Innovation Europe > News > Innovation blog > European Commission starts to join up the dots….

The plan to transform the European Union into the ‘Innovation Union’ by 2020 has been unveiled with great fanfare by EU Commission President Barroso.

Key objectives are to boost investment in research to make Europe an attractive place to develop new products. The plan also includes completion of the European Research Area (ERA) with improved access to capital for budding entrepreneurs and companies.

These new political priorities combined with the influx of new Commissioners are triggering some productive thought processes within the Commission.

DG Research recently staged an innovative workshop together with DG Enterprise and DG Regional Policy to take a cross-cutting look at the complex financing environment facing budding entrepreneurs when they attempt to take their innovations to the marketplace.

In one room were assembled the broad spectrum of the financing ecosystem, including representatives from the private early-stage finance sector (‘business angels’ and venture capital), from the European Investment Fund (EIF) as well as experts from European Commission financial tools such as the research Framework Programmes, the Competitiveness and Innovation (CIP) funds, and the regional and social structural funds (ERDF and ESF).

A number of entrepreneurs were at the workshop anxious to find out how to gain access to SME finance. They were given clear and useful information which is often difficult to come by: don’t go looking for more than 200,000 euro from the ‘business angels’; don’t approach the venture capital players if you are looking for less than five million euro; and don’t expect to get anything from the European Investment Fund, because it only works indirectly through established investors.

The EIF explained that it focuses its support on the top tier of venture capital funds, those with a proven track record.  As well as assisting successful funds with further finance on a strict minority basis, it is now also open to approaches from talented investment teams and prepared to give backing to first time funds that demonstrate potential talent to succeed.

The track record of early stage investors has admittedly been disappointing in recent years compared to the later stage segment. While the sector is clearly in the doldrums, venture capitalists stress there is in reality no shortage of money for good projects - the problem for them is that there are not enough good projects coming through.    

There are further positive signs that the Commission is listening hard.  For instance, it will soon launch a pilot program of demonstration actions. The aim is to help suitable research projects develop their business propositions and become commercially more attractive. A call for proposals will be made in the summer with a budget allocation of 15 million euro.

While the pause for ‘reflection’ continues, the timing for presenting the ‘Innovation Act’ has been pushed back to the summer and may be delayed further as Commission departments start to assimilate their thinking on these perennially difficult issues.