Directly related to this website are the events we hold in Hungary, Czechia and Slovakia to help local business people get connected to FP6 funding programs. Last night I held such an event here in Budapest, for an audience of about 40 people - a mixture of MBA students, entrepreneurs and business people. FP6 is the EU’s program to fund tech R&D.
One strong impression from last night: there’s a vast disconnect between the murky, bureaucratic logic of FP6 and how people actually do business. It takes ages to explain these procedures to intelligent people!
Another key take away: 220 Hungarian businesses have received funding so far under FP6, to a total of EUR 40 million. That’s an average grant of EUR 200K per company. (In a country where seed funding is hard to come by.)
The figures above came from Vilmos Bognar, the National Contact Point for FP6 IST. Vilmos is a spokeman, representing FP6 to Hungarian companies working in Information Society Technologies (IST) - generally meaning Internet and IT.
Vilmos held the first presentation, which was meant to be an overview of the FP6 funding process. Unfortunately, we had technical problems and couldn’t get his slides to work - I give credit to Vilmos for braving it through without the visual aids. The fact is, however, he snowed the audience with EU jargon and I could see from the faces they were having a hard time following him.
Our second speaker was Eva Feuer from the Ideal-IST project. Fortunately, we got her slides to work. Ideal-IST is a project that connects companies to other companies in order to form funding consortia. You can search the database for companies offering particular skills in various countries. You can list your company in order to join a consortium. Eva says the success rate is high.
The logic behind all this is that you need to apply for an FP6 project as a consortium of at least three companies from different countries. This is all part of the FP6 mission to create a ‘European Research Area’ - where companies collaborate across borders. It’s also part of the EU’s social and cultural mission of further integrating Europe.
Another angle is that if you apply for the first time, you have a better chance of success in partnership with companies that already have a track record. (Please refer to the Ideal-IST website for details on how to take part in the program.)
Our last speaker was a breath of fresh air. Dr Richard Schwab has successfully taken part in half a dozen FP6 projects as well as a number of Hungarian grants (through the NTKH.) He works with local medical universities to locate technologies suitable to commercialization, then obtains funding to further develop these technologies. Richard stood up to share some of his experiences and offer tips.
Richard’s honest advice was that entrepreneurial companies should start by seeking angel investment or venture capital to develop their technologies. The FP6 process is slow, complicated and bureaucratic. The goal is not only to develop new technologies but to further the social and cultural aims of the European Union (as I described above). The criteria for application are bureaucratic rather than commercial, as are the criteria for successful completion of a project.
Having said all that, Richard advised companies seeking FP6 funding to look for partnerships with local universities that may actually need further partners to build consortia. Richard’s bottom line: don’t invest too much time in applying. Don’t let the PF6 process distract you from your commercial goals of developing and commercializing your technology.
(Richard may want to correct me, or add what I’ve said in the comments.)
All this is a Catch-22, isn’t it? Already 220 Hungarian companies have received an average of EUR 200K through FP6. And although FP6 is finishing this year, FP7 is starting soon. The opportunity is there, and can’t be ignored.
This kind of money is compelling to ambitious little businesses - the kind of businesses that actually innovate. And yet the Commission is having a hard time getting these kinds of businesses to apply. I know there’s pressure on the Commission to reform and simplify this process, and I’d like to hear more.
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Steve - you make many important points here, but two stand out: the difficulty of large, unwieldly organisations trying to “orchestrate” entrepreneurial activity and the matter of jargon.
The difficulty of making funding a ‘carrot’ to push people into creating collaborations etc is that it polarises the interest. You can either be very small, lean and active (ie startups or pre-startups, where a couple of thousand pounds is enough to fund the entrepreneur’s own salary for a while) or a large organisation structured to deal with the admin, bureacracy, planning, recording, reporting, analysis etc involved. These tend to be enterprise agencies, universities or big companies - the common characteristic being an infrastructure to leverage, experience in funding success and (subjectively) often a base in existing public funding.
This is why we don’t see too many SMEs going for the funding streams. Once your business is in a revenue stage and mildly profitable, then the effort to sell an incremental good or service is less than the effort to apply for a grant!
The jargon point is well made, but sadly not confined to this sector. It’s endemic that wherever there’re people paid to dispense public money they need to count not only the number of angels on a pin-head, but whether those angels have “added value” to the pin, the pin-holder and the community of pins, but also the gender, background and skill-level of those angels!
While it’s easy to mock (and easier to be frustrated) this detail is a result of a) the need to protect and account for the value of spending public money and b) to ensure that the grant administrators are kept occupied and look to be ’specialist’ administrators!
Ultimately, any grant funding is a market intervention and there are consequences of this: you need balances, dampening and feedback. That said, SMEs are most interested in the reduction of red tape, market liquidity and a genuine reduction of barriers to entry (eg restraints on monopolistic behaviour). True market access is preferable to the creation of exquisite step-ladders, access devices etc which just add complexity.
Given where we are, though, it’s worth at least being pleased for the companies who do manage to extract funding, even if we may lament the overhead:effect ratio and the painfulness of the process.
Dear Steve,
I read you post with great interest.
As I said before in my post entitled “Are current European mechanisms adapted to SMEs?”, SMEs’ positioning is complex for several reasons: (1) they should join existing partnerships or, as you are saying, partnerships with companies that already have a track record; (2) EU guidelines are quite bureaucratic; (3) payment procedures can be an issue for SMEs.
Having said that, my opinion is that (close to what Richard Schwab says above) FP6 projects should not be the main focus of SME’s innovation policy but that they should come as opportunities to further develop products and processes in addition to their usual business. Therefore, FP projects are more likely to fit in the business cycle of SMEs that already innovate, with the support of other financial sources (their own, private money, etc.). If EU money can be an additional leverage and enable SMEs to connect with universities, research centres, etc., it should not be seen as a financial basket guaranteeing their development.