Debate: Implementation report on the European Innovation Council
Date: MONDAY, 21 NOVEMBER 2022
Speaker: Christian Ehler
Country: Spain
Language: EN

A one-stop agency where innovators could ask for support through grants as well as equity. The EIC had a great start during its pilot under Horizon 2020. It was a popular instrument with a growing reputation in the venture capital market and I am talking not about a small instrument, it is the biggest public instrument in Europe in the venture capital market for deep technology.  That is how it was supposed to continue on the rise in Europe as well but it ran into a wall of a settled bureaucracy inside the European Commission because this new approach to support innovators was pushing the boundaries of the budget implementation as traditionally done by DG BUDG. This fight or fear about loss of reputation led to a yearlong or more than yearlong fight between three DGs. Personally, I don’t think it reached even the political level, but it blocked the biggest innovation programme for more than a thousand start-up deep-tech companies – we selected more than hundreds – which had been waiting more than a year for the money which had been dedicated to them originally.  And so the programme is no longer a question of the reputational risk. Who is going to manage that? The Commission itself, the EIB, not known as a racing horse in the capital market if I may say. The question is no longer about reputational risk, it is about reputational damage for the Union. It had been blocked. We lost the confidence of start-ups in Europe that we would have that interesting instrument, that challenges-addressing instrument.  We need, and Parliament needed, to step in through that. The whole thing is a disgrace. In the public sector, someone would have to resign. If your proceeding of a billion budget and you’re not able to allocate that budget in the private sector, you would have to resign. We needed, as a Parliament, to publicly call out the problems created by the Commission.  We needed to publicly set out a positive agenda for the EIC and we did; through great collaboration between all political groups, we quickly developed a shared vision of the future of the EIC as co-legislator. We delivered a list of recommendations for the Commission that would restore the transformative nature and ambition of the EIC. A key recommendation is that the implementation of both the equity and the grant components are under full control of the Commission. This ensures that our start-ups really experience EIC as a one-stop shop. It also ensures that investment decisions are informed by the strategic interest by the Union. To deliver on strategic interests of the Union, the EIC also needs to be able to be an investor on its own. It needs to be able to be a sole investor, to take the lead in an investment around and to take a major share in a company. It is the only way we can fix the market failure of the European VC capital market where we don’t have the needed investment in deep-tech technology. And the EIC needs to deliver investment decisions in line with industry standards.  Deep-tech start-ups cannot wait months and months for European institutional machinery and we need the money now for the sector. We also made some recommendations to address some challenges in this programme. Europe has a major issue with the underrepresentation of women in this sector. This is costing us billions of euros each year and the rise of it deprives us of great innovations that could have been done. We still have an innovation divide on our continent. This is reflected in the low participation in successful start-ups from some European regions.  To sum it up, we appeal to the Commission now to act. This is one of the valuable instruments that is needed for us to reach the 2030 goals because we need innovation, we need creative start-ups. So I appeal to the Commission to come to terms and let this common undertaking run.