MEPs left cold by Moedas’ fund of funds idea

EU Research Commissioner Carlos Moedas’ ambition to boost the availability of venture capital by creating one or several fund of funds was rebuffed in the European Parliament last Thursday, with German MEPs Christian Ehler and Hans-Olaf Henkel telling Moedas his first priority should be ensuring enough money is flowing to basic research. 

Moedas argued there is a shortage of venture capital (VC) to support technology start-ups which is why he is backing the creation of several fund of funds, run by professional external fund managers, to gin up investment across Europe. 

But Christian Ehler, who has already seen the research budget raided once under President Jean-Claude Juncker’s Commission in order to furnish a similar investment scheme, challenged the focus, saying basic research is of foremost importance. 

If the logic is cannibalising research in order to back venture capital, the Commissioner is putting the cart before the horse, Ehler said. “You’re right when you describe the problem of VC capital. [But] if you don’t fund research you don’t have to seek out venture capital.”

The Commission says its new European Fund for Strategic Investment, which is partly financed by €2 billion originally earmarked for research, will mobilise total spending of €315 billion. In addition to sprucing up European transport, digital and energy grids, the fund managers will allocate some money to new research infrastructures.

Moedas did not say how the new fund of funds idea would be financed, but the scheme should not put any more research money in jeopardy, said Ehler, who sits with the centre-right European People’s Party bloc. 

If more money is taken from Horizon 2020, success rates will go down further, Ehler claimed. “There is no hope [and] no willingness to participate in a programme whose success rate is below 10 per cent. Additional cuts to research are politically offensive and, for the Parliament, not acceptable,” he said.

Meanwhile Henkel, who sits with the centre-right European Conservatives and Reformists group, suggested the Commission’s efforts to trigger research investment was inspired by flawed economic thinking. 

“The logic which is put forward by Commission President Herr Juncker goes like this: he says if I take €1 from the Horizon 2020 budget, I get €15 of additional economic activity,” said Henkel. “As a by-product we get more research and development. I’d like to challenge that logic.” 

“I know basic research is not done by industry, and especially not by small or medium-sized companies. The logic is flawed,” Henkel said.

Support for text and data mining

During his back and forth with MEPs, the Commissioner also threw his support behind giving researchers free rein to use computer programmes to data mine research papers, a practice which to date has been tightly controlled by journal publishers in Europe. “I’m for, and will always be for, an exception in text and data mining,” he said. 

Moedas also announced he wants to simplify the way the Commission measures research and innovation performance. “I really think we should review somehow the Innovation Scoreboard,” he said. “We have too many indicators of innovation. It’s a little bit scattered. I’m trying to get one indicator … we’re working on that.”