fund Some takeaways on the New European Innovation Agenda
By Ingemar Pongratz
The European Union (EU) has through the European Commission (EC) released a new communication presenting plans support innovation. The New European Innovation Agenda present new activities to support EU innovation in particular innovative SME. Here we present Some takeaways on the New European Innovation Agenda communication
Interestingly, there appears to be an important shift in the EU priorities. In this communication, the EC speaks mostly on Scale-Ups. Previously, the focus of the EU / EC was on Start-Ups. This is an interesting shift in priorities as it seems that the EC now will focus on more mature SME that are ready to enter the market. The Communication focuses on presenting different funding sources for EU Scale Ups and presents the opportunities already available in the European Innovation Council or the Invest EU fund (Juncker fund).
These two funds are already operational and can provide considerable support to European SME. In addition, the EC is currently discussing how to increase available funds further. Collaboration with other financial actors such as European Pension funds and European Insurance funds is a key possibility. These organizations invest trillion of Euros, primarily in mature, low risk projects. However, if a small share of their capital could be used to support European Scale Ups, available funding for Scale Ups would increase considerably.
The Commission highlights that available funding for Scale Ups needs to increase and that European Scale-Ups are at disadvantage. Furthermore, focus is on Deep Tech Scale Ups in areas of healthcare, agriculture, digitalisation among others. In particular the Commission highlights Deep Tech Scale Ups that combine knowledge from different research areas. These Scale Ups are emerging from a cohort of European Start Ups and have the potential to drive innovation and solve pressing societal challenges across different sectors.
Currently, EU Scale Ups rely on costly and insecure standard products provided by banks. These products include loans, bank overdrafts and other costly and risky solutions.
Often, equity capital is a better alternative, however, EU VC investors are both very narrow and also risk averse. In addition, EU financial institutions such as pension funds and insurance companies do invest in small companies such as Scales Ups. Lack of suitable financing solution often drives EU Scales Ups out of Europe and force them to relocate.
To improve the current situation, the European Commission will change the European conditions to secure owner influence in Scale Ups that go public. Furthermore, a new European fund will be established to invest in Scale Ups that are going through an IPO or have plans to perform an IPO. Together with available funds such as the EIC or Invest EU fund, the Commission will improve access to finance for Scale Ups.
Other areas for improvement include the development of stronger Innovation Ecosystems. The plan is that Scale Ups will be able to connect to expertise in different areas and have access to testing facilities and to advice from different societal sectors and even users.
The Commission also present plans to improve the skills required by SME and Scale Ups. The EC wants to target 1 million talent workers required by Scale Ups and SME in the future. These training activities would include skill development programmes. Furthermore plans include an EU wide platform to match the needs of Scale Ups with available talent.
Furthermore, the EC plans to address the regional divide in the area of innovation support. The Commission will launch calls to create so called Innovation Valleys in 2023. Though this call, the Commission aims to bring together and promote collaboration between regions in the Food, Health, and Digital areas. Innovation Valleys will also bring together funding mechanisms such as Horizon Europe and INTERREG. This will be an interesting possibility to promote regional collaboration between innovation support facilities and should benefit Scale Ups and other SME as well.
Taken together, there are a lot of interesting novel points. Some takeaways on the New European Innovation Agenda include focus on funding for Scale Ups (not Start Ups) and additional support for enterprises. Interesting, there is little mention regarding the role for universities in this area. This is a surprise and I suppose that the academic sectors will try to contribute to this activity as well.
Ingemar Pongratz is founder of Fenix Scientific AB / Pongratz Consulting. We help universities and enterprises to apply for funding from European sources such as Horizon Europe. If you are interested in our services please contact us through the Online Contact form.
Ingemar Pongratz cofounded Letavis AB as well. Letavis AB develops new product to support the agricultural sector. We have developed a safe and efficient product that considerably increases plant growth. We are also developing a new product to improve animal growth which have been tested in field conditions. Our industrial pilot demonstrates that we can considerably improve animal health and growth.
If you are interested in more information in our products, please contact us through the Letavis AB online contact form.