Europe is no longer a leader when it comes to innovation but it can still fight back against the US and China by backing companies working in disruptive technologies such as artificial intelligence (AI) and biotechnology, delegates at a briefing in Dublin were told last week.
Speaking at the event, Jean-David Malo, director DG research and innovation at the European Commission, said the continent "had lost the battle to be the lead player in the digital space." However, he added that adequately supporting start-ups who are working on "risky, but scalable" innovations could help it rebound.
“We are able to generate more high-tech start-ups than the US but let’s be clear, we are no longer an innovation leader. We are not able to provide the necessary means for companies to mature and scale,” Mr Malo said.
He said the failure to properly support start-ups is in part the result of a fragmented venture capital market, and the fact that Europeans are more risk-adverse than in other parts of the world.
Mr Malo was in Dublin to reveal more details about the European Innovation Council, an initiative, which was recently awarded an additional €2 billion in funding.
The initiative, which first launched as a pilot in late 2017 as part of the Horizon 2020 programme, aims to support top-class innovators, entrepreneurs, small companies and researchers who have smart, but highly risky innovations that have the potential to scale up internationally. It offers grants and “blended” financing – grants and equity to entrepreneurs.
Europe accounts for 20 per cent of global R&D investment, despite only being home to about 7 per cent of the world’s population. But, it is widely accepted that the continent has fallen behind when it comes to sufficiently supporting new companies with innovative and disruptive technologies by closing the financing gap between R&D grants and private investment.
Mr Malo said some of the most promising companies were those seeking to commercialise research but which might be many years away from generating revenues.
The council initiative is intended to shake things up on the funding front by enabling the commission itself to become an investor in companies, rather than just providing grants. More than 276 highly innovative projects have already benefitted funding of more than €730 million under the initiative and the aim is to ramp this up in the coming years.
Commission backing critical
Also speaking at the event was Patricia Scanlon, founder and chief executive of SoapBox Labs and someone who was last year named by Forbes magazine as one of "the world's top 50 women in tech".
Ms Scanlon, whose company uses AI and deep learning to develop cloud-based speech recognition solutions for young children, spoke of the importance of commission backing for companies such as her’s, which previously secured a €1.5 million Horizon 2020 grant.
“Winning that money allowed us to go deeper in terms of our products, which is important because AI is a really problematic area as you can knock something together by taking something off the shelf but it will be crap and while you might get a few clients, you won’t be doing anything different. If you want world-class companies then you have to invest deeply,” said Ms Scanlon.
She added that her experience fundraising in Europe was that many venture capitalitsts were highly risk adverse, had little knowledge of deep tech and were largely focused on how quickly a company can generate revenues, while the opposite was true in the US.