Germany’s Sprind innovation agency: what works, what does not

Independent evaluators have this week released a five-year assessment of Germany’s new innovation agency, Sprind, which is trying to create radical breakthroughs by backing high-risk projects and funding innovation challenges. 

Overall, the agency has been a success so far, the evaluation concludes. Sprind has attracted lots of ideas from the research community and created a much faster, more dynamic working culture than traditional funders. 

There are lingering questions, however, about its independence from politicians and whether it has the financial muscle to back disruptive new technologies for the long haul. 

But the general impression is positive. “The atmosphere, the culture within the organisation, that's definitely something that's very different compared to other organisations in the innovation funding system in Germany at the moment,” said Florian Berger, managing partner at Technopolis Group, one of the organisations that carried out the evaluation. “That's definitely promising to see.” 

Set up in 2019 in Leipzig, Sprind’s goal is to encourage what it calls “leap” innovation: radically new technologies that can create whole new industries, rather than the incremental advances it argues are often the result of existing, conservative research funding. 

It is partly inspired by the US Advanced Research Projects Agency (ARPA) model, emphasising quick grants, with low paperwork applications, and a willingness to cut funding for projects that are not working out. 

Sprind’s five-year assessment is relevant for policymakers not just in Germany, but across Europe. The UK has set up its own ARPA-inspired body, the Advanced Research and Invention Agency, and the model is increasingly cited in EU circles. 

Earlier this week, the EU’s Competitiveness Compass strategy document recommended that the European Innovation Council should continue with increased risk-taking, “inspired by elements of the DARPA model,” referring to the US defence-related ARPA.

Positive signs

One encouraging early sign is that projects funded by Sprind have attracted follow-up funding, either from research agencies or venture capitalists, said Hendrik Berghäuser, a researcher at the Fraunhofer Institute for Systems and Innovation Research, which was also involved in the assessment. “We did find lots and lots of these positive examples,” he said. 

It has also created a speedy, dynamic and open-minded internal culture that is in a “different world” to some traditional funders, said Berger. Sprind is “very much faster than the usual structures in the public or semi-public funding system,” he said. The agency typically aims to get funding to successful challenge teams two weeks after they apply. 

According to Berghäuser, interviewees agreed it would not have been possible to offer similar grants from an existing ministry; the culture is just too different. “You need a new agency that can act much, much more independently,” he said. 

Part of the reason is that so many of Sprind’s employees come from industry, start-ups, venture capital firms and other innovation agencies, explained Berger. “It's just a different mindset and different approach,” he said. Forty percent have previously worked in industry, the evaluation found. 

Many Sprind employees are on fixed term contracts. “They don't want everyone to work there all their life,” said Berghäuser. “This is part of their organisational identity”. 

Too early

But there are some caveats to this rosy picture. For a start, the evaluation hasn’t assessed whether Sprind has actually backed disruptive technologies; it is simply too early to say, said Berghäuser. 

These technologies have a “very, very long time horizon until their disruptive potential actually becomes obvious,” he said. “It was, I would say, too early.” 

Unlike US ARPAs, which are focused on specific areas like defence, energy or health, Sprind is open to projects across all fields. While this openness is positive, the report says, it could make its profile unclear. 

Sprind has also taken on project work for various German ministries, working on a education platform project, for example. But Berger worries that this isn’t exactly within Sprind’s core mission, which is to develop breakthrough innovations. 

“I think it should concentrate on its mission and what it is doing really well, which is innovation challenges and its other instruments aimed at breakthrough innovation,” he said. The danger is that Sprind gets seen by the federal government as just another project manager, he added. 

Political control

When it comes to political control, Sprind was given more operational freedom at the beginning of 2024, but the new law still has clauses that allow the Federal Ministry of Education and Research (BMBF) to exercise “technical supervision”. 

So far, the ministry has left the agency alone to pursue the projects it thinks are most valuable. Sprind and the BMBF are “on the same page,” said Berghäuser. 

“But, you know, things can change. We have elections coming up,” he added. “The next government might have [. . .] a different understanding of what supervision means.” 

And finally, it is unclear if and how Sprind can shepherd new breakthrough technologies all the way through the expensive Valley of Death to commercial success. 

It’s not a problem raising €10-20 million of private funding for early-stage projects, said Berghäuser. “But if you are going for these innovations that Sprind is looking at, basically, in the second [funding] round, you need several hundred million euros of risk capital,” he said. Such amounts are rare, both in Germany and in Europe more broadly.  

So even if Sprind does back world-changing new technologies at an early stage, “the question is, if the company will still be in Germany” when it matures, he said. 

Election looms

With fresh German federal elections set for February 23 , the question is now whether Sprind will continue to win big budget increases under a new government, which could be constrained in its spending plans by the country’s controversial debt break.

The conservative Christian Democratic Union (CDU), which is leading in the polls, doesn’t mention Sprind in its election manifesto. 

But lawmaker Thomas Jarzombek, the party’s parliamentary research spokesman, said the CDU would continue to support Sprind. “It is our baby,” he said of the agency, which was set up under a CDU-led coalition. 

The Greens, one potential junior coalition partner for the CDU, mention Sprind approvingly in their manifesto, singling out its innovation challenges. “We want to expand this approach and accompany it at European level,” they say. 

The Social Democratic Party, another possible partner, does not mention Sprind in its manifesto.