Innovation in Europe: an update on Horizon 2020

With the first calls for proposals due to be published in December, the wheels are soon to begin turning on Horizon 2020 – the EU framework programme for research and innovation 2014-2020, and successor to FP7.

Priorities for Horizon 2020 include raising the level of excellence in Europe’s science base as a platform for innovation, and fostering industrial leadership to speed up the deployment of technology to tackle societal challenges in health, the environment, energy and transport.

Whether Europe achieves these goals will depend on the translation of scientific breakthroughs into products and services, and the support that Horizon 2020 can provide to the innovation community.

For an update, TMR+ tuned in to “From Lab to Market: Horizon 2020 – and how the EU can advance innovation”, a panel discussion held this week at the European Parliament in Brussels and broadcast via the website –

The event featured MEPs closely involved with the drafting of Horizon 2020 –

Maria Da Graça Carvalho (Portugal)
Christian Ehler (Germany)
James Elles (UK)

And also gave Hermann Hauser, a serial entrepreneur based in Cambridge, UK, and co-founder of VC firm – Amadeus Capital Partners, the opportunity to speak out on what it takes to commercialize university research.

So what did they have to say? What are the positives?
“If I have to choose one, I would choose simplification,” commented Da Graça Carvalho. “This is a good thing for SMEs and for newcomers [to the programme].”

And with simplification, hopefully comes speed.

“In practical terms, [Horizon 2020] will be faster, it will be more appealing to applicants who want to get something on the market, it will be more appealing for entrepreneurs,” added Ehler, “And I think that is a substantial change coming from FP5, FP6, FP7.”

Here, Ehler draws attention to a pilot scheme dubbed “Fast track to innovation”, which has been drafted to increase the participation of industry, SMEs and first-time applicants in Horizon 2020.

Focusing on innovation is however a big commitment, as Da Graça Carvalho highlights: “When you add innovation you are adding a lot of ambitions, because if you have the whole cycle of innovation in areas like transport or energy, it means that you are going from the fundamental research and technological involvement to full scale demonstration and early entrance to the market, which in areas such as carbon capture storage, offshore wind, transport, or aeronautics are huge projects that require a huge amount of money – if you really mean innovation in the full sense.”

And given these facts, the question remains what impact cuts in the Horizon 2020 budget, which were required to secure agreement between member states, will have on its effectiveness.

Ehler is frustrated that Europe has dropped its commitment to a 3% spend on R&D. “It is a question of whether we can be on an eye-to-eye level with the US and with our partners in Asia, by sticking to 2%,” he remarked.

The reality is that the Horizon 2020 budget was hammered out during a tough financial climate, but one of the positives from the back-and-forth negotiations has been the addition of a mid-term evalution (to take place no later than end 2017), which, if economic conditions permit, could allow Europe to reverse some of the cutbacks.

“Hopefully things will look a bit better in two to three years’ time and then we can provide urgent input into areas like innovation,” commented Elles.

Although as he points out, there is a political angle to factor in. Topping up areas such as innovation will depends on the campaigns which open out into European elections next year, and whether lead candidates take this on as a major priority.

Looking at the broader framework, there is also some hope that within Horizon 2020, projects will have the option to bridge with Europe’s regional funds – something that could benefit the construction of demonstration plants for wind energy or carbon capture, for example, following up on Da Graça Carvalho’s earlier comments.

Everything has to be “innovation friendly.”
But the responsibility for success goes beyond the Horizon 2020 programme, as she explained in the broadcast: “It is not enough to fund innovation to have innovation – you have to have a very efficient and well-funded research projects, you need to have an efficient and well-funded education system, and you have to have framework conditions that need to be in place.” Here, Da Graça Carvalho refers to the macroeconomic conditions, competition, intellectual property and immigration laws – activities that also have to be considered on a national level. In a nutshell, everything has to be “innovation friendly.”

Hauser picks up on this with three reforms that he feels have been “hugely beneficial” to innovation in the UK –

i) R&D tax credits.
ii) Prudent man legislation, which in effect allows pension funds to invest a portion of their money in risky, but potentially high-return, investments.
iii) A change in the way options are taxed, for high-tech companies.

Hauser has been a longtime advisor to the British Government on ways of boosting innovation, and played a key role in the creation of the UK’s seven catapult centres, which target areas such as high-value manufacturing, transport systems, offshore renewable energy and satellite applications.

“It’s not a matter of filling in holes, it’s a matter of building on mountains,” he told the audience. Hauser’s point being that if you don’t have a world leading position then it makes it incredibly difficult to compete on a global scale, and innovation has very much become a global game.

As well as pooling expertise, the catapults also address another factor – time frame. Translating technology from research labs into industry can take a long time, particularly in areas such energy and materials, and once you move beyond a 10 year time horizon (the time frame of most venture capital) the challenge to secure capital ramps up.

“There are really only two sources of funding [in this case] and that’s either the government or very large companies that take a long term view,” he said, emphasizing the 10 year plus commitment of the catapult project.

The race is on
As well as advising the government, Hauser is also working with the Royal Society, again looking at the translation of science into industry. “It is clear that this has become a race,” he told attendees. “When there is a new scientific breakthrough, when there is a new invention, a new idea that appears – it normally appears in a number of different areas in the world.”

The winner, in Hauser’s opinion, will be the one that can organize its affairs most efficiently, which brings the discussion to the topic of world-class management expertise. “If you look at small European high technology companies, attracting international management talent is a very important part of the puzzle,” he said.

Hauser points out that it took Silicon Valley 20 years to learn the management skills, often through lots of failures, that has made it the success it is today. Europe has now had that 20 year schooling and so is primed to create the next wave of great technology companies.

He expands on this, touching on the way to get IP out of universities, by explaining that you need to create teams that understand the technology, but then have the management capability to translate it to a successful business.

Further reading on the web –

Draft work programmes for 2014-2015 (European Commission)

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