EU should create venture capital fund, say experts


The European Investment Fund (EIF) should be expanded to fund corporate ventures and innovation projects, according to a panel of experts brought together by the EU executive.

The group, which includes policymakers and leading thinkers from the world of innovation, said the EIF should be used to accelerate pan-European venture capital funds. The EIF’s role should be broadened to create funds “with the critical mass of resources and expertise to operate on a transnational basis funds and specialise in future growth markets”. 

A report produced by the panel is the result of an online brainstorming session on the future of innovation in Europe and is expected to have a major influence on the shape of the European Innovation Act, which will be launched in spring 2010. 

The group says venture capital funds backed by the EIF must attract sustainable co-investment from the private sector and should be free from political interference from Brussels or EU governments. 

Incentives are also required to create a functioning EU market for intellectual property, which would allow universities, public research organisations and small companies to find partners and to access the unused intellectual property of larger players. 

Broaden concept of innovation 

The group wants a broader definition of innovation which would encompass community-based innovation and reforms in the public sector. 

“Scale and speed are everything in innovation,” according to the report, but more work is needed to accelerate the adoption of new technologies, especially in the public sector. 

EU directives and regulations must support innovation, according to the expert panel, and public procurement should be reformed to encourage innovative proposals. 

On a practical note, the report says every household, business and public building in Europe should have “ultrafast” broadband and smart energy grid connections. 

“We propose that the EU commits to universal access to ultrafast broadband and smart grids, implements an integrated, cross-border investment strategy, and combines infrastructure projects with support for innovative services and open access,” the group suggests. 

Information exchange via new Web 2.0 tools will feed innovation, according to the experts, who say boosting collaboration will increase innovation. 

“We propose to create and network innovation labs, invest in cultural and creative institutions, organisations and networks, reinforce the role of brokers and intermediaries, develop a major prize for innovative localities, and stimulate universities and public research centres to be more open and international,” the report says. 

Charles Leadbeater, a leading author on innovation and creativity, said innovation comes from people combining their different ideas "to create new recipes for how we make products and provide services". 

"Increasingly this process of combination involves consumers as participants or even instigators of this process. Innovation is driven by creative collaboration as much as by competition, it is something you do with people rather than to them. This report - incisive, imaginative and inspiring - captures the essence of this approach and so is essential reading for anyone who cares about Europe's future." 

Ann Mettler, executive director and co-founder of the Lisbon Council, said Europe has a chance to reinvigorate innovation policy. 

"This report will undoubtedly be remembered as a turning point in EU innovation policy. Never before has a group of eclectic thought leaders and successful practitioners been so frank in their diagnosis, so forward-looking in their prescription and so caring for Europe's collective future – a future that is ours to shape, and that must be built on a holistic endeavour of societal renewal," she said. 

Mettler warned that Europe is in danger of becoming more risk-averse just at the moment when a more innovative, experimental approach is needed. "This blueprint is the first of its kind that not only provides a strategic vision but also a concise plan, as well as an intricate understanding that 21st century innovations can only thrive in a collaborative, open and interdisciplinary space where new ideas are celebrated and bold entrepreneurial activities rewarded," she said. 

Andreas Pyka, professor of Innovation Economics at the University of Stuttgart-Hohenheim and president of the Lisbon Civic Forum, said that considering innovation as a comprehensive process encompassing all of European society can help transform Europe into "a knowledge-based and future-oriented economy". 

The British Chamber of Commerce said improving access to public financing for innovation by business should be a high-priority for the EU. 

"The acceleration of pan-European venture capital funds is a positive development, however it is important that SMEs have equal access to these funds as is the case large firms. There is also a real need to address the issue of how we fund small, innovative but higher risk companies." 

The EU executive will produce a European Innovation Act by next spring, which will bring together efforts to make Europe more competitive. This process is being led by the European Commission's enterprise directorate (EURACTIV 8/9/09). 

Last month, outgoing Commission Vice-President for Enterprise Günter Verheugen described Europe's innovation policy as "a mess", noting that up to 12 commissioners have a stake in this cross-cutting area. 

The EU executive's education arm is currently finalising an 'Innovation Manifesto' which has been drafted by a 27-strong group of Ambassadors for Creativity and Innovation. 

Meanwhile, Research Commissioner Janez Poto?nik this week endorsed a report by BusinessEurope designed to craft a more favourable innovation ecosystem (EURACTIV 13/10/09). 

José Manuel Barroso, president of the European Commission, plans to reconfigure the incoming college of commissioners to put greater focus on innovation policy (EURACTIV 23/09/09). 

  • 12-16 Oct.: 1st European Innovation Summit.
  • Spring 2010: European Commission to publish European Innovation Act.

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