European Funding Programmes Need A Concrete, Market-based Approach To Support SMEs

The European Union is currently undergoing the finalisation of its funding programmes for the 2021-2027 period. One of the key elements concerning new funding opportunities is that the SME Instrument, a funding programme mostly aimed at small and medium-sized companies that was present in the 2014-2020 period, will be cancelled. This is a problem.

In its place the European Commission is proposing a new programme called the European Innovation Council, composed by two parts: the Pathfinder and the Accelerator. Neither of these parts however has been designed to specifically support SMEs as we know them.

The Pathfinder aims to cover the following areas of research and innovation:

- Human-Centric Artificial Intelligence
- Implantable autonomous devices and materials
- Breakthrough zero-emissions energy generation for full decarbonisation
- Future technologies for social experience
- Measuring the unmeasurable –– Sub-nanoscale science for Nanometrology
- Digital twins for the life-sciences

While sounding very ambitious and technical, these are not areas where it is feasible for SMEs to work on. Already by chosing a technology centred approach, DG R&D was most probably only consulted by Universities and decided to open the measure to Universities and research centres.

The mixture of vague concepts and goals that aim to revolution our technological world in broad strokes make for a very abstract focus, in contrast with the clear concrete needs and objectives that an SME must build upon to succeed when innovating. They simply cannot afford to engage alone in such far-fetched innovation research, so they are bound to depend on Unversities.

But SMEs don't want to be guinean pigs in the research laboratories of Universities. They want to grow. Maybe thanks to innovation and technological progress. But innovation that is adapted to their business model.

The Accelerator part is equally problematic as it offers funding for late-stage development of innovative technologies in the areas mentioned above, likewise a private start-up accelerator. In fact, if you look at the members of the "SME Jury" of the EIC, you will find more supposed "venture capitals" and "investors" (which normally use the money of others), instead of Entrepreneurs that have been standing in their workshop for years.

This approach, while well-meaning, completely ignores the reality of Small and medium-sized enterprises. Accelerator is a tool designed for Start-ups. Maybe those born before in the laboratories of Universities and research centres and that then seek public funding to maintain the employees' incomes at tax payers' risk.

Even assuming such a start-up would be able to develop a revolutionary technology and business model, the best and fastest way to profit from it is to sell it to bigger companies that can afford to transform any prototype into a product for purchase on the mass market. Most of these companies are not European.

What SMEs need is not so visionary goal and a financing approach that ignores markets, but a concrete approach to help them integrate digital technologies in their business so that they can become more efficient and competitive. Our project DigitaliseSME showed one way to achieve this and we believe it is still possible to build upon it - it is better to support 10.000 well-functioning garages than one non-existent unicorn!

Stefan Moritz

Managing Director European Entrepreneurs CEA-PME


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