Slovenia Innovation Ecosystem

From Monday 20th till Wednesday 22d of November I spend 48 hours in Slovenia. The formula of a field visit is by now well tested. A visit entails typically an informal meeting with the key actors in the ecosystem; an information session with applicants and beneficiaries for the EIC, a round table with key players of the ecosystem and an in-depth political discussion. I always want to visit beneficiaries to understand their innovators journey. That understanding from the eco-system to scaling up is a key mission of the EIC President.

To put Slovenia in context, it is a small country in the middle of Europe on the cross-roads of a Mediterranean orientation, a Habsburg history, and a real socialist heritage. It has made a good transition over the last thirty years, but it has challenges. It has a small GDP, comparable to a medium-size region in the EU. It has a good but narrow research infrastructure. It has a strong industry, mainly as subcontractor (e.g. ski manufacturing) and components (automotive) supplier to OEMs. It is uniquely positioned with both sea and skiing within one hour travelling.

Ecosystems and Culture of Entrepreneurship

An ecosystem is determined by some of conditions. It starts with a production environment in which entrepreneurial culture and structure are essential. Also relevant is the skills base and the education on the one hand and the capital base and financial market on the other. In Slovenia the skills base is strong, the entrepreneurial culture is rather dominated by large companies and more short-term oriented SMEs. The financial market is very narrow and little specialized.

A first challenge is to promote entrepreneurship at large and more specifically entrepreneurship through innovation in deep-tech. The latter requires seed financing but also financial (and fiscal) instruments to reduce the valley of death. We had deep discussions on culture, but one should not overstate the cultural impact: even in hot-beds of entrepreneurship, the share of deep-tech innovators is below 1% of all SMEs. In no place does the share of EIC Beneficiaries go above 0,25% of all SMEs.

Beyond the Metaphysics of S3

The small size of the country may foster strong cluster but also little competition or emulation. Small countries are often enclined to specialize in few sectors in order to recreate some focus and critical mass. Slovenia has not made such choices. It has 10 priority sectors. Large countries (France) or large regions (Lombardia) can afford such choices, for smaller countries and regions such a broad outlook means not choosing. That is a second challenge.

Moving to a focused smart specialization is not easy, as there are possible processes and outcomes. What generally works is an evidence-based approach (based on measurable assets and output such as patents and global recognized specialisations). However, such a legacy-based approach can be combined with a mission-based approach: where does a region want to go to deliver on specific challenges for that region. It can also help to define challenges that requires crossovers between sectors. It can finally help to look a broader region for competition (emulation) and cooperation. For Slovenia that can be Croatia, Austria and Veneto in Italy.

A more horizontal approach is to look at the support structures for innovation and more particularly deep-tech start-ups. Here is where understanding of the innovators journey comes into play. And that journey goes from early ideation in a funnel towards scale up and deployment. Each stage requires specific instruments, but preferably organized around a one-stop service. Especially in smaller countries (and regions) such services should be given by one agency (and not scattered in several agencies or in several smaller regions or sectors). Sectorally, a smart specialisation approach may help, but also a competitive bidding approach in which the best proposals are funded, could count as a valid approach if the level of excellence is progressively higher across the funnel.

Tailored Approach

Looking at Slovenia with 3 Accelerator beneficiaries, and 6 possible beneficiaries according to “EPO deeptechfinder” a tailored approach could do, without waiting for the impact of a more macro-approach. By the way the EPO DTF only looks at patents owned by start-ups. The pool of applicants is higher as patents can be licensed to a start-up or are still not spun-off by a Research Organisation or a larger company.

A tailored approach is based on a systematic identification and support to possible applicants. This is easier when the funding instrument is not at regional/national level. Supporting applicants and evaluating their proposals requires good Chinese walls, those are better assured when different levels of governance do the two functions. Support to applicants must be hands-on going up from good reviewing till mock interview training. Support can be given by an agency, but if the agency lacks the skills it can be offered through vouchers that can be used to contract skilled professionals. I am also curious to understand how the EEN network can be more relevant.

Community of Practice

What also helps is to bring the community of practice together. That starts with regular information sessions, but also by promoting contacts between beneficiaries, unsuccessful applicants and aspiring applicants. That is why I do promote that member states also give value and content to the “Seal of Excellence”. Such a seal is given to companies with excellent scores but ranked below the budget available. A seal would ideally allow for a regional/national grant preferably in the same order of magnitude of a European grant. But it also helps of a “SoS” beneficiary gets a lifeline to survival, to scale up and integration in an innovative ecosystem.??

There is no one size fits all. However, what characterizes an ecosystem is that is living, that it survives and adapts, that it learns and grows; and that is somehow politically neutral. The latter does not mean that it not publicly funded, but it should not be politically driven but driven by long term objectives and associated KPIs. Innovation is a marathon that requires stable institutions. ?