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  • Hungary-EU-Israel Workshop Start-Ups and Innovation Tel Aviv, 30th May 2011 The Innovation Union flagship initiative and framework conditions  :  How to provide incentives for start-ups early-stage innovation?  Emilie Tack, Innovation Policy Unit DG Research and Innovation
    • Globalization of knowledge and innovation capacities
    • Impact of the crisis on public finances and business (especially innovative SMEs)
    •  The EU has lost six million jobs, € 1,000 billion of annual GDP during the crisis;
    • Major challenges
    • Maximize available resources by leverage, integration and cooperation
    •  The EU target of 3% of GDP for R&D in 2020 could create 3.7 million net new jobs and nearly € 800 billion of annual GDP by 2025
    Urgent need to fill the GAP at any level! Europe is facing a major innovation emergency
  • Evolution of World R&D expenditure in real terms PPS in millions € at 2000 prices
    • Ever stronger global competition for investments & markets
    • US and Japan lead on innovation whilst emerging economies are quickly catching up
    • On current trends, China is set to overtake the EU by 2014
    China excluding Hong-Kong Source: European Commission The EU must close the innovation gap now
  • Research and innovation performance: EU Member States Source: Innovation Union Scoreboard 2010 Note: the index used for comparison in the this chart is based on a set of 24 indicators Strong variations across Member States ES EU
    • Competitors’ success: no accident nor luck
    • Our key partners and emerging economies (eg. China, India, Brazil) follow a strategic approach to innovation and implement it!
    • A strategic approach to innovation =
      • Innovation is the overarching policy objective driving all other policies ( education , skills, regional development, standards, tax policy …)
      • Innovation policy is steered & monitored at the highest level (Prime Ministers are in charge)
    What can we learn from our competitors?
  • Our partners invest more in higher education Expenditure on tertiary education (% GDP)
  • US leads top universities ranking % in the top university institutions of the 2010 Shanghai list Source: European Commission
  • Students enrolment Number of undergraduate students 0 1 2 3 4 5 6 7 02 03 04 05 06 07 08 09 Millions China Source: DB Research, Eurostat, Figures for 2008-2009 for EU+US+JP are estimates National Statistics of China, 2010 Japan United States EU
    • A flagship initiative of the Europe 2020 strategy
    • Radically improving the framework conditions and reducing time-to-market
    • Tackling underinvestment, fragmentation and duplication (“critical mass”)
    • Using public funding to leverage private R&D (e.g. the EU Risk Sharing Finance Facility - RSFF)
    • Promoting massive investment in skills, education, research and innovation especially through « recovery » packages ( “Smart” fiscal consolidation )
    • See: http://ec.europa.eu/research/innovation-union/index_en.cfm
    EU’s strategic approach: Innovation Union
    • A “standardisation package” – comprising a Communication and a legislative proposal, to be adopted in May.
    • 2 implementing legislative proposals to create a unitary patent protection (under enhanced cooperation between 25 MS) presented on 13 April.
    • Proposals for putting in place an operational framework for the cross-border operation of venture capital funds by 2012.
    • A review of the State aid research and development and innovation framework in 2011
    • Proposals to exploit public procurement budgets for innovative products and services by the end of 2011
    Improving Framework conditions
  • Key Framework conditions Source: Eurostat R&D procurement expenditures ( excl. defence ) in the US and EU in Bn € - 2007 Source: European Commission Early-stage Venture Capital in Bn €, 2000 and 2009
  • IU Commitment 11
    • By 2012, the Commission will ensure that Venture Capital funds established in any Member State can function and invest freely in the EU
    • (If necessary by adopting a new legislative regime).
  • European Council conclusions follow-up
    • Every effort should be pursued to lift remaining legal and administrative obstacles to the cross-border operation of venture capital.
    • The Commission is invited to present proposals by the end of 2011 for putting in place an EU-wide venture capital scheme
  • IU Commitment 10
    • By 2014: on the basis of Commission proposals, the EU should put in place financial instruments to attract a major increase in private finance and close the market gaps in investing in research and innovation.
  • European Council conclusions follow-up
    • The Commission is invited to present proposals by the end of 2011 for scaling up the Risk Sharing Finance Facility
    • During 2011-2013, we will expand the scope and scale of RSFF implementing recommendations of the RSFF interim evaluation
  • Risk-Sharing Finance Facility (RSFF) Policy Support : current state of play
    • Moving towards a Portfolio First-Loss Piece for the whole RSFF (by end-2011), enabling a potential higher leverage effect on the EU financial contribution (cf. facing the level of demand until end-2013) and more support for target groups such as SMEs and research infrastructures
    • Launch of a dedicated window to address research-intensive and innovative SMEs and mid-caps (early 2012)
  • After 2013? Greater investment in R&D Next MFF Debt and equity Financial instrument ? Europe 2020 Europe 2020
  • RSFF post 2013? Innovation Credit Facility Good practice from the Netherlands
    • Most applicants for loans are young start-ups
    • Strong stress on the eligibility criteria on the developmental approach
    • Risk sharing
    • Cooperation-to-be with EIB
  • An integrated approach for the use of financial instruments to support R&D&I
      • Preparing the ground for the implementation of IUC 10
      • e.g. debt financial instrument in future CSF
    • Debt instrument will provide debt finance for risky investments in R&I activities and will cover loans, guarantees…
    • Equity instrument for early and growth stages investments :
        • Support to early stage and seed investment
        • Support to the development of EU venture capital
  • Current Programme s (2007/2013) R&D 7FP (DG RTD) Innovation (i) CIP (DG ENTR) Future Programme (2014/2020) R&D&I CSF EIPs Innovation Union Towards a Common Strategic Framework The European Institute for Innovation and Technology
  • Next steps towards a CSF
    • Follow up:
      • Analysis of contributions by Commission
      • Major event to conclude consultation (10 June 2011)
      • Inputs to preparation of Commission proposals
    • Commission proposals:
      • for post 2013 EU budget (June 2011)
      • for the Common Strategic Framework (by end of 2011)
    • Legislative decisions on the Common Strategic Framework by the Council and European Parliament (2012-13)
    • => Common Strategic Framework (from 2014)
  • Lessons learnt from current EU R&I funding
    • Cross-border pooling of resources
    • More competition in research
    • Focus on Excellence
    • Wide range of training possibilities
    • Raise of the international attractiveness of EU R&I
    • Fragmentation
    • Need for further simplification
    • Better strategy for innovation
    • Need to focus resources to address grand challenges
    • Broaden participation
    • Clearer agendas
  • Thank you for your attention