EU Innovation Funding Needs Overhaul to Aid Small Enterprises

2025-08-08 community

Amsterdam, Friday, 8 August 2025.
Analysis reveals much of the EU’s innovation budget fails SMEs and startups. ‘Funding ideas, not companies’ advocates for bottom-up models to enhance innovation, focusing on Dutch impacts.

Current Inefficiencies in EU Innovation Funding

The European Union allocates a significant portion of its annual €10 billion innovation budget to large-scale projects, often neglecting startups and small to medium enterprises (SMEs), which are crucial for regional economic vitality [1]. The ‘Funding ideas, not companies’ report, as highlighted in Het Financieele Dagblad, argues that a mere fraction of these funds actually promotes meaningful innovation among smaller players by channeling substantial funding towards bottom-up initiatives [1][2].

Impact on the Dutch Innovation Ecosystem

The analysis calls for urgent reforms to EU funding strategies, a sentiment echoed in the Netherlands, where the current allocation does not align well with the needs of Dutch startups and SMEs. Market actors and policymakers suggest that reorienting funding to favor smaller enterprises would leverage local talent and foster a more dynamic economic environment [1][3]. Current debates influenced by the ‘Draghi’ reforms and the Technologiestrategie further stress the necessity of aligning innovation policies with practical, on-the-ground realities [2][3].

Advocating for Bottom-up Models

Proponents of reform advocate for an increase in the allocation of budget for the European Innovation Council (EIC) instruments, which currently only receive 7.5% of the total funding. Such bottom-up models are considered more effective in nurturing startups, offering them the necessary resources and flexibility to drive technological advancements and economic growth [1][2]. Compared to prevailing top-down approaches, these models ensure that smaller entities are not overshadowed by large corporations in the competitive marketplace [2].

Broader Implications for EU’s Strategic Goals

The broader implications of revising funding policies extend beyond individual startups. The proposed changes correspond with the European Commission’s goals for competitive sustainability, requiring member states to prepare as the new budget era approaches in 2028 [4]. This timeline suggests the need for immediate action to address long-standing inefficiencies in the innovation ecosystem. The discourse on these reforms is expected to intensify, with key reports scheduled for discussion at symposiums like the forthcoming AWTI in Amsterdam [5].

Bronnen

innovation policy EU funding