Support for businesses and innovators in the time of Covid-19: The role of innovation agencies

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Support for businesses and innovators in the time of Covid-19: The role of innovation agencies

By now it is clear that the Covid-19 pandemic is much more than a global health crisis. Specific impacts vary greatly from country to country, driven by the feasibility of implementing effective social distancing practices, but also by the robustness of national health systems and socio-economic support measures. Regardless of these differences, it is safe to say that around the globe the pandemic is shaking countries to their very foundations. Many governments have taken unprecedented measures to contain the spread of the virus, and while lockdowns and travel restrictions are meant to protect people’s lives, they are also having varied and often negative impacts on people’s livelihoods, mental health, and relationships.

At the same time, due to issues such as supply chain disruptions and changes in customer purchasing behaviour, the economy is taking a massive hit. Some of the businesses that were shut temporarily may never recover; people are losing their jobs, financial markets are going through serious turmoil and almost every country is expecting a sharp contraction of their GDP growth. Many studies suggest that negative consequences will likely outweigh anything experienced during the global financial crisis in 2008-09 and some predict the largest quarterly decline in economic activity since 1933 for both Europe and the US.

As policymakers find themselves in unchartered territory grappling with what is often presented as a trade-off between public safety and reviving economies, we asked ourselves what governments are doing to help businesses and innovators to survive, while also calling on their capabilities to develop innovative solutions and help tackle the crisis. This blog focuses particularly on the role taken on by innovation agencies. At their heart, these agencies aim to stimulate the creation and adoption of technologies and services that do not already exist. This puts them in a good position to identify and support innovative solutions to prevent and ease the impacts of the pandemic. 

Despite common missions, innovation agencies have different characteristics with a toolkit that can range from R&D tax credits and grants to technical advisory services and horizon scanning methodologies. These differences in mandates and available instruments come with opportunities, but also constraints, when it comes to playing an active role in supporting businesses and innovators during the crisis and beyond. However, there are a number of trends that we have observed in agencies’ responses. In the following sections we want to present a few examples, from the many we have found, under the two headings of agility and funding and new ideas and connections. 1

Agility and funding

You know that the world has changed when the European Commission manages to approve member states’ requests such as the ones to derogate from the rules against subsidising domestic industry in under 24 hours. This is a process that normally takes an average of six months to review. 

Along the same lines, we see that many innovation agencies are adopting quicker funding and payment rules for companies, and increasing the flexibility of their instruments. Internal procedures are being fast-tracked to allow for a more swift response, timelines for project implementation are extended to take some of the burden off of project teams and grant recipients, and funding and payment rules for companies as well as co-financing requirements are being adjusted in order to support businesses that are already experiencing constraints in cash flows.

UK Research and Innovation, for instance, announced in its online guidance that final-year PhD students funded by the organisation and whose work has been affected by the pandemic will be given extensions of an extra six months and additional funding to complete their research.

The Serbian Innovation Fund introduced a special call for proposals to respond to the pandemic tailored for micro, small and medium enterprises (MSMEs) developing new products, technologies and prototypes to be set up in a very short time. Despite the very short period of time the call was open, almost 300 applications were received and the 12 recipients had up to the end of May to develop their products and services such as protective reusable masks and devices for disinfection.

Along the same lines, Innovate UK launched a £20m de minimis call for innovative ideas related to Covid-19. Successful projects are receiving a £50k up front payment for projects that can take up to 3-6 month. Another aspect to highlight and which also speaks to the point about increase in processing speed, is the 4 week call turnaround time from launch to notification going out to applicants informing them of the approval for funding.

In Austria, short-term funding of EUR26 million was made available via the Austrian Research Promotion Agency (FFG) to finance individual R&D projects carried out by Austrian companies on topics such as infection prevention and control and development of new diagnostic methods. With FFG processing the Emergency Call in a fast-track procedure, the funding was then provided by the Federal Ministry for Digital and Economic Affairs (BMDW) and the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation and Technology (BMK). The planned projects should be designed for short-term implementation (development period up to 12 months). 

New ideas and connections

But beyond funding many innovation agencies have adopted measures to connect supply and demand, building on their unique position in the national innovation ecosystems. For example, Luxembourg’s innovation support agency, Luxinnovation, quickly created an internet platform connecting individual protective equipment supply and demand. It also created a research task force bringing together the combined expertise available within the Luxembourg public research sector to jointly develop innovative solutions.

Others have tackled emerging needs through innovation contests, collaborative platforms and hackathons, calling on entrepreneurs and innovators to develop solutions in response to well defined problems and coordinating these efforts to avoid unnecessary duplication. Turning our view to Latin America, we find interesting examples of this kind from Uruguay, a country that managed to finance 10,000 diagnostic kits in record time through a call launched by its innovation agency ANII and from Colombia, where Ruta N in Medellin launched the crowdfunding platform #InnovaPorLaVida where businesses and citizens can find innovative approaches from local entrepreneurs that they can directly support. 

Others used their convening power to create new alliances. For example, Innovate UK has partnered with Formula 1, bringing together racing teams that would normally call each other rivals, to rapidly produce ventilators. It has also brought in Catapult Centres and business to coordinate health related innovation activities and disseminate useful information for SMEs.

Governments currently have to act fast to keep up in a rapidly changing environment and are experimenting with new approaches as they go. Learning from the measures taken, assessing their impact and evaluating how some of these new ways of working might inform the innovation agencies of the future is key. As the UNDP puts it “Development trajectories in the long-term will be affected by the choices coun­tries make now and the support they receive.” And as colleagues argued in a previous blog, innovation will be vital for a sustainable recovery which puts innovation agencies in a great position to help inform these necessary decisions. 

To further facilitate an exchange and hear first-hand experiences from innovation agencies and governments around the globe, we are hosting a series of online events as part of the virtual delivery of our annual conference IGL2020. Come and join us on 17 June and 24 June to hear first-hand accounts from national governments and multilateral organisations from around the globe and use the opportunity to exchange ideas on how we could learn from  the crisis and take that new knowledge to help us inform the innovation policies of the future.

Author

Marieke Goettsch

Marieke Goettsch

Marieke Goettsch

Senior Policy Manager, Innovation Growth Lab

Marieke was a Senior Policy Manager for the Innovation Growth Lab in Nesta's Research, Analysis and Policy unit.

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Alex Glennie

Alex Glennie

Alex Glennie

Senior Policy Manager

Alex is a Senior Policy Manager in the Innovation Growth Lab (IGL).

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