Jorge Costa-David European Commission Enterprise Directorate General

1. Enterprise Directorate-General Conference & awardBest Practices in Science Based IncubatorsThe role of Business Incubators in post-2006 EU What are the priorities Jorge Costa-David European Commission Enterprise Directorate General Oxford, 10 December 2004

2. The context (I) • Lisbon objectives (EU Council 2000 invited the EC and M. States to focus their action on small and micro businesses) • 24 million SMEs in Europe 25 2/3 of total private employment average size : 6 persons • European Charter for SMEs • Open method of co-ordination • « Think small first » and « SME Envoy » • Entrepreneurship agenda • Entrepreneurship Green Paper • Entrepreneurship Action Plan

3. The context (II) • Wider EU • Kök report • Blaming, Shaming, Faming • Fewer priorities, more focus • National (M. State specific) action plans • Reactions to all the above • EC DG Enterprise and its main functions • New Commission (as of 22 November 2004)

4. Enlargement: Key Facts • As from 1st May 2004 • Larger/est Integrated Market in the World • EU 25 : 450 Mio Inhabitants 25 Mio Enterprises • Implementation of the ‘ Acquis Communautaire ’ • Economic Prospects

5. Challenges/Opportunities • Strengthening Competitiveness in Candidate Countries • Entering New Markets • Investment Opportunities • Clustering, Networking, Industrial Co- operation • Sustainable Development

6. CHALLENGES FOR ‘ACCESSION’ AND CANDIDATE COUNTRIES • Private business activity has grown very fast in CCs during transition to market-oriented systems • SME sector less developed than in EU member states → however, strong latent potential for entrepreneurship • Very small businesses → need for policies, access to finance and business support to encourage the transformation of self-employed and microenterprises to larger companies • Limited knowledge of the demand for finance among SMEs in the CCs → however, latent demand potentially important • Supply of finance to SMEs in the CCs different than in EU countries → commercial banks not aware enough of SME needs

7. Role of the European Commission Strategic goal of Lisbon (2000) • “to become the most competitive and dynamic knowledge-based economy in the world… • … capable of sustainable economic growth with more and better jobs and greater social cohesion.”

8. The European Charter for Small Enterprises • Charter for Small Businesses of June 2000 commits Member States and the Commission to create “the best possible environment for small enterprises”. • Erkki Liikanen said “Charter is central to achieving the Lisbon goal of making Europe into the world’s most competitive and dynamic knowledge-based economy by 2010”

9. Charter Action Lines (I) • Education and training for entrepreneurship • Cheaper and faster start-up • Better legislation and regulation • Availability of skills • Improving online access • More out of the Single Market

10. Charter Action Lines (II) • Taxation and financial matters • Strengthen the technological capacity of small enterprises • Successful e-business models and top-class small business support • Develop stronger and more effective representation of small enterprises’ interests at Union and national level

11. Central objective of the Charter “Create top-class small business support systems, easy to access, to understand and relevant to the needs of business”

12. I. Awareness and visibility - results • 75% of EU small business lack information on the availability of support services • Better take up of support services by female entrepreneurs and by entrepreneurs with secondary and university education

13. I. Awareness and visibility - results Graph 1: Information and participation rates of businesses

14. I. Awareness and visibility - results Main reason for 60% of enterprises not to make use of support services: “they do not see any need for external help”.

15. I. Awareness and visibility - results Graph 2: Main reason for not using support services

16. I. Awareness and visibility - conclusions Two main factors influencing awareness • Promotion of support services • Direct contacts and personal visits - most welcome promotional methods • Word-of-mouth • Organisation of contact points • looking for support services at local / regional levels

17. I. Awareness and visibility - conclusions KEY CHALLENGES OF SUPPORT POLICY • Promotional tools should focus on direct and personal contacts • Co-ordination between service providers

18. II. Types of support - results • EU Small businesses need specifically targeted support services • 70% according to their size; • 77% to their sector and • 73% according to their phase of development • There seems to be a certain mismatch between demand of services and offer in Europe

19. II. Types of support – results (II) • Regional differences as far as enterprises’ needs are concerned • Demand for support services related to the development of the business location

20. II. Types of support – conclusions (III) KEY CHALLENGES OF SUPPORT POLICY • Small business need more tailor made support and more targeted services • Coherent support services in the area of professional information and finance • Demand for specific types of support differs by the location of an enterprise

21. III. Conditions and Delivery - results Graph 5: Satisfaction with use of support services

22. III. Conditions and Delivery – results (II) Graph 6: Satisfaction and participation rates

23. DG Enterprise main functions Objectives of 2001-2005 Multi-Annual Programme for SMEs • Promote entrepreneurship • Enhance growth and competitiveness • Improve administrative and regulatory environment • Improve financial environment • Facilitate access to Community support services and networks • Contribute to the « open method of coordination »- Exchange of information - Identification of best practices - Implementation and monitoring

24. COMPETITIVENESS • Competitiveness Report (annual), specific issues: • Manufacturing industry (2001) • ICT (2001) • Biotechnology (2001) • Services (2002) • Competition (2002) • Sustainable development (2002) Impact Assessment Benchmarking REGULATORY FRAMEWORK ENTREPRENEURSHIP & INNOVATION Less red tape • Charter on small enterprises • Action Plan on Regulatory Environment (2002) • Entrepreneurship Green Paper/Action Plan • Minimum standards for consultation • Communication on impact assessment • Scoreboards • Innovation (annual) • Enterprise Policy (annual) DG Enterprise main functions Enterprise Policy Main Activities

25. European agenda for Entrepreneurship Policy areas mentioned by respondents A) Continued efforts needed Administration and regulation Access to finance Support and training services Innovation Facilitating transfer of businesses Entrepreneurship education Attitudes towards risk-taking and failure

26. European agenda for Entrepreneurship Policy areas mentioned by respondents B)More efforts needed • Social security for entrepreneurs • Public procurement • State aids • Taxation • Labour law complexity and inflexibility • Internationalisation • The regional dimension

27. European agenda for Entrepreneurship Suggestions about the approach A co-ordinated approach to entrepreneurship policy • Involving policy-makers at EU, national and regional level as well as businesses organisations • Ensuring synergy among different policy areas that affect entrepreneurship (Enterprise, innovation, employment, taxation, education, …) • Respecting diversity among different regions, types of entrepreneurs and their enterprises

28. European agenda for Entrepreneurship The Entrepreneurship Action Plan Five key areas for action • Fuelling entrepreneurial mindsets • Encouraging more people to become entrepreneurs • Gearing entrepreneurs for growth and competitiveness • Improving the flow of finance • Creating a more SME-friendly regulatory and administrative framework

29. European agenda for Entrepreneurship The Entrepreneurship Action Plan Key actions 2004-2005 • Fostering entrepreneurial mindsets through school education • Reducing the stigma of failure • Facilitating transfer of businesses • Improving social security of new small business owners • Tailor-made support for women and ethnic minorities • Facilitating SMEs business cooperation in the internal market • Fostering innovative clusters • More equity and stronger balance sheets • Listening to SMEs • Simplification of tax compliance

30. The Entrepreneurship Action Plan Possible key actions 2006 and beyond • Conducting entrepreneurship campaigns • Fostering the creation of more fast-growing enterprises (gazelles) • Promoting entrepreneurship in social sectors • Enabling micro-enterprises to recruit by reducing the complexity of regulations • Facilitating SMEs’ access to public markets

31. Other EU programmes and policies on SMEs with a bearing on BIs Innovation and Technology Transfer • Innovation policy • Gate2Growth : business plan assistance & project-investor matching (www.Gate2Growth.com) • Networks • Innovation Relay Centers : 68 IRCs to promote technology transfer • ‘Innovating Regions in Europe’ network • CORDIS (www.cordis.lu)

32. EU average EU average Current performance Trends over last four years Innovation Scoreboard +/- High performance, Low trend: “Losing momentum” +/+ High performance, High trend: “Moving ahead” -/- Low performance, Low trend:“Falling further behind” -/+ Low performance, High trend: “Catching up”

33. Overall innovation performances

34. Innovation Scoreboard: M. State 1

35. Enterprise investment in LLL

36. Biotech Innovation: Performance

37. Innovation performance vs GDP R² = 0.55

38. Innovation Scoreboard: M. State 1

39. Innovation Scoreboard: M. State 2

40. Report on Benchmarking of Business Incubators • Available on: http://europa.eu.int/comm/enterprise/entrepreneurship/support_measures/incubators/index.htm Highlights issues such as: • Role of Business Incubators • Business Incubators definitions and typology • Geographical aspects and scope of incubator activities • European Policy context

41. Business Incubator type (I) Two years ago the following issues were raised at the Best practices in Science Based incubators conference • Traditional Business Incubators • ‘New economy’ incubators • Other, e.g. virtual incubators (such as the Synergy Incubator - virtual service delivered through a virtual medium, the internet)

42. Business Incubator type (II) ‘New economy’ incubators Are private-sector, profit-driven with the pay-back coming from investment in companies rather than from rental income; They tend to focus mainly on high-tech and internet-related activities and unlike ‘traditional’ incubators, do not have job creation as their principal aim; ‘New economy’ incubators often have an essentially virtual presence with financial and business services at the core of the offering unlike their ‘traditional’ counterparts that usually centre on the provision of physical workspace.

43. Setting Up and Operating Incubators (I) • Business incubators should be designed to support and be part of a broader strategic framework – either territorially orientated or focused on particular policy priorities (e.g. development of clusters), or a combination of these factors

44. Setting Up and Operating Incubators (II) • Incubators should be promoted by an inclusive partnership of public and private sector stakeholders

45. Setting Up and Operating Incubators (III) • There are a number of different set up funding models but the evidence from this project is that public support for the establishment of incubators in Europe will remain critical for the foreseeable future

46. Setting Up and Operating Incubators (IV) • There are different ways in which incubators cover their operating costs with many incubators relying on public subsidies, but dependence on this source of revenue funding should be minimised

47. Business Incubators functions (I) • The provision of physical space is central to the incubator model. Standard good practices now exist with regard to the most appropriate configuration of incubator space

48. Business Incubators functions (II) • The value added of incubator operations lies increasingly in the type and quality of business support services provided to clients and developing this aspect of European incubator operations should be a key priority in the future

49. Business Incubators functions (III) • The type of activities client companies are pursuing, in particular the technology/knowledge intensity of these activities, is the key factor (rather than physical features or operating modality) that should be used to differentiate one type of incubator from another

50. Business Incubators functions (IV) • Across Europe, there are a variety of different business incubator models and precise modalities should reflect local, regional and national circumstances and priorities