Visit by the Dutch Ministry of Economic Affairs and Climate Policy

What innovative businesses need

‘How can innovation policy better respond to the realities businesses face?’

This question was at the heart of the visit by a delegation from the Dutch Ministry of Economic Affairs and Climate Policy (EZK) to PNO Innovation Netherlands. In Rijswijk, our experts shared their experience of the development, financing and growth of innovative businesses.

Informing policy through practical experience

The focus of the discussion was clear: more effective innovation support schemes, less administrative burden and support that better meets businesses’ needs. Through our involvement in regional, national and European innovation programmes, we see where support helps businesses move forward and where they encounter challenges in practice. During the visit, we discussed these experiences using the questions EZK had shared in advance.

Five key points from practice

Our contribution focused on five interconnected themes:

1. Access

An entrepreneur’s primary concern is finding a solution to an innovation challenge, rather than finding a support scheme. In practice, there are different routes to support: regional, national, European and thematic. It is not always clear which route is the best fit or how these options relate to one another. Greater clarity and predictability in requirements, processes, formats and timelines help entrepreneurs make more informed choices and prepare their innovation plans.

2. Alignment and effectiveness

A good mix of policy instruments is more than a collection of separate support schemes. Research, development, demonstration, market launch and scale-up require financing of a type and amount appropriate to each development stage. While grants play an important role early on, loans, guarantees, risk capital and blended finance may also be needed as innovations approach the market. That makes alignment between instruments and forms of financing essential: businesses must be able to move from one development stage to the next.

3. Collaboration

Collaboration is not an end in itself, but a means of advancing innovation. The innovation challenge should therefore determine the knowledge and skills required and which organisations are best placed to provide them. These could be universities and research institutes, businesses with complementary technologies, customers or other partners. It is important to draw on the strengths of existing ecosystems while keeping space for new participants and new combinations.

4. Strategic direction

Strategic choices can guide public investment and help build critical mass in key technology areas. At the same time, innovation often emerges across disciplines and outside predefined priorities. Alongside a clear focus, there must therefore be room for promising new developments. Predictability also matters to businesses: innovation and investment decisions are often made with a multi-year horizon. A clear long-term direction gives businesses a basis on which to build.

5. Growth and impact

Technological progress alone is not enough to grow a business. Alongside technology readiness, market readiness and business/commercial readiness also matter: is there a market, are customers willing to pay, is the business model scalable, and does the business have the organisational capabilities needed for further growth? Technology, the market and the business do not necessarily develop at the same pace.

From innovation to impact

The common thread across these five points is that a business’s needs change as an innovation develops. The bottleneck may shift from technology to financing, collaboration, market access or the business’s ability to scale up.

This does not necessarily call for more support, but above all for greater coherence in that support. At each successive stage, businesses need access to the right combination of financing, partners, ecosystems and markets.

Above all, the visit provided an opportunity for an open exchange of views on these issues. We shared our experience from day-to-day innovation work while gaining a better understanding of the policy considerations, constraints and choices that EZK faces. Bringing these two perspectives together led to a valuable dialogue about what is desirable in practice and what is possible and feasible within innovation policy.

We thank the EZK delegation for the open and constructive exchange.