Support to SMEsEuropean Entrepreneurship AcademyBruxelles, 03.11.2009

Christian SAUBLENS

EURADAFields of Intervention

Dialogue with the Community Authorities

Promotion of common projects Dissemination of information

EURADA

Cooperation with non EU agencies Exchange of experience between members

New Ideas Accelerator

Eurada: History

Creation: December 1991

150 members mainly in EU countries

3 staff members

Budget: ± 450.000 € / year

Members are public or semi-public organizations under private law, but having public missions and strong links with regional authorities. The public missions are in the field of regional strategy and services support to enterprises.

Eurada: Main areas of activities

EURADA current work programmes focus on:

Entrepreneurship

Enterprise support services (added value ones)

Regional strategy (innovation, clusters, RDT, enterprise, access to finance)

Role of higher education institutions in regional development

Regional competitiveness and attractiveness

Access to finance (“All money is not the same”, “Investment readiness”)

Models of regional value chain

Doing economic development in crisis time (next meeting: 18-19 June, Round Table of Practitioners in Economic Development).

Financial instruments 2007-2013

Cohesion Fund and Structural FundsCohesion Fund and Structural Funds

CIPCIP

TENsTENs

LIFE+LIFE+

7th framework programme

7th framework programme

Life Long Learning

Life Long Learning

State aidsState aids Environment

EnvironmentICTICT

CultureCulture

EIB-EIFEIB-EIF

Rural Development

Rural Development

EnergyEnergy

External RelationsExternal Relations

Synergies among FP7 – ERDF – ESF – CIP

FP7 (opportunity) Regions of knowledgeResearch potential

Transnational collaborative project

Risk Sharing Finance Facility (EIB)

Pre Research

Access to finance:- spin-off- seed capital

Commercialisation of research results:- proof of concept- technology transfer- mentoringNetworkingIntellectual Property RightsTraining

ERDF & ESF(Impulsion)

InfrastructureRegional Platform (cluster)

Training

Regional ResearchProgramme

(enhancing regional capabilities)

CIP (opportunity) Innovation Relay Centre

InnovationEIF (GIF)Entrepreneurship

Post

The Promotion of Innovation in European Regional Policy: a silent (r)evolution

1989 -1993: approximately 4% for innovation (2 billion out of 50) (L. Tsipouri, IPTS Report N° 40, 2004)

o Community initiatives: Science and Technology for Regional Development - STRIDE, TELEMATIQUE, ENVIREG, VALOREN…

1994-1999: approximately 7% for innovation (7,6 billion out of 110) (L. Tsipouri, IPTS Report N° 40, 2004)

o Pilot Projects: RIS, RIS+, RTTs, RISI, RISI2, IRISI, EBN, BICs2000-2006: approximately 11% for innovation out of 195 billion

o “Regions in the new Economy”: PRAIS – Regional Programs of Innovative Actions 400 million

2007-2013: approximately 25% for innovation (86 billion out of 345)o Article 5 of the ERDF: innovation as a priority for the “Competitiveness” objective -

31.000 R&TD projects identified in only 95 ERDF Programs (40% of total budget) (Nordregio 2009)

o Regions for Economic Change

Source: DG Regio

Enterprise

SME

EEEEnterprise

SME

Big Firms

Public SectorNational/Regional

Administration

BusinessConsultants:

Services

Universities

TechnologyCentres

Finance-Banks

Valu

e C

hain

Clu

ster

sM

ento

ring

Sche

mes

...

Inno

vatio

nSu

ppor

t Sch

emes

Busi

ness

Inno

vatio

n

Cent

res

Innovation ManagementTechniquesTechnology AuditsTechnology Foresights

Intermediaries

Clus

ter P

olicy

…

Busi

ness

For

ums

Seed Capitalventure Capital

Business Angels

Technology Transfer

Projects

R&

D Valorisation

Graduate Placement

Schemes

University-Enterprise

Cooperation...

The “Structural Competitiveness” of SMEs based on systemic relations, subject to policy action, within a territorial model

Source: DG Regio

Priority themes in 434 Operational Programs in 271 regions 344.305.598.427Research and technological development (R&TD), innovation and entrepreneurship 50.046.501.271

01 R&TD activities in research centers 5.783.265.65302 R&TD infrastructure and centers of competence in a specific technology 9.899.436.08103 Technology transfer and improvement of cooperation networks (Clusters and Business Networks). 5.577.995.23504 Assistance to R&TD, particularly in SMEs (including access to R&TD services in research centres) 5.573.990.43705 Advanced support services for firms and groups of firms 5.150.882.219

06 Assistance to SMEs for the promotion of environmentally-friendly products and production processes 2.504.554.193

07 Investment in firms directly linked to research and innovation 9.029.635.35009 Other measures to stimulate research and innovation and entrepreneurship in SMEs 6.526.742.103

Information society 13.028.213.08511 Information and communication technologies 3.597.833.22112 Information and communication technologies (TEN-ICT) 523.787.206

13 Services and applications for citizens (e-health, e-government, e-learning, e-inclusion, etc.) 5.225.072.351

14 Services and applications for SMEs (e-commerce, education and training, networking, etc.) 2.144.358.16015 Other measures for improving access to and efficient use of ICT by SMEs 1.537.162.147

Increasing the adaptability of workers and firms, enterprises and entrepreneurs 14.427.929.049

62 Development of life-long learning systems and strategies in firms; training and services for employees ... 9.752.889.678

63 Design and dissemination of innovative and more productive ways of organising work 1.897.998.513

64 Development of special services for employment, training and support in connection with restructuring of sectors ... 2.777.040.858

Improving access to employment and sustainability 3.247.192.561

68 Support for self-employment and business start-up 3.247.192.561Improving human capital 4.926.200.421

74 Developing human potential in the field of research and innovation, in particular through post-graduate studies ... 4.926.200.421

Total for innovation in a broad sense 85.676.036.387

Source: DG Regio

Challenge of economic development

Source: Eurada

“The human creativity is the ultimate economic resource!”

Source : Richard Florida

Universities and high schools become the raw material of economic development as coal mines were the raw material of the industrial age !

The CHALLENGE

How ensuring that the offer of public support services matches with the demand and expectations of

entrepreneurs?

Enterprise hub

Ideas & Money

Research Talent

Market

Capital

IPR

Open innovation

Collaborative ProjectsInfrastructure

Creativity EducationLife longlearning

Technologytransfer Licensing

Proof ofconcept

EquityGrantsProfit reinvesment

Products Technology

Entrepreneurship

Investmentreadiness

Incubators

Clusters

Source: EURADA

Science parks

Publicprocurements

Ways forward

I. Enterprise life cycle

II. Enterprise segmentation

III. Support services value chain

IV. Knowledge intensity in support services

Entreprise Cycle

IdeaPeopleMarket drivenResearch results InnovationEntrepreneur by necessity

Incubation Seed fundingBusiness planProof of conceptEntrepreneurial skills

Incorporation

Start-upEquity1st ClientsHuman Resources

Growth

o Overcoming death valley o Market validationo Equity burning rateo Profitso Quality, design, innovation

Life Style EntrepriseDeath

Maturity

IPR – Research capacity IPO Merger & Acquisition Market development

Problem in Europe

Start-up rate Ok

Incubation performing well

But ...

No growth accelerator

SME Segmentation• newly-developed companies;• spin-outs and spin-offs of large businesses, research centres and

universities;• start-ups (less than five years in existence);• locally-rooted companies (micro-businesses and craft companies);• entrepreneurial growth companies;• innovative businesses and companies leveraging RTD outcomes;• companies in the process of being transferred;• subcontractors;• companies at risk of bankruptcy;• multinationals• social economy driven enterprises

Support Service Value Chain

Knowledge intensity in support services

Market failure: private sector:• Lack of provision of a support service• Asymmetry of information• Geography• Costs• Lack of mature demand for support services• Problem with target audience• Provision of early stage finance

Market failure: public sector:• Driven by offer, not by demand• Dogmatic approach• Fashion versus capability• Bureaucracy, red tapes, …• Lack of flexibility• Lack of investment willingness• Lack of financial engineering

Governance and strategy

Comparison DG Enterprise & Industry public consultation (SEC(2009)1197) and IRE expectations

ENTERPRISES EXPECTATIONS

INTERMEDIARIES EXPECTATIONS

IRE

Acces to finance Address new needs of innovative

Post 2013

Internationalisation Better promotion of innovative SMEs

Role of regions

Networking Specific support for high growth potential enterprises

From incubators to fast growing companies

Intelligence Increase gross added value in the region

Business involvement

Knowledge/technology transfer

Support enterprises in service sectors

Impact of clusters

INNOVATION

ProductProcessBusiness model

• High Tech• Manufacturing• Services• Non-technology• Technology integration

CreativitySolved hereInvented here

start up incubation acceleration

Challenges:

Threats/opportunities:

automatisation outsourcing digitalisation

IDEAS AND INNOVATION

ROUTINE WORK Done by people

ROUTINE WORK Done by machines

CREATIVE WORK Talent

Digitalisation

Outsourcing Automatisation

ResearchDevelopmentDesignMarketing and salesGlobal supply chain managementCustomisationNetworks

Innovation by enterprises

Source: http://www.bayeconfor.org/media/files/pdf/InnovationDrivenEconomicDevelopmentModel-final.pdf

Business function and internationalisation

Business International functions services Research Joint research Access to equipment Establishment (FDI) Innovation Joint development Proof of technological concept Proof of economic concept Licensing and transfer of intellectual property Production Outsourcing Offshoring Subcontracting Establishment (FDI) Marketing Market testing Distribution Economic intelligence Finance Venture Capital Source : EURADA

The paradox of access to finance

• Banks• Venture Capitalists have money • Stock Exchange

But argue that there aren’t enough good projects

What is a good project?

Access to funding

OFFER = availability of funding sourcesDEMAND = quality of business proposals

Offer of Funding

Value chainDue diligence

What are the funding options for an entrepreneur?

« All money is not the same ! »

• Own money

• Family and Friends’ money

• Loans with or without guarantees

• Public grants

• Equity• Business angels

• Seed capital

• Venture capital

• Mezzanine

• IPO on stock exchange

NB: Delay of payments – Advance on payments

Areas for improvement

Source: Sally Goodsell, Finance SouthEast

Resistance test: here we sell cactuses and balloons

Is the human creativity really the ultimate economic resource?

Source : Richard Florida – revised by Christian Saublens

Thank you for your attention !

www.eurada.org – info@eurada.org

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