The EU reinforces investment in key technologies within its borders

Boosting investment in critical technologies in Europe, reducing Europe’s dependence on other economies and mitigating the effects of high inflation, labour shortages, supply chain disruptions, rising interest rates and increasing energy and input costs. This is the aim of the Strategic Technology Platform for Europe (STEP), recently proposed by the European Commission. STEP will strengthen and leverage existing EU instruments to rapidly allocate financial support to companies, directing it towards deep tech and digital technology, clean technologies and biotechnology, crucial sectors for European leadership.

“STEP replaces the European Sovereign Fund and will be a dedicated funding platform, aimed at boosting innovative technological solutions,” underlines Alessandro Provaggi, head of the Brussels office of Zabala Innovation. The platform will build on existing programmes such as InvestEU, Innovation Fund, Horizon Europe, EU4Health, Digital Europe, the European Defence Fund, the Resilience and Recovery Mechanism and Cohesion Policy funds.

To boost investment capacity specifically to promote the objectives of STEP, in addition, Brussels proposes to allocate an additional € 10 billion to the following programmes: € 3 billion for InvestEU, which is expected to result in an outcome of € 75 billion, after applying the provisioning rate and multiplier effect; € 500 million for Horizon Europe, complemented by € 2.13 billion of reallocation and use of decommitted amounts, resulting in an outcome of € 13 billion; € 5 billion for the Innovation Fund, with an expected outcome of € 20 billion; € 1.5 billion for the European Defence Fund, which could result in investments of up to € 2 billion. Overall, the total amount of new investments through STEP could reach €160 billion, according to European Commission estimates. “Zabala innovation has a very long experience in these programmes, backed by extraordinary results, such as those we learned about a few days ago and which refer to the last Innovation Fund call for large-scale projects”, Provaggi assures in this regard.

STEP’s efforts will focus on deep tech innovations and digital technologies (such as microelectronics, artificial intelligence, cybersecurity, and many others), as Brussels considers them key to help tackle climate change, sustainable energy, and health. The same applies to clean technologies, of which renewable energies, electricity and heat storage, electrolysers and fuel cells are just three examples. The final area for action will be biotechnologies, such as biomolecules and their applications, pharmaceutical technologies, medical technologies, and crop biotechnology, as these can help the EU economy grow in sustainable development, public health and environmental protection, according to the European Commission’s intentions.

STEP will target companies at different stages of business development.

• Equity support to unbankable SMEs, including start-ups; and to unbankable small mid-caps through the European Innovation Council under Horizon Europe.
• Equity and debt support for EU companies under InvestEU.
• Grants to clean technology projects, including large-scale projects, under the Innovation Fund, and grants to deep and digital technology projects for defence applications under the European Defence Fund.
• Any type of support to any type of enterprise active in the deep tech, cleantech and biotech sectors through Cohesion Policy funds and the Recovery and Resilience Mechanism.

In addition, the Commission’s proposal intends to introduce a Sovereignty Label to be awarded to all projects that have obtained a high score during the selection process of a competitive procedure. In case a high-quality project cannot receive funding under the programme for which it applied due to limited budgetary availabilities, this label will give it privileged and simplified access to other sources of funding under STEP.

“In short, STEP will support investments in companies that contribute to preserving Europe’s edge in critical technologies,” says Provaggi. “Many of our customers are already leaders in these sectors,” he concludes.