Europe’s economic future hinges on how swiftly its businesses can innovate and grow, a reality underscored by the Letta and Draghi reports. Amidst mounting competitiveness challenges, a fragmented single market that limits EU companies’ scale, and a persistent "middle technology trap" affecting multiple sectors, Europe’s response must be decisive in the next multi-annual financial framework (MFF) and Framework Programme (FP10). We urge the European Commission to take bold action in FP10, making innovation the foundation of Europe’s economy. This means attracting both public and private investment, strengthening the entire innovation lifecycle, streamlining the support ecosystem, and forging strategic global partnerships.
Placing innovation at the core of the European economy
For research and innovation (R&I) to drive economic resilience, Europe must address the fundamental challenges faced by SMEs, particularly startups, and scaleups. These range from limited access to research and data needed for ideation to bureaucratic hurdles in cross-border expansion, from fragmented capital markets to missing incentives for companies to scale inside the EU. The European Commission has taken steps in the right direction, aiming to complete the single market, launching the Clean Industrial Deal, announcing the Innovation Act, developing the 28th regime, preparing a Startup and Scaleup Strategy, and introducing an SME competitiveness check on EU legislation. However, if SMEs are indeed the engine of Europe’s future, stronger support is needed to help them innovate and grow. This support should be delivered at regional and national levels through accessible, embedded actors, an approach that Eureka has successfully implemented over the last 40 years.
Europe’s growth and competitiveness are inextricably linked to frontier technology. While the Commission’s commitment to deep-tech startups and scale-ups is encouraging, overly rigid, top-down sectoral approaches can constrain innovation, as highlighted in the Heitor report. Based on our experience with both open and thematic calls, we see that bottom-up funding mechanisms—such as our Eurostars 3 mid-technology readiness level (TRL) open calls—support disruptive businesses faster and with greater flexibility. The results speak for themselves: 60% of Eurostars 3-supported companies are startups and 25% develop deep tech. On the technology side, 20% focus on cleantech, 17% on advanced materials, and 20% on AI. One illustration is Polish startup Orbify, delivering AI and space-sensing intelligence for sustainable forestry. Rather than taking a strict approach to predefining future sectors, FP10 should balance broad, open calls with targeted opportunities, thus achieving policy objectives while maintaining agility.
With half of EU businesses operating solely within national borders, easier access to the single market is crucial. The 28th regime is a promising step, but further simplification and flexibility are needed to enable the rise of continent-wide companies that can rival global leaders. Large-scale EU projects remain out of reach for many startups and smaller SMEs due to track record requirements. Bridging national support with EU flagship initiatives is critical for scaling innovation. Eureka’s Eurostars programme provides a proven model, with over a third of SME participants engaging in international collaboration for the first time. The Council of the EU has recognised Eureka’s effectiveness in helping European businesses break out of national markets and expand to European and global scales.
Leveraging public funding for greater impact
The Draghi report estimates that revitalising European competitiveness will require investments equivalent to 5% of GDP. The European Commission rightly acknowledges that the EU budget alone cannot cover this. However, aligning public EU, national, and regional funding towards shared R&I objectives could generate the necessary scale to then crowd in significant private resources. Eureka has demonstrated this in practice. Through the Partnership on Innovative SMEs, Member States, Associated Countries, and global partners have pooled funding, mobilising one billion euro in public investment; in turn, this has attracted another one billion euro in private funding, achieving a 1:7 leverage factor for the funding the EU contributes. Since 2008, three consecutive editions of this collaboration have seen steady increases in national investment, proving both strong government commitment and private sector appetite for de-risked R&I investments.
To maximise impact, the upcoming ERA Act, which aims to increase R&I investment to 3% of GDP, should be accompanied by a streamlining of EU funding mechanisms, including cohesion. Cohesion Fund alignment with R&I objectives, as successfully done by Portugal and Lithuania in the Eureka context, has allowed these countries to outperform their Innovation Scoreboard ranking. The Letta report’s "right to stay" principle under the fifth freedom aligns perfectly with this approach and could have transformative effects particularly in "left behind" regions.
Further efficiencies could be achieved by aligning Eureka beneficiaries, national instruments and EU programmes, through an extended “Seal of Excellence” mechanism. Additionally, bilateral and multilateral policy exchange programmes, such as those under the Committee on Disparities in Eureka’s Innovative SMEs Partnership, would foster mutual learning between advanced and emerging innovators.
Crowding in private investment
As the Competitiveness Compass underlines, public funding alone cannot close Europe’s innovation gap; crowding in private capital is essential. Public-private co-funding has proven highly effective, as seen in Eureka’s Innovative SMEs Partnership, which has attracted nearly one billion euro in private investment. However, young startups in particular require more tailored financial support than mature businesses with stable revenue streams. We call for a nuanced approach to leverage factors, recognising the unique funding needs of dynamic, high-growth SMEs.
Additionally, new models of engaging with large industry actors should be explored. Partnerships between leading manufacturers and agile SMEs could unlock further private investment while accelerating technology diffusion. For instance, Eureka’s corporate programme has facilitated challenge-based collaborations between 15 large companies and SMEs. As a result, multiple SMEs have been acquired or engaged in joint projects, such as Cambridge University spinout PolyChord, now working with global powertrain player AVL on complex battery simulations. Our Clusters programme also enables co-creation and wide dispersion of groundbreaking innovations along technology niches.
Creating a more connected EU ecosystem
FP10 must provide clearer, more streamlined pathways for participants. This applies not only to its internal structure but also to how it connects with other EU initiatives. Clarity and predictability resonate with our SME community, which is why Eureka has established a programme of recurring calls and support activities. To avoid duplication and enhance impact, Eureka aligns closely with the EIC Accelerator, other European Partnerships, the Enterprise Europe Network and the EIT community. This coordination ensures SMEs receive continuous support at different stages of their lifecycle. 54 companies from our Eurostars 3 programme have been funded under the EIC Accelerator. To further enhance this pipeline, we have built a Fast Track that has already sent its first cohort into the Accelerator’s step 2. Furthermore, 10% of our companies are also in the EIT ecosystem, either following their incubation in a KIC with a Eureka grant or moving from a successful Eureka project towards scale-up and private financing in the KICs. Austrian startup Revo Foods illustrates this well: an EIT Food graduate in 3D printed seafood alternatives, it has secured a Eurostars 3 grant to explore new proteins that could be incorporated into its products. It has since raised millions in public and private funding to deploy its production process at scale.
The European Commission’s active membership in Eureka remains vital, fostering synergies between our programmes and FP10. Our memorandum of understanding with the Commission strengthens collaboration and coordination between national and EU policy priorities.
Leveraging our global network of trusted partners
We welcome Commissioner Zaharieva’s commitment to expanding partnerships with like-minded international players in strategic sectors, along supply chains, and in critical technologies. With 40 years of experience, the Eureka network has expanded beyond Europe, including Brazil, Canada, Chile, Singapore, South Africa and South Korea, with potential new partnerships in countries like India and Japan. Many of these countries are already associated or considering association with the framework programme.
We call on the European Commission to clarify how potential actions to reduce dependency and modulate partnerships internationally will impact SMEs. For startups with global scaling ambitions considering their next target market, having clarity on global partnerships is crucial, as we have seen in our Innowwide programme for global market exploration. While normally encouraging European startups and SMEs to take their innovations to any non-European geography, it has the potential to further cooperation between Eureka and EU global priorities by focusing calls, as demonstrated by our experience with the African innovation ecosystem.
Reducing administrative burdens for greater agility
We strongly support the Competitiveness Compass' goal of reducing SME funding programme bureaucracy by 35%. In line with the Heitor report, we advocate for leaner, faster processes that embrace risk and offer businesses greater flexibility through non-prescriptive calls. We echo its call for the framework programme to engage more closely with industry and non-traditional players. Our experience with the Eureka Clusters – industry-led communities active in critical technology areas – demonstrates the added value of such engagement. However, this engagement requires simpler, more flexible collaboration models, less reporting, and faster processes, while maintaining transparency and accountability on the business side.
We also support the Partnership Knowledge Hub’s opinion that Partnerships should be better integrated into FP10’s planning, ensuring that connections to other parts of the EU ecosystem are made from the design stage. A more integrated approach to Partnerships in FP10, including one framework agreement for its entire duration, would reduce administrative costs, provide stability, and allow for adaptability in response to changing conditions.
By prioritising excellence-based innovation, simplifying access to funding, and fostering global partnerships, FP10 can drive Europe’s economic transformation. Eureka stands ready to contribute its expertise and network to make this vision a reality.
The views outlined in this paper are those of the Eureka member countries. Its content does not pre-empt individual country positions in the upcoming negotiations for the next framework programme (FP10) and the multi-annual financial framework (MFF). The European Commission has neither been involved in the writing, nor consulted on the content of the paper. This paper therefore reflects solely the views of Eureka countries and not those of the European Commission.
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