Digital Agenda for Europe
A Europe 2020 Initiative

Preparing the Seville workshop 4th April 2104: discussing the policy recommendations so far

Discussion

On April 4th, 2014, Seville (Spain) will host the seminar: ICT and innovation: building partnerships at regional levels, that follows up to the Digital Agenda Assembly workshop 3  and the previous Brussels workshop.

 

The seminar aims at bringing together experienced practitioners with EC senior officials in order to develop new ideas for overcoming the “Valley of death” between research and market, namely at the regional level. We will be discussing existing innovative and high impact initiatives in order to identify specific bottlenecks to greater impact and propose actionable policy ideas. 

 

In the last event in Brussels, stakeholders developed policy recommendations that we are going to comment in preparation of the Seville event.

 

To start with, one of the key points was how can organisations turn ICT research results and innovation into competitiveness and growth in Europe.  Different models of transfer of research and innovation to the market were discussed. One of those recommendations was:

"to reserve funding for SMEs: Many stakeholders invited the EC to provide quotas for funding and procurement to SMEs, as well as easier rules for participation, such as joining a project only for one year"
  • Do you agree with it?
  • Do you think that existing novelties introduced into Horizon 2020, such as the SME instrument, is a good step in this direction?

Top contributors will be invited to the workshop with travel and accommodation expenses paid

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Comments

Romain Bouttier's picture

Several barriers for high tech SMEs are well known: too long, too rigid, administrative burden... The simplification of rules in H2020, SME Instrument and procurement for SMEs are novelties going in the right direction.
However, is it so radical? Three observations:
- It will depend on the implementation. Will it be really simpler and faster? As for innovative processes, it will need a testing approach and be open enough to criticisms during the assessment of these new mechanisms in order to improve and tailor it to the target group (flexibility).
- Can it be smarter? Whilst it is going in the right direction, it is not a radical change, and will probably remain too slow and complex for several high tech SMEs. At the time of development of alternative funding, such as crowdfunding, EC could think about what new schemes could look like in the future (the next shot).
- High tech SMEs need market more than support, as highlighter in 2013 by the French Minister in charge of SMEs. In this way, public support shall integrate a strong early adopter dimension. Procurement is a tool, but more innovative demand-side innovation actions could be promoted.

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Katarzyna Szkuta's picture

definitely Horizon 2020 instrument for SMEs is a step in the good direction since it enables faster and less cumbersome access to funding, especially the idea of introducing the 2 phases funding process and coaching support.

additionally, it will be good to mention the RSI funding stream (Risk Sharing Instrument for Innovative Research oriented SMEs & Small Mid-Caps ) of European Investment Bank which is another way to facilitate access to finance for SMEs. 

but what I would add to the very pertinent previous comment is the importance of easing up the adminitrative rules (which is already being introduced in H2020).

We should not only think of the proposal drafting process but also about delivery and reporting. Even if the 9 months rule for Horizon 2020 will be upheld (indicative max time between the deadline of call of proposal and signing of grant agreements), still  more flexible rules for changing the Description of Work are needed for the very fast changing market to avoid developing solutions that already exist on the market. also shifting the stress from deliverables in forms of textual reports (which are easier to review) to more tangible results (such as demos, etc with technical specifications) would be welcomed.

 

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Valentina Parziale's picture

Novelties introduced in Horizon2020 carry the promise to improve the situation: this holds true for the SME instrument or for the role given to the European Investment Fund, actions expected to enhance research and innovation and access to capital investments for SMEs. Also some Member States are beginning to tackle the issues related to capital investments required at different stages, with Germany for instance having set up a very successful seed-investment fund, the German ‘High-Tech Gründerfonds’, a model worthwhile replicating in other Member States.

However, these objectives should be seen in the broader challenge posed for Horizon 2020, which is reversing the trend of a declining industrial participation in research and innovation programmes, a key condition to enable innovation and, thus, contribute to competitiveness and growth.

Regarding the ‘demand side’, an important aspect is also that Europe keeps suffering from the fact that that it does not have established a true single market and digital single market. Start-ups are struggling to reach economies of scale in fragmented national markets and often have to aim at reaching out rather to other markets, such as the US market and are often bought by US organisations once they have a chance of becoming successful.

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Laia Pujol's picture

Good points! for the first one you think that a questionnaire or any online tool could be good / enough to assess about the implementation of those new instruments? Concerning your point on crowdfunding, do you suggest that EU should support any crowdfunding platform? I didn't understand what do you suggest exactly in that direction...

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Laia Pujol's picture

I agree...! EC should limit deliverables and ask for less textual reports and more visual and easy reporting. On the other hand, I still don't know if the access of SME will be much more easy and therefore increase, or if it will still be mediated by other consultancy companies supporting organizations to deliver EU proposals. 

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Romain Bouttier's picture

About the first point, in my opinion it will require a good monitoring system. This can include surveys targeting the beneficiaries, but also those who were not selected, Another aspect to have a fast qualitative assessment with feedback from the evaluation (from independent observers) and from EC project officers.
But these processes shall be supported by the acceptance that it is a new instrument, and thus will probably need to evolve to fully reach the expectations. Thus, a specific attention shall be given on improvement needs.

About crowdfunding and public funding, at national and European levels, the interest is growing, as highlighted in the recent European Commission consultation and described here: https://www.linkedin.com/groups/Crowdfunding-potential-revolution-public...
We are at the beginning of the reflection on its use by public funders, but we could indeed imagine experimentations at European level. For example, at stage 3 of the SME Instrument the beneficiaries could be invited to use an EC crowdfundng platform. It could provide the last funding support before market and enhance the link with users. It would also provide information to EC about the interest of individual investors / donors on project results.

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Evangelos Achillopoulos's picture

Let’s see the facts. As Federation of Hellenic Associations of Young Entrepreneurs, we see the following things...

1. The motto, “think small first” is 100% correct. That’s fact 1#.

2. The SME facility is a good step but not sufficient. Still very bureaucratic, not fast and still is keeping the problem of “dead weight” as is being described from the European Court of Auditor in a recent assessment, high in our agenda. “Dead weight” is when we implement tools that don’t result to an economic benefit from what we had before we use them. Measures proposed are having a mandatory rule that the beneficiary must first supply his own contribution to a project and then the State will add the assistance. Typically in this kind of measures a beneficiary will have enough capital to realize its business plan, with or without the State assistance. That results to little or no economic impact in the said State, economy, because the beneficiary regardless the measures available he was capable to undertake the investment. “Dead weight” is the enemy of every state subsidy framework available in EU. That’s fact 2#, avoid “dead weight” when design measures that need to have economic impact.

3. Measures that can support innovation and especially Young High Growth Enterprises are typically Equity based tools. These tools because they don’t impose “own contribution” as a barrier to entry, are the ones that are appropriate. From our studies equity tools have a much bigger impact in the economy. So this is fact 3#, we need Equity based tools and not grants for innovative startups.

4. Equity tools like European Investment Fund assisted VCs and other tools around Europe based on equity, have a different set of problems. There are regions that these tools are performing well and regions that these tools are under-performing to the point, even, of being useless. The problem root is the well known issue of the “valley of death”. Or in other words the lack of Seed capital (15k€ < Seed > 300K€) is what kills the European Young Entrepreneurs. In the South Europe the numbers are devastating, we are talking about 200-300 Seed investments per year in an area with >200mil people and youth unemployment over the roof… 200-300 startups are just a drop in the ocean of unemployed… If we want to make a policy that will make a difference we should aim to 15.000 Seed investments per year! That’s fact 4#, we need 80-100 Seeds/million-capita. Now in Europe we have 2-15 Seeds/mil-capita.

5. What is the real root of the problem? The root of the problem is “risk aversion”, or in other words, “its not that we have Lazy engineers and innovators in south Europe, what we have is Lazy investors!” That’s fact 5#, it’s the lazy capital, not the lazy people…

6. What we do wrong then? All measures available are driven either by capital contribution (fact 2#) or by lazy investors (fact 4#). We use, in both cases what has give birth to the problem, to drive the solution. That’s fact 6#, new problems can’t be solved with old solutions…

7. “But we have so many other, alternative tools… like accelerators, incubators, research centres etc.”… None of them are solving the fact 4#, the lack of real Seed investments. But the infrastructure is there, available to be used… That’s fact 7#, we have all the infrastructures needed. No cement is needed.

8. In the South Europe i.e. do we have only “capital” related issues? Don’t we have other State imposed barriers like, insolvency laws, tax system, Bureaucratic burden etc? Yes we have, so we need the tool proposed to be capable to overcome also these issues until they are solved… That’s fact 8# bypass all local entrepreneurial bottlenecks, fast.

9. Ok that’s a tough one… What about connecting applied research and the market? Isn’t that a major issue? Yes it is. We have found that Creative people (inventors, researchers, engineers) often can’t sell their idea or convert it to a sellable product… They need Business people to be combined with them in order to do that… These guys are the Business Developers… So we have to find BDs and connect them with the Creative minds to make innovation… Think mr. Hewlett and mr. Packard, Jobs and Wozniac, Gates and Allen… Final fact 9#, join together creativity and business to have innovation.

So what is the solution?

We need new tools that; “think small first” (fact 1#); don’t allow the “dead weight” effect (fact 2#); thus are based on Equity (fact 3#); we must aim to get a critical mass that can make a difference that’s 80-100 Seeds/mil-capita (fact 4#); the tools must not be driven, a) by committees or “experts”, b) by investors or capital (fact 5#, 6#); take in advantage all existing infrastructures thus not make just an On-Line solution (fact 7#); design a tool that will bypass all local entrepreneurial bottlenecks (fact 8#); and lastly combine Creative mindsets with Business mindsets…

What is the solution that combines all these? Is it CrowdFunding? NO.-

So, what is it?

It’s a sort of CrowdSourcing or as we say, “Lets Democratize Innovative Entrepreneurship”!

In Greece, we Young Entrepreneurs, we have done what we know best. We have innovated once more time! We have invented a totally novel mechanism to finance Innovative Entrepreneurship. We have invented iDea Framework. Or in other words a Participatory, Assessment, Assisting and Funding Mechanism that unleashes ideas and allows an ecosystem to be created even in the most difficult circumstances, a mechanism that can change the risk aversion culture of the lazy investors naturally by allowing on the same time innovators to be decoupled by all the problems and fly!

We are in the experimental phase, with an experiment assisted by the Greek brunch of European Commission in Athens to make a test run of the concept in the form of a competition. A very different competition, that will not have experts as judges but instead the innovators them selves.

Check out what we do in this video:
https://www.youtube.com/watch?v=1kOunSTLb0g

This is the abstract of iDea Framework
http://bit.ly/196vBDb

This is the white paper of iDea Framework
http://bit.ly/1fTaYBY

And here is the StartingUP competition web site.
http://welcome.startingup.gr/?lang=en

We have already 200 participants and we haven’t yet start the marketing campaign!!!

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Juan Francisco Delgado's picture

I think it is important to take into account the "Technologic Trends" factor. I mean you have a network that will move an ecosystem of knowledge sharing technological trends very connected with universities, companies and networks.
is a key that will also balance the subject patent and R & D companies

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Sofía Moreno-pérez's picture

Usually americans pay more attention to what is remarkable in a proposal than where the mistakes are.
And this attitude really makes a difference.
The SME instrument could be powerful if it is applied with the aim of identifying european companies with some remarkable added value even if they miss a good marketing approach or a global market vision.
Current gaps in valuable companies could be addressed later with the support of the instrument itself and other EC and national mechanisms.

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