The growing importance of the Open Innovations Network has impacted the work of the European Union Commission in several ways. The Commission recognizes the need of creating a strong and healthy innovation ecosystem to advance open innovation to the benefit of society, economics, and individuals. Therefore, it has created an agenda based on three main pillars.
Pillar 1: Reforming the Regulatory Environment
The first pillar of the EU Commission’s plan to foster open innovation is reforming the EU regulatory environment. This is a challenging process because legislative reforms take a lot of time, whereas technologies evolve by the day.
However, improving the EU’s current regulatory framework will have a tremendously positive impact on advancing the Open Innovations Network. The reason is that unencumbered legislations attract investors like magnets. After all, businesses, especially highly dynamic ones, do not want to become captives of slow bureaucratic procedures and unnecessary paperwork.
If you are unfamiliar with the Open Innovations concept, here is a quick guide:
The Commission has adopted the stance that regulations should support open innovation as much as possible. The way to go, it states, is to identify how the current EU legislation affects the innovation ecosystem and resolve the issues that might impede its evolution. To achieve this goal, the Commission uses four tools: The Scientific Advice Mechanism, InnovRefit, Innovation Deals, and the Policy Support Facility. Let us take a closer look at each one:
The Scientific Advice Mechanism
As we noted, technology is fast to develop while regulations are slow to change. Therefore, the Commission has created the so-called Scientific Advice Mechanism (SAM). Its goal is to provide sound and non-biased scientific advice to advance legislative changes. SAM complements the work of the Joint Research Center and bridges science and policy-making.
SAM is operated by the High Level Group consisting of seven scientific advisors. It brings independent scientific evidence through a structured relationship with scientific research bodies within the EU member states and beyond. Throughout this process, SAM ensures transparency and observes the specifics of EU policymaking.
InnovRefit
The InnovRefit initiative was born after the EU concluded that it lagged behind global competitors in terms of private investments in Research and Development activities. InnovRefit aims to introduce improvements in the regulatory framework that will allow investors to take greater advantage of the Single Market’s benefits. In turn, this would incentivize them to invest more.
Innovation Deals
The Innovation Deals initiative allows innovators to question EU regulations they find obstructing innovations with significant socio-economic or environmental impact. This step has come as a result of the realization that the Union’s legislative framework may be outdated and too slow to address major acts of innovation.
Innovation Deals are specifically intended for innovators who are new to the EU market and have limited or no access to it. It is important to note this tool should not intervene aggressively with existing EU regulations. Rather, its goal is to identify possible “grey areas” and help the EU address them.
In essence, Innovation Deals are voluntary partnerships between innovators and different authorities on the local, regional, and national levels. Ideally, such forms of cooperation should create dialogue and agreement on how a certain innovation can be introduced without breaching the existing EU legislation.
Horizon 2020 Policy Support Facility
Creating stronger and more sustainable links between science and businesses is vital for the evolution of the Open Source Innovation Network. That is why the EU established the Horizon 2020 Policy Support Facility (PSF) in March 2015. Its goal is to provide practical support in creating, introducing, and evaluating policy reforms that will stimulate investment in research and innovation.
The Horizon 2020 PSF delivers a wide range of demand-driven services on the national level, such as:
- Evaluation of national research and innovation systems
- Peer reviews
- Support in reform introduction
- Mutual learning projects
- Knowledge Centre for transfer of know-how
Pillar 2: Boosting Private Investment in Research and Innovation
The goal of the EU Commission’s Pillar 2 is to establish improved conditions and a strong ecosystem to motivate private investment in advancing the Open Innovation Network. More precisely, it facilitates access to financial support for innovative ideas. In addition, it fosters the relationships between private investors and helps them utilize the benefits of the Single Market. It does so by using two major tools described below.
The European Venture Capital Fund of Funds
It may come as a surprise to some, but the EU has been facing significant challenges in expanding Ventura Capital (VC) investments in the Open Innovation Network. The reason is that VC in the EU strongly depends on funding from public sources. Close to one-third of VC fundraising in Europe comes precisely from the public sector.
Several complications arise from this fact. One is that the EU VC funds are not big enough to accept large-scale investments. The other is that the return on VC investments is too small. The negative effects are obvious:
VC is essential in helping startup and innovation businesses develop. This is especially important for companies in the spheres of life sciences, ICT, and clean tech. When supported with VC, such businesses develop innovations more effectively, become more competitive than their peers outside the EU, and generate patents and other forms of intellectual property.
The establishment of the pan-European VC Fund-of-Funds (FoF) is aimed to address these challenges. Among others, its goals include stimulating large VC investments and bringing better returns.
Maximizing the use of the European Fund for Strategic Investments (EFSI)
Experts have identified a broad investment gap in the EU. One of the Commission’s tools to close this gap is the EFSI. The Fund works to secure private funding for big infrastructure and innovation projects and manage finance for small businesses.