This article is part of our special report Innovation.
SPECIAL REPORT / Problems with investment funding, stigmatising business failures and regulatory red tape are threatening Europe’s technical innovating industries, delegates at the InnovEIT Forum heard yesterday (5 May).
Corinne Vigreux, the co-founder and managing director of satellite navigation company TomTom, told delegates at the Budapest conference that her company was the sole consumer electronics brand to emerge from Europe in the past 15 years, and was only competing with Asian and US companies.
“If you look at smartphones today – they are the biggest revenue pullers – where are the Europeans? We need more entrepreneurs,” she said.
Europe had failed to respond to the dominance of Silicon Valley and Asia in technological innovation – such as Uber, Twitter and Facebook – she specified, adding: “If you are not at the table, you are on the menu.”
Richard Pelly – a consultant who until last year was the executive director of the European Investment Fund – said that although Europe was holding its own in terms of patent registration, “this is being eroded by Asia, which is catching up fast”.
The key problem Europe faces is bringing its ideas to market, Pelly said, adding: “It is a cliché, but true nevertheless, that our European inventions are commercialised elsewhere.”
Mentoring and education at fault
Corinne Vigreux said that Europe has an issue with a risk-taking attitude.
“We have an education system that stigmatises failure. There has to be more ability to dare to fail. Mentoring can help with that,” Vigreux said.
“We want education and mentors and physical resources to make Europe better than Silicon Valley!” a delegation of young researchers demanded in a mock protest on stage at the event.
“Europe must challenge Palo Alto and Silicon Valley – I support that,” said Birgitte Andersen CEO of Big innovation centre, said.
For her, the chief problem lay in Europe’s failure to scale up start-ups through a poor investment finance ecosystem.
“Banks and Europe’s venture capitalists remain wary of investing in start-ups’ intangible assets, yet these are increasingly the kinds of risky investments they need to be making,” according to Andersen.
Vigreux said that founders of start-ups must also take more responsibility for failure to scale up because there was a tendency to sell off companies too early.
“They must aim high and keep going rather than just doing it to sell out,” she added.
Regulatory overdrive hinders entrepreneurs
Another sticking point was the regulatory landscape.
“The other problem we have is big data; we need a charter on which conditions for the sharing of data because our entrepreneurs are hindered by privacy and citizens’ rights,” Andersen explained.
Pelly pointed out that the relative impact of an enterprise failing can have a longer administrative tail in Europe “that must be shortened”, to release entrepreneurs from the burdensome elements of European regulations.
Successful innovation clusters in Barcelona, Berlin and London had all emerged, basing themselves on an Israeli innovation model which took as its precept that regulatory barriers to innovation should be removed, Pelly explained.
“The future is not big against small, but fast versus slow, and that is why the regulatory backdrop is so important, because it is too expensive and slow at the moment,” Andersen told delegates.
Optimism for the future
Pelly stated there is something moving now in terms of the EU member states pledges to commit 3% of GDP into research and the Innovation Union strategy different model through horizon.
“The EIT is now playing an important role in linking the pure science research with the universities and then bridging these with enterprise,” said Pelly.
Meanwhile Tibor Navracsics, the Hungarian Commissioner for Education, Culture, Youth and Sport, said: “We have heard today about how 15 years ago the EU was one of the biggest powers in IT and now we are lagging.”
Navracsis added that the EIT played an important role in finding ways to tackle the problem, “but there is no golden rule we have to make experiments[…] it is not a two-year issue, and it is in the medium term that we will see if we can keep up the pace.”