How Innovation Vouchers Are Boosting Business

In recent years, the number of innovation voucher schemes in Europe has virtually exploded. Across the continent, companies are using publicly funded vouchers for everything from solving technical problems to finding more profitable business models. The value of the support may be small in terms of euros or pounds, but the impact of these vouchers on the transfer innovation knowledge from the academic world to small businesses is far greater.

Previous to 2006, only a handful of innovation voucher schemes existed in Europe. Since then, more than 20 new publicly supported schemes have been launched.

Since the phrase was first coined in the Netherlands in the year 2000, innovation vouchers have become an increasingly popular way for states and regional bodies to grease the wheels for small and medium sized businesses looking to tap the innovative power of the academic world or private consulting companies.

And with good reason too, says Sven Schade, policy officer for innovation support at the European Commission’s Enterprise and Industry Directorate:

Innovation vouchers are more in line with the philosophy of today’s companies

- Innovation vouchers are more in line with the philosophy of today’s companies, where small, short term projects dominate. You can’t capture that with traditional support structures, which are more focused on long term projects. So far, innovation vouchers is the best way to support this.

Inherent simplicity

A big part of the innovation voucher system’s appeal is its simplicity. A small business that is  awarded with one or several vouchers can seek academic expertise, usually from pre-approved universities and research institutes, to solve a specific problem or get an influx of new ideas for their business. The company pays the researchers or consultants with the voucher, which in turn is reimbursed by the issuer, such as the state or regional authority.

The value of these vouchers is generally quite low, around the equivalent of a few thousand euros. On the other hand, the application process can amount to no more than a 30 minute web questionnaire and approval on the application can be given in days rather than weeks or months.

It’s better to let the businesses themselves identify the topics they would like to address

- Since the sums are relatively low, it doesn’t make sense to have a long application process and heavy evaluation procedures. It’s better to let the businesses themselves identify the topics they would like to address. An innovation voucher can be an incredibly flexible mechanism to test and kick-start a very innovative activity, says Sven Schade.

In many cases, businesses can also apply for larger checks, up to 25.000 euros, by agreeing to co-finance it themselves.

Big regional variations

There are of course large regional variations in the scope of innovation vouchers as well as the conditions for getting them. Many programmes are highly specialized, targeting specific companies and only supplying specific knowledge providers.

- In Manchester in the United Kingdom, for instance, there is an innovation voucher scheme where businesses consult local companies working with design and creativity. The added idea is to bring designers closer to the market, says Sven Schade.

Other countries, such as France, let their businesses choose knowledge providers from both the public and the private sector, domestic or foreign.

Introduce innovation processes

Apart from the inherent simplicity of the scheme, another reason for the innovation vouchers’ growing popularity is their ability to introduce innovation processes to new businesses. In Finland, a study showed that two out of three participating companies had never used any outside expertise in their innovation process before being issued vouchers. And a large proportion continued their cooperation with the academic institutions even after the vouchers had been used up.

Many of the current innovation voucher schemes are supported by the EU’s structural funds for regional development. Sven Schade foresees a future where other types of financing from the EU could be used to back up these schemes, which would negate the need to limit eligible service providers to a certain region or province.

Why not co-finance some local schemes and make them eligible to seek expertise from all over Europe?

- There are no plans to establish any European innovation vouchers issued by the EU, the organization is too slow for that. But why not co-finance some local schemes and make the companies eligible to seek expertise from all over Europe? he concludes.

By Erik Olausson, freelance journalist

About innovation vouchers in Europe

There are at least 25 different innovation voucher schemes in operation today in the EU member states. Eleven do not require any co-financing from the applying company, while eight require as much as 50 per cent co-financing from the applicant. Voucher values vary from 500 euros in the Belgian province of Wallonia to 25.000 euros in Portugal.

Vouchers can be used to finance several activities including applied research, product development, innovation management and in a few cases intellectual property management and establishment of e-business. Most schemes allow only public or semi-public institutions to be used as knowledge providers and limit these to regional or national knowledge providers.

Applications for the innovation vouchers are handled by the issuer, usually a regional or national body working with industry and business development. For example, in Ireland, vouchers are issued by Enterprise Ireland, in the United Kingdom’s Northwest region, businesses apply to Northwest Regional Development Agency and in Finland the state-run innovation development agency Tekes handles the vouchers.

About Sven Schade

Sven Schade works as Policy Officer at the Innovation Directorate within the Directorate General for Enterprise and Industry under the European Commission. He co-authored a recent report on the different innovation voucher schemes in place around Europe. Before joining the European Commission in 2006 he worked as a freelance consultant for innovation projects, including the establishment of  cluster initiatives and an incubator in Lithuania.

  • Egils Milbergs

    Interesting. Need to expand this innovation voucher concept into the US. Provides a potential pull mechanism for commercialization of university/federal lab research and expertise.

  • Mike

    This is interesting, do you have a feel for how many voucher schemes are running a year from when this was written? Also, what differentiates the better performing schemes from those that are not performing as well?