European governments, facing a nearly $1
trillion gap in investment funding, are casting a wide net to back start-ups developing
pioneering technologies.
·
Innovative
funding model:
Germany’s Federal Agency for Breakthrough Innovation (SPRIND) is backing
high-risk, potentially transformative technologies that conventional investors
and government grant programmes often avoid.
·
C3
Biotech breakthrough:
UK-based C3 Biotech
developed a low-cost process to convert agricultural waste such as
potato-processing residues into acrylic
glass.
·
Unexpected
solution: After
expensive stainless-steel equipment failed, researchers discovered that
inexpensive plastic
containers could be used in the successful process.
·
German
funding for UK innovation:
Although SPRIND is funded by the German
government, it finances promising projects across Europe,
including C3 Biotech in Manchester, England.
·
Europe’s
competitiveness challenge:
Europe has fallen behind the US
and China in investment, R&D and productivity growth,
threatening its traditional strengths in automobiles,
pharmaceuticals and machinery.
·
Large
investment gap:
Estimates suggest Europe would need almost $1 trillion in additional annual investment
to remain competitive.
·
Structural
disadvantages: High
energy costs, relatively expensive labour, geopolitical conflicts and the EU’s
slow decision-making processes are weakening Europe’s industrial
competitiveness.
·
SPRIND’s
mission: The
agency seeks innovations capable of solving major technological, social or environmental problems,
creating entirely new markets or transforming existing ones.
·
Fast
grant decisions:
SPRIND says the average period between a grant application and signing of a
contract is only 14 days,
compared with months or years for many conventional programmes.
·
Alternative
to Horizon Europe: The
approach contrasts with the EU’s €95.5
billion Horizon Europe programme, which critics say involves
complex applications, confusing rules and a bias toward larger companies.
·
DARPA-inspired
model:
SPRIND draws inspiration from the US Defense Advanced Research Projects Agency
(DARPA), which supported technologies including the internet
and major aerospace and defence innovations.
·
Tackling
the “valley of death”:
SPRIND aims to bridge the funding gap between early-stage scientific research and commercial-scale
production, where many promising technologies fail for lack of
capital.
·
Challenge-based
competition:
SPRIND identifies technological challenges and invites entrepreneurs, academics and researchers
to compete for funding, with expert juries selecting promising proposals.
·
Funding
record: Since
its establishment in 2020,
SPRIND has received 4,740
submissions and funded 376
teams.
·
Failure
is accepted: Teams
must demonstrate measurable progress to receive additional funding, but failed projects are considered an
expected part of the high-risk innovation model.
·
C3
Biotech project: Its
three-year SPRIND-funded challenge focused on developing a commercially viable
method to transform waste
streams into industrial products.
·
Other
frontier technologies:
SPRIND has also funded projects involving AI and health data, microgravity-based drug development and
advanced AI systems.
·
Major
AI investment:
SPRIND recently awarded up to €26.5
million to 10 teams from five countries developing frontier AI
systems.
·
Ambitious
commercial target: By
the end of 2028, SPRIND plans to help three leading AI teams raise €1 billion each from
public and private investors.
·
Growing
international cooperation:
Sweden’s Vinnova
is partnering with SPRIND on technology challenges, including methods to
destroy small drones while protecting civilians.
·
Model
spreading across Europe: France plans to
establish its own breakthrough innovation agency, while the Netherlands is
considering a similar initiative.
·
C3
Biotech’s commercial potential:
Its fermentation process uses bacteria to consume starch waste from potato-chip
production and generate Citrasyn, which can be processed
into acrylic glass.
·
Potential
applications: The
material could be used in products ranging from automobile headlamps to toys and could
support manufacturing through moulding and 3-D printing.
·
Proof
of concept: C3
Biotech recently achieved 180
days of continuous production and is now discussing
commercialisation with interested corporations.
SPRIND
represents a DARPA-style
European model for funding breakthrough innovation—accepting
high failure rates in exchange for the possibility of creating entirely new
industries. Its willingness to fund projects across national borders could
become a significant model for Europe as it seeks to close its technology, productivity and investment
gap with the US and China.
The
shiny cylindrical tanks and slant-roofed control panels shoved against a wall in
C3 Biotech’s laboratory have essentially been turned into a multimillion-dollar
graveyard of high-grade stainless steel equipment.
All
of this state-of-the art gear was discarded during the company’s quest to discover
a cheap way to convert agricultural waste like potato peels or sugar beet pulp into
acrylic glass, a material widely used in manufacturing.
Nigel
Scrutton, a co-founder of C3 Biotech in Stockport, England, makes a point of showing
off these expensive failures before explaining that the eureka solution involved
using discount plastic tubs — the kind you might find at Walmart.
What
is equally surprising is that this British company’s breakthrough has been funded
by an unusual grant from the German government, part of a novel effort to support
shoot-the-moon innovation throughout Europe.
The
pressure on Europe to better compete with Chinese and American technological and
industrial advancements is peaking.
Europe
has been trailing the world’s two largest economies for more than a decade on several
measures of competitiveness, including investment, research and development, and
productivity growth.
At
stake is Europe’s “lead in many historic strongholds, including automotive, pharmaceuticals
and machinery,” a report on competitiveness from McKinsey Global Institute concluded.
The
region would have to spend nearly $1 trillion more in investment annually just to
keep up, according to estimates.
Soaring
energy costs, aggravated by wars, relatively high labor
costs and the European Union’s trademark slow decision-making process are also blamed
for blunting Europe’s competitive edge.
Amid
the dire forecasts, Germany’s Federal Agency for Breakthrough Innovation — called
SPRIND — offers a breath of optimism.
The
office is determined to buck ingrained assumptions and prove that governments can
fund ambitious, cutting-edge ventures quickly and across national borders.
SPRIND
is hardly the first effort by the European Union or Britain aimed at jump-starting
innovation and research. The European Union’s 95.5-billion-euro Horizon Europe program
has been running since 2020, and a €175 billion budget had been proposed for the
next phase, scheduled to commence in 2028.
Horizon’s
track record has been mixed, with critics complaining about cumbersome applications,
confusing rules and a preference for large corporations over disruptive enterprises.
SPRIND
is much smaller, but it thinks big. Its goal is innovations that “solve a massive
technological, social or environmental problem,” create “a completely new market”
or change an existing one.
“SPRIND
is completely different,” said Mr. Scrutton, who has applied
for countless grants during nearly four decades of research at C3 Biotech and the
University of Manchester, where he is a professor. Most have timelines that span
several months or even years.
The
average time between the filing of a grant application at SPRIND and the signing
of a contract is 14 days, according to the agency.
A
seminal report on the competitiveness crisis commissioned by the European Union
and headed by Mario Draghi, a former prime minister of Italy, singled out SPRIND’s
approach as a model for innovation.
One
inspiration for SPRIND was the Defense Advanced Research
Projects Agency in the United States, or DARPA, which laid the foundation for the
internet and backed projects like the Saturn rocket, armed drones and biofeedback
systems.
Public
research funding often steers clear of projects that may have a big payoff but also
a big possibility of failure and could take a long time to develop. Groundbreaking
innovations frequently perish in what’s known as the “valley of death” because they
can’t get money to finance the leap between early-stage research and commercial
production.
Jano
Costard, whose title at SPRIND is head of challenges, wants to give researchers
the “freedom to really push the boundaries and do something that you wouldn’t get
funding for probably through a conventional venture capital route.”
The
strategy is to offer challenges to develop pioneering products and technologies,
and then to invite teams of entrepreneurs, academics and researchers to compete.
A jury of experts screens the proposals. SPRIND also offers grants, investment and
financing for innovative start-ups outside its own sponsored challenges.
Since
it started in early 2020, SPRIND has received 4,740 submissions and funded 376 teams.
To obtain the next round of funding, a team must demonstrate measurable progress.
Failures are expected.
The
goal of C3 Biotech’s three-year biomanufacturing challenge was to create a way to
cheaply convert waste streams into products that could ultimately be produced on
an industrial scale.
Other
challenges funded by SPRIND involved the application of artificial intelligence
to health data, the use of microgravity for drug development and more.
One
unusual feature of how SPRIND works is that while its funding comes from the German
government, the organization is willing to spend it all over Europe, including the
Manchester, England, suburb where C3 Biotech is located.
“We
need to create breakthroughs, and these might not just come from Germany,” Mr. Costard
said. After all, if a significant advance could, say, reduce energy prices in Germany,
then it’s money well spent.
Last
month, SPRIND awarded grants worth up to €26.5 million to 10 teams from five countries
to develop frontier artificial intelligence systems. At the end of 2028, the agency
plans to help three teams that emerge as winners to raise €1 billion each from public
and private investors.
Vinnova,
a Swedish government agency that similarly seeds innovative start-ups, is teaming
up with SPRIND on a new technology challenge: how to destroy small drones while
safeguarding civilians from fallout.
Darja
Isaksson, Vinnova’s director general, said that “we were
really surprised” to learn that SPRIND was funding teams outside Germany. That was
“one of the things that really caught my attention.”
Other
countries have taken notice. Last month, France announced plans to create its own
breakthrough innovation agency that would work with SPRIND. The Netherlands, too,
is eyeing proposals to set up its own version of the German incubator.
At
C3 Biotech, the team is tending to SPRIND’s investment. In the lab are plastic vats
filled with hungry, salt-loving bacteria that are feeding on starch left over from
the manufacture of potato chips.
The
biological compound that this fermentation produces can be processed into acrylic
glass and used in a mold or 3-D printer to manufacture
thousands of products, from automobile headlamps to children’s toys.
A
scientist cradled prized prototypes in his hand: a tiny black toy brick, a translucent
blue heart and a yellow Lego-like figurine, all made from Citrasyn,
the new chemical produced in their lab.
Establishing
a cheap process to make chemicals from waste streams “has been the holy grail of
biomanufacturing for many, many years,” Mr. Scrutton said.
This month, he and his team celebrated a landmark: 180 days of continuous production.
C3
Biotech is now talking to corporations that are interested in commercializing the
discovery.
Companies
like C3 Biotech could provide the kind of innovations that undergird Europe’s future
prosperity.
“That
is exactly kind of the background against which SPRIND was created,” Mr. Costard
said. “Our job now is to make sure that we are able to create those new industries.”