Helping Europe’s start-ups cross the ‘valley of death’

Europe’s scientists are among the best in the world at research but seemingly among the worst at making money from their discoveries. In Europe, early development is akin to crossing the “valley of death” because many would-be innovations wither and die. Notable failures littering Europe’s valley include battery material technologies and graphene.

In a bid to turn around such commercial floundering, since 2011, the European Union has funded scientists’ most promising projects to determine whether they are commercially viable. With this program, called Proof of Concept (PoC), the EU may have struck innovation gold. PoC, although modest in scale, is succeeding in bringing an unusually high percentage of projects from the lab into the commercial arena.

But public funds are tight, and industry is demanding a greater share of innovation money. Expanding the program would be an ideal way to enable more scientists—both industrial and academic—to commercialize their ideas, but it won’t be easy.

Run by the EU-funded European Research Council (ERC), PoC has a 35% success rate, taking well over 200 of its 620 completed projects from the lab to a start-up or a commercial license, according to ERC figures.

PoC’s high success rate means it has caught the eye of Europe’s politicians, who ultimately choose to fund it. And the success rate compares favorably with the 11% average success rate for projects funded by the EU’s Horizon 2020 R&D program, a seven-year initiative that will run through 2020. It has funding of about $80 billion.

PoC “helps Europe to spread the ideas and help them diffuse from top research to the industry and society,” said Carlos Moeda, European commissioner for research, science, and innovation, when announcing the latest wave of awards at the end of January of this year.

PoC is supervised by Klaus Bock, an ERC executive and former chair of the Danish National Research Foundation. “The program has been so successful that a few years ago, funding was doubled to $20 million annually,” Bock says. This year, awards of up to $150,000 have been made to 133 scientists. Any additional funding in the future, though, is not guaranteed, Bock cautions.

PoC’s success is due partly to the high quality of applicants. They are “top-notch” because they must already have received an ERC frontier research grant, Bock says. The quality of the selection panel is also a factor, he says. There are about 40 panel members from technology transfer offices, angel investment groups, and venture capital organizations, with a broad range of expertise.

This year, PoC-funded projects that focus on chemistry include electrodes made with ultrathin two-dimensional materials, superhydrophobic coatings to collect moisture from fog in low-precipitation areas of the Mediterranean, a technique for detecting and decontaminating harmful substances, and systems for the controlled generation of nanostructured materials.

Scientists have some flexibility in how they spend the money. For example, they can use it to establish intellectual property rights, investigate business opportunities, or conduct technical validation. Awardees can also use the money to cover initial expenses for establishing a company.

Among past PoC successes is a project undertaken by Peter H. Seeberger, director of the Max Planck Institute of Colloids & Interfaces, to research glycans and the immune system with an eye to developing vaccines and other therapies for infectious disease. His PoC grant led to the formation of three spin-off companies in Germany and Switzerland. One of Seeberger’s commercial products is a test for diagnosing adverse reactions to heparin.

Henrique Veiga Fernandes and associates at Portugal’s Institute of Molecular Medicine are also enjoying start-up success. They set up StemCell2MAX, a Portuguese start-up that produces stem cells for research and transplants.

Bidding to develop a commercial product with one of this year’s PoC awards is Athanasios Papathanasiou, who plans to demonstrate how clean water can be collected on superhydrophobic surfaces from fog in arid areas. Papathanasiou, an assistant professor of chemical engineering at the National Technical University of Athens, developed a coating that alternates between being hydrophobic and hydrophilic. Inspired by lotus leaves, the coating has “microspikes” on which water droplets can rest, preventing their absorption. He will use the PoC grant to demonstrate affordable water collection systems.

Nicola Pugno, professor of environmental engineering at Italy’s University of Trento, is the recipient of another of this year’s 133 PoC awards. Pugno aims to produce superstrong spider silk and enhance its properties with nanomaterials such as nanotubes and graphene. The PoC grant will fund the development of a manufacturing process that could lead to the commercialization of these novel materials, Pugno says.

PoC grants have become important in Italy in a short time because few Italian universities have the systems in place to translate technology from academic labs to industry, Pugno says. And the high level of competition for other translational grants in Italy “is ridiculous,” he points out. Pugno says his frustration is shared by many of his colleagues in universities throughout Italy.

But even though the PoC program has become an important source of funding for some academics, they lament that once the money is spent, they must rely on their own host organizations to help translate the proof of concept into commercial reality.

Another limitation of PoC is that the award is capped at 150,000 euros, close to US$160,000 at today’s exchange rates. Even given its success, a marked increase in the size of the PoC program is not in the cards, Bock acknowledges.

An approximate equivalent of PoC in the U.S. is the government-funded Small Business Innovation Research program. With an annual budget of $2.5 billion, the SBIR funding pot dwarfs that of PoC, and it emphasizes small companies rather than academics. SBIR, similarly to PoC, provides individual awards of $150,000, but companies also have a chance to pick up Phase II project commercialization awards that can go up to about $1 million.

SBIR’s industry-oriented approach is one that the European Chemical Industry Council (Cefic) would like to see applied in Europe. More public funding of innovation should be going into companies rather than academics, the industry association says.

But the balance between industry and academia is not just about the money. “The entire innovation ecosystem—academia, research and technology organizations, start-ups, small companies, and large industry—must be efficient and must work in a collaborative way,” says Pierre Barthelemy, Cefic’s director for research and innovation. “Beyond money, we need the right conditions in place to support innovation.”

PoC may be a flying success, but there appear to be plenty of obstacles to making it a bigger and broader program. Even for the lucky scientists selected for PoC funding, Europe’s valley of death continues to be a high-risk place to cross.