Are you sure?

A Budapest conference on European innovation drives home the point that ideas are plentiful here – itʼs the support networks that are in short supply.

Matchbox-sized power converters that increase battery life 2-5 times, do-it-yourself LED lamps for households with no electricity, and customer tracking systems that help predict future purchases are some of the brilliant new ideas that consumers will soon be able to buy.

Aside from promising to help improve our lives, these innovations also have other traits in common: They were all invented here in Europe, and they were all shown in Budapest at the InnovEIT, a May 5-7 forum hosted by the European Institute of Innovation and Technology (EIT). What’s more, these innovations will also be commercialized in Europe, something that has not often been the case in the past decade when U.S. companies have bought up many startups.

According to organizers of the conference, which was held at the Budapest Congress Center, selling innovations overseas has meant Europe has lost its lead in innovation. What the Old Continent lacks, compared to the States, is cooperation.

“We have excellent universities, researchers, and scientists, and have a lot of big businesses, but they do not work in an integrated enough manner,” Martin Kern (right), EIT’s interim director told the Budapest Business Journal. This is one of the first reasons why there is this gap in innovation capacities between Europe and the States, Kern said, adding:

“European universities are not always entrepreneurial enough, and businesses could engage more sufficiently to make sure they have the right level of talent.”

Europe is also fragmented. Hotspots such as Silicon Valley in California are not yet established in the Continent, and EU member states have different funding systems for companies, which curbs entrepreneurial ambitions. So does the risk-averse attitude ingrained in Europeans, according to Kern. It is more in the culture of America to set up a business, fail, and start again, he explained.

The lack of an entrepreneurial mindset is, in-part, due to the European educational system, which penalizes failure, said Corinne Vigreux, co-founder and consumer business managing director of TomTom, the only consumer electronic brand to emerge from Europe in the past 15 years and still be here.

Trying to catch up

Pinterest, Facebook, Uber, and Airbnb are all American, but couldn’t these companies have come from Europe, Vigreux told reporters, adding that the Continent needed to get entrepreneurs and innovators back. She said she is not worried about the supply of innovators, as good ideas abound.

“Europe is still holding its place, with 30% of the world’s science and technology production as measured by patterns and publications,” said Richard Pelly of RFP Advisory Services, CEO of the European Investment Fund until 2014. Yet much of that is being eroded by Asia and America, which are catching up fast, he added.

Money should not be an issue either, Vigreux claims. “We often look at finances as an issue while there is a lot of capital around.”

Pelly added: “The venture capital market is more buoyant: It has been raising more capital in the past two years than it did in the previous five.” Willingness to invest, though, varies by region. Investors in Hungary, for example, still think twice about where they put their money. This is a problem across the region, according to Pelly. “It needs a national effort to stimulate investments by business angels and to create a better VC market”.

To stop European innovations from being produced and commercialized elsewhere, EIT has introduced several tools. It gives an EIT Label to Master and PHD level programs whose curriculum include soft skills that help graduates start and run their own business. Europe-wide, EIT has identified more than 50 of these programs.

After finishing his studies in China, Zhenyu Lin, a nominee for the 2015 EIT Change Award, took part in one such Masters program in Sweden and the U.K. Six months after graduating, Zhenyu founded his company, Sensory Media, which sells an intelligent LED lighting system that synchronizes with music emotionally. SoundGlow can “sense” rhythm and emits muted colors, say, for soft piano music, or flashy, vivid tones for electronic music. Among current and future customers are event centers and theaters. Multi-sensory experiences are already being developed and much in demand in the entertainment and dining industry, but these solutions are costly, Zhenyu said. He is offering a more cost-effective product.

Innovation hubs

To ensure that good ideas become products in Europe, EIT supports startups through its community of Knowledge and Innovation Centers (KIC). These select the most promising innovation projects and startups and decide who receives funding. KIC will receive roughly 95% of EIT’s overall €2.7 billion budget for 2014-2020. Currently three, covering InnoEnergy, climate and ICT, the community is to be expanded by five more centers by 2018.

The KIC ICT Lab helped connect the members of the DA4RBI (Data Analytics 4 Retail Business Intelligence) project including Fabio Belloni, formerly principal researcher for Nokia Research Center now the CEO of Quuppa, a company in indoor location positioning. “We met at a partner event of the ICT Lab in Paris in 2013. We immediately realized this is a common interest, something we need to work together on,” Markus Löchtefeld, a researcher at DFK, a member of DA4RBI told the BBJ. The system helps physical stores analyze customer behavior by tracking their route within a shop and allows stores to predict future customer locations and buying decisions. Though two shops in Germany and two more in Italy are already using the system, interest in DA4RBI is more enhanced in the Unites States, Löchtefeld said. The group hopes to seal three contracts from different U.S. retail chains soon.

Awarding the best

EIT also rewards the best projects/products in three categories. The winner of this year’s Venture Award, Regnar Paaske, co-founder and CCO of Nordic Power Converters (NPC) claims to have revolutionized a system practically untouched for 30 years. Electric power converters are found in numerous devices from LEDs to chargers. Take an Apple charger, currently the size of your palm and reduce its size to smaller than a matchbox but with 2-5 times more charging capacity – and you get the idea. The technology used also helps NPC cut the cost of power converters, which represent 15-25% of production costs and take up most of the space inside an LED bulb today.

NPC is entering a €20 bln market and plans to roll out its first product for the LED lighting market by the end of 2015. Currently negotiating a €1 million customer contract, Paaske hopes to have five business customers by the end of next year.