Universities fear being shut out of EU innovation push

The European Union is planning a grand new body to make the Continent more innovative and to spur the emergence of companies that create entirely new markets, such as Uber, Google and Amazon.

For too long, the EU has been best known for fining and regulating such firms, rather than spawning them, Brussels policymakers believe.

But universities and academics are nervous that the new European Innovation Council (EIC), which will be piloted from 2018, could leave them out in the cold and eat into the budget normally earmarked for research.

More broadly, some fear that policymakers in Brussels and London are increasingly unconvinced of a link between excellent university research and economic growth – and may change their spending priorities accordingly.

The cause of universities’ recent angst is a major new report, the strangely titled LAB–FAB–APP: Investing in the European Future We Want, released with great fanfare in Brussels at the beginning of July. It sets out how Europe should invest in research and innovation after the current framework programme, Horizon 2020, runs out.

The Continent’s problem is not a dearth of good science – “Europe is a global scientific powerhouse”, it says – but rather its “innovation deficit”: that is, its inability to turn all this new knowledge into tangible economic and social progress.

The US boasts five times as much venture capital to get new companies off the ground as the EU, it warns, and five times as many “unicorns” – private technology companies valued at more than $1 billion (£768 million).

Look down a list of unicorns, and you’ll find it dominated by companies in the San Francisco Bay area, Beijing and Shanghai. Europe’s biggest prodigies include the music-streaming service Spotify, based in Stockholm, and Berlin’s food delivery companies HelloFresh and Delivery Hero, but they are still relatively small fry compared with the likes of Uber, Airbnb and Snapchat.

To help rectify this, an EIC pilot starting in 2018 will provide funding for “crazy innovators”, most of whom “don’t come from universities”, according to Robert-Jan Smits, the European Commission’s director general for research and innovation, in a recent interview with Times Higher Education.

It is “a little bit surprising to say the least that the political conversation in Brussels” has “sidelined” universities, said Alea López de San Román, a policy officer at the League of European Research Universities (Leru). “Some policymakers seem to ignore the role of universities.” She added that Leru was “very disappointed” that no member of the group currently brainstorming ideas for the EIC comes from a university.

Hermann Hauser, the Cambridge-based entrepreneur and venture capitalist who is chairing this group, told THE that academics were “always apprehensive” when they heard the word “innovation” but said that “nobody was trying to attack blue-sky research”.

But universities also needed to accept that “the speed that we get stuff out of universities is broken”, he added.

He denied that the main point of the EIC would be grants or loans to help companies scale up. Instead it was about the entire “innovation ecosystem” and “minimising the time it takes from a breakthrough in the university to a product out there in the market. The Americans and the Chinese are beginning to do this better than we do.”

Jan Palmowski, secretary general of the Guild of European Research Intensive Universities, shares the concerns that universities and academics could be shut out of the EU’s innovation push. There has been a “groundswell of support for innovation, which must not be at the expense of basic research”, he said.

This is evident in the UK as well as in Brussels, where the government has promised an extra £2 billion a year for innovation by 2020-21, some of which will be funnelled through an Industrial Strategy Challenge Fund. It’s not yet completely clear how it will be spent, but the general idea is to set business-led challenges for researchers to solve – a rather different model from curiosity-driven science.

“A lot of basic research will lead to innovation of all kinds, but that won’t always be in the next five years,” said Professor Palmowski, and so spending is difficult to justify to policymakers with an eye on the short term.

There is also a “real danger” that the sector has become too utilitarian in its arguments for research money, making it vulnerable if scientific excellence fails to translate into the kinds of bleeding-edge companies that the European Commission desires, he thinks.

So what will the EIC look like, and how can universities and academics be involved? According to LAB-FAB-APP, it should be a “permanent, high-level strategic body” that can “invest in entrepreneurs and businesses, irrespective of size, sector or maturity, with risky innovations that have rapid scale-up potential”.

Leru, however, is against the EIC investing money itself as a kind of substitute venture capitalist, and instead it wants it to stick to an advisory role. Europe needs to improve already existing funding tools, not go about “creating new layers and funding streams”, said Ms López de San Román. Part of this opposition is also about protecting money for university research, she said, in case an expanding EIC starts encroaching into money set aside for existing organisations such as the European Research Council (ERC).

However, it’s “not all doom and gloom”, said Professor Palmowski, as the report made it clear that there is still very strong support for the ERC in Brussels. The hope is rather that the EIC becomes as successful at encouraging new companies and innovation as the ERC has been at stimulating top research.

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The EIC pilot, which will run from 2018 to 2020, will involve venture capitalists and other business figures to help decide which innovators to fund. Ms López de San Román wants assurances that academics will be involved too. “They are very much in touch with the industrial world,” she said.

Another way that researchers could end up as part of the EIC vision is through business secondments. Luke Georghiou, vice-president for research and innovation at the University of Manchester, and an adviser to a recent EU report on public innovation spending, has argued that many companies are stuck using “off-the-shelf technologies” because they are locked out of new knowledge.

“So, what you might do is have a scheme that subsidises a doctoral researcher to go and work on a company problem. You create a job for them, but you also give that company the capability not only of what that person is doing for them, but all the networks that they bring with them,” he suggested to Horizon, the EU’s research and innovation magazine.

Mr Smits has suggested that the EIC could model itself on Israel, which has gained a reputation as a high-tech start-up hub. There, about $500 million (£384 million) annually is invested by the Israel Innovation Authority, which helps support “risky” new businesses that the private sector might not otherwise touch, explained Nili Shalev, who leads the Israel-Europe Research and Development Directorate.

The good news for academics is that universities are seen as a key part of the innovation system that Israel has fostered, she said. The authority funds joint projects between researchers and companies to develop new products; at least some academics help decide which companies get funding; and a sizeable chunk of the country’s start-ups are founded by graduates of the Technion Israel Institute of Technology.

“There are many successful researchers who become entrepreneurs,” Ms Shalev said. Mobileye, a maker of technology useful for self-driving cars, was co-founded by a professor of computer science at the Hebrew University of Jerusalem. It was bought for more than $15 billion by Intel earlier this year.

Yet this shift towards high-tech innovation has subtly changed Israeli values, Ms Shalev thinks. “You don’t need to be a Nobel prizewinner…being a successful entrepreneur is the pinnacle of success in Israel,” she said.

But for Europe to replicate Israel’s success, it will have to overcome several challenges. Israel’s companies, research centres and funders have such excellent links precisely because it is such a small country, said Ms Shalev. Meanwhile, Europe, despite decades of economic integration, is still a far more heterogeneous market than the US, making it difficult for companies to scale up continent wide, said Professor Palmowski.

And Israel started its push towards a high-tech, start-up friendly country all the way back in the early 1990s, Ms Shalev added – suggesting that Europe, at least as a whole, may have a long way to go.

david.matthews@timeshighereducation.com