EU start-up strategy will aim to bridge gap from lab to market

Brussels wants to inject more money into innovative companies by expanding the European Innovation Council (EIC), working with the European Investment Bank (EIB) on a new scale-up fund, and creating new instruments for innovative defence firms. But in addition to extra funding, the plans attempt to address the trickier question of how to make better use of the excellent research conducted across Europe.

In doing so, the draft strategy, which is not dated, aims to help innovators and investors to “Choose Europe,” in a nod to the EU’s recent push to attract research talent.

The need to make better use of Europe’s research is a well-known and longstanding challenge for EU innovation policy. Today, only a third of inventions patented by universities and research organisations are commercially exploited. The Commission points to several factors, including “insufficient pro-innovation mindset” at universities, varying frameworks for academic spin-offs across the EU, and confusion around state aid rules.

To overcome these barriers, the strategy outlines plans for a “lab to unicorn initiative.” This would finance the establishment of a network of start-up and scale-up hubs “rooted in strong university ecosystems,” which would collaborate across borders to support companies with access to services, infrastructures and corporates.

The initiative would support technology transfer offices and the creation of venture builder roles in universities and other research organisations with expertise in creating spin-outs.

The Commission will also clarify the conditions for universities and other public organisations to grant intellectual property rights without breaking state aid rules. Science|Business recently heard from several universities how state aid rules can limit the support they are able to offer early-stage start-ups.

Other proposals include simplifying public procurement procedures to facilitate access for start-ups and scale-ups, developing a charter of access for industrial users to research and technology infrastructures to harmonise access conditions, and launching an EU innovation platform to provide access to funding opportunities and services.

Entrepreneurship education

To boost knowledge transfer even further, policymakers want to reward researchers who participate in commercialisation activities. “Entrepreneurial education remains insufficiently integrated into university curricula across the EU,” the Commission says, while universities incentivise publication over commercialisation.

The Commission will also propose a “blue carpet initiative” to attract and retain talent in Europe. This would include strengthening entrepreneurial education through Erasmus+ and developing a blueprint for an academic career development framework that rewards research commercialisation activities.

Attracting talent from overseas also means adapting visa rules. The Commission wants member states to expand the EU Blue Card scheme, which offers fast-track visas for highly skilled workers, to cover start-up founders, and to introduce start-up visas akin to the French Tech visa.

Access to finance

Each year, a similar number of start-ups are created in Europe and in the US, but when it comes to scaling them up, Europe faces a major funding gap which pushes founders to cross the Atlantic. Around 60% of global scale-ups are based in North America, compared to 8% in the EU.

To fill this funding gap, the draft strategy outlines plans to work with the EIB Group to launch a Scaleup Europe Fund for deep tech scale-ups. The idea previously featured in the Commission’s Competitiveness Compass, under the name TechEU.

Earlier this month, the EIB Group announced its intention to provide €70 billion in start-up funding by 2027, to finance research projects and companies “from idea to initial public offering”. It’s unclear whether this is the same as the proposed Scaleup Europe Fund.

There are also plans to develop “new instruments to invest in European high-tech defence start-ups and scale-ups,” but the strategy provides no details of what these will look like. The European Defence Fund already supports collaborative defence R&D, while the EIC looks set to expand its scope to fund projects with civil and military applications.

Meanwhile, the Commission wants to “expand and increase the firepower of the European Innovation Council and simplify its rules,” with the EIC adopting processes inspired by the oft-cited US Advanced Research Projects Agencies.

On the regulatory side, the strategy includes plans for a 28th regime to make it easier for companies to operate in multiple European countries. A European Innovation Act will promote regulatory sandboxes to allow companies to test innovative technologies in a controlled environment, and will propose a definition of start-ups, scale-ups and innovative companies.

To track progress across all of these initiatives, the Commission plans to set up a European start-up and scale-up scoreboard to measure the performance of European and national ecosystems, including the number of start-ups, scale-ups and unicorns. The latter refers to start-ups growing to a value of $1 billion or more. It is also promising to carry out an annual survey of company founders to gather feedback on changes to the regulatory environment.

Single market strategy

On May 21, EU vice-president Stéphane Séjourné presented another pillar of the bloc’s competitiveness agenda: the single market strategy. The plan is designed to complement the start-up and scale-up strategy by tackling the barriers that prevent companies from making the most of the European common market, including limited recognition of professional qualifications, complex rules for setting up a business and delays in standard setting.

“Today, businesses expand internationally before expanding in Europe. In the current geopolitical and trade context, this can’t continue,” said Séjourné.

Alongside the strategy, the Commission has brought forward a new definition of small mid-caps, for companies of between 250 and 750 employees, so that they can benefit from initiatives to reduce their administrative burden. “Sometimes, that will mean alignment with simplification measures introduced for SMEs. Sometimes, we will have an approach that’s more specific to their size and status,” said Séjourné.