The European Union has launched a new strategy to empower innovators and to close the gap with the United States and Asia, Keith Sequeira, a senior official from the European Commission, has explained. The key element of this plan is the newly-established Enhanced European Innovation Council (EIC), which would provide increased funding and connect startups with the remaining stakeholders in the ecosystem. Currently, the Council is in a test phase and would become fully operational in the new programming period (2021-2027).
On Wednesday, Mr. Sequeira, who is a Senior Adviser to the Commissioner for Research, Science and Innovation Carlos Moedas, presented the new structure during Bulgaria’s stop of the ongoing EIC Roadshow. The event, which took place at the House of Europe in the capital Sofia, had three parts: presentation from Mr. Sequeira; a panel for innovation challenges, moderated by Sasha Bezuhanova, a Board Member of the European Institute of Innovation and Technology (EIT) and founder of MOVE.BG; and a panel for the EIC’s funding opportunities, led by prof. Kostadin Kostadinov, Advisor to the Minister of Education and Science.
In the past, the EU was the main innovation drivers in the world along the US, Mr. Sequeira explained. For example, in the car, electricity, antibiotics, or telecom industry lots of new and disruptive technologies had come from the EU member states. However, in the current state of innovation, the US dominates with breakthrough technologies such as blockchain, cloud computing, internet of things, or digital platforms. Asian countries, especially China, also perform very well.
“The EU is very weak in innovation, especially in digital innovation and platform economy,” Mr. Sequeira told attendees at the EIC Roadshow.
Mr. Sequeira during his speech in Sofia. Image: EC under CC.
The EC analysis shows that three main challenges hold back European innovation, Mr. Sequeira noted:
- Innovation performance - lack of breakthrough and disruptive innovations that create new markets;
- Innovation funding - financing gap between research and development (R&D) grants and private investment for scaling up innovative startups;
- Innovation ecosystem - many national and local ecosystems, but fragmented at European level.
Therefore, the EU has established the EIC, which would be one of the three key drivers of the new scientific and innovation program Horizon Europe (2021-2027), the successor of the current Horizon 2020. The remaining two are:
- The EIT, which mission is to increase Europe's competitiveness, its sustainable economic growth, and job creation by promoting and strengthening cooperation among leading business, education and research organizations;
- The European Research Council (ERC), which supports excellent science.
The EC proposed a historic budget for Horizon Europe - 100 billion Euro. In March, the EU institutions reached a partial political agreement on the Horizon Europe framework. The deal is subject to formal approval by the European Parliament and the Council.
The European Innovation Council
The EIC would provide direct funding to high potential innovators - breakthrough and disruptive technologies that currently face high risks due to the fragmentation of the innovation ecosystem, lack of risk finance and risk aversion, Mr. Sequeira said. The new structure would bring together all existing Horizon 2020 innovation instruments in one place and would simplify the application process. Moreover, it would open up the system - startups could apply for any sector as the EIC’s grants would be cross-disciplinary.
The EIC put great attention on the team and their motivation rather than on the business plan in order to test new and bold ideas, Mr. Sequeira explained. The funding would be more flexible and faster with the aim to attract VC money to the projects as one of the most significant gaps between the EU and the US is in venture capitalist’s financing.
“EU startups have a harder time raising funding from VCs than their US counterparts. European startup city hubs and a truly connected European innovation ecosystem are only starting to form now,” Mr. Sequeira said.
The EIC would build ecosystems and communities by providing access to mentoring, advisory services and knowledge partners, offering expert program managers to engage with projects and communities, and awarding prizes for breakthrough technologies.
To agile funding from idea to investment, the EIC offers two programs in its test phase (2019-2020), Luis Sanchez from the European Innovation Council Task Force told attendees in Sofia:
- PATHFINDER Pilot - a grant-only instrument for future and emerging technologies (FET): visionary ideas for developing radical and innovative technologies;
- ACCELERATOR Pilot - it has two tools: grant-only for fast-track innovation (FTI) and small and medium enterprises (SMEs); as well as mixed financial instruments with grant plus equity. The accelerator targets radically new, highly risky ideas, which are commercially viable and with a potential to scale up.
Last week, the European Commission closed a call for the EIC Pilot Advisory Board, which would bring together startups, VCs, and other stakeholders with the aim to design what the EU needs from the perspective of innovators. Ms. Bezuhanova, who is also the local leader for Bulgaria of the pan-European network Early Stage Investing Launchpad (ESIL), praised the move.
“Bringing entrepreneurial element to the EU innovation policy is as important as increasing the financing,” Ms. Bezuhanova said.
Ms. Bezuhanova moderated one of panels during the EIC's Roadshow in Sofia.
MOVE.BG and the startup ecosystem
In April, MOVE.BG co-organized the first specialized workshop for angel investors in Bulgaria. Moreover, MOVE.BG's EDIT program conducts the exclusive annual study of the startup ecosystem in Bulgaria called "Innovation Ship."
The program also organizes a series of specialized webinars that provide key insights for the development of digital businesses.