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The rainbow of innovation on the horizon

Incubators

From the Budapest Business Journal print edition: The newly appointed president of the Hungarian Innovation Office (NIH), Endre Spaller, is counting on the seven-year R&D program of the European Union and the entrepreneurial spirit within Hungary. In an interview with BBJ, Spaller expounds on his promise to do whatever it takes to help innovation thriving here.

BBJ: You took up your duties on February 1 and the next thing you were on your way to China as a member of a rank-and-file government delegation.
Endre Spaller: With the assistance of a central authority there, Hungarian experts are deployed to work and carry out research at big Chinese corporations. The jointly financed cooperation concerns industrial projects that have a long tradition in the Asian country. They developed a model that focuses on the practical gains of research and our professionals get first-hand experience of how knowledge is transformed into high-tech results.

Does this partnership fit with your leadership agenda?
We are open-minded and ready to adopt best practices. We would also like to see local success stories receive more publicity. Hungary should become a place that looks forward. Innovation is the tool that could build the basis for economic upswing, and people can gather inspiration from it.

The timing could hardly be better as Horizon 2020, the EU’s R&D program, has just begun for the period 2014-2020, and other types of financing are abundant too.
There has never been a more ideal situation to call on R&D resources. Some HUF 700 billion are available for this purpose from the EU structural funds alone, and private capital is also getting engaged. In addition, the government has launched a business incubation program. The Hungarian startup world is about reach a critical mass; that can be sensed in the daily operation of the office. The largest proportion of cash is certainly expected from Horizon 2020, and if at the end of the day €350 million could actually be used in Hungary we would be satisfied.

One of the novelties in Horizon 2020 is the direct involvement of venture capital.
It surely won’t save the day by itself. The idea behind it is rather a change of approach. The problem with R&D projects financed from European funds has been that neither GDP growth, nor competitive products have followed as a result. That had to be addressed.

Which pillars of the development scheme do you think most of the money could be called from?
The structure for using the money matters most. Up till now, predominantly universities and scientific consortia have gained access to funding. They are important, but other actors, primarily SMEs, should gain influence as well. The money available for such entities from the European pot amounts to €8.6 billion. It is essential that the chronically undercapitalized Hungarian SMEs seize as much as possible from those funds and fight their way into key business teams. But that is what we are there for: to assist them in this effort.

If somebody calls you seeking such help, saying they have a great idea and a company, how do you guide them?
Our horizont2020.gov.hu website, where all the necessary information will be available [was] launched at the end of February. In addition, a network of national contact points is run by our office. It seems, though, as if there was a lack of self-confidence, and capital was needed to bring the proposals into life.

NIH also is promoting its ‘toolkit’ in a country-wide road show.
The bulk of the EU money has been channeled to Budapest and the central region of the country. Our goal is to widen the scope of target areas. By reaching out to other regions, people will obtain information from us directly on how to apply. Many are interested, and word-of-mouth is also on our side to draw an ever larger audience as the tour goes on.

That tour enables you to promote the government-backed incubator program that may be another gateway for success.
The business incubation accreditation will reach its second phase soon and at least four more centers are foreseen to be funded by the government. Such ecosystems have enormous potential. To give you an idea of the extent to which it is worth investing in such schemes, global startup star Prezi now pays so much tax that it alone would cover half of the budget of the first four incubators selected in phase 1.

Accelerators, also known as startup schools, provide a platform for new businesses to go global, and are closely connected to incubators.
The development of entrepreneurial training is granted priority. The biggest working group within the BudapestHub Forum deals specifically with this area. Startup courses, contests and publications will be promoted by our office, and last year even a video series was made on the topic.

University students are being encouraged to walk their own path upon completing their studies. In America, however, youngsters start their first business at age of 15. People like Vimeo founder Zach Klein had become veterans by their mid-20s. Do you have any plans to reach out to teenagers?
The phenomenon exists here too. Maybe at a bit older age, but a significant share of first-year IT students do work on real projects. There are numerous programs meant to encourage founding businesses. We believe that one of the edges our country has is its quality IT education, so our goal is not to discourage high-school kids from going to university.

Hungarian success at the Tech-Match startup contest in California in early February is another manifestation of young talent delivering results.
From among 100 applicants, the number of Hungarians was 47, which is positive. The two companies selected for the presentations in the United States forged important business ties, concrete user tests have begun, and specific deals have been struck.

How does Hungary fare in the innovation race from the European or the regional perspective?
In terms of R&D spending of GDP as a percentage, we are at the top of the lower third of EU countries, but the target of 1.8% set for 2020 should propel us ahead several places in the ranking. Spending has been continuously soaring in the last three years. But that’s for measuring input. What matters more is measuring output, and for that purpose a new European Innovation Index has been developed. According to that, Hungary clearly scores higher and is now ranked in the middle section. And we are making every effort to do better.

Prior to his position as head of the NIH, Endre Spaller was an MP representing the Christian Democratic People’s Party (KDNP) and gained experience in the Committee for Innovation and Employment in the current parliamentary term. But his involvement in public life dates back to 2002 when he became a representative in the municipality of Budapest’s District XIII. He has also worked as a research fellow and a career consultant. Spaller holds a degree in sociology and has studied in Belgium and the US with a scholarship. He speaks English and Romanian.

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