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Demonstration activity: Bringing research results to the market

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The 2012 FP7 Capacities work programme 'Research for the benefit of SMEs' aims to strengthen the research and innovation capacities of European SMEs. It is aimed at those SMEs which have little or no research capability to turn innovative ideas into products and services with clear future market potential.

Demonstration activities are funding packages designed to bridge the gap between research and the market. They do this by aiming to prove the viability of a new solution that offers a potential economic advantage but which cannot be commercialised directly as further technological or other developments are required.

'A demonstration activity is a follow-up to a successful FP7 'Research for SMEs' or 'Research for SME associations' project as SMEs often need to follow through on research projects with work linked to a kind of demonstration action before actually commercialising products and services,' says Corinna Amting, head of the SME Actions Unit at the Research Executive Agency.

This activity helps participating SMEs to increase the impact of their projects or to explore new ways of using the acquired knowledge from their FP7 'Research for SMEs' or 'Research for SME associations' project, the two distinct schemes which constitute the core activities of 'Research for the benefit of SMEs'. The former scheme directly supports SMEs in the project to outsource their research activities while the latter indirectly supports SMEs through their associations/groupings to outsource research activities.

Participants have to demonstrate in their project proposal firstly that the research results which lead to the demonstration activity originate from these two schemes within the Capacities programme and secondly that these results are ready and suitable for the exploitation phase via the demonstration project.

Paving the way for research and innovation production

Ms Amting stresses the importance of the last development stage before products or processes enter production: 'The purpose is really to bridge the end of a research phase with the two or three years that it takes to make their products ready for the market, as research studies show. SMEs have the opportunity in this critical phase to make the final steps to bring their products to the market and reap the economic benefits.'

However, funding can pose a significant challenge to moving forward at this stage: 'What we fund overall is innovation for SMEs. The contribution for demonstration activities is up to 50% of the total eligible costs and 100% for management and other activities.'

Demonstration projects must be centred on the needs of SMEs to carry out demonstration activities before being able to enter the market. Such activities include: testing prototypes; scale-up studies; performance verification and implementation of new technological and non-technological solutions; detailed market studies; and business plans. There are no thematic restrictions; projects may address the entire field of science and technology. However, these projects are not meant for further research and development activities.

A demonstration activity is a bottom-up scheme in which SMEs that have participated in an FP7 'Research for SMEs' or 'Research for SME associations' project build the core of an international consortium. Ms Amting points out, SMEs own these project results and can use them to market new products and services, as well as commercially exploiting their intellectual property rights (IPR).

SMEs: Proving their market worth

The demonstration action only targets SMEs that have participated or continue to participate in a 'Research for SMEs' or a 'Research for SME associations' project. The objective is to guarantee that the benefits of supporting demonstration activities will go directly to the SMEs involved in such projects and which are ready to fully exploit the results. Thus the SME consortium needs to show that the results of the demonstration activity are ready and suitable for exploitation in order to receive the funding.

'Partners from previous SME projects are now asked to work together again,' says Ms Amting. 'There has to be a successful outcome from the previous SME or SME association project, a process or a product that can be brought to market. The SMEs decide which part of their prior research project outcome is worth bringing to the market; therefore the focus is on achieving this because there may be two or three results owned by different SMEs from the former SME or SME association project.'

The expected impact of the research should be clearly delineated both at qualitative and quantitative levels, providing an indication of the expected economic impact on turnover, employment or target markets, as well as expected patent applications or licence agreements. Ms Amting explains that it is therefore necessary for each demonstration activity to include a convincing business case on how investment in this demonstration action will lead to a clear benefit for SMEs: 'You have to establish what your factor for success and innovation will be.'

Evaluators of the funding applications are instructed to assess the project's needs from concept to exploitation, thus helping to provide strong guarantees that the needs and ambitions of SMEs will be reconciled from the outset. Ms Amting stresses that a demonstration activity should show a clear route to exploitation and commercialisation.

There are minimum conditions for participating in a demonstration activity. The consortium must include at least three independent legal entities, each one of which is established in a Member State (MS) or an Associated Country (AC), and no two of which are established in the same MS or AC. At least two of the three must be SMEs that have participated together in a successful SME or SME association project that has finished or is in its last year of operation.

The indicative budget for 2012 is EUR 20 million. The overall budget of a project normally ranges from EUR 500 000 to EUR 3 million. The typical duration is 18 to 24 months.

The next call for a demonstration activity is July 2012. For updates on the upcoming call for proposals, please check here.