Minimizing the risk of innovation projects with EU funding
If people were not sometimes willing to take risks, there would be no innovations, no advancement or form of progress – and no chance to change the future for the better. For companies, the earlier the stage of a development project, the higher the risk they enter into, and that’s something they know when they engage in innovation. It’s also the reason why firms set milestones on their innovation roadmaps to gauge whether risks remain justifiable. This is also an important aspect with financing because innovation is not possible without investment. This is where Steinbeis Europa Zentrum comes in. For the past 30 years it has been helping companies make use of EU funding and thus mitigate the risk of innovation projects. It also provides companies with support in identifying the best form of financing, submitting applications, and implementing projects.
Minimizing risk and risk assessments have become increasingly important in an increasingly complex and globally interconnected world, and the intensity of recent challenges has only served to make people more cautious. Products and processes that have stood the test of time offer a certain degree of security, but they can also slow things down, and merely resorting to the tried and tested can be a handicap. If companies want to remain competitive, they know that they will need to be open to new markets and the challenges of modern society. This is especially true in times of crisis with all the challenges they bring. It is therefore important to seize the opportunities offered by emerging markets – without losing sight of risk.
EU funding and collaborative research projects reduce risks
Innovation needs the right options to invest heavily. When research is already extremely cost-intensive, this exacerbates the need to invest major sums of money in implementing projects or putting plant, products – and in the case of deep tech: often entire new factories – in place to serve markets.
The experts at Steinbeis Europa Zentrum have found that funding from the European Commission, which does not have to be paid back, offers enterprises the ideal opportunity to conduct research and development, and at the same time reduce risk. Most well-funded projects are based on collaborative research and development, which offers many advantages:
- Collaboration with partners who take on sub-projects brings new ideas on board, thus making it possible to explore different lines of development. This increases the chance of jointly developing promising solutions – without becoming bogged down by obstacles.
- Joint funding for all project partners gives individual companies more room to breathe – particularly because co-funding can also go toward coordination efforts.
- Pure research projects (RIA = Research and Innovation Action) are eligible for 100% funding through the EU Horizon Europe program – for all project participants. The funding rate for projects with a stronger focus on market implementation (IA = Innovation Action) is still 70% of costs to companies, and even 100% for research institutions and universities. These high funding rates reduce the pressure to make investments, particularly on companies. They also help free up money that could be channeled into launch activities.
In addition to any collaborative research they are engaged in, individual companies involved in disruptive innovation also have the opportunity to receive EU funding for the final steps of market introduction. If its funding experts are impressed by a project, the European Innovation Council makes it possible to receive payments of up to €2.5 million in the form of a non-repayable grant.
Shaping innovation with the right funding
With suitable funding, it is therefore possible to significantly increase people’s willingness to take risks. The possibility of spreading risk among project partners can also lower inhibitions. Support through EU programs allows research and innovation projects to receive funding of between 70 and 100%, establishing a good basis for collaboration between research teams and companies. This can encourage companies to embark on the first stages of projects and enter into new developments, products, and markets that they would feel reluctant about without financing.
This also opens the door to new possibilities and technological breakthroughs, leading to sustainable products that offer tangible commercial potential by building partnerships between industry, research, and the public sector.
Steinbeis Europa Zentrum has a wealth of experience and a high success rate in applying for and acquiring EU funding. Whether it’s screening ideas, applying for funding, or implementing projects, the Steinbeis experts pave the way for EU funding by planning, structuring, and managing companies’ innovation projects. The Steinbeis experts also look for suitable partners in other countries and ensure the effective transfer of ideas to sales markets.
“Doing research for the sake of it, or just to get funding, is no use to anyone”
An interview with R&D managers Dr. Michael Peschl (Harms & Wende GmbH & Co. KG) and Dr. Johannes Maurath (MIMplus Technologies GmbH & Co. KG)
Harms & Wende from Karlsruhe and MIMplus Technologies from Ispringen successfully embarked on a journey of EU funding with the support of Steinbeis Europa Zentrum. The Harms & Wende experts are an impressive example of an SME specialized in resistor technology and friction welding not only developing circular economy strategies for future production scenarios, but also driving the circular economy in industrial manufacturing today. MIMplus, a wholly owned subsidiary of OBE Holding – a traditional, family-owned business and a leading manufacturer of components and assemblies for the medical technology, aerospace, automotive, luxury, and eyewear industries – has also met and mastered new challenges. One involved the recycling of rare-earth magnets, the other involved the development of innovative processes in the production of permanent magnets. In an interview with TRANSFER magazine, R&D managers Dr. Michael Peschl (Harms & Wende) and Dr. Johannes Maurath (MIMplus) offer insights into their experiences with such EU projects.
Hello Dr. Peschl, hello Dr. Maurath. How do you assess the risk for companies – in terms of lost know-how and having to share results with others – when decisive developments are carried out with European partners?
The risk depends heavily on people’s interests within the consortium. As soon as the applications come in, it’s really important to ensure the consortium works on a complementary level, and it’s not competitive. You also need to iron out commercialization rights, and any corresponding deals that are entered into should be captured good and early within a consortium agreement. Assuming those basic principles are adhered to, compared to the many benefits of joining forces with others we consider the risk quite low.
When you enter into this sort of collaboration with other companies, research institutions, or sometimes even competitors, of course the first thought is that you’re going to lose know-how – because you have to work together, really closely, but that’s also necessary to achieve the big goals you share.
But there are tremendous advantages to sharing your thoughts with others – not just for the sake of the project or the new technology you develop in the process, but also for the company itself. For example, if you consider how difficult it is to recycle rare-earth elements in Europe, it would appear unrealistic to do that by yourself, especially as an individual company in the SME sector. If, on the other hand, you’re part of an international consortium, that would seem possible. It allows you to develop new technologies and win new markets with others.
To what extent does EU project funding mitigate risk for companies, especially when it comes to financing?
When you’re submitting applications – and afterwards during project implementation – you have to make sure the areas looked at by the project are in line with your corporate objectives. Doing research for the sake of it, or just to get funding, is no use to anyone. But if the project goals are a good fit with your own strategic agenda at the company, then EU project funding offers an outstanding level of support in significantly reducing technological and business risk.
Without EU funding, we wouldn’t have been able to develop and finance such groundbreaking technologies in-house, not as a medium-sized company. Funding is a huge help, and it’s absolutely crucial when it comes to promoting technology. Projects do also involve quite a bit of admin, but it’s worth it when you consider the opportunities they pave the way for. Having Steinbeis Europa Zentrum working with us on the projects as a partner also helped us deal with the admin side of things, and any issues with the difficulties that arise could be cleared up quickly.
Why do you think so many companies are reluctant to approach the EU? What would you recommend to other companies?
There are a variety of EU funding programs and a number of regulations to go with them. At first glance, it makes entering the EU funding space feel a bit difficult for companies. Another reason for not taking the plunge could be the anticipated administrative burden when the project is up and running. That said, you also have those hurdles with domestic funding programs. In my experience, once you get started EU funding programs are even a bit easier, and above all more flexible. That’s why it’s a good idea to kick things off with an experienced partner at your side, or bring in professional support to accompany you during the application process.
Even if, on the face of it, the bureaucracy side of things feels a bit intense – and I’m sure this deters a lot of SMEs from taking part in such projects – we’d recommend that every company take advantage of the EU funding. To work, it’s important that you strike the right balance within the project consortium between research and industry, so you work together on an innovative technology that also holds promise for your own company. Then the opportunities that arise from the projects and the funding are definitely worth it.
THE CIRCULAR ECONOMY AND THE MANUFACTURING INDUSTRY
Industrial manufacturing plays a key role in innovation and growth in Europe. Obsolete machinery and downtime can lead to significant losses. This is where circular economy strategies may help. As part of an EU-funded project called RECLAIM, Steinbeis Europa Zentrum is working with a consortium of researchers and industrial enterprises from nine countries. One of those companies is Harms & Wende, home to one of five pilot sites that will test applications in the field of welding. The aim is to reduce the obsolescence of industrial plants and strengthen the economy and the environment. By retrofitting digitech on machinery, malfunctions and production downtime can be prevented, also improving net energy and material consumption. The EU is providing around €13 million of funding for the project, which involves 22 partner companies.
For more information, go to www.reclaim-project.eu
RECYCLING OF RARE-EARTH ELEMENTS
With the support of Steinbeis Europa Zentrum, in 2014 OBE was granted a subsidy of over €1 million to take part in REProMag, an EU project looking at the efficient production of permanent magnets from recovered rare earths. The initiative also involved setting up sustainable recycling processes. Success continued with further EU funding of €13 million for the SUSMAGPRO project, which in addition to OBE also involved its subsidiary, MIMplus Technologies. SUSMAGPRO involves working alongside other partners to raise market-ready technology to an industrial scale. Under the third successful EU application, project REEsilience, more work is underway on the supply chain itself. This €12 million project has been funded by the EU since July 2022 as part the Horizon Europe program.
Steinbeis Europa Zentrum provided support with the application process for all three projects, and has also assumed responsibility for project management, communication, and the commercialization of the project results.
More information: www.steinbeis-europa.de/de/aktuelles/beitrag/die-lieferketten-fuer-seltenerdmagnete-nachhaltiger-und-sicherer-gestalten
Dr. Petra Püchner (author)
Steinbeis Europa Zentrum | Steinbeis EU for YOU (Stuttgart)
Steinbeis IDEA Europe/Institute of the European Commissioner of the Baden-Württemberg Minister of Economics, Labor, and Tourism (Stuttgart)
www.steinbeis.de/su/2136 | www.steinbeis-europa.de
Anette Mack (author)
Senior Manager Public Relations
Steinbeis Europa Zentrum
Steinbeis EU for YOU (Stuttgart)
Steinbeis Europa Zentrum | Steinbeis EU for YOU (Stuttgart)
Michael Peschl (interviewee)
Head of Research & Development, Harms & Wende GmbH &Co. KG (Karlsruhe/Hamburg)
Johannes Maurath (interviewee)
Head of Research & Development, MIMplus Technologies GmbH & Co. KG (Ispringen)