Entrepreneurs and technical universities have different expectations for a European Innovation Council. Read two experts' thoughts on it:
Jana Kolar is executive director of the materials research platform CERIC-ERIC, Jana Kolar advisES the European Commission on the creation of a European Innovation Council. @kolarjana
Creating synergies among different initiatives
The European Innovation Council aims to significantly improve the way Europe provides funding and other support to highly promising but also potentially risky market-creating innovations. In the pilot phase, proposed to be launched in 2018, it will reshape a number of existing supports, like the SME Instrument or Innovation Prizes. The goal is to optimise their tools and see how they can better support the market-creating companies. In the future, in my opinion, it is also conceivable to build bridges with other instruments, such as the European Institute for Innovation and Technology (EIT), whose governing board I am on. The EIT brings together academia, research and business stakeholders to form dynamic cross-border partnerships. The institute can contribute to the creation of a real innovation ecosystem in Europe. Take the example of a young SME that wants to enter new markets: contact with other companies in the same societal challenge within such an ecosystem could be a crucial step in terms of know-how exchange, in finding customers, skilled workforce or R&D partners.
The importance of venture capital
In Europe, the main problem is not the creation of start-ups but the growth phase. One of the main issues is access to funds. The venture capital spent in Europe represents around one quarter of what is invested in the US. Sure, in Europe there are loans for scaling up companies, but this isn’t enough. One has to consider that venture-capital investors bring knowledge related to particular areas in which they continuously invest. Companies benefit not only from their investments, but also from their know-how.
The SME Instrument was designed in the context of Horizon 2020 to give support and funding to small and medium-sized companies. As it is a rather new instrument, there is still space for optimisation. For example, it makes sense to implement a fully bottom-up approach, where no priorities are given to any specific area of innovation. Also, interviews should become part of the selection process for SME funding. No venture capitalist would invest in a company without this tool to assess the most appropriate candidates. These changes are now proposed to be included in the EIC pilot.
A broader outlook on innovation
The creation of a European Innovation Council is welcome as it sets a clear aspiration for universities, with a strong focus on market-creating innovation. Even so, innovation should not be defined solely as entrepreneurship. Start-ups do play an important role, as they’re often better equipped than big companies to bring on breakthrough innovation. Universities are crucial for this as well, but there’s a gap. The issue is that universities create very early technology for which there might not yet be a market: when a technology is so far at the forefront, people often don’t know they need it until it’s been established. The EIC could further support universities in maturing those technologies until they can find users and investors, for example with additional proof of concept grants.
Europeans tend to be too modest, compared to Silicon Valley. We need to change the culture, to drive more ambition and enthusiasm in our entrepreneurs. The EIC, for example, could contribute through pan-European events and by highlighting role models. Both entrepreneurs and the public sector must change their mind-set and dare to take more chances, because innovation simply cannot be as structured as research. A start-up never follows its initial project plan, because it follows an iterative process, learning along the way. It has to adjust to market dynamics, insights gained from prototypes and feedback from its first customers. It’s essential that the support system in place better reflect this reality.
Academia backing new businesses
Technical universities are not just a source of new start-ups. With their know-how, they can also help small companies solve technical problems and achieve their research and development goals. Though such cooperation is much appreciated, applying for an EU grant today is too slow and bureaucratic for start-ups. The EIC should ensure that they get fast, uncomplicated access to financial support.