Tag ‘gap financing’
Today on Promoting Enterprise we are joined by Tue David Bak, director of Innovation and Growth for Region Zealand in Denmark. In the first of a series of interviews, he shares with us his experiences in identifying innovation and creating innovative environments.
Firstly, we must identify how innovation takes place before talking about how it is fostered. Innovation takes place via two processes:
1. Internal innovation within companies and organisations
2. Public or other innovative institutions creating innovation frameworks
In this context, I am going to focus more on the second process, as this is where the region plays a role. In Region Zealand there are different schemes which establish innovation frameworks to encourage innovative behaviour, for which specific funds are set aside. For example, one of the things that we do at the regional level is to reduce the risk for companies that are willing to invest in innovative ideas. Currently the focus is on innovation in the healthcare system. The region has set aside funds so that investors are taking financial fewer risks, and, hence, willing make much investments that are much greater than expected in innovation.
We also run gap financing schemes through universities, which also aim at reducing the level of risk for potential investors. Our role as the region is to bridge the gap between research and commercial finance, which in many cases could stop a potentially innovative body of research from receiving the necessary support to grow and expand. One example is the company Xnovo, which began as a research idea developed at the Technical University of Denmark. Through the support provided with the gap financing scheme it has now developed into a commercial company with its own private employees.
What are the key aspects of an environment that encourages innovation?
There are three main elements required for an innovative environment:
1. Private and public risk capital
You need free money to finance risk taking
2. The ability for public institutions to purchase innovative ideas
Region Zealand has recently changed its internal procurement laws to stimulate innovation by incentivising public institutions to purchase novel ideas and technology.
3. Excellent advising systems
Companies and individuals require guidance when it comes to innovation, therefore it is necessary to have easy to use support systems in place.
In the case of Region Zealand, I believe that we have all of the elements above but simply not enough of each. We can strengthen the advisory and support systems that currently exist. We can increase our in-house purchase of innovative ideas. In the United States the small business administration had special programmes to acquire public contracts, which is something we can learn from and build upon. In Denmark certain requirements for companies, e.g. a three year track record, have been taken away in order to make it easier for new startups which would not fulfil this criterion. Taking away this type of requirement could make certain steps in the process of scaling up and establishment easier, for example access to funds and schemes. Removing barriers is absolutely key, you have to make it easy, to provide incentives and minimise the risk of purchasing innovative ideas.
Stay tuned for more from Tue David Bak on global innovation, where it will lead us, the future of enterprise and trends in startup culture.