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European SME grants waste Dutch innovative talent

Potential innovative diamonds fobbed off with consolation prize due to lack of funds
31 March 2017
Dries Faems

With a relatively high number of successful applications, Dutch SMEs are strongly represented within the European SME Instrument grant programme. At the same time, a lack of funds within that programme is a huge risk for Dutch SMEs. More than 50% of the Dutch entrepreneurs who apply for additional funding via a prestigious grant after a successful first phase project in the programme are fobbed off with a consolation prize due to a lack of available funds. Their applications are awarded the quality label ‘seal of excellence’, but no actual funds. Thus the SME Instrument is leading to a waste of Dutch innovative talent, concludes Prof. Dries Faems of Innovation and Organization at the University of Groningen.

Faems and colleagues from the Scuola Superiore Sant’Anna analysed the participation and success of Dutch SMEs in this European funding programme. Faems is in favour of better dovetailing of SME funding instruments at European, national and regional levels. ‘Dutch companies who miss out on funding in the second round of the SME Instrument, despite excellent assessments, should be able to acquire funding from similar funding instruments at the national or regional level in a way that cuts down and simplifies the red tape’, says Faems. ‘Dutch bodies that operate within the country’s borders, like the Ministry of Economic Affairs, could thus play an important role in the stimulation of innovation among Dutch SMEs.’

Good representation

‘The good news is that Dutch SMEs are well represented within the SME Instrument’, concludes Faems. ‘Dutch SMEs are relatively active in applying for and being awarded grants. The Netherlands is in sixth place regarding number of winning projects, immediately after the large countries (Spain, France, Italy, Germany and the United Kingdom).

Huge risk

The downside is that Dutch SMEs run a huge risk within the programme, says Faems. ‘Our analyses show that entrepreneurs can run a successful Phase 1 project, then submit an application for a Phase 2 project that is assessed by evaluators as of high quality, but eventually miss the funding boat as there are limited funds available within the SME Instrument. These companies are awarded a “seal of excellence” as a sort of consolation prize but no funds. Potential innovative diamonds are simply fobbed off.’

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Last modified:29 February 2024 10.02 a.m.
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