Europe’s €10 billion bet on deep tech: insights from Michiel Scheffer

During the summer vacations, including today, thebrokernews podcasts are also on vacation. In their place, we are showing interesting video interviews and podcasts from our partner, The INGAGE Institute. Today with Michiel Scheffer.

In the global race for technological leadership, Europe faces the challenge of maintaining its industrial and innovative strength against China and the USA. Michiel Scheffer, President of the European Innovation Council (EIC), explains Europe’s €10 billion plan to promote deep tech and the strategies for remaining competitive in the age of artificial intelligence.

The EIC aims to use Europe’s strength in research to create market-leading companies. The focus is on deep tech, innovations with a long development cycle and high risk, such as AI chips, medical imaging or new energy storage systems.

What is deep tech?

• Based on fundamental scientific advances
• Development times from 3-10 years
• Examples: AI chips, medical imaging, battery technologies

Financing and scaling

The EIC manages 10 billion euros (2019-2027) for grants and equity investments in over 250 companies. It cooperates with national banks and will also award larger financing rounds (up to 30 million euros) in the future.

Application process

The process is comparable to private venture capital: short video pitches, presentations and detailed business plans. Around half of the applications are submitted without an advisor.

Europe’s innovation landscape

Innovation is spread across Europe: from Paris to Copenhagen. The region southwest of Paris is the largest European innovation cluster, but only accounts for 6% of the EIC portfolio.

The Unicorn Challenge

Europe has fewer unicorns than the USA and China. The EIC sees 10-15 potential Unicorns in its portfolio, but is struggling with a lack of large financing rounds. “Golden shares” should hold patents in Europe.

Attracting institutional capital

Two strategies: strengthen a network of existing investors and attract institutional investors such as pension funds to better finance European innovation.

Regulation: a burden or an advantage?

Strict European regulation protects civil rights and is particularly important for medical AI. It only affects a few companies and can serve as a competitive advantage.

AI and productivity

AI is replacing many mid-level office jobs, but above all it is increasing productivity, especially in the healthcare sector, which is under pressure from the ageing population.

Social and ecological challenges

Europe must accelerate decarbonization and sustainable use of resources. Political support and public debate are crucial.

Key performance indicators (KPIs)

• Leverage ratio: 4.1 – every euro attracts over four euros of private capital
• Patent activity: Above average for funded companies
• Jobs: Around 40,000 created by EIC companies

Outlook

Scheffer wants to use the EIC to create a sustainable foundation for innovation and establish new financing models in order to channel more private capital into industrial innovation.

Europe’s deep tech initiative is a bold move to turn research into economic and social success. Success depends on collaboration, smart regulation and capital mobilization.

Binci Heeb

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