Start-ups in Central and Eastern Europe are Finding Help from New Initiatives
At Serbia’s Zvezdara science and technology park, a 21-hectare concrete and glass complex on the outskirts of Belgrade, Ivanka Milenkovic holds up a plate of succulent-looking oyster mushrooms. “Serbia has to play to its strengths. Agriculture is one of them,” she says, before revealing that her company has grown the mushrooms entirely from recycled cellulose waste materials.
Milenkovic, a microbiologist by training, is general manager of Ekofungi, one of more than 50 small businesses that are benefiting from financial grants allocated under a €8.4m European Union-inspired project designed to stimulate creativity and the use of innovative technologies in Serbia.
Similar EU initiatives are afoot elsewhere in central and eastern Europe as part of the bloc’s long-term effort to raise living standards, promote an entrepreneurial spirit and develop competitive, value-added industries in the continent’s former communist half.
The World Bank administers the Serbian project, with the help of several Belgrade research institutes, but the EU provides the financing. The aim is also to accustom administrators and businesses to handling EU aid funds as Serbia gears up for entry into the 28-nation bloc, a prospect the government hopes will happen by 2020. Small and medium-sized companies can win grants of up to €80,000, if they display a potential for creating new intellectual property and for meeting a clear market demand.
Milenkovic is in no doubt about the project’s value for Serbia, a country whose economic progress was severely retarded after the fall of communism in eastern Europe by a decade of wars, extreme nationalism and financial chaos under Slobodan Milosevic, the late despot who was overthrown in 2000. It was partly Serbia’s experience of international isolation and economic dislocation in the 1990s that prompted her to search for ways to increase the efficiency of local food production.
Years of experiments led to the invention of advanced waste technology capable of producing the substrate required for oyster mushroom cultivation. This might never have been converted into a business had it not been for the EU-World Bank’s Innovation Serbia Project, which provided finance and technical advice.
Mushroom production based on Milenkovic’s patented technology began in June 2013, and she aims to produce 15-20 tons of oyster mushrooms a year for hotels, restaurants, cafés and bakeries.
“For small businesses in Serbia, conditions are very difficult. Just wondering how to survive is today’s problem,” Milenkovic says.
“But I look after my employees like pearls, because they are so dedicated.”
Other companies that benefit from the EU-World Bank project include mBrainTrain, which builds smartphone-operated headgear that records and analyses electrical brain activity, aiding the rehabilitation of stroke patients, and Coprix Media, which is developing an interactive educational application to help pre-school and primary children learn basic mathematics.
“Before the innovation fund existed you had to go to a bank for credit, and either it would be very expensive or you wouldn’t even have got a meeting with the bank manager,” says Vladimir Kopric, chief executive of Coprix Media. “Now there is a better understanding in Serbia that innovation drives the economy.”
Of course, the sums of money available under recent programmes pale into insignificance compared with the tens of billions of euros that poured into the region every year before the onset of the 2008 financial crisis. According to a report published last December by the McKinsey Global Institute, the research arm of the McKinsey management consultancy, net foreign direct investment into central and eastern Europe peaked in 2007 at €33bn, or 5 per cent of the region’s annual economic output.
Moreover, in the years between the demise of communism in 1989 and the financial implosion of 2008, roughly 80 per cent of the region’s foreign capital arrived from western Europe. Most of this investment was concentrated in sectors such as the car industry, banks and outsourcing, where western European, US and Asian investors saw a chance to take advantage of the well-educated, low-cost labour forces or to acquire assets at bargain prices.
Undoubtedly, these waves of foreign capital drove up overall labour productivity, but the levels attained were still below those of advanced western and Asian economies. Moreover, the benefits of technology transfer and shared management expertise tended to be limited to the industries in which foreign direct investment was most heavily concentrated.
When the west’s financial crisis slammed the brakes on foreign direct investment in central and eastern Europe, the region made two unpleasant discoveries. First, it had abruptly lost one of the principal forces propelling the labour productivity improvements of the previous two decades. Second, its domestic savings rates were too low to compensate for the fleeing foreign capital on which economic modernisation had depended.
These two factors explain the importance of EU-funded programmes in sustaining investment in the region and in trying to channel it in the direction of business creativity.
A similar role is played by the US Agency for International Development, which, for example, launched a $33m project in March aimed at improving access to capital for innovative agricultural businesses in Albania. “We have to change the mentality of support schemes and agricultural survival, and move towards investments in modern technology through financing from the banking sector,” says Edmond Panariti, Albania’s agriculture minister.
Indeed, the McKinsey report identified agriculture and food processing as an area of potential for central and eastern Europe. It suggested that, with the help of the larger foreign food processors such as Nestlé and Olam, as well as the involvement of private equity groups, the region could adopt new agricultural technologies and build food research and development centres.
At present, food exports from central and eastern Europe consist mainly of cereal-based products and meat. Targeted foreign investment would enable the region’s food processing industry to turn its attention to high value-added products such as dairy items, alcoholic beverages and soft drinks associated with fitness and health.
Beyond the fields and farmyards, innovation – particularly in the digitally driven knowledge economy – will need more effective collaboration between the region’s business communities and technical universities, which despite financial constraints continue to turn out highly skilled engineers and programmers. However, deepening contacts with the world’s most advanced economies can be a mixed blessing, as many of the best and brightest graduates seek their fortunes in the US and western Europe, leaving a lack of skilled human resources in their home countries that hampers both public and private R&D investments.
In few countries is the brain drain as acute as in Bulgaria. The number of students at graduate level who went to the US in 2010 was higher than the number from Poland, even though Bulgaria’s 7m population is not even one-fifth as big as Poland’s 38m.
“Working conditions are not attractive for highly productive researchers,” the European Commission’s directorate-general for research and innovation wrote in a report last year on Bulgaria. The brain drain affects Estonia, too, but for Timo Rein, an Estonian-born entrepreneur in California, there are other, more cultural obstacles to innovation. Writing in advance of this year’s The Next Web Conference, held in Amsterdam last month, Rein, co-founder and chief executive of Pipedrive, a sales management and training company, said: “With just 1.34m people in the entire country, and the kind of mentality that stifles entrepreneurship, most founders have only had their eyes opened when they’ve left the country and seen the potential that exists outside Estonia and Europe at large.”
Source: www.innovationfund.rs, www.ft.com
Therefore, the present training will be focused on creating value by professional management and exploitation of intellectual property. Special attention will be paid to the importance of intellectual property to the economy and the academy, its treatment of the Horizon 2020 project, as well as licensing and commercialization.
Training will be held on Friday, 13 June 2014., In Room 8 of the University of Belgrade, Studentski Trg 1.
During the visit, the Innovation Fund presented its results under the Innovation Serbia Project which show potential of innovation driven growth in Serbia. The Innovation Serbia Project which is being implemented in collaboration with the World Bank and funded by the European Union Pre-Accession Assistance (IPA) in the amount of EUR 8.4 million has awarded EUR 6 million to innovative start-ups and technology-oriented companies across Serbia.
In addition to hearing about the Innovation Serbia Project results, attendees had the opportunity to meet selected financed companies (Coprix Media, Ekofungi, KreativTeh, mBrainTrain and Strawberry Energy), which demonstrated the results of their projects financed by the Innovation Fund.
Taking into consideration that most of the Mini Grants and all of the Matching Grants projects are still in the implementation phase, some notable results have been accomplished thus far: 8 products have been fully developed, 8 companies have generated revenue from sale or lease of their innovative products, including mass produced items, white label solutions and beta devices, while 4 companies have successfully established new business cooperation or partnerships, and 5 PCT applications and 15 national patent applications have been submitted. Through its financial instruments, the Innovation Fund has engaged over 30 R&D institutions and over 100 R&D experts and advisors from different fields.
With the aim of stimulating collaboration between academia and the private sector to commercialize R&D and promote technology transfer, the Innovation Fund is preparing the implementation of the Technology Transfer in Serbia project, which is to be finance through IPA 2013 funds in the amount of EUR 6.9 million.
The Innovation Fund will continue to work on creating a favorable regulatory environment that supports private sector investments in innovative SMEs with high growth potential, which are crucial to the development of a competitive economy.
More information (in italian) on:
The coordinators of the competition, prof. Dragan Povrenović and prof. Dr. Vojin Senk are responding to the moderator’s questions Zika Milenkovic and explain what type of support to innovators provides competition, as well as the way in which innovators can apply. While Danica Mićanović emphasized the role of Chamber of Commerce of Serbia and the importance of innovation to launch economic development . Besides them, earlier participants present contests of competition: Branko Kecman, winner NTI2005, Ivan Gligorijević, winner NTI 2013, Stepan Stepanovic and Stevan Sremac, participants NTI2013 and Živoslav Milovanovic.
Competition organized by the Ministry of Education, Science and Technological Development of Republic of Serbia in cooperation with: Faculty of Technical Sciences in Novi Sad, the Serbian Chamber of Commerce , the Office for the Protection of Intellectual Property Rights and Radio Television of Serbia and the Radio Television of Vojvodina.
The aim of the competition for the best technological innovation NTI2014 is to promote the entrepreneurial climate in Serbia and assistance to potential and existing high – technology entrepreneurs who are willing and able to own ideas and inventions translate into a market valuation of innovation.
Participation in the competition, except for awards (initial prize fund is 4,000,000 dinars), provides for all competitors technical assistance in the form of education through training and consulting, the free media support, and continuous monitoring and assistance in the years following the completion of participation in the competition.
The competition is held in the territory of the Republic of Serbia and in the Republic of Serbian in cooperation with the Ministry of Science and Technology of Republic of Serbian.
As before, the registration is done in three steps: registration of users, create team (of at least three members) and the Application for innovation. Applications for this year’s competition to be submitted only electronically via the website www.inovacija.org. Incomplete or late applications and applications that are sent by mail or in any other way, and that is not prescribed by the rules, will be considered by the organizers.
The main difference compared to earlier cycles of the introduction of the event meeting with potential investors, for technical and scientific assessment of the applicability of the idea of the economy. Innovations in NTI2014 will compete in the category of implemented innovations, and training will be conducted through a four -day and one-day training.
Sign up to June 10th of 2014, Until 20 pm (Central European Time).
Current achievements in almost all industries deemed strategic for the economy and technology will be presented at an indoor surface area of over 12,000 square meters.
Belgrade Fair, as one of the oldest members of the Union of International Fairs (UFI) from Paris, will bring together more than 500 domestic and foreign exhibitors from around twenty countries.
International Fair of Technique and Technical Achievements is the most important economic and technological event in Serbia and South-Eastern Europe and it has a huge impact on the future industrial development of Serbia and surrounding countries. Over the years it has become a place for meetings and networking that helps numerous exhibitors and visitors to fulfill their business expectations.
From a total of 170 projects, have been selected the seven best and among them are two projects from Serbia, which clearly shows how much potential for innovation is our country, as well as the need to systematically address this area in order to put that potential to improve the function of technological development of Serbia. Innovators will be able to conclude the agreement with investors and prepare pilot projects for the implementation of innovations. Representatives of Chambers of Commerce from Vratca and Kraljevo discussed the promotion of cross-border co-operation in this field within the NOBLE project and have reached an agreement regarding the signing of an agreement on cooperation in innovation festival in May this year in Novi Sad.