For the past two years, Luxembourg has had a new legal framework for the promotion of R&D and innovation. The law of 17 May 2017, which replaced the law of June 2009, came into effect at the beginning of June of the same year. The text is particularly exhaustive.
“The European Union’s state aid rules have been transposed in the same way, so that we propose the most comprehensive regulatory framework available,” says Marco Walentiny, Head of the Research and Innovation at the Ministry of the Economy. “Our system covers the entire innovation chain, including SMEs for which an innovation approach is new and for which we can co-finance the intervention of an external expert.”
The following steps are also covered, from feasibility studies to technological developments themselves. “Particular emphasis is placed on collaboration with other companies or public research centres, and on the possibility of sharing research facilities, equipment or laboratories,” says Walentiny.
Aid schemes for any step in the innovation cycle
The aid schemes are of various types and concern R&D projects or programmes; technical feasibility studies; innovation for SMEs; innovative start-ups; process and organisational innovation; research infrastructures or innovation poles.
In 2018, the first “full” year of the law being in effect, 86 projects or programmes were reported for an expected Research, Development and Innovation expenditure of more than EUR 100 million and aid granted of nearly EUR 34 million.
Compared to 2017, the number of projects reported increased by 8% and 11 of them exceeded one million euros.
Three-quarters of the funding allocated came from three specific sectors of activity: ICT (31%), Industry 4.0 (26%) and Materials (24%).
Companies, regardless of their size, are eligible for such aid, provided that they are not considered to be ‘in difficulty’, i.e. if more than half of their subscribed share capital has disappeared as a result of accumulated losses or if, even more so, they are the subject of collective insolvency proceedings and receive rescue aid.
Access to funding schemes
While interested companies can obviously apply directly for such support mechanisms, it is also in their interest to receive free support from Luxinnovation’s R&D and Innovation Support team. “Our consultants have in-depth knowledge of national and European financing programmes and can consequently guide companies, whatever their size or activity, in structuring their projects,” explains Marc Ferring, Director R&D and Innovation Support at Luxinnovation. “As a result, we are able to define, together, the solutions that are best adapted to their needs. It can also be done through one of our Fit 4 performance programmes.”
Fit 4 Digital; Fit 4 Growth, Fit 4 Innovation; Fit 4 Service: These programmes can be a springboard for companies likely to make use of such a support mechanism. They are based on a diagnosis carried out by an external consultant approved by Luxinnovation and chosen by the company itself. “By this means, they can see the impact that an innovation approach can have and, therefore, want to go further within the framework of the 2017 law,” notes Mr. Ferring.
“Be well supported and well prepared”
It is, therefore, through the Fit 4 Start programme that the company Aiva Technologies (Artificial Intelligence Virtual Artist), which develops algorithms based on artificial intelligence to compose music, has embarked on an accelerated innovation process.
The system developed by Aiva has swallowed up more than 30,000 scores of classical music written by the greatest composers and entered the public domain. The analysis of these scores then allows the user to have access to digital models of musical content, allowing him or her to create their own compositions. Aiva is even recognised by Sacem (the collective management body for authors, composers and publishers) as a fully-fledged composing company.
“We received 150,000 euros after 16 weeks of coaching. This enabled us to first complete a fundraising campaign with, among others, Kima Ventures, Xavier Niel’s fund,” says Pierre Barreau, one of Aiva’s founders. “We then worked with Luxinnovation for three months, at the beginning of 2018, to prepare a file under the Process and Organisational Innovation regime. We were able to obtain additional support from the Ministry of the Economy of 450,000 euros to co-finance a research project, half of which we have already carried out.”
Accompanied by Luxinnovation in its efforts, Aiva was subsequently able to familiarise itself with other approaches and other ways of presenting its activities and needs. “When you are a start-up, you are mainly used to approaching venture capital investors who may be less focused on financial projections, but are more attentive to the potential expressed both by the technologies, but also by the teams developing the project. When we address the Ministry of the Economy, the discussions revolve around these financial projections. It’s a little confusing at first, hence the importance of being well supported and well prepared.”
The company’s designers, who combine musical and technological knowledge, have established all their development teams in Luxembourg. “The country is very favourable for the emergence of start-ups like ours, with mechanisms that can almost double the funds raised.”
Aiva’s target audience is quite large: professional composers, video game and film makers, or companies looking for musical packaging. “We also target simple amateurs who have no commercial interest in creating music, but do it just for the pleasure.”
Today, the company has an international presence, with customers on all continents, mainly in North America.
“A decisive competitive advantage”
In a completely different field, the company PM-International, founded in 1993, based in Schengen, which develops and markets high-end food supplements and cosmetics under its own brand FitLine® (many of which are equipped with patented technology), has also called on Luxinnovation to support it in two projects to co-finance two research projects, one of which, Activitis, is carried out in partnership with the LIST.
Launched in February 2018, this project aims to develop new bioactive food supplements based on by-products from Luxembourg’s cellars. The aim is to extract secondary plant compounds from grape marc and to valorise them for industrial purposes in a sustainable way, taking a very circular approach.
“We know that such an approach can give us a decisive competitive advantage,” explains Dr. Tobias Kühne, Chief Scientific Officer at PM-International. “In addition to our internal resources for our R&D activities, the adoption of this RDI law came at the right time because it opened up a whole series of new funding opportunities for us. The relevant know-how and advice we received from Luxinnovation then made it easier for us to manage this complex application process. From the first day until the final submission of our application, their teams supported us in every way possible. In the end, we were able to obtain public funding for a volume of projects in progress of 1.1 million euros.”
The benefits of this additional funding were immediate for PM-International: an advantage in terms of time and planning reliability. “Thanks to the RDI Act, we are able to undertake exploratory research and carry out the entire process, from the first idea to the launch of a marketable product,” says Mr. Kühne.
PM-International is also looking for manufacturers who are likely to be ready when the research results are ready for industrial implementation, which is expected by 2020. However, there is no shortage of projects, of course. “Research is by no means a static process, and we are already planning our next steps with the LIST. Luxembourg is becoming a scientific and research centre in Europe and we are very proud to be part of it. In addition, we also know that we can count on Luxinnovation’s network, whose market knowledge and ability to connect players together in order to join forces with great benefits for all parties involved are appreciated.”