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SME Update

Editorial:

Horizon 2020: Stimulating SME research and innovation

Clara de la TORRE

SMEs are to have a pivotal role in achieving the overall objectives of Horizon 2020, the forthcoming framework programme for research and innovation (R&I) in the EU. To facilitate this role, a dedicated instrument will be set up to strengthen the innovative capacity of SMEs in order to boost their competitiveness in European and global markets and to promote company growth.

Set to launch in 2014, Horizon 2020's objectives are to maximise the contribution of EU-funded R&I to rediscover a path for sustainable growth and to confront the challenges facing Europe. Part of its strategy is to enable SMEs to benefit more from EU funding and to improve the conditions and access to finance for innovation. SMEs will benefit from around EUR 8.6 billion, recognising their critical role in innovation. Around 15% (EUR 6.8 billion) of the total combined budget assigned to societal challenges and industrial technologies is to go to SMEs. In addition, a specific action will promote SMEs involved in research and development, building on the Eurostars Joint Programme. Finally, it is estimated that around 30% of the financial instruments will target SMEs (approximately EUR 1.2 billion).

'We have developed this new programme for R&I to make a quality jump by reaching more SMEs and by generating more impact to ensure that innovative ideas can be turned into products and services that create jobs,' says Clara de la Torre, Director Research and Innovation at the Directorate-General for Research and Innovation. She maintains that by encouraging SMEs to invest in R&I, they can create new business opportunities in Europe and beyond, and contribute to finding solutions to key societal challenges. Highly innovative companies are vital if Europe is to become a knowledge-based economy with sustained growth and high-quality jobs.

The new dedicated SME instrument will encourage SMEs to put forward innovative ideas which demonstrate a clear EU dimension. 'We want to put SMEs in the driver's seat, to lead a project,' emphasises Ms de la Torre. 'A bottom-up approach for funding is required because SMEs usually come up with new ideas that offer combined elements from different actors and technologies. Therefore, we want to be very open; they can come up with any idea, as long as it is highly innovative and addresses Union challenges.' The SME instrument is designed to stimulate all kinds of innovative companies, regardless of type, research capability or sector.

Project support from start to finish

'SMEs will be provided with staged support covering the entire innovation cycle, in order to bring ideas to market introduction,' says Ms de la Torre. This support is structured in three phases, resembling that of the American Small Business Innovation Research (SBIR) programme.

The feasibility phase lasts six to 12 months, and offers a grant in the form of a lump sum for an SME to explore the viability of a concept, both in terms of its technological merit and commercial potential.

This feasibility report can then be used to apply for funding in the second phase which supports research and development, but notably also demonstration activities and market replication. The duration is one to two years, and it is also financed by a grant. 'It is hoped that the successful evaluation of an SME project at the end of this phase will enable such a project to then apply for private funding,' Ms de la Torre states.

The commercialisation phase will be supported by financial instruments as well as offer innovation support services. Successful results achieved in one phase enable an SME to proceed to the next; however, SMEs are eligible to participate in any stage.

Horizon 2020 plans to utilise the Enterprise Europe Network (EEN) to enable companies to increase their innovation capacity and benefit fully from the instrument, thus creating a true one-stop shop for SMEs. 'EEN has extensive experience in helping SMEs access R&I funding at EU level and in advising them on technology and knowledge transfer, as well as partnering services,' affirms Ms de la Torre. By upgrading existing EEN services, SMEs should be able to benefit from mentoring and coaching throughout the life cycle of an innovation project, get assistance to pursue commercialisation activities, and also use networking channels to find partners across Europe and beyond.

Less burden, more simplification

EU funding for R&I has a much greater impact if needless red tape is cut out and participation is made simpler. Ms de la Torre stresses that the dedicated instrument aims to set forth simple rules and administrative procedures adapted to the needs of small companies: 'The objective is to ensure that implementation is as simple and straightforward as possible, in addition to allowing a short time to contract and a small administrative burden.'

To eliminate fragmentation, Horizon 2020 seeks to bring together SME support that is spread across several programmes and initiatives for the period 2007-2013 (e.g. the Seventh Framework Programme (FP7) and the Competitiveness and Innovation Framework Programme (CIP)) by providing one comprehensive but simple scheme.

The road ahead

Ms de la Torre says that one challenge for Horizon 2020 will be spreading the word to SMEs: 'SMEs often tell us that they are not well enough informed about EU funding and procedures. Therefore it is an important task to make this new instrument known among SMEs so as to maximise their involvement.' However, Horizon 2020 and its SME strategy will first have to be approved by the Council and the European Parliament on the basis of the Commission proposal.