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Towards Industry 5.0

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Author: Mayte Carracedo, Chief of Development and Partnerships Officer at FundingBox*

The path to Industry 4.0 has made the industry more resilient than ever. By way of illustration, the Covid-19 crisis demonstrated the survival capabilities of more digitalised companies. Digitalisation is also a driver of environmental sustainability as more digitalised processes offer better production monitoring possibilities for factories which in turn reduces a lot of the waste generated by these processes. Nevertheless, the rate of digitalisation in the manufacturing sector is slow, especially amongst SMEs (around 60% of EU manufacturing).

The European double transition, digital and green, establishes the next phase of industrialisation: Industry 5.0. The main objective of Industry 5.0 is to transition towards a more sustainable, human-centric and resilient European Industry. In short, digitalising the industry should serve both people and their environment. For instance, from a human-centric perspective, focus can be put on upskilling and reskilling workers while from a sustainability one, it can be put on a full life-cycle approach for industrial processes to make sure all environmental impacts are measured and taken into account. The development of AI and 6G technologies demonstrates well the importance of moving towards Industry 5.0 values, if many business opportunities arose, stakes related to cybersecurity and data protection emerged too. Cascade funding will be a critical enabler here, as it was for the “Industry 4.0” approach. Digitalisation continues to be the way to go for companies, but the next step of capabilities, including AI tools and procedures within their processes, Big Data, IoT elements and cybersecurity-related issues.

The European Commission has launched a call to create a network of European DIHs to foster this evolution, with funding which will be employed to accelerate the digital maturity of SMEs. Besides this, Cascade funding will be an essential instrument needed as it will link technology partners (such as competence centres), facilitator agents for open innovation (such as FundingBox) with SMEs in need of digitalisation.

Industry 5.0 elements not only are a challenge from a technical implementation perspective, but they also require us to rethink training, collaboration (with machines), safety, and sustainability. In this sense, Cascade funding programmes allow us to generate new interdisciplinary solutions and ease their uptake. And finally, Cascade Funding continues to be a fundamental instrument for innovators keen on deploying nextgeneration technologies. What about quantum technologies, increased cybersecurity, and interoperability of data spaces? Technology never stops evolving, companies will lead its market uptake to ensure our industrial and social evolution.


The rapid technological change has set a series of challenges for the innovation capacity of the industry. SMEs in particular struggle not to be left behind in a fast-paced international context. At FundingBox, we have understood that technology is the key enabler to fostering a company’s growth at two different levels according to its needs: from basic digitalisation to leveraging its know-how and skills, towards reliable business. This is aligned with the European Commission views described in its large-scale innovation programmes, from the previous period (2014-2020) to this one (2021-2027) and leading to EU 2030 objectives.

Within this context, the Financial Support to Third Parties mechanism (FSTP), also known as Cascade Funding, is an extremely valuable tool. Cascade funding works in the following way:

1. The European Commission sets a technological scope (e.g. industrial collaborative robots or smart mobility) to champion and invests in.

2. Then, next-generation intermediaries, public and private, appear on stage. They are in charge of discovering European innovators, screening them and, as FundingBox does, finally handpicking the
most promising ones who will then be receiving funding.

Such a process follows four main criteria established by the European Commission: transparency, fair treatment, no conflicts of interest and confidentiality. FundingBox is today one of the biggest distributors of cascade funding in Europe, with a total of 83M€ distributed until now through 104 open calls and 82,5M€ to be distributed in the next few years.

The first level of our activity when managing cascade funding is focused on the digitalisation of SMEs, by creating awareness and fostering technology uptake through funding and mentoring schemes. A good example of projects using this approach is those from the I4MS initiative, the flagship European Commission initiative to support the manufacturing industry in its digital transformation journey. Here, FundingBox helps manufacturers with the distribution of cascade funding and the enrolment in tailor-made support programmes that allow them to “test before invest”. This means that they have the opportunity to experiment with digital solutions that are developed by European excellent competence centres and see whether they see any process improvement (productivity gain, better product quality, more sustainability, etc.).

The second level of Cascade Funding programmes is focused on giving access to an open innovation system, where startups, scaleups, and SMEs can leverage their technical know-how to go to market successfully and feed a deep tech ecosystem eager to be aware of the most recent technology advances for potential technology transfer and implementation. The projects that FundingBox manages demonstrate these innovation capabilities in various technological fields such as Artificial Intelligence (AI), Blockchain, Robotics, IoT or advanced manufacturing.

Why are DIHs important in the process of digitalisation?

As the business world turns more and more digital, access to technology defines the success of an enterprise. Yet, for many small and medium enterprises (SMEs), the path to these much-needed solutions can be full of obstacles. SMEs at the beginning of their digitalisation process find it hard to grasp how all of these opportunities can ease and accelerate their transformation. Fortunately, a network of European Digital Innovation Hubs (EDIHs) is under construction to connect European SMEs with the technological solutions they require for their growth. DIHs and EDIHs support companies, especially SMEs but also the public sector in their digital transformation process, working at a local level while they should be also connected at a European level. They act as the orchestrators that can connect those companies with all these opportunities for digitalization.

For this reason, FundingBox has always strived to maintain a special relationship with DIHs from all around Europe, as they represent a very valuable partner to put us in contact with the type of end-users we are looking for. Projects like PhotonHub Europe, BOWI, DIH² or AEDIBNET (including EBN as a project partner) are examples of networks that support SMEs through DIHs in specific technologies (photonics, robotics, etc.) and places (Europe, Africa).

The way we connect with those DIHs is also being made through one of our online tech communities: DIHNET. Within this community, DIHs can connect and network with other European Digital Innovation Hubs to offer the best services to their customers. The DIHNET Community is now home to 1600 stakeholders from all over Europe helping companies in their digital transformation. The goal for the community is clear: become the central information and collaboration point for the Digital Innovation Hubs ecosystem in Europe. In the past three years, the community has transferred knowledge to Digital Innovation Hubs and other stakeholders in topics such as IoT, Digital Manufacturing, Artificial Intelligence and much more and established connections through webinars and events, as still available for spreading news and events of interest for DIHs.

* About FundingBox Communities is an online platform for networking, mentorship and ideas exchange for key players in the areas of interest. This ecosystem is a onestop-shop space for accessing information, stakeholders and collaboration opportunities, such as Expressions of Interest, Open calls and others, as the main support element for our projects. Our platform is made of a constellation of 46K deep tech communities on topics such as IoT, Robotics, AI, Blockchain, Circular Economy, Mobility, Next Generation Internet, Industry 4.0, EU partner search, funding opportunities, events, relevant news and much more.

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