In April, Ilaria Tagliavini, Head of Operations at the European Institute of Innovation and Technology (EIT), Marta Kacsmarek, Director of the EIT Community Strategic Regional Innovations Cluster, and Anton Adamovitch, Managing Partner and Ecosystem Architect at Commercialization Reactor (an EIT Deep Tech Talent Initiative Pledger) participated at the “Deep Tech: Europe’s New Wave of Innovation” conference in Brussels. The conference was organised by Science Business Network in partnership with Tallinn University of Technology, University of Tartu, Estonian Research Council, and the Estonian Business and Innovation Agency.
The conference discussed three fundamental questions that remain following the adoption, of the EU’s New European Innovation Agenda in July 2022, namely:
- How to design a Europe-wide ecosystem that fosters and scales deep tech companies?
- Are markets ready for deep tech solutions, especially in Central and Eastern Europe?
- What role will universities play in driving the deep tech innovation agenda forward?
Building effective, dynamic ecosystems
Featured Guest: Anton Adamovitch
The panellists at this session, which included Anton from our Pledger Commercialization Reactor, discussed that while Europe has many of the key ingredients in place to be a deep tech leader, it needs to improve in two areas: depth of expertise and investment risk.
In terms of investment, deep tech is both high risk, due to market uncertainty, and high reward, with innovation breakthroughs. But greater clarity and simplification around commercialisation pathways would help attract more entrepreneurs and investors to deep tech domains. Two gaps around funding were identified:
- The need to increase investment ticket sizes, because Europe struggles to fund successful companies in the 50-to-500-million-euro range.
- The European Innovation Council (EIC) generally funds target close-to-market technologies, which has led to a funding gap for companies working on products below Technology-Readiness Level 6. One suggestion to help close this gap was to use a blend of private and public funding with incentives such as reimbursements for R&D and venture capital to help de-risk these investments.
However, deep tech is not just about the technologies; equally as important are the people, mindset and culture, and the panel discussed the need to improve communication around the opportunities available, along with the importance of introducing policies to streamline talent development and rethink training frameworks that equip deep tech entrepreneurs with the skills for success.
Universities and industry also have crucial roles to play in the deep tech ecosystem.
- Universities provide an environment where deep tech talents can develop their science up to Technology Readiness Level (TRL) 4, along with access to a network of technology specialists and experienced entrepreneurs who can guide others on their development pathway.
- Industry involvement can help entrepreneurs build a business case and leverage their market entry expertise.
Europe needs to find ways to engage and encourage larger companies in deep tech ventures, especially in terms of investment to enable up-front proof of concept and viability of ideas.
Central and eastern Europe and the market development challenge
Featured Guest: Marta Kacsmarek
The EU is a great place to live and conduct business, but for Europe to become more competitive, a deeper capital market union would solve a lot of issues. To overcome the hurdles for early-stage deep tech innovations to secure private investment, the European Investment Bank (EIB) created a department dedicated to venture debt, its highest risk lending facility to address tech areas that many traditional investors avoid. Over the last nine years, this department has evolved into three distinct start-up financing units for clean tech, life sciences, and deep tech and digital technologies, to reflect new market realities, and the EIB has seen the portfolio grow to a value of 7 billion euros, with 2 billion dedicated to deep tech.
However, in central and eastern Europe, when it comes to deep tech market development there are two main issues:
- Lack of knowledge about funding instruments which results in fewer applicants and recipients
- Obtaining funding for start-ups to transition into the scale-up phase so they can compete on a pan-European, or global stage.
These smaller countries with real ambition have no choice but to target larger markets, and while those who actively seek EU funding are visible, there are many success stories that remain invisible.
The EIT Jumpstarter is a pre-accelerator programme with the strategic aim of creating a sustainable impact and by boosting innovation and entrepreneurship in the Central-Eastern and Southern-European Regions. To date it has helped build over 100 start-ups and attracted over 60 million euros in external investments.
Deep tech and the role of universities
Featured Guest: Ilaria Tagliavini
Universities will play a vital role in providing education that connects both entrepreneurial and technological aspects of deep tech. And this should be seen as part of a wider strategy of innovation capacity building not an isolated activity, because although deep tech’s potential is generally acknowledged, there’s still a lot of work to do to move it into the mainstream.
There are steep learning curves around development and commercialisations pathways, and universities need to build up a pool of experts, partners, and serial investors with a blend of scientific and commercial know-how to identify the best development pathways
Deep tech also implies re-thinking industry engagement models, so universities need to work with companies and SMEs to develop long-term roadmaps, including valorisation targets, to build robust innovation pipelines
Universities may also need to engage directly with governments to secure relevant infrastructure and large-scale testing facilities
University tech transfer offices (TTOs) also have a key part to play in funnelling innovation and connecting relevant partners to work on business cases, commercial applications and legal issues. By adopting a start-up friendly model (low royalties, low equity stakes), and giving access to early-stage VC investors before start-up company formation can also help increase the chances of success.
Policy makers should prioritise the development of an effective ecosystem of deep tech knowledge sharing and matchmaking across Europe to strengthen the pool of experts and successful deep tech entrepreneurs.
Given the complexities and nuances of deep tech applications in different sectors, customised skills and learning programmes are required to skill, reskill, and upskill the incoming and current workforce to understand deep tech’s potential and its applications. Future programmes will need close alignment with industry and market needs. The EIT Deep Tech Talent Initiative and Higher Education Initiative (HEI) both offer scalable models that could easily be adopted.
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