Innovation Ecosystem Building Playbook: ESOs raising access to finance for their local ecosystem and Europe
This article is part of a series, you can find other ecosystem-building stories here
Access to finance is a cornerstone for the growth and sustainability of innovation ecosystems. As entrepreneurial ventures progress from ideation to scaling, the need for financial support becomes paramount. EU|BICs (European Business and Innovation Centres) play a crucial role in this landscape, bridging the gap between innovative enterprises and potential investors. By fostering networks of funding partners, including business angels, venture capitalists, and public funding bodies, EU|BICs ensure that promising ventures receive the financial backing they need.
Regional innovation is key. In Europe especially, its diverse regional landscape makes up a larger part of the continents’ innovative business creation output than in other innovation-competitive regions. Whereas “Only 30 per cent of European start-ups have located their headquarters in a tech superhub” almost more than half of American startups have done so. In Europe, surveys show that more than 60 per cent of founders start their companies where they live or where they have family and support systems. 1 This regional strength is a strength of Europe’s innovation landscape, but also raises some challenges to guarantee equally high levels of access to finances in all places.
Access to finance is a cornerstone for the growth and sustainability of innovation ecosystems. As entrepreneurial ventures progress from ideation to scaling, the need for financial support becomes paramount. EU|BICs establish robust funding networks and knowledge centres to support startups and SMEs access financing of all types (private to public sources) in their region, a crucial role in Europe.
EU|BIC Furthr: Venture Capital Fund, Investing in Truly Transformative Tech
Targeting the next generation of highly scalable tech companies in Ireland, with a focus on B2B SaaS across a wide range of vertical markets and MedTech. Furthr VC, is looking to invest in highly scalable, early-stage tech companies. Furthr wants to help build Ireland’s next generation of leading technology companies, having deep expertise in preparing companies for investment, with 85% of our start-ups going on to secure third-party funding. For 30 years, Furthr’s business consultants have shared their first-hand experience, considerable knowledge, resources and passion to benefit many of today’s business leaders.
Furthr’s current fund is highly active, investing in some of Ireland’s most scalable and transformative tech start-ups at the seed stage and beyond. The fund is backed by several leading tech entrepreneurs and business leaders as well as Enterprise Ireland. Furthr is investing in 7+ new start-ups every year, with the ability to invest up to €3m in an individual company through multiple investment rounds to drive growth in international markets.
Companies that Furthr is seeking to invest in our highly scalable, early-stage companies developing B2B software products and services, as well as Class I and II medical devices. Furthr VC In Numbers: €50m under management, 50+ investee companies, €120 m of co-investment leveraged to date, 7+ new investments annually.
Historically, Europe’s ecosystems have lagged behind their competitors in turning start-ups into late-stage successes. For example, adjusted for population and GDP, the number of seed-stage start-ups that Europe generates is only 40 per cent of that in the US. This disparity is not due to a lack of potential in European start-ups, as data shows that they do not fail more frequently when measured by bankruptcy numbers2. Instead, the challenge lies in the accessibility of funding. European companies are more likely to stall due to funding challenges. Entrepreneurship Support Organisations, EU|BICs, are pivotal in addressing the gap between European innovation and potential investors.
By cultivating a network of funding partners, including business angels, venture capitalists, and public funding bodies, EU|BICs ensure that promising ventures receive the financial backing they need. This support is more than transactional; it encompasses a wider range of available and expert strategic guidance, financial literacy training, and continuous mentorship, creating a holistic support system for entrepreneurs.
EU|BIC St John’s Innovation Centre: Systematising contacts between companies and investors
St John’s Innovation Centre unites its vast connection with business angel actors, groups and networks in the annual PitchFest event , making the process more efficient through scale. ‘’The key ingredients at the outset ensure that supply and demand are in balance and that our selection and training added enough value to keep both companies and investors engaged. In our experience, investors are often willing to provide informal advice in the early years of a cluster’s development, but they will soon lose interest unless investable proposals start coming through regularly.
Pitchfest’s (East of England editions) cumulative figures over 6 years show an investment of £23M in 33 companies, including sectors such as IT & Telematics, Manufacturing & Engineering, and Bioscience & Healthcare, with 43 jobs created and 46 jobs preserved. Since early 2021, we have been rolling out this service across the country, working with partner organisations, as part of a service funded by Innovate UK EDGE. By Spring 2022, two cohorts of around 15 companies each will have been put through Pitchfest in each of the English regions, Wales and (soon) Northern Ireland. That means that over 200 companies will have been drilled intensively to become investment-ready, out of a pool of 1,000 applicants. And the longer-term legacy will be embedding the know-how in organisations like St John’s across the UK.
The articulation of networks of experienced investors can help start-ups navigate challenges, scale their operations, and expand into new markets. For instance, experienced investors can provide the necessary expertise in professionalising start-up processes, which has been a noted gap in the European ecosystems.
In recent years, EU|BICs have taken further steps by developing their funds. This allows EU|BICs to foster a more collaborative and supportive innovation ecosystem, strengthening relationships between start-ups, investors, and other stakeholders such as universities and research institutions. A robust ecosystem is essential for nurturing talent, fostering innovation, and accelerating the growth of start-ups. Increased collaboration with established companies also facilitates market access and product development.
EU|BIC Marseille Innovation: Innovation fund to facilitate the scale-up of companies without dilution
EU|BIC Marseille Innovation developed an innovation fund to facilitate the scale-up of local start-ups. By involving several partner banks and private endowment funds in its expertise in supporting innovation, Marseille Innovation provides start-ups with the capital they need to consolidate their growth.
Marseille Innovation is the first support structure for innovative companies in the region and created an Innovation fund allowing access to targeting startup growth supported by the Marseille Innovation accelerator. The fund is called Innovation Fund by MI, and it provides project leaders working with technological innovations, so-called Honorary Innovation loans of 30,000 euros. The loan has zero interest rate and is guaranteed by Bpifrance (The public bank for investment in France).
The applications to access the load are studied by an evaluation committee composed of former successful entrepreneurs of Marseille Innovation and its partners. The creation of this fund is the link in the value chain of Marseille Innovation’s support strategy for enabling startups to have cash quickly and without an essential dilution for their start.
Investing in local start-ups through EU|BICs’ funds can have a direct positive impact on regional economies. Successful start-ups generate employment, foster innovation, and stimulate industries. By strategically investing in sectors with high growth potential, EU|BICs can contribute to the broader economic development goals of their regions. Having dedicated funds allows EU|BICs to tailor their investment strategies to align with their specific objectives and the unique needs of their start-up ecosystems. This approach can focus on early-stage funding, sector-specific investments, or supporting ventures that align with regional development goals. The flexibility to design and implement these strategies can lead to more impactful and targeted support for start-ups.
MINERVA Business Angels: Driving the Green Economy with EU|BIC University of Warwick Science Park
As part of the EU|BIC University of Warwick Science Park, MINERVA Business Angel Network is a driving force in the green economy. We provide a platform for private investors seeking to invest in emerging technology businesses. With over 150 members from the UK and overseas, corporate partnerships with Venture Capitalists, and collaborations with universities, we facilitate face-to-face events at various locations.
Since 2010, MINERVA has invested in over 130 companies, enabling them to leverage more than £80 million. The network has been recognised as the 2nd most active investment group for green projects in the UK. It is driven by our passion for innovative technologies that address pressing challenges in the green economy.
In this era of urgency to combat climate change and transition to a carbon-free economy, early-stage startups and spinouts play a crucial role. They are nimble, and creative, and often become the foundation for larger organisations seeking cutting-edge technology. As the demand for green solutions intensifies, these startups have the potential to become the next unicorns, focusing on green economy-related problems.
At MINERVA, we embrace this transformative moment. Our recent investments include a company developing midsize electric boats with hydrogen hybrid engines, a startup producing electrically assisted cargo bicycles for last-mile delivery, and a recycled clothing company, among others.
The continuous development and strengthening of regional innovation ecosystems in Europe represent an opportunity to transform the continent’s economic and sustainable landscape. By leveraging the unique strengths of diverse regions and fostering close-knit networks of support, European start-ups can access the resources they need to thrive. EU|BICs play a crucial role in this transformation, not only by providing essential funding but also by nurturing a culture of collaboration, mentorship, and strategic growth. This holistic approach ensures that, as ecosystems mature, they create a virtuous cycle of innovation and economic growth. The success of one start-up can inspire and catalyse the efforts of many others, creating a thriving community of innovators who are well-positioned to tackle the pressing challenges of our time.
The localised focus of EU|BICs ensures that the benefits of innovation are widely distributed, fostering regional economic resilience and reducing disparities between urban and rural areas. By continuing to support and invest in these regional ecosystems, Europe can build a more inclusive and sustainable innovation economy, where the next generation of entrepreneurs can flourish.
To delve deeper into the intricacies of building resilient innovation ecosystems, explore the EU|BIC Innovation Ecosystem Building Playbook. Embark on a journey of discovery and empowerment, shaping a future where innovation fuels sustainable growth and prosperity for all. µ
Breaking silos, filling gaps↗
By cultivating key qualities, regions grow to the forefront of innovation.
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