Eastern partner countries have significantly built up their innovation ecosystems in the pastrecent years; many hubs, accelerators and start-ups took the stage and business support programmes were introduced. Yet, there are still gaps regarding the capacity of ecosystem actors to service the growing needs of start-ups and small-to-medium-sized enterprises (SMEs). The lack of resources for ecosystem expansion and specialisation of innovation support actors in EaP countries hinders their sustainable development and ecosystem performance. In comparison, ecosystem development progressed more quickly in the EU countries, which inherited a strong business support framework and abundant resources for ecosystem building in line with growing market needs.
During Phase I of EU4Digital, the ICT Innovation thematic area conducted market research comparing the start-up ecosystem performance of different countries. This showed that conversion rates between the startup development stages were 70% lower in Eastern partner countries than in Central and Eastern Europe. To improve performance, Phase II of the initiative focuses on specifying the gaps in Eastern partner countries’ start-up and innovation ecosystems, developing targeted strategies for intervention, and providing the platform for ecosystem development mapping and data-supported policy-making. The EU4Digital initiative aims to foster a robust and inclusive ICT innovation ecosystem by promoting the critical role of ecosystem builders, the importance of partnerships between public and private sectors, and by empowering high-performance incubation programmes that provide access to knowledge, markets, capital, and other operational resources.
EU4Digital follows five lines of action in the area of ICT Innovation:
- Promoting development of a favourable legislative framework in the Eastern Neighbourhood region that advances ICT innovations, taking into account EU approaches and best practices. In Phase I this was done in five policy areas prioritised by the Eastern partner countries and included country-specific policy recommendations and action plans for country stakeholders to implement. In Phase II we are developing policy recommendations to enable the use of specific emerging technologies (e.g., European AI legal framework) in the region in alignment with the EU policies.
- Promoting networking between innovation ecosystem players within the region and with the key EU networks and organisations. This happens through targeted events, study visits and Startup and Innovation Forums, in synergy with other ICT Innovation thematic area activities.
- Promoting the EaP Startups ecosystem platform to facilitate its increased use by Eastern partner countries’ stakeholders as well as EU investors.
- Implementing promotion campaigns in the Eastern partner countries to raise awareness of the importance of ICT innovation and to increase the participation of women in the ICT innovation field.
- In Phase I, EU4Digital conducted a ‘Market assessment for Digital Innovation and Scale-up Initiative (DISC) in Eastern partner countries’. EU4Digital also developed a guide for ICT entrepreneurial ecosystem development, including maturity assessments and country-specific recommendations. The gaps identified in Phase I led to continued, in-depth research in Phase II, to identify in detail the gaps hindering ecosystem performance. Following the development of detailed recommendations for empowering high-performance incubation, EU4Digital Facility is supporting the launch of a specific regional programme aimed at eliminating the gaps in incubation support. EU4Digital will also develop a common framework and provide recommendations for the development of innovation clusters in the Eastern partner countries.
Innovation needs a favourable environment. This includes access to knowledge, risk-tolerant funding and the ability to make and learn from mistakes.
State support is needed in areas where the market fails to address innovators’ needs. Specific tax regimes create incentives for both start-ups and existing businesses to innovate in areas of prior interest for the national economy.
Another example is the need to have a regulatory framework for the operation of crowdfunding, business angels and venture capital so that that it defends both investors and start-ups. Regulatory ‘sandboxes’ – controlled environments for testing innovations – are created to check how new technologies such as Artificial Intelligence and blockchain can be used to satisfy customers’ needs without exposing them to risks.
Aligning basic terms and learning from EU best practices, tools and regulatory approaches will allow businesses from the Eastern partner countries and EU countries to work on mutually understandable rules and facilitate the flow of risk investments and innovations. In EU4Digital Facility Phase 1, the ICT Innovation thematic area developed policy recommendations and action plans in five ICT innovation policy areas prioritised by the Eastern partner countries. In Phase 2, it will develop policy recommendations to enable the use of specific emerging technologies (e.g., European AI legal framework) in the region in alignment with EU policies.
In the Digital Innovation and Scale-up initiative (DISC), EU4Digital Facility Phase I conducted a ‘Market assessment for Digital Innovation and Scale-up Initiative (DISC) in Eastern partner countries’. EU4Digital also developed a guide for ICT entrepreneurial ecosystem development, including maturity assessments and country-specific recommendations. The gaps identified led to continued, in-depth research in Phase II, to identify in detail the gaps hindering ecosystem performance. Following the development of detailed recommendations for empowering high-performance incubation, EU4Digital Facility is supporting the launch of a targeted regional programme aimed at eliminating the gaps on the start-ups incubation stage.
The EU has created a number of online networks and platforms for ICT innovation ecosystem players, such as start-ups, accelerators, venture capitalists, etc. These networks and platforms allow businesses and organisations in different EU Member States to connect, exchange contacts and ideas, and participate in shared initiatives and events.
In 2022, EU4Digital launched the EaP Startups ecosystem platform in partnership with Dealroom. The platform provides macro-level trends and trusted insights into the ICT innovation ecosystem to support data-driven policy making, match startups with potential investors and much more, benefitting a broad range of users:
- Government institutions and policy makers
- Venture Capitalists, angel investors and other investors
- Start-ups and scale-ups
- Researchers and journalists
- Universities, service providers, accelerators.
EU4Digital ICT Innovation networking events facilitate the establishment of communities and networks in the EaP region. The events build bilateral and multilateral bridges between EaP and EU organisations and stakeholders, enabling deeper knowledge and understanding of relevant EU best practices and their transfer to Eastern partner countries via further joint activities and projects. Therefore, these events target topic-specific audiences, selected from ministerial level representatives and agencies, associations and networks of relevant policy areas, ICT infrastructure organisations and other ICT innovation ecosystem actors.
Phase I (2019-2022) EU4Digital ICT Innovation networking events succeeded in bridging between EaP stakeholders and the following organisations: European Cluster Collaboration Platform (ECCP), European Business Angels Network (EBAN), Business Angels Europe (BAE), European Business & Innovation Centre Network (EBN), European Crowdfunding Network (ECN), European IP Office (EUIPO), European IP Helpdesk, Digital Innovation Hubs Network (DIHNET), I4MS, European Digital SME Alliance and Startup Europe Regions Network (SERN). In Phase II (2022-2025) we have already made bridges with Women Go Tech, WEgate, Women Business Angels, WINGATE, Female founders, International Association for Trusted Blockchain Applications (INATBA) and EU Blockchain Observatory and Forum.