An Overview

SMEs in Horizon 2020 Policy and implementation

Iker Ayerbe

DG Research and Innovation

Unit B.3 SMEs, Financial Instruments and State Aid @EaP conference 'From Innovative Ideas to Successful Businesses', 21 September 2017, Minks

Policy Research and Innovation

SMEs in the European economy

SME

"SMEs accounted for 71.4% of the increase in employment in 2014 in the

non-financial business sector."

"99.8% of all enterprises in the non-financial business sector in the

EU28"

"For every km2 of land surface the EU has an average of 5 SMEs."

"In 2014 SMEs employed almost 90 million people - 67% of total

employment, and generated 58% of the sector’s value added."

"22.3 million SMEs in the EU"

Policy Research and Innovation

• Results of econometric analyses showed that SMEs participating in the EU's 7th Framework Programme for Research and Technological Development scored 38% higher than the control group with regard to employment growth and operating revenue.

• SMEs that participated in FP7 report a range of impacts that have a positive effect on their competitiveness, e.g. more cooperation, new knowledge, improved innovation competences.

EU support to Research, Development and

Innovation in SMEs

But still important challenges to solve:

Exploitation of R&D – bridge to the market

Access to specific knowledge and skills

Access to finance

Internationalisation / open innovation

Most SMEs research-driven rather than market-driven, not strategic innovators

FP information environment not considered as business-friendly or welcoming to SMEs

Framework Programme 7: Helping R&D in SMEs had a

proven positive impact on job growth creation and on overall

SME competitiveness

Policy Research and Innovation

Horizon 2020

Excellent science

(ES)

Industrial Leadership

(IL)

Societal Challenges

(SC)

SME

Three priorities

The biggest

EU Research & Innovation

programme ever

with nearly €80 billion

of funding available over

7 years (2014 to 2020)

–

It promises more breakthroughs, discoveries and

world-firsts by taking great ideas from the lab to

the market

Policy Research and Innovation

Barriers to SME Innovation & Growth

• Source: European Commission and European Central Bank, SMEs’ Access to Finance Survey 2013, Analytical Report.

SME Key challenges

Why a new approach to 'Innovation in SMEs' in

Horizon2020?

o Inadequate Access to Finance (additionality of public support)

o Inadequate Access to Skills / knowledge (innovation management capacity)

o Weakness in Networking and Cooperation with External Partners (~ Open Innovation)

o Lack of Internationalisation (includes Access to Markets)

Policy Research and Innovation

Business-Oriented & SME-Friendly

A strong challenge-based approach, allowing SME applicants to have considerable freedom to come up with innovative solutions

Emphasis on innovation, with continuing support for R&D

Less prescriptive topics, strong emphasis on expected impact

A strategic approach, with two-year work programmes

Focus areas bring together different technologies, along entire innovation chain

Horizon2020 SME policy response

Policy Research and Innovation

Horizon 2020 pillar Horizon 2020 Objective Concrete Support Measures

Societal Challenges SME

Instrument RIAs & FTI pilot

Industrial Leadership

LEITs

Innovation in SMEs

Eurostars II

Coordination and Support Actions (CSAs)

Access to Risk Finance

InnovFin SME guarantee (Debt)

InnovFin Equity

Accompanying measures

Excellence in Science

MSCA Marie Sklodowska-Curie Actions

FET Different types of actions (RIAs, CSAs)

Project Grant

Support

H o r i z o n 2 0 2 0 ' s c o m p l e m e n t a r y m e a s u r e s f o r S M E s u p p o r t

Innovation Capacity Building and

Value Chain Development Support Financial Instruments and Accompanying Measures HR Support

Policy Research and Innovation

• Armenia, Georgia, Moldova and Ukraine

o Ukraine

18 SMEs in 18 projects (total projects EUR 34M; SME EUR 4M)

4 SME instrument (3 phase1: Climate, Nano, Energy, 1 phase2: ICT)

8 MSCA

3 CSA (Transport and energy)

3 RIA (Food, Agriculture and marine, Euratom and transport)

o Moldova - 3 MSCA & 1 CSA (ICT) - (Projects EUR 13M; SME EUR 240k)

o Georgia – 1 RIA (FET) & 1 IA (climate) - (Projects EUR 6M; SME EUR 200k)

EaP associated to H2020 Overall SME participation

SME participation of countries associated to H2020

Policy Research and Innovation

SME Instrument Accelerating Business

Innovation

Policy Research and Innovation

SME Instrument Innovators

• 89% of SMEs agree that

coaching has had a positive

impact on their business

strategy

Manuel Nina, Smart Separations:

"Wolfgang's approach to our company made us change

immensely the strategy for the better. We have also

engaged in fruitful discussions with potential partners as

part of his network."

Tomáš Šalamon, Netcampaigner:

"I didn't expect much, but the coaching experience with

Didier appeared to be incredibly useful."

Carmelo Simón, Urbana de Exteriores:

"The experience with the business coach was excellent.

Unai provided help for our project from the

internationalization point of view. Coaching was one of the

best outcomes that we got from the SME Instrument."

SME Instrument coach,

Kaija Pöysti, Finland:

"I grew my 1st company from 1

to 260 people in IT services, and

have since helped several other

companies to achieve significant

growth and globalization.

I have international experience

from Germany (1 year in Bonn)

and the US (8 years in Boston).

M.Sc. degree in applied

mathematics and physics gives

solid scientific background".

Business Innovation

Coaching

empowering teams

Business acceleration

services

SME Instrument

Innovators Summit

2016

Participation to trade fairs in 2016

building the SME Instrument community

Policy Research and Innovation

Increase focus on market creating innovation:

EIC pilot 2018-2020

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Horizon2020 business policy response

Revise Horizon 2020 work programme (2018-20) with simple presentation of instruments targeting market creating innovations

SMEi, FET Open, FTI and Horizon Prizes (EUR 2.65 Billion)

Make SME instrument fully bottom up with a (near) continuously open call

Revise and accelerate evaluation process with face-to-face interviews with teams and faster results

Strengthen evaluation criteria to focus on market creating innovations, with potential to scale, and higher risk profiles

Test out new scale-up instruments, e.g. reimbursable grants, blending grants and financial instruments, etc.

Policy Research and Innovation

Horizon 2020

• http://ec.europa.eu/programmes/horizon2020/en/area/smes

• http://ec.europa.eu/programmes/horizon2020/en/h2020-section/access-risk-finance

• http://ec.europa.eu/programmes/horizon2020/en/h2020-section/innovation-smes

EASME – http://ec.europa.eu/easme/sme/

Eurostars - https://www.eurostars-eureka.eu/

Financial Instruments

• https://ec.europa.eu/programmes/horizon2020/en/h2020-section/access-risk-finance

• InnovFin – EU Finance for Innovators:

http://www.eib.org/products/blending/innovfin/products/index.htm

EU Access to Finance – http://www.access2finance.eu

Other programmes/initiatives

Startup Europe https://ec.europa.eu/digital-single-market/en/policies/startup-europe

COSME http://ec.europa.eu/growth/smes/cosme_en

More information

Many thanks! Iker Ayerbe

SME Support

DG Research and Innovation

Unit B.3 SMEs, Financial Instruments and State Aid

ec.europa.eu/research

Twitter @EUScienceInnov

Twitter @H2020SME

facebook.com/EUScienceInnov

Towards an EIC

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Recap of policy context: New focus on importance of innovative firms scaling up for growth and jobs

"To improve innovation support, the Commission intends to make

changes for the remaining period of Horizon 2020 to provide

bottom-up support targeting breakthrough innovation projects

with the potential for scaling up, and will consider reinforcing this

approach in future through a European Innovation Council."

(Commission communication: Europe's next leaders: the Start-up

and Scale-up Initiative, 2016)

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• The Horizon2020 Interim Evaluation found that, "while Horizon 2020 demonstrates potential in terms of supporting breakthrough, market-creating innovation, such support needs to be strengthened substantially"

• In May, the High Level Group of Innovators (see next slide) published a statement of intent, declaring its readiness to support the Commission in developing the EIC to help Europe lead the next wave of innovation

• During a lunch debate at the May Competitiveness Council, Member States expressed broad support for the creation of an EIC and emphasised the importance of innovation-friendly regulation to create an enabling ecosystem

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Evolving towards an EIC (1)

Nicklas Bergman Martin Bruncko Paddy Cosgrave Gráinne Dwyer Hermann Hauser

Marjolein Helder Taavet Hinrikus Ingmar Hoerr Bindi Karia Jana Kolar

Carlos Oliveira Jim Hagemann Snabe

Kinga Stanisławska

Constantijn van Oranje

Roxanne Varza

EIC High Level Group of Innovators

• On 06 June, Commissioner Moedas met with 11 innovation agencies from across Europe to share best practice in support for market-creating innovation

• On 15 June, Commissioner Moedas launched a special announcement inviting experts in innovation to register as evaluators for EIC Pilot.

• HLG second meeting took place in Copenhagen on 20 June. Hermann Hauser was confirmed as Chair at its second meeting held on 20 June

• The 3 July report of the High Level Group on maximising impact of EU Research and Innovation Programmes ("Lamy Group") urges to invest in a coherent and streamlined EU (open) innovation policy that boosts rapid scale-up of innovative solutions and creates future markets

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Evolving towards an EIC (2)

Scope of EIC pilot (WP 2018-20) Package of 4 instruments with potential to support breakthrough, market-creating innovation:

• SME Instrument: Close-to-market and scale-up projects of a single SME or a consortium of SMEs established in EU Member States or Horizon 2020 associated countries.

• Fast Track to Innovation (FTI): Close-to-market projects of consortia with three to five entities from at least three different EU Member States or Horizon 2020 associated countries. Industry must participate. Interdisciplinary approaches encouraged.

• FET Open: Early-stage, science and technology research by consortia exploring novel ideas for radically new future technologies that challenge current paradigms and venture into the unknown. Open to research into any area of technology. Aims to attract new, high-potential research and innovation players.

• Horizon Prizes: Prizes boost breakthrough innovation by fostering solutions to challenges which bring major benefits to society.

Support and Exploratory Actions (cross-cutting) help to optimise the impact of EU investment in EIC innovators and innovations; they contribute to building an EIC community and a vision underpinning a possible future EIC.

Overall budget: EUR 2.65 million

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SME instrument: what's new

• Fully bottom-up, no predefined topics, so innovative projects that cut across sectors/technologies become eligible for support

• Single budget line, maintaining budgetary contributions from Societal challenge and LEIT

• Larger pool of evaluators with relevant technological/scientific expertise as well as financial/commercial backgrounds

• Evaluation criteria phase 2 revised to better target the scaling up of SMEs with the greatest potential for breakthrough, market-creating innovation (business capacity, international growth ambition)

• Interviews in phase 2

• Coaching for SMEs (available across SMEi, FTI and FET-open) Mentoring introduced

• Monitoring of thematic coverage

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SME instrument phase 2: evaluation criteria

• Impact (50%): demand? Users? Market? Scale up? Commercial strategy? International?

• Excellence (25%) high risk and potential? Steps to market? Beyond state-of-the-art? Feasibility?

• Implementation (25%): team? Resources? Implementation plan and time frame?

• Interview step will concentrate on commercial strategy, feasibility, quality of the team

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SME instrument phase 2: interviews for the best of the best

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Two-step evaluation 1. Remote evaluation: - 4 evaluators per proposal - threshold 13 points overall (4 per

criterion)

2. Interviews for 2 x budget - 30 mins - Panel of experts - To assess quality and ambition of

the team - Decide on to be funded/not funded Expected TTG remains 27 weeks

Fast Track to Innovation (FTI)

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• Assessment 2016: "FTI is a useful addition to the portfolio of instruments available to Horizon 2020", recommends continued support. FTI…

• demonstrates the high demand for a bottom-up approach (success rates < 5%)

• is highly attractive to industry including SMEs (75% of the participants)

• bridges the commercialisation valley of death

• accelerates the expected scale-up of industry

• FTI's attractiveness to industry building on a bottom-up and market-driven approach makes the scheme a natural fit within the remit of a European Innovation Council.

• Evaluation criteria revised for sharper focus on scale-up potential, high novelty, high chance of success or failure

FET-Open

• FET-Open supports high-risk/interdisciplinary collaborations to explore radically new technologies that may become future game-changers

• Offers an Innovation Launchpad (CSA) to propel promising results forward and explore their market potential

• Participants will get access to the assistance, networking and financing possibilities offered by EIC

• Corresponding texts in EIC and FET Open WP parts.

• Scope, orientation and governance of FET-Open remain unchanged

(interdisciplinary, high-risk, radically new, future technologies, TRL 1-3 for

FET-Open)

• Evaluation criteria revised: attention for the future market-creating

potential

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Horizon Prizes

• Only inducement prizes (mission-driven)

• New approach in this WP:

• Opportunity to create greater impact, public awareness

• Reach out to a variety of new talents and innovators

• Incentivise breakthrough market creating innovation

• Topics identified through collaboration across the Commission using following criteria:

• Response to some of our most pressing societal issues

• Transformative in line with the EIC concept

• Feasible yet ambitious targets/implementable within the timeframe

• Easy to communicate

• Leverage effect > increasing private investment

• Expected result not achievable with other existing instruments

• Reaching new innovators

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1. Innovative Batteries for eVehicles (€10 million)

2. Fuel from the Sun: Artificial Photosynthesis (€5 million)

3. Early Warning for Epidemics (€5 million)

4. Blockchains for Social Good (€5 million)

5. Low-Cost Space Launch (€10 million)

6. Affordable High-Tech for Humanitarian Aid (€5 million)

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EIC Horizon Prizes

Coaching and mentoring

Coaching

• Covers business and organisational development, cooperation, financing

• Available to SMEs receiving grants from SMEi, FTI or FET-Open

• Max 3 days in phase 1 (SMEi), max 12 days in phase 2 (SMEi), FET Open and FTI

• Facilitated by the Enterprise Europe Network (EEN)

Mentoring

• Aims to develop leadership skills – resilience, tenacity and strategic insight

• Available to SMEs receiving grant from SMEi, FTI or FET-Open

• Individual founders, CEOs and leaders are eligible

• One-to-one meetings with mentors (CEOs of scale ups)

• Initially mentors to be drawn from pool of SMEi Phase 2 clients acting pro bono

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Blending public finance

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• Studies into

• blending grants with loans and/or equity

• crowd-funding

• both targeting breakthrough, market-creating innovation

• Exploring new financial instruments

Wanted: proposal evaluators from business and finance

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• About 500 new innovation evaluators needed, especially from business and finance, for the remote evaluation of FET Open, FTI and SMEi and for the interviews for SMEi phase 2 (now, about 1,500 in the database)

• Interview panel: seasoned entrepreneurs, innovators and investors. Names will be published.

• Wanted: experts to evaluate market-creating innovation (special announcement on the Participant Portal, proactive communication with business community, multipliers (e.g. NCPs, EEN, BusinessEurope, EBAN, EVCA etc)

• Experts registration (EMPP) will be simplified

• Special announcement launched on 15 June

https://ec.europa.eu/easme/en/investor

Monitoring progress and results

• Close monitoring of progress and results

• Regular reporting by projects in the Participant Portal

• Outside experts will assess projects' progress, using the Innovation Radar

• Focus on

• Outcomes of the projects

• Identifying early indications of breakthrough market-creating innovation

• Level of private investment attracted, eg venture capital and loans

• Companies' performance, eg jobs/turnover

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• Commission acknowledges importance of interaction with other key players in the innovation landscape, including Eureka, EIT/KICs, etc

• That is why EIC is being developed in an open and inclusive manner

• Important to identify complementarities and synergies and to avoid unnecessary overlaps/duplication (e.g. Eurostars and revamped SME instrument have different objectives and modalities)

• One possible approach would be a Memorandum of Understanding (or similar)

• Commission sees this as a start of a process, open to new ideas. Clear potential to engage national innovation agencies and promotional banks in delivering scale up finance.

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EIC in the Innovation Ecosystem

Improved navigation and outreach to new participants

• An IT tool (questions and answers) to guide users to the best fitting instrument

• Revamped website

• Intensive and targeted communication via social media, intermediaries and high-profile events

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