Interview: EISMEA Director Jean-David Malo takes stock of the EIC's achievements to date, and challenges ahead
Hello, and welcome to the EIC Scaling Club podcast, where we share interesting insights from leading European deep tech entrepreneurs, investors, and industry experts. You've come to the right place. Now sit back and enjoy the podcast. My name is. I'm here at the EIC Summit in Brussels.
Speaker 1:EIC, of course, stands for the European Innovation Council. I'm standing here with Jean David Malo. He's the director of ISMEA, which is the agency that is responsible for European Innovation Council. In a nutshell, Jean David, what is, today's event about?
Speaker 2:Hi, Robin. Thank you for the opportunity of, this interview. This event is, a flagship event for us, which has several purposes. The first one is, to take stock of where we are in the implementation of the Europe Innovation Council, in terms of results, in terms of implementation matters, in terms of challenges ahead, just also to share some success stories with the presence of a number of our beneficiaries, be it, from the, Pathfinder program or the transition of the accelerator. So we have an exhibition, which are there.
Speaker 2:It's also the occasion to, to discuss in policy panels challenge that we have in front of us. For example, the question of sovereignty, the question of scaling up of companies, the issue of the use of innovative public procurement and how to adapt to what we have for the time being in our toolbox. So, it's an important moment mainly for our beneficiaries. I mean, it's clearly, designed, for the benefit of our beneficiaries. We have a number of workshop where we are sharing with them the different services that we are proposing or that our partners are proposing, how also, for some who are interested to join, the IC community, what are the, the, the the assets that they have to develop.
Speaker 2:So I'm thinking in particular of a particular workshop that we have on pitching. So for them to better understand in fact what is behind the European Innovation Council. So it's an event where we have reached this morning more than 1,100 participants. So we are we are very happy for this and it's a moment where on our side, implementers but also policy makers, we are learning a lot. We are exchanging a lot with them in order to continue to improve this program and to, to reach the objectives that have been set to us by the parliament and the council.
Speaker 1:And what are some of the things that, could be improved down the line? You also already mentioned some of the challenges that you have in terms of, like, big picture, but the IC itself is still relatively quite young. So I'm sure there's still growing pains. So what are the things that you think, you can still improve in the short term?
Speaker 2:You're right by saying that it's, let's say it's a new kid on the block in the European innovation ecosystem. I mean we just launched in fact the pilot in 2019. So it's 5 years. So it's very it's very young. But after 5 years, I mean, we are now in the landscape clearly.
Speaker 2:And when you see, for example, the level of participation today of the VC industry, it's it's very, very rewarding if you allow me because at the beginning when we launched the idea, let's say that a number of them were very skeptical. But now when you look at the results that we have achieved with, within investment that we are doing in the context of the IC accelerator thanks to our fund. I mean, we see that indeed we have been able to attract a number of private investors with whom we are now building a real relationship of trust and which allows us as we announce it in the EIC impact report that we have published also yesterday, a leverage effect of 3.5, meaning when we are investing €1, I mean, we have an additional 3 point €5 coming from the other investors which is for a beginning something quite positive. We have the objective set by our board to reach a leverage effect of 5. So it's one of our challenge.
Speaker 2:But we see also and, it was part of the commission proposal, in the in the context of the midterm review of the multi financial framework that we still have in Europe an issue on the later stage. I mean, on the bigger ticket that you need after, round a, round b, and, it was, as you know, one of the proposal of the commissions that finally has not been retained as to to be financed with additional money or reallocation of budget in the agreement with the policy making bodies, but which remain in the agreement. In other words, the step proposal because this is how it is called. We will test it already next year, with bigger tickets, for some of, of the projects that we will support on an equity only approach, opening it not only to EIC beneficiaries but also partially to other other type of applicant. I mean, other type of deep tech startup and SMEs that are not necessarily EIC beneficiaries.
Speaker 2:It will complement, in fact, what we have. So it will be a kind of follow on, support. So this is one of the challenge that we have in front of us. It would be a good testing in view of the next MFF. A 3rd challenge that we are confronted with is, the success of the program.
Speaker 2:In other words, we, are receiving and here, I'm not talking only about the accelerator but I can talk also about the pathfinder, so the advanced research part of the program. We are receiving a lot of excellent proposal. And despite an important budget, we have a budget of more than €1,000,000,000 this year, We are only able to finance around 5% of them under the Accelerator, 7.5% under the Pathfinder. This is, is an issue on which we have to reflect, and, this is a work which is, ongoing. Last one, if you allow me, I don't want to be too long, but last one is, is a question of the geographical spread in Europe.
Speaker 2:Of course, the IC must remain, a program which is driven by excellence and therefore, the objective is clearly for us to select the best of the best. And when you see again in the EIC impact report the fact that we have been able to increase in 1 year the valuation of our global portfolio by €20,000,000,000 moving from €50,000,000,000 to €70,000,000,000 Indeed, it means something in terms of selection selecting the best of the best. I mentioned also the leverage effect we had before. Having said that, what we see is that in a number of countries are which have gems in terms of, deep tech startups, are not as successful as others. And, it should not lead to the conclusion for some countries that this program is not for them.
Speaker 2:So, we are currently reflecting on a number of actions. We have received, of course, some advice from the IC board. I'm sure that you have seen the report that they have published on how to do more for so called widening countries in the EIC, and we are reflecting on a number of specific actions. I mean, some of them are relatively easy but are giving a signal. I mean, you have seen the import the the very important share of widening countries in the renewed EIC board.
Speaker 2:The same in the number of experts that we are using and the various step in the different program where the widening country experts have hugely increased. But we have to do more, so we are reflecting with colleagues of the commission on, specific action in order to stimulate this. Of course, this will not revolutionize, everything. It has to be complemented also by actions taken by these countries themselves building also on the opportunities that exist in the context for example of structural funds and some countries did it. If you see what Estonia did and Estonia has good results under the EIC or what, Bulgaria did more recently and with already some promising results.
Speaker 2:I mean, there is no reason for a change, but it's important to take appropriate action and to treat this, with a lot of rigor and seriousness.
Speaker 1:Yeah. But, it's already good that you know the issues and that you're doing something about it because, obviously, no program is ever perfect. Right? So, you mentioned the the impact results report, that you've put out. I saw a comment this morning on commissioner Ivanova's post on LinkedIn about the results, from an entrepreneur that was justifiably saying, you know, these results about funding and valuations are vanity metrics.
Speaker 1:What about job creation? What about actual revenue? You know, the real tangible results, where are they? What do you say to that?
Speaker 2:The remark is relevant, but, maybe this entrepreneur have not, seen that, we have also reported, about the the key performance indicators because they are key performance indicators that you just mentioned In the report and in the fact sheet that we have published also yesterday, we made clear that for the companies that we are supporting under the EIC, we had an increase of their employment growth by 35%. And regarding their revenue growth, so I mean the increase of their turnover, globally, we also published the figure of 68% of increase. So this is things that are very important for us. So it's not only about the money that we have received and that we have spent. I mean, it's always easy to spend money, but it's also on the impact of this money.
Speaker 2:And, the valuation is not spending money. It's the perception from the outside. The 2 indicators that you mentioned and on which I give you the figures are real impact. The number, of patents or particular deals that have been signed between our beneficiaries and large corporate cooperation with public procurers anything like this on which we have reported also our concrete, impact. So it's not only, a report that is dealing with the consumption of the budget that have been allocated by by the parliament and the council.
Speaker 2:It's also about the impact for the beneficiaries. So, I will recommend to this, entrepreneur to have a look more in details to the report and to the to the fact sheets that we have published. His remark in substance is fully relevant. Great. And now we will
Speaker 1:link also to the report, of course, in this, podcast episode. I also wanted to ask of course about the EIC scaling club, which is the initiative that I'm a part of. Space. EIC Scaling Club in that sense is a bit different because it focuses more on scale ups, series b and up. Why was it so important for the EIC to set up something like this and to actually fund, the program that we have now?
Speaker 2:The EIC Scaling Club is clearly in complementarity of what we are doing with the accelerator. You understood it. I mean you are part of it so, you understand the DNA of it. And it has to be linked also with, what we were just talking about before which is a step initiative. What we need in Europe is clearly to, to attract private investors in later stage, in the growth of companies for rapid scale up, especially in deep tech.
Speaker 2:So when we have, launched this initiative, the objective was and, of course, is still, to create a kind of community with the relevant stakeholders be it on the investment side, be it on the tech side, be it on the advisers for any, area like IP and, other things. In order to provide additional means to, the most promising companies that we have in our portfolio, but also identified by the member states, as you know, and to give them an additional push. So it's a relatively modest initiative in terms of budget. But in terms of action and in terms of commitment of the various actors of the EU innovation ecosystem, it's a it is, I think, a very powerful one. I mean, the fact that first cohort has been of companies have been already identified in a number of strategic areas because the idea is also to do it in areas that are very strategic for the union and where we have a number of assets, in the current, global tech race, in the world.
Speaker 2:So, the fact that this has already started when I see the number of stakeholders beyond the partners of the consortium, that are there and that are committed to help these companies to help them to make connection with, with, with all the stakeholders and, we we mentioned investors, buyers, public buyers, and so on. I am, very confident on what we could achieve with this. It would be, a very interesting pilot even if it's not presented as a pilot. It is a pilot. The first time that we are doing this because if it is, of course, providing great results and the results there also will be measured in terms of scaling up.
Speaker 2:So, in terms of growth, revenues of the company, capacity evident that it will become a part of the arsenal of the 2 evident that it will become a part of the arsenal of the toolbox, of the EIC in order to achieve our objective.
Speaker 1:Fantastic. And we're looking forward to presenting in the first, cohort, very soon, with you in attendance as well in Brussels in April.
Speaker 2:Meeting a couple of days.
Speaker 1:Yeah. At the, ignition form. So, for those who are gonna be there, you have something to look forward to. Final question, the EIC summit 2025 in a year from now, what is that going to look like? Are you already looking forward to that one?
Speaker 2:We are already reflecting, but you will allow me to, keep, the information for the time because it will be with a new commission, a new parliament. It will be at the moment where the commission will also certainly table its first ideas, first proposal for the next MFF including for the next Ramer program of research and innovation. So it will be a very, important moment. So we have to prepare it, very cautiously. We have already some ideas but I cannot tell you for the time being with all with all my respects, Robin.
Speaker 1:That is fair enough, Jonathan. Thank you so much for taking the time and, best of luck
Speaker 2:with everything. As always always a
Speaker 1:pleasure. Thank you so much for tuning in to this episode of the EIC Scaling Club podcast. For more interesting insights on European deep tech, subscribe to our podcast YouTube channel and our newsletter on eicscalingclub.eu. See you.
