We spoke with the head of the European Innovation Council’s advisory board, Professor Mark Ferguson, about his hopes for how the EIC will function and what he hopes it will achieve.
Europe needs to capitalise on its science and start-ups to compete in global markets increasingly defined by new technologies. That is why the European Commission has now introduced the European Innovation Council (EIC). A first phase of the EIC pilot was launched on 27th October 2017 as part of the Horizon 2020 Work Programme 2018-2020. These instruments continue to offer funding to innovative companies in support of market-creating innovations.
The Enhanced European Innovation Council (EIC), which is now in its pilot phase, supports top-class innovators, entrepreneurs, small companies and scientists with bright ideas and the ambition to scale up internationally. It brings together the parts of Horizon 2020 that provide funding, advice and networking opportunities for those at the cutting edge of innovation.
The EIC will go on to become a full-fledged reality from 2021 under the next EU research and innovation programme Horizon Europe with a proposed €10bn budget. It will build on the structure of the EIC under the Horizon Europe proposal to fast track disruptive and market-creating innovation. The pilot will be implemented using 2019-2020 budgets under Horizon 2020, and will involve a revision to the Horizon 2020 work programme.
How will the enhanced EIC build on the first phase of the EIC pilot, which was launched on 27th October 2017 as part of the Horizon 2020 Work Programme 2018-2020?
An interesting analogy is the European Research Council (ERC). The ERC has clearly developed a huge brand for research excellence in fundamental research, and the aim of the EIC in simple terms is to do the same thing for innovation.
Europe has excellent science, but we lag behind other regions and countries in terms of commercialisation and company formation. One of the often-stated reasons for this, which is backed up with a lot of data, is that there is insufficient European investment capital in terms of venture funding etc. in comparison to countries such as the USA. The EIC will address that with a potential €10bn budget which will be used to leverage other funding.
We also want to see more companies grow and scale-up in Europe, and that requires the deployment of capital, as well as smooth and very efficient assessment. The EIC will also give the European programmes something of a unique opportunity in that riskier investments are better tackled via grant funding, but also through a blended funding approach, whereby a few key milestones are identified and if they are achieved then the equity investment will be activated in order to enable a very smooth and seamless process, and which is very quick to scale. That is a real advantage because it essentially means that we are able to de-risk by using a stage gated, milestone-driven grant instrument. Of course, the milestones will not be met in every case: when they are not, funding will cease and when they are, funding and equity investment will flow efficiently.
These are very interesting and exciting possibilities for Europe, and I hope they will allow us to see a comparable increase in innovation quality and volume to that which we have seen on the research front via the ERC.
The members of the EIC’s advisory board is well mixed in terms of backgrounds and experiences. This is, of course, important, but will it be a challenge to co-ordinate?
The really key thing here is to define what ‘success’ looks like, and to make sure that the board helps the Commission in every way possible to set the background and the agenda and the structures so as to maximise the possibility of success.
You are absolutely right that there is a mix of backgrounds, and that is what is needed; we need to have representation from entrepreneurs, venture capitalists, those from the tech transfer sector, science, and so on. The EIC is absolutely not about displacing anything; we are very much in a crowding-in mode and in a connections mode – we want to provide smooth connections to the European programmes. If there are solutions to some of the missions in Horizon Europe then some of them, though not all, will have commercial potential, and we can help them to achieve that.
The Enhanced EIC will take ‘new approaches’ in its aim to bring together the parts of Horizon 2020 that support high-risk/high-return, breakthrough research or market creating innovation. How do you envisage these working?
While these approaches may be ‘new’ in Europe, they are not necessarily so elsewhere. For example, in the USA the Defense Advanced Research Projects Agency (DARPA) – which was originally known as the Advanced Research Projects Agency (ARPA) – takes a very different approach to funding research projects than we do in Europe. The European programmes currently require a project proposal to be submitted, which is then sent to the best experts in that particular field. If they agree that the project is worthy then the funding is allocated. That approval tends to fund the consensus or mainstream view in that particular subject area and that is great because most of the time it works.
DARPA, however, also invests, at the same time, in alternative approaches – they will allocate funding for the mainstream, but also in alternative approaches using a stage-gated methodology, whereby there is a commitment for a defined level of investment contingent on achieving certain milestones (this is like venture grant funding). That way, if it turns out that the previously-identified mainstream area isn’t the best way forward, then they have already made some headway in alternative areas and are able to harvest those opportunities (and, of course, they can also branch into the mainstream if appropriate). That kind of approach doesn’t occur very much, if at all, in any European system – at either the EU or national levels – and so presents an interesting opportunity for us to explore.
That could be deployed very well in the European context to essentially take high risk science projects and assess the new scientific advances and whether there is commercial potential in them.
It is ideas such as this which will be discussed by the advisory board. Although, I should emphasise that these are just some of my own ideas and/or things that have been discussed previously, and I have no doubt that the board will have many other excellent ideas as well. What is really important is to be innovative and entrepreneurial both by seeing how existing things could be improved and by seeing how we can learn from other successful programmes around the world and adapt them to the European context. The most interesting thing will be to see whether the board can think of something good that no one else has thought of.
Pitching proposals is also an important way of assessing applications. When we look at fast-moving fields such as AI or robotics, the idea that you submit a proposal for funding and then it can take up to 1.5 years for it to be reviewed doesn’t fit with the timeline of the innovation. As such we need to find different ways of doing things, and one of those will definitely be pitching ideas, rather than submitting long written proposals – even in the SME instrument and elsewhere, people will actually come and present their proposal in an effort to obtain funding. This is a tried and tested methodology in the venture world – if you can’t explain yourself in a presentation and answer a whole barrage of quite aggressive questions, then you don’t win the funding.
As an advisory board, we will be helping the Commission to refine these things, but we will also give them the courage to do them because this will not be the way that things have been done conventionally before and people don’t always like change; there needs to be a good board to support the EIC staff and tell whomever that this is the right path to follow.
The Prizes, akin to the Longitude Prize, are interesting ways to tackle specific problems. Can you tell me more about how these are chosen, and how the system works?
A feature of Horizon Europe will be the ‘missions’, and so we need to understand how to best approach and interact with them. A key thing here will be to define the challenge or mission, and in some cases it can be very specific, such as the original Longitude prize, and in others it can be much broader. Those definitions need to involve a wide spectrum of people from industry, academia, society, entrepreneurs, and so on. However, that is not always as easy as it sounds. To take the agriculture sector as an example: there are a lot of farmers with very good ideas, but few of them are looking to be professors or to establish a start-up company. Thus, by widening the innovation base and by being very specific about what challenge you want to solve is an important addition to the research and innovation programmes.
Then it is important that when someone comes up with a potential solution and wins a mission prize, that there is a very fast way of implementing the solution, and that is how I see the missions in Horizon Europe and the European Innovation Council interdigitating. Indeed, the EIC should be able to help these ‘mission prize winners’ commercialise and scale up, hopefully growing a unicorn company that can go on to provide global solutions. The European Research Programmes are voluminous and they are also well-funded; there’s a lot of capital being deployed, and there is a lot of innovation taking place. We now need to improve our ways of capturing that and scale it quickly.
How will you approach your role as the Chair of the Advisory Board? What challenges do you expect to encounter?
There is a huge amount of expertise within the board and we absolutely want to see that harnessed so that we get all of the good ideas coming out. I would like to see what I would term ‘synergistic challenge and enhancement’ – often, when such a group of excellent and experienced people come together, someone has a good idea and another refines it, and you end up with something that is much better. That is important and we want an environment where that is fostered.
Focus is also going to be very important. We will need to have a focus on actually delivering and making these things happen, as well as a real focus on innovation excellence, by which I mean leveraging other capital and having investments that are performing well and using novel instruments to do that.
It will fall to the Commission to execute that, however; we are an advisory board and so our role will be to provide help and support in terms of the ideas and how to structure programmes, as well as helping to overcome the conservatism and inertia you find in any normal institution when trying to do new things.
The board is there to help; we are there to create ideas; we are there, in my view, to be clear about what success looks like and to optimise the prospect of the EIC achieving that success. To return to the analogy with the ERC: clearly innovation is a little more complicated, but in a relatively short space of time the ERC has become a world benchmark for excellence in research, and I hope that in a few years’ time that the EIC will become a world benchmark for excellence in innovation. If that happens, then it will address some of the main problems we are experiencing in Europe today because many of the world’s best entrepreneurs and investors will become very interested in what the EIC is doing and if indeed a fundamental problem is lack of capital in Europe, then the EIC and the leverage it creates will be a fundamental part of the solution.
Professor Mark Ferguson
Chair of the Advisory Board
European Innovation Council