Periodic Reporting for period 1 - P2P FINBIO (Peer to peer learning for financing of innovation in the food & bioeconomy)
Okres sprawozdawczy: 2021-09-01 do 2022-08-31
At several occasions throughout the EU policy development, the importance of utilising renewable biological resources and converting them into value added products such as food, feed, and bio-based products is highlighted. Most recently mentioned as a part of the European Green Deal.
Yet while Europe leads the world in commitment to a circular bioeconomy, many innovative companies are still not able to fully unlock this potential for their technological projects and processes due to difficulties in accessing funding or financing in spite of the many available opportunities at national and EU level.
Financing plays a critical role in innovation, allowing SMEs and organisations to carry out research, adopt technologies necessary for inventions as well as develop and commercialise these innovations. Access to external sources of finance is often particularly challenging for smaller businesses at seed or early stages of business development as they have no documented track record. Funding needs and funding availability are closely related to the stage of development of the firm and its innovation projects. In the early stages, when inventions are developed and research conducted, there is still considerable uncertainty about what results and innovations will emerge, if at all.
At more advanced stages, as prototypes are developed, specialised investors such as venture capitalists and business angels are more willing to get involved.
In the final stages, once there is more clarity concerning technologies and markets, more traditional investors can provide funding. The situation is however more extreme in the bioeconomy where figures from the European Investment Bank’s report Study on Access-to-finance conditions for Investments in Bio-Based Industries and the Blue Economy from 2017 show that 77% of all bioeconomy companies experienced problems in accessing funding. While the number of successful investments is growing, private financing is proving difficult still. Private investors including business angels, venture capitalists and corporate VCs have stepped in with high profile investments, but they remain extremely selective in their investment opportunities and demand that SMEs and projects must be prepared in terms of project scalability and investment readiness – which is rarely the case. SMEs too, need to understand what investors are looking for how to address information requirements, reduce risk premiums and secure investments.
This is why this project has gathered five strong agrifood & bioresource investment innovation agents during 12 month from September 2021 to August 2022 to exchange best practices and clarify opportunities across Europe through five study trips and workshops. The name of the project is P2P finBIO and it has been received funding as convened in Grant Agreement NUMBER 967555.
Yet while Europe leads the world in commitment to a circular bioeconomy, many innovative companies are still not able to fully unlock this potential for their technological projects and processes due to difficulties in accessing funding or financing in spite of the many available opportunities at national and EU level.
Financing plays a critical role in innovation, allowing SMEs and organisations to carry out research, adopt technologies necessary for inventions as well as develop and commercialise these innovations. Access to external sources of finance is often particularly challenging for smaller businesses at seed or early stages of business development as they have no documented track record. Funding needs and funding availability are closely related to the stage of development of the firm and its innovation projects. In the early stages, when inventions are developed and research conducted, there is still considerable uncertainty about what results and innovations will emerge, if at all.
At more advanced stages, as prototypes are developed, specialised investors such as venture capitalists and business angels are more willing to get involved.
In the final stages, once there is more clarity concerning technologies and markets, more traditional investors can provide funding. The situation is however more extreme in the bioeconomy where figures from the European Investment Bank’s report Study on Access-to-finance conditions for Investments in Bio-Based Industries and the Blue Economy from 2017 show that 77% of all bioeconomy companies experienced problems in accessing funding. While the number of successful investments is growing, private financing is proving difficult still. Private investors including business angels, venture capitalists and corporate VCs have stepped in with high profile investments, but they remain extremely selective in their investment opportunities and demand that SMEs and projects must be prepared in terms of project scalability and investment readiness – which is rarely the case. SMEs too, need to understand what investors are looking for how to address information requirements, reduce risk premiums and secure investments.
This is why this project has gathered five strong agrifood & bioresource investment innovation agents during 12 month from September 2021 to August 2022 to exchange best practices and clarify opportunities across Europe through five study trips and workshops. The name of the project is P2P finBIO and it has been received funding as convened in Grant Agreement NUMBER 967555.
The work performed from the beginning of the project to the end of the period has been:
- Deciding on a work format for 5 workshops
- Designing the P2P finBIO final Design Option Paper Format
- 5 Physical site visits and workshops at agrifood & bioresource innovation Ecosystems have been carried out through the 1-year project: In Denmark (October 2021), Spain (February 2021), France (March 2021), Portugal (April 2021) the Netherlands (May 2021)
Outcome:
- Learnings which are now being adopted within each of the five ecosystems
- A Design Option Paper with descriptions of the five innovation learnings and summaries has been created and disseminated
Dissemination & communication:
- At the beginning of the project, a PR was created and the project was communicated through the partner websites
- At each workshop, there has been communication: One press release per workshop + minimum one LinkedIn post
At the end of the project:
- A common press release and a common post for LinkedIn was created and shared among the partners to share it from their own LI-page
- Several partners are sharing the learnings from the project internally and expternally (see the adopted learnings section of the DOP)
- Deciding on a work format for 5 workshops
- Designing the P2P finBIO final Design Option Paper Format
- 5 Physical site visits and workshops at agrifood & bioresource innovation Ecosystems have been carried out through the 1-year project: In Denmark (October 2021), Spain (February 2021), France (March 2021), Portugal (April 2021) the Netherlands (May 2021)
Outcome:
- Learnings which are now being adopted within each of the five ecosystems
- A Design Option Paper with descriptions of the five innovation learnings and summaries has been created and disseminated
Dissemination & communication:
- At the beginning of the project, a PR was created and the project was communicated through the partner websites
- At each workshop, there has been communication: One press release per workshop + minimum one LinkedIn post
At the end of the project:
- A common press release and a common post for LinkedIn was created and shared among the partners to share it from their own LI-page
- Several partners are sharing the learnings from the project internally and expternally (see the adopted learnings section of the DOP)
When it comes to the topic “financing of innovation in the agrifood and bioeconomy” it was identified at an early stage, that not only the investment infrastructure in Europe compared with e.g. the US and Israel is lacking maturity, but also that the maturity stage from region to region among the participating organisations were at different stages – which then defined the topics of the thematic workshops (section 5 of this DOP).
Summing up, a few overall, observed learnings on how to stimulate a good environment of financing of innovation in the agrifood and bioeconomy:
- Stakeholders in the region must collaborate and have a clear division of tasks
- Public funding is necessary to bridge the gap until private capital is ready
- It’s an advantage to have a good overview as well as a good understanding of the many funding options available in both your own region and in your peer regions.
- When suggesting funding for SMEs and start-ups, it is important that the cluster organisation understands the consequences of the funding that the organisation is suggesting for any development activity – be it funding a testing or a scaling phase. For instance, dilutive funding may affect the future control of the company, as the funding comes with shares in return, while non-dilutive, such as EU innovation funding, may not affect the future control of the company, but could have an impact on the company’s ownership of the IPR.
The project is expected to further integrate the knowledge of the partners among them and strengthen the collaboration for the benefit of the innovative startups and SMEs, who thus can tap into the EU-funding eco-system and find and explore new ways to expand and collaborate.
Summing up, a few overall, observed learnings on how to stimulate a good environment of financing of innovation in the agrifood and bioeconomy:
- Stakeholders in the region must collaborate and have a clear division of tasks
- Public funding is necessary to bridge the gap until private capital is ready
- It’s an advantage to have a good overview as well as a good understanding of the many funding options available in both your own region and in your peer regions.
- When suggesting funding for SMEs and start-ups, it is important that the cluster organisation understands the consequences of the funding that the organisation is suggesting for any development activity – be it funding a testing or a scaling phase. For instance, dilutive funding may affect the future control of the company, as the funding comes with shares in return, while non-dilutive, such as EU innovation funding, may not affect the future control of the company, but could have an impact on the company’s ownership of the IPR.
The project is expected to further integrate the knowledge of the partners among them and strengthen the collaboration for the benefit of the innovative startups and SMEs, who thus can tap into the EU-funding eco-system and find and explore new ways to expand and collaborate.