The Commission on Tuesday (5 June) released its new European Innovation Agenda, setting out five core channels through which it will seek to boost deep tech investment and innovation within the EU.
Announced by Research and Innovation Commissioner Mariya Gabriel, the five areas include talent attraction, policymaking and bridging the scale-up gap and aim to foster a more comprehensive supportive landscape for startups in Europe.
“Innovation is a priority as far as the EU is concerned, so let us be bold”, said Gabriel. “We have to enable startups to get over the ‘valley of death’ when it comes to funding so that they can grow and become leaders in their field.”
According to a study by Stripe, released this week, startups generally regard the European innovation environment as attractive due to factors such as availability of talent and geographical proximity of markets.
But in terms of ease of operation, many see EU regulation as causing unnecessary friction and placing significant administrative and compliance burdens on businesses, with 53% of respondents citing the time spent on this as the biggest threat to their business.
The plan’s first pillar, focused on funding scale-ups, aims to mobilise resources for deep-tech startups looking to grow. While Europe is the fastest-growing region in private capital investment, the plan notes that its volume of tech scale-ups and scale-up financing is considerably less than in the US and China.
The EU’s primary body for startup financing, the European Innovation Council (EIC), was launched under the Horizon Europe programme last year but has been hit with many issues.
Most notably, companies have experienced significant delays in receiving the funding they had been awarded. As a result, the beleaguered organisation is now the subject of a parliamentary investigation launched last month by conservative MEP Christian Ehler.
The Commission proposes several measures to free up additional capital to address the scale-up gap between Europe and other regions.
These include creating a debt-equity bias reduction allowance (DEBRA) on corporate income tax, which the EU executive says would broaden the availability and ease the cost of new equity for businesses, particularly SMEs.
Before the end of the year, the Commission will also propose a Listings Act set to reduce the listings requirements on certain companies to decrease costs and up legal certainty for issuers.
The second action centres on providing spaces for innovation and experimentation, namely through the creation of regulatory sandboxes and test beds through which innovators can work to develop disruptive technologies in an expanded range of sectors. For example, a new open innovation test bed in renewable hydrogen will be launched by the Commission next year.
A proposed novel rule within the State Aid Framework for Research and Development and Innovation would also allow EU countries to grant aid for creating and improving innovation infrastructures, such as testing and experimentation facilities.
Under the plan, the Commission will also take steps to develop a pan-European innovation ecosystem featuring interconnected regional systems working on several deep-tech projects.
In part, through Horizon Europe funding, the interregional collaboration between more and less innovative areas will be financially supported by the EU, leading to the designation of “regional innovation valleys”.
The Commission will also establish an AI-based platform, “Innospace”, for sharing knowledge, contacts and research results. A select number of deep-tech startups already working with the EIC or other EU programmes will be provided with enhanced support for the further development of their work.
The plan’s fourth action area focuses on cultivating, developing and retaining deep-tech talent within Europe, primarily through the European Institute of Innovation & Technology (EIT), which will expand its programmes to target one million talents across EU member states by 2025.
The EIT, in conjunction with the EIC, will also launch an innovation intern scheme next year, through which researchers and students can work in the startups receiving EIC financing. Targeted programmes will also aim to boost the participation of women in the sector.
These programmes will build on existing skills goals set by the Commission in its Digital Decade targets, aiming for 80% of the EU population to have basic digital skills and 20 million ICT specialists to have been trained by 2030. Concerns have been raised, however, that the EU risks falling short of these targets without a substantial and rapid ramping up of digital development.
The fifth and final pillar of the strategy deals with creating a more innovation-conducive policy framework.
Amongst the proposals made in this area, plans are outlined to develop common definitions and a more robust grounding in data for policy and to boost the role of the European Innovation Council Forum in facilitating the transfer of best practices and the coordination of policy innovation throughout the EU.