At first event to be jointly organised by European Innovation Council and European Institute of Innovation and Technology, entrepreneurs call for EU to fill gaps in support and funding their companies need to scale up and be profitable
Innovators called on the EU to provide more long-term support to help companies scale-up, at an event held to mark a year since they were asked to put their weight behind the fight against COVID-19.
French biotech Xenothera received 20% of the funding needed for its work developing an antibody treatment for COVID-19 infection from the EU, the rest coming from national funding bodies in France. But Odile Duvaux, co-founder and CEO of the company, hopes the EU will provide long-term support and procurement opportunities. Finance is one thing; enabling start-ups to scale-up is another, she said. “We really need EU support in this aspect. National support will not be sufficient.”
Europe forms as many start-ups as the US, but far fewer grow to be profitable and self-sustaining. Lack of long term venture capital is often cited as the main hurdle and next week the EU formally launches its own start-up funding agency, the European Innovation Council (EIC), following a three-year pilot phase.
Although it will fund innovation at all levels, EIC will have a special focus on companies that have the potential to scale-up at a European level, said Keith Sequeira, head of the governance and coordination unit of the EIC.
To help companies reach EU and global markets, EIC will work with the European Institute of Innovation and Technology (EIT), which supports networks of investors, academics, established companies and business mentors around Europe, enabling entrepreneurs to connect with potential partners, investors and mentoring services.
The event on Wednesday was the first time EIC and EIT have organised a joint event to describe how they will cooperate with each other.
Adam Rottenbacher, head of director’s office at the EIT, says ecosystem support is key to enabling companies to scale-up at EU and a global level. “This is equally important beyond the funding that is provided, and probably this is something that national funding or national schemes cannot provide,” he said.
Research commissioner Mariya Gabriel said EIT/EIC cooperation is important for the future of European policy on innovation. “For the first time the EIC and the EIT have organised a joint event to showcase how they can both work together in a complementary way,” she said. “Together they can ensure European tech sovereignty, reduce the innovation divide across Europe, and increase the role of women in European start-ups.”
Gabriel is also hoping the €750 billion EU recovery fund will help bring further momentum to innovation funding. Member states are due to submit their national strategies for spending the money next month.
Keeping up with the demand
Germany has plenty of support options for start-ups, said David Schmelzeisen, co-founder and CEO of Upper Hand, a start-up producing a self-disinfecting anti-viral mask. The problem is that securing financing takes time. He submitted his latest proposals to a German funding body last October and is not expecting to hear back until the summer.
The experience with the EU was different. When the EIT launched its COVID-19 response funding call, Schmelzeisen applied and within two weeks had secured the money. By July, the company had developed a high-performance fabric for face masks that are highly efficient while being washable, reusable and cheap. “It was a great and speedy start and now we need to somehow do the acceleration and the growing phase,” said Schmelzeisen.
The two-week €60 million EIT call was part of the EU’s response to the pandemic. In total, over a few months, the two innovation agencies mustered €226 million to invest in start-ups and projects tackling the pandemic.
Such rapid mobilisation of funding was unusual for the agencies, and now they hope continue to provide faster, more agile services. As a first step, under Horizon Europe, EIC will introduce rolling applications for funding and provide a response to each applicant within a few weeks, rather than wait for a cut-off date to respond to each applicant.
“This is a major change for us,” said Sequeira. “I think we are going even further than we are at the moment. It’s not just maintaining what we’ve done during the crisis.”
Companies will submit short applications, which include a 5-page form, a pitch of up to 10 slides and a 3-minute video pitch, at any time. Successful candidates will then be asked to prepare a full application.
For Duvaux, maintaining agility is key to ensuring the EU can address future crises. “I think this attitude from the EU has to be kept in some way, especially if we want to anticipate [future pandemics],” she said. “The way we learnt to react quickly should really be embedded in our way of working, so that both start-ups and institutions could keep the ability to react.”
Peter Lakatos, co-founder and CEO of Entremo, a Hungarian company producing remote medical monitoring devices, highlighted the importance of networks. Entremo, started from an idea developed during EU vs Virus, the hackathon run by the EU last April, and then got funding from the EIT. Now, the devices are being tested in Hungarian institutions. “It wasn’t just a two-day competition, but more like an innovation hub that brought entrepreneurs together,” Lakatos said.