Financing ideas from Europe
31 March 2016, Innovative Enterprise Conference, The Hague
Carlos Moedas - Commissioner for Research, Science and Innovation
Check Against Delivery
Ladies and gentlemen, recently, in Brussels and beyond, in Ankara, Istanbul, Lahore and Al-Asriya, a small village in the province of Babil in Iraq, people were injured. Families lost loved ones. Children's lives were cut short.
On Sunday, on the steps of Bourse in Brussels, a journalist asked a woman, wearing the Belgian tricolours, why she had joined the crowds leaving tributes to the victims of the Brussels bombings. Standing towards the sun… surrounded by people, flags and flowers, the woman said to the journalist smiling,
"My English isn't very good."
"I am here for love".
We have faced many dark hours in our history, but we are also part of the most profound peace project in history. We are here for love and love brings strength and meaning to everything we do, in a way fear and hatred cannot.
Ladies and gentlemen, love is investing in Europe, because we value peace. Love is investing in Europe, because we want to create prosperity for everyone. So it is with great pleasure – after joining you at the first ever Innovative Enterprise event in Riga last year – to join you again here in The Hague.
You are the real Europe.
Open and diverse.
I would like to thank Minister Kamp, the European Investment Bank, and the hard-working organisers of this conference. I have the opportunity to talk to you about 3 specific things we are doing to increase investment in innovation:
Increasing support to innovative SMEs,
Attracting private venture capital,
And creating a European Innovation Council.
I am delighted that Corinne is with us. As Co-founder of TomTom she's grown a European business that has gone from reading electricity meters, to making satnav the norm, to selling sports watches and action cameras. TomTom is a European company that exemplifies the entrepreneurial approach to product diversification and I think TomTom's success lies in the fact that they have recognised that the user must be at the centre of innovation. Users want life to be made simpler, easier and cheaper.
So it's my job to ensure that Europe helps people like Corinne early on. The people who innovate to make our lives better. The people who will ensure Europe's benefits from a competitive knowledge economy in the digital age.
This brings me to my first point. How to increase support for innovative SMEs. SMEs make up a fifth of the participants in all Horizon 2020 selected grants.
Diversifying the support we offer is working well. The SME Instrument, introduced under Horizon 2020, has already supported close to 1500 projects − worth more than 500 million euro.
We're supporting companies like Immunovia in Sweden. They're developing a blood test to diagnose pancreatic cancer. And Lingvist in Estonia. They're developing a mathematically-optimised way of learning a new language.
The European Fund for Strategic investments is also contributing a great deal already. Since its launch last year, EFSI has already financed 54 large projects worth around 30 billion euro. I am pleased to say that at least 32 of these 54 projects have a research and innovation component.
Additionally, The European Fund for Strategic Investments has also mobilised over 45 billion euro of new investments for SMEs. These include new financing for the Horizon 2020 InnovFin SME guarantee, going beyond what we could achieve with Horizon 2020 alone.
And today, we are adding another string to our bow. We're launching the SME Initiative Securitization Instrument (SISI), enabling banks to engage more in lending. The point is to revitalise SME access to credit, by freeing up capital set aside for risk in healthy banks.
This brings me to my second point. Attracting private venture capital. Together with Vice-President Katainen, Commissioner Hill and others, we will launch a Pan-European Venture Capital Fund of Funds, as part of the Capital Markets Union.
Why a Fund of Funds?
First, EU VC funds are still relatively small. Their average size is around only 60 million euros − just half the size of the USA's. This limits their ability to make the larger investments needed as companies scale-up. Second, this smaller market struggles to attract funds from major institutional investors (just a 5 billion euro market in Europe compared to 26 billion in the US). In fact, over 30% of venture capital is funded by the public sector in Europe and that needs to change. Third, European VC funds still face many trans-national barriers.
We believe that a VC Fund of Funds, investing in a combination of early-stage, later stage and expansion stage VC funds, with a size of at least 500 million euro, would be attractive to major investors. And would bring much needed private investment to the European venture capital market.
So I am happy to announce, that this summer, together with the European Investment Fund, we are working to launch a call to create a Pan-European VC Fund of Funds.
You know, since starting this job, I have been inspired by the success of the European Research Council, but I have also been struck by the fact that many innovators do not know who we are and what we do.
And this is my final point today, we need more than just investment. We need new ways of encouraging market-creating innovation in Europe. This is why I have launched a call for ideas to design a European Innovation Council. As I said earlier, nothing works anymore unless the user is at the centre. So I want to create something that will meet the real needs of Europe's innovators. This call for ideas is a way of making sure we're listening to real problems.
The call will run until the 29th of April. I encourage all of you and your contacts to think freely and take part. Fill in our online questionnaire and tweet your ideas with the hashtag #EU_EIC. My plan is to discuss the ideas we receive, and next steps, with the Parliament and Council before the summer.
So, ladies and gentlemen, without these 3 things…
Without supporting market-creating ideas and new business models, through innovative public support and greater private investment, we will miss our chance. The future has arrived, so let's invest in it.