Eureka R&D network due to announce first grant winners in new €1B Eurostars 3 programme

The Eureka R&D network’s new programme Eurostars 3,  bringing together 37 partner countries and the European Commission, is set to invest €1 billion in cross-border innovation projects over the next six years.

The project, also called the European Partnership for Innovative SMEs, is co-funded by the Commission and Eureka member states. Discussions are underway with the Commission to finalise its expected €250 million contribution from Horizon Europe, and a formal grant agreement is expected to be signed at the end of April 2022.

With Horizon Europe late getting off the ground, it was decided to go ahead anyway, with Eurostars 3 launching its first call in October 2021. The first winners are due to be announced in the coming months.

“We decided as the countries that it was too important not to launch,” said Peter Chisnall, chief strategy officer at Eureka. “The Horizon 2020 programmes ended, and there was essentially nothing for SMEs at European level. So we have taken a big risk,” he said.

The countries that band together under the Eureka association for international cooperation in R&D and innovation have taken on the risk of covering the administration and evaluation costs of the first calls themselves, while discussions with the Commission continue. As there is a clause of retroactivity in the contract to be signed, the risk for having to pay the extra share of grants out of their own pockets is deemed low and would only become a reality should the Commission reject the proposal. Chisnall says this is highly unlikely.

This is the third edition of a partnership that has been running since 2008, and it might be the most important yet. With the UK and Switzerland being key members of Eureka, the two countries’ participation in Eurostars 3 is guaranteed, providing its SMEs, universities and research institutions with a channel to continue to collaborate with other European researchers, as long as there is one other participant from an EU member state or Horizon Europe associated country – even if these two countries end up being barred from Horizon Europe.

“It’s necessary to have other fora in which we can engage in R&I collaboration. This is a fora that is not so known to many people but it’s a flexible platform,” said a source from Germany, which is due to take over the chair of Eureka from current incumbent Portugal in 2023.

Long-term game

Unlike the EU’s other start-up and SME fund, the European Innovation Council, Eurostars 3 is not looking to create €1 billion European technology champions. Rather the aim is to help entrepreneurs find each other beyond state borders, to share ideas and help each other bring innovations to market. “Unicorns are great, but they don’t fix everything -you can’t give Elon Musk all the money and not fund anyone else,” said Chisnall.

Harald Eisenhauer, co-founder of the DEEP Startup Ecosystem Accelerator, agrees there is too much focus on big headlines of new unicorns growing to €1 billion valuations. A more holistic approach is required and with the right tools, innovators in the countryside in Romania, or in a big city like Berlin, or a small town in Ecuador, can all learn how to create their own innovation infrastructures.

“Unicorns don’t just fall from the sky,” Eisenhauer said. “They start somewhere they can find support, funding, community, the right talent. These are the ecosystems.”

Creating such ecosystems is a long-term game and not all funded projects result in breakthrough innovations. This is the logic behind Eurostars 3, which aims to inject hundreds of millions to foster relationships and contacts that could benefit Europe years from now.

“R&D is risky,” said Chisnall. “That's why we're involved. That's why we pay for it. That's why we offset the risks.” A project may well fail, but “we don't see it as a complete waste of money, because at the heart of it, we've got two companies from different countries to speak to each other. That cooperation may well continue to exist outside of the project,” he said.

And it’s not necessarily about connecting strangers on different sides of the world. Often, the funding will enable an entrepreneur in Belgium to link up with someone in the Netherlands. “It's more about leveraging the people that you already know, or the people that you have ready access to, in order to create something much better than you could yourself,” said Chisnall.

Part of the innovation agenda

The start of Eurostars 3 puts the question of how to develop innovation ecosystems under the  spotlight light as the Commission prepares to release its new innovation agenda for Europe. Nothing is known of the communication as yet, but it will be a primer of policy recommendations for member states on how to start fixing Europe’s innovation woes.

Until now, Eisenhauer says, it’s been far easier to secure funding for start-ups than it has been to get backing for the supporting ecosystems these start-ups need to thrive. “If you have this plan of building an ecosystem, running a new incubator or supporting universities to support [company] founders, the money there is much slower and people are much more hesitant, because they don’t see the immediate effect,” he said.

Chisnall hopes removing policy barriers to smoother cooperation is on the Commission’s innovation agenda to-do list. Some of these are, for example, strict regulations put in place to differentiate funding streams within the EU framework. The Commission should, “remove barriers as much as possible, especially these artificially created ones,” said Chisnall.

One barrier Eurostars 3 has managed to get removed is the Horizon Europe rule that at least two countries from a Horizon Europe country must be involved in a project for it to receive funding. For Eurostars 3, it’s enough to have one partner from a Horizon Europe country and another one from the wider Eureka network. Other partners can come from anywhere in the world.

Another concern for Chisnall is that the move towards more EU-first policies and the push for technology sovereignty could impede cooperation with entrepreneurs in other parts of the world. “I think it needs to be recognised that Europe is great at stuff, but we can't do everything,” he said. “While European focus is key, [it’s important] that we don't exclude important international partners that may bring benefits into Europe. It's all very well, bringing European companies together and doing something great, but we should not exclude the idea that bringing in American or Japanese expertise, for example, that could make it amazing.”

Eisenhauer says the EU seems to finally be on board with the ecosystem approach to innovation but he is skeptical of the Commission’s power to initiate change on the ground. “I’m sure they have the right mindset, but it’s not easy to push something from Brussels and expect a lasting impact across Europe,” he said.

Editor’s note: This article was corrected on 11 March 2022, to clarify the status of contract negotiations between Eureka and the Commission; they are expected to be finalised by the end of April 2022. Further, we note that Eurostars 3 is a co-funded partnership with the Commission and Eureka member-states, and the Commission made available additional Horizon 2020 money for the Eurostars 2 programme.