1. Green Paper Towards a Common Strategic Framework for EU Research and Innovation Funding & Specific focus on EU financial instruments
Jean-David MALO
DG Research and Innovation – Head of Unit C-03 “Financial Engineering”
“Sophia Café” – Sophia-Antipolis, France, Monday 8 March 2011

2. What is the Green Paper?
Proposing major changes to future EU research and innovation funding
Bringing together the FP, CIP and EIT into a Common Strategic Framework
Standardising the rules
Simplification (single entry points, common IT platforms, etc)
For the next EU Budget (to start in 2014)
Seeking stakeholder views ahead of the Commission’s formal proposals (to be presented by end 2011)
On the proposed changes
On the priorities and design of the Common Strategic Framework

3. The context: Europe 2020 strategy
Objectives of smart, sustainable and inclusive growth
Headline targets, including 3% of GDP invested in R&D
Includes the Innovation Union Flagship initiative
A strategic and integrated approach to research and innovation (from research to market, all forms of innovation)
Putting in place the key conditions to make Europe attractive for research and innovation
Common focus to address major societal challenges and aiming at competitiveness and jobs
Endorsed by February European Council (Heads of State)

4. Innovation gap with US and Japan, emerging countries catching upEU
Percentage gaps between EU performance (0) and other countries across 12 indicators. Other counties, such as India and Brazil, are developing fast.
Source: Innovation Union Scoreboard

5. EU R&D investment is lagging behind our main competitors
Evolution of World R&D expenditure in real terms, PPS€ at 2000 prices and exchange rates,

6. The rationale for a Common Strategic Framework

7. Positive benefits from FP7 (interim evaluation and other sources)
Enables cross-border pooling of resources to achieve critical mass and diffusion of knowledge
Promotes competition in research, thereby raising levels of excellence
Offers a wide range of training possibilities and enhances Europe’s research capacity
Provides a way to deal with pan-European policy challenges and link to EU market frameworks
Raises the international attractiveness of EU research and innovation

8. But concerns about FP7 and other programmes (interim evaluations and other sources)
Complexity - too many instruments and funding mechanisms, complex landscape
Further simplification- less variation in rules, simpler audits and controls, avoid duplicate information
Better strategy for innovation – how to commercialise results, generate impacts
Need to focus resources – with critical mass to address the grand challenges
Broaden participation – new Member States, women
Clearer agendas - driven by scientific, industrial, social objectives

9. Scope of the Common Strategic Framework
Bringing together
The 7th Framework Programme for research, technology development and demonstration
The Competitiveness and Innovation Framework Programme
The European Institute for Innovation and Technology
And strengthening complementarities with the Structural Funds

10. Why a Common Strategic Framework (1)?
Simplifying the programmes:
FROM different rules in each programme and initiative
TO more standardised rules across all initiatives
FROM a large number of funding schemes within and between programmes
TO a rationalised toolkit of schemes that are common to all programmes
FROM multiple websites, guidance documents, applications
TO common entry points, one stop shops, common IT platforms

11. Why a Common Strategic Framework (2)?
Greater impact:
FROM fragmented calls where projects cannot go from one stage to the next (R&D, demonstration, market take up, etc)
TO support for projects and organisations from research to market
FROM research results sitting on the shelf
TO stronger support across the whole innovation cycle
FROM different priorities in each programme and initiative
TO common strategic priorities, focusing on societal challenges, competitiveness and research excellence.

12. Summary of questions in the Green Paper

13. Delivering on Europe 2020
How can a Common Strategic Framework make EU funding more attractive and easy to access?
How to cover the full innovation cycle: research to market?
Where to act at EU level (and leverage other resources)?
How to support joint programming between Member States?
What between large vs small projects?
What balance between standardisation vs flexibility in the rules?
What measures of success?
How to complement national, regional and Cohesion Policy funding?

14. Tackling societal challenges
How to focus on societal challenges?
What scope for bottom up activities?
What support for policy making and forward- looking activities?
Role of the Joint Research Centre?
How to involve citizens?

15. Strengthening competitiveness
How to take account of non-technological innovation?
How to strengthen industry participation, including public private partnerships?
What support for SMEs?
Use of open schemes to support innovation?
Use of financial instruments (equity, debt)?
New types of support (public procurement, prizes)?
Treatment of Intellectual Property Rights?

16. Strengthening the science base and the European Research Area
Stronger role for the European Research Council?
EU support to improve Member State policies?
Greater support to mobility and research careers (Marie Curie actions)?
EU level support to research infrastructures?
Priorities for international cooperation?
Addressing obstacles to the European Research Area?

17. A broad debate – next steps
Addressed to all stakeholders:
Key questions for design of the Common Strategic Framework
Deadline for contributions by 20 May 2011:
Online questionnaire
Submission of position papers
Interactive blog
Next steps:
Major event to conclude consultation (10 June 2011)
Commission proposals for next multi-annual financial framework
Commission legislative proposals for the Common Strategic Framework (by end of 2011)

18. European financial instruments for Research and Innovation: Post-2013 priorities and added value of future EU financial instruments

19. Future EU financial instruments for Research and Innovation
Trend at European level to make increasingly use of financial instruments for the next budgetary period (“Multiannual Financial Framework”, MFF)
Advantages of EU financial instruments:
Limited budget resources could be used (co-financing; risk-sharing or guarantees to mobilise private funding (« leverage effect »)
Unless risks/ losses exceed expectations, EU budget resources could be “recycled” and reused for further projects (revolving funds)
Flexibility to better meet the funding needs of target groups/ beneficiaries and address funding gaps in the market (rational for intervention)
European Commission is currently discussing the future political priority areas where European financial instruments could be of added value
Future EU financial instruments and their governance (guiding principles: streamlining, coherence, critical mass, mobilisation of private capital, delegation to Financial Intermediaries) need to be determined

20. Future EU financial instruments for Research and Innovation
“Financial instruments” as currently discussed mean: EU financial support measures from the EU budget in order to address a specific policy objective by way of loans, equity/ quasi-equity, guarantees or other risk-bearing instruments, possible combined with grants
Future EU financial instruments should ideally address more than one policy area (“cross-flagship” approach), for instance Research and Innovation, and they should support particular EU policy objectives such as the SET PLAN (low carbon technologies) and the Digital Agenda (ICT/ Broadband investments)
For Research and Innovation, a first outline of possible future financial instruments has been made in the “Europe 2020 Flagship Initiative Innovation Union” Communication of the EC (6 October 2010)

21. Current EU financial instruments for RDI
Risk Capital 1
CIP Resources (SME) 2
RSFF (SME / MidCap)
Entrepreneur, friends, family
Business Angels
Seed/Early Stage VC Funds
Formal VC Funds
Bank Loans and Guarantees
Seed / Start-Up Phase
Emerging Growth Phase
Development Phase
Facility: High Growth Innovative SME Scheme (GIF), Ecotech
Purpose: IP financing, technology transfer, seed financing, investment readiness
Target Group: VC Funds, Business Angels
EIF Product: Fund-of-Funds
CIP Guarantee schemes
Growth financing for SMEs
Formal VC Funds, CLOs
SME guarantees (loans, microcredit, equity/mezzanine, securitisation
FP7 RSFF
RDI financing
SMEs/MidCaps, Banks, PE Investors (sub-investment grade)
Loans (incl. Mezzanine), Funded Risk Sharing Facilities with Banks (Investors)
Investment Loans
MidCaps/Large Corporates/Public Sector Entities (investment grade)
Loans, Guarantees
Later Stage
Counterparts 3 4
EIF EIB

22. Future EU financial instruments for Research and Innovation
Market/ funding gaps which could/ should be addressed through EU financial instruments for R&I are:
Investment in knowledge transfer and start ups
Venture capital for fast growing firms expanding on EU and global markets
Risk-sharing finance for investments in R&D and innovation projects and loans for innovative fast growing SMEs and mid-caps
Next steps: Consensus on an integrated approach within the Commission, involvement of EU Member States (and EP), consultation of stakeholders

23. Thank you for your attention
Find out more and participate in the debate at: