A report on ‘Funding ideas, not companies: Rethinking EU innovation policy from the bottom up’ by the Institute for European Policy Making at Bocconi University was published on 30 June 2025 and presented at a lunch debate with, amongst others, EC DG RTD Director-General Marc Lemaître, on 3 July 2025.
The key findings of the report include the following:
- Funding allocation skewed toward low-growth firms: More than half of Horizon programme funding goes to mid-tech firms and consultancies with limited innovation and growth potential.
- Dominance of large corporate groups: Many beneficiaries are repeat recipients – some involved in up to 200 projects – typically belonging to wide corporate groups. These entities receive funding for research close to their corporate interests.
- Collaborative instruments: Limited impact: Most Horizon funding (60-80%) is directed to collaborative instruments involving sizable international consortia with detailed top-down research agendas. However, there is no evidence that these collaborations improve recipients’ long-term growth or innovation outcomes. Some positive effects are observed during the grant period (about three years), but they do not persist beyond the funding horizon.
- Collaborative instruments: Research programmes dominated by Member States: The work programmes for these collaborative instruments are elaborated by big programme committees in which national, often corporate interests dominate. This leads to programmes that seek incremental, rather than radical innovation.
- Early-stage innovation support seems ineffective: Grants targeting early-stage innovation often go to large corporate entities rather than small independent firms. For these large firms it is difficult to measure the impact of relatively small grants.
- Single-entity, SME-targeted instruments show the most promise: Funding programmes like the SME Instrument and European Innovation Council (EIC) Accelerator show significant and lasting positive effects – but only for small, independent firms (i.e. SMEs that do not belong to wider groups). These companies are also more likely to file high-tech patents.
- Limited reach of effective funding: Only 35% of funding reaches independent innovators in the sample; the figure drops to 12% for the overall Horizon programme. Additionally, the strongest growth effects are observed in consultancy and support service sectors, not in IT or manufacturing.
The report therefore makes the following key recommendations:
- Refocus Horizon funding: Reallocate resources from collaborative instruments to SME-targeted programmes – especially those supporting early-stage, high-potential innovation – within Pillar 3 of Horizon Europe (under the EIC).
- Support independent innovators: Prioritise funding for small, independent companies that do not belong to corporate groups. Impose limits on repeated participation and restrict funding to consultancy firms.
- Encourage novelty and bottom-up innovation: Promote open and flexible calls to allow space for novel and diverse ideas, following the EIC’s “Challenge” approach.
IEP@BU report: Funding ideas, not companies – Rethinking EU innovation from the bottom up