01 Jun 2015
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Rebooting Europe

Under Carlos Moedas’s watch, the EU makes efforts to innovate
by Janelle Nanos

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For centuries, Europe has been at the forefront of innovation: the Greek and Roman architects, the Renaissance inventors, the intrepid navigators in the Age of Exploration. Even in more recent history, Europe has dazzled in its efforts to recover from the devastating impact of two world wars, rebuilding cities and economies, many of which were thriving as we entered the new millennium.

But in the wake of the economic downturn, that innovative spirit has faltered, and now Carlos Moedas (MBA 2000), in his new role as European commissioner for research, science, and innovation, must determine how to reignite that flame.

The former Goldman Sachs banker and Portuguese secretary of state has his work cut out for him. The EU’s 2012 Community Innovation Survey found that while nearly half of European companies claimed innovation activity between 2008 and 2010, that number dropped nearly 4 percent in the next two years. Global patent filings from the EU also dropped to record lows, hovering at a dismal 5.8 percent of global filings in 2013. (In comparison, the United States was at 22.3 percent, China at 32.1 percent.) And state-level regulatory restrictions throughout many countries in Europe are crippling startups that are increasingly looking outside the EU for both funding and a safe haven to launch their businesses.

“The United States is a country where you are able to transform knowledge into products, and I think Europe needs more of that,” says Moedas, who will hold the post through 2019. “The big objective of my tenure is to help Europe to be able to have an ecosystem where you can actually create the conditions for fundamental science and research to be transformed into real products and businesses that create jobs and growth.”

His action plan? Horizon 2020, the EU’s seven-year, nearly 80 billion euro program designed to break down regulatory barriers between the 28 member states and push research and innovation through grantmaking and public-private partnerships.

The potential was immediately obvious: Within two months of its November call for proposals, a targeted effort to improve Ebola treatments resulted in development of an antiviral drug with potential to treat the early stages of the disease. Better research, Moedas says, also requires better support for researchers. At a gathering of university leaders in early March, he shared his vision to make it easier for researchers to settle throughout Europe while also improving job security and pension options.

In the speech, Moedas also lauded the newly launched European Fund for Strategic Investments, an effort that will mobilize 315 billion euros to expand the work of incubators and promote the flow of more venture capital to EU startups. (Currently, 70 to 80 percent of EU businesses rely on bank loans for funding, whereas in the United States that number is closer to 30 percent. The fund, according to EU Commission estimates, could create up to 1.3 million new jobs and help pump between 330 and 410 billion euros into the EU GDP over the next three years.)

Moedas sees his role as not only finding funding and research opportunities for budding entrepreneurs, but also creating a vibrant startup culture. “A lot of young Europeans who go to the United States are fantastic risk takers,” he says. “The question is, why don’t they take those kinds of risks in Europe? That’s because the barriers and frameworks and bureaucracy don’t give them the incentives.”

One solution, he notes, is bringing innovation into classrooms far earlier so as to foster an entrepreneurial spirit in students. Building a whole new culture must come from the ground up. “The whole point,” Moedas says, “is to create an environment where people are not afraid of failure.”

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