The Ecosystem: Visegrad Fund stakes claim to catalytic role for innovation

16 Nov 2022 | News

Fund backed by the governments of Czechia, Hungary, Poland and Slovakia sees supporting academic start-ups as an important first step in bridging the gap between academia and business in central and eastern Europe

Visegrad Funding brought technology transfer professionals together in Prague this summer to exchange knowledge and build further collaborations. Photo: Network4Growth

With limited means but a broad vision, the International Visegrad fund is working to overcome some of the barriers that hold back research and innovation in central and eastern Europe, including development of start-up ecosystems. “We consider our support to be the first step, so we can help institutions start with start-ups,” said Petr Mareš, executive director of the fund.

The soft support the fund offers, for meetings, exchanges and other forms of network building, can pave the way for bigger things. “What we tell potential grantees is that you can start with us, with something small, and if you succeed you can go on and apply for much bigger money elsewhere,” Mareš said.  

This makes the continuity between the fund and EU support for research, development and innovation particularly important. The fact the European Innovation Agenda, adopted in July this year to promote the next wave of technologies and start-ups, highlights the need to close the innovation gap in Europe is particularly welcome. “Finally, it’s not only about our governments, it’s about Europe as a whole. And that’s what we need,” said Mareš.

The International Visegrad Fund was set up in 2000 by the governments of the Visegrad group of Czechia, Hungary, Poland and Slovakia, or V4 for short, with the aim of supporting closer cooperation between civil society groups in the four countries. Initially this meant cultural and educational exchanges and capacity building, but the fund has become increasingly involved in research, development and innovation projects, reflecting both interest from the grassroots and, more recently, the commitment of earmarked resources by its sponsor governments.

The key challenge for the region is the weak connection between business and research and development. “That’s a problem experienced by the whole continent, but it is even more apparent in the four Visegrad countries,” Mareš said. Academic spin-offs are a useful starting point in this respect. ”Start-ups are an important step forward in developing this business-research connection, and we have already supported several programmes in this field.”

The catalytic role of the Visegrad fund is endorsed by some of the projects to have won support in recent years. “If you want to change the innovation ecosystem in central Europe, you cannot do it with one nine-month project,” said Jana Lachmann, head of projects at Czech technology transfer company Unico. “But it can be an important step forward, on which we can build other activities.”

Unico received Visegrad funding for Network4Growth, a project connecting technology transfer professionals in the V4 countries, plus Armenia and Georgia. “It’s not a huge amount money in terms of changing things, but it can be the seed funding to start a bigger cooperation,” Lachmann said.

Recipients also benefit from the fund’s influence in the region. “The fund is the backbone of the Visegrad cooperation,” said László Jónás, head of strategy and joint chief executive at the Design Terminal, an innovation agency in Budapest that runs the V4 Startup Force programme. “Whenever we want to talk to an automotive company, for example, saying we are working with the Visegrad fund shows we are an important programme, and the doors open much faster. So, the role of the Visegrad fund is much bigger than the funding.”

Retaining start-ups and intellectual property

V4 Startup Force was an early beneficiary of the Fund. It launched in 2018 with the aim of encouraging local start-ups, along with their intellectual property, to remain in the Visegrad countries, and to expand there. “Our hypothesis was that those companies that start to grow in the region will stay in the region for the long run,” Jónás said. “And if we don’t help them to grow, it’s very easy for other companies to buy them out and take all the intellectual property created here out of the region.”

In particular, the programme sets out to convince start-ups the V4 region presents a good opportunity for growth. “The four countries together represent a big market, and if you are already established in one of the countries, it is culturally very easy to understand the others and provide products or services in all four,” said Jónás.

What holds that back is often a lack of contacts in the other V4 nations, so one of the goals of the V4 Startup Force has been to create a community that participating companies can talk to. This is done through partner agencies in each country.

The programme consists of a three-day virtual bootcamp, during which 20 start-ups go through workshops, mentoring and team-building exercises, all focused on business development. At the end, they pitch to a jury. Based on their pitch and overall performance throughout the bootcamp, one company from each Visegrad country is selected to enter a three-week accelerator to take them further.

But just participating in the bootcamp should bring tangible benefits. “We try to make sure the jury is made up of people we think could be a good fit for them, and that provides business value even if they don’t get into the accelerator programme,” Jónás said. “We also introduced business mentoring, where start-ups have the chance to meet top level executives to discuss their pressing questions in the fields of marketing, sales, human resources, law and seeking investment.

So far, more than 110 start-ups have participated in the programme, and more than 360 meetings with corporate partners have taken place. Programme alumni include Hungarian fintech start-up Péntech, which used the connections it made to set up a Polish subsidiary; Czech cybersecurity company Whalebone; Slovak virtual reality company Virtual Everything; and Aeriu, also from Hungary, which has developed software for drone applications in warehouses, partnering with Ikea.

For the future, V4 Startup Force would like to expand to other countries, for example in the Western Balkans, which together with the countries of the Eastern Partnership are also of strategic interest to the Visegrad fund. But the immediate target is Ukraine. “There are many innovators in Ukraine now who do not have the chance to do their jobs, so we want to help them get into the Visegrad business scene and restart or continue their work,” Jónás said.

Fostering academic entrepreneurship

The Network4Growth project grew out of work that Unico had carried out with partners in Georgia, under a United Nations development programme grant. This explored the country’s innovation ecosystem and looked for promising technologies for further development. “The Visegrad fund enabled us to scale that up a little, to involve six countries and connect our Georgian contacts with partners in central Europe,” said Lachmann.

The project set out to build a network of technology transfer professionals from universities and research institutes in the V4 countries, plus Georgia and Armenia. “We felt that there was a lack of knowledge sharing and cross-border cooperation in technology transfer in these countries,” said Jana Kolomazníková, who managed the project. “So, the goal was to strengthen the exchange of experience and share knowledge on what is available in each country for tech transfer.”

This was done through a series of webinars on best practice in technology transfer, followed by an in-person study visit to Prague. Meanwhile, the innovation ecosystems in each country were mapped to highlight the technologies available.

While part of the rationale was to help Armenia and Georgia learn from technology transfer practices that are more advanced in the V4 countries, these Eastern Partnership countries also had experience to share. “In Armenia, for example, we were impressed by how the information technology ecosystem is supported by an active venture fund network,” Kolomazníková said. The Georgian partners, meanwhile, had well-developed activities in entrepreneurship education.

Network4Growth also functioned as a think tank to highlight other shared challenges across the region, such as the lack of support for start-ups emerging from research environments, and the need for exchanges between policymakers. “By creating this network, it has the potential to generate topics that can be translated into future projects,” Lachmann said.

The topic Unico chose is building capacity for entrepreneurial education. “Some universities already offer interesting courses on an ad hoc basis, but this could be much bigger and, once set up, could have a real impact,” she said

The ultimate ambition is to hold entrepreneurship summer schools across central Europe, using the same methodology and sharing a pool of trainers. Achieving this is beyond the means offered by the Visegrad fund, but it could help lay the groundwork, so Unico has submitted a new proposal to the fund involving partners from the Network4Growth project. “What we want to do is create a methodology toolkit for trainers, and then train the trainers who could then deliver such summer schools on innovative product and service development,” said Lachmann.

Academic connections

In addition to its direct support for start-up initiatives, the Visegrad fund is working to strengthen academic connections more generally between the V4 countries, which will also benefit the development of innovation ecosystems. “Our research and academic institutions tend to be oriented to the west, and if they are looking for someone to collaborate with, they usually start with western partners. That makes it more difficult to construct an efficient network of cooperation within the V4,” Mareš said.

This tendency runs from students looking for places to study, through to academics seeking research collaborations. One issue is a perception that universities in the V4 countries cannot compete with the best in Europe and around the world. That is often true at an institutional level, but there are departments, faculties and research institutes that do excel. One of the fund’s goals is to make these centres of excellence better known.

“We have places that are able to produce research and other academic work on a European or even a global level, but their neighbours do not know about it,” Mareš said.

He gives the example of the Technical University of Liberec, in the north of Czechia. “Nanotechnology research at this small university is world-class, but who knows about the University of Liberec? So, our goal has been to connect these top departments and schools, and to inform our students and younger researchers about the possibilities they offer.”

From next year there will be a new programme of Visegrad fellowships, supporting short research visits of 2-5 weeks to institutions in the V4 countries. This contrasts with the fund’s traditional scholarship support, which covers several semesters.

“If you spend several weeks or a month at another university, you make new colleagues and find out how the institution works. And the next time you need someone to cooperate with, these are the people who come to mind,” Mareš said. “We think this could be our small, but not completely unimportant contribution to creating a network of connections among young academics.”

Elsewhere in the Ecosystem…

  • The 50 deep-tech start-ups singled out by the European Innovation Council (EIC) as the EU's best hope for scaling up attracted €545 million in investment over the past year, despite challenging market conditions. But 60% of this investment was raised by just three companies: IQM Quantum Computers, zero-emission car company Lightyear, and SMART Photonics. IQM alone raised €168 million in two rounds in the past 12 months. The analysis of the first year of the EIC ScalingUp Top50 also shows that digital start-ups are significantly outperforming health and cleantech companies.
  • The European Investment Fund is putting €30 million into Dutch specialist water investor PureTerra Ventures, its first targeted investment in the sector. PureTerra Ventures I has a target size of €80 million with an ultimate close set at €100 million, which it will use to support companies developing water technologies in their early stages of commercialisation.
  • Animab, a spin-off from the Flanders Interuniversity Institute for Biotechnology, has raised €10 million to continue its work on orally administered antibodies for pathogen control in livestock. The money will be used to bring its lead product, a monoclonal antibody targeting enterotoxigenic Escherichia coli, to market, and to expand its pipeline. The series A round was led by local venture fund Qbic.

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