05 VINNOVA’s views on the European
Commission’s proposal for
the Seventh Framework Programme
on Research & Tech -
nological Development 2007
– 2013. Position paper.
VINNOVA REPORT
VR 2005:
04 Information and Communications
Technology in Japan. A
general overview on the current
Japanese investments and trends
in the area of ICT.
05 Information and Communications
Technology in China. A
general overview of the current
Chinese investments and trends
in the area of ICT.
11 ICT-based Home Healthcare.
Only available as PDF.
13 The KTH Entrepreneurial Faculty
Project
14 OLD@HOME Technical Support
for Mobile Close Care. Final
Report. Only available as PDF.

26
For complete financial accounts, please see
Annual Report 2005 on www.VINNOVA.se
Publication details:
Texts: Andreas Nilsson, Håkan Borgström
English translation: Jonathan Dellar
Photography: Anette Andersson
Graphic design: Cecilia Witt-Brattström
Printed by: Davidsons Tryckeri 2006
ISSN 1650-3120

SWEDISH GOVERNMENTAL AGENCY FOR INNOVATION SYSTEMS
VINNOVA, SE-101 58 Stockholm, Sweden. Office: Mäster Samuelsgatan 56
Phone: +46(0)8-473 30 00 E-mail: VINNOVA@VINNOVA.se www.VINNOVA.se