As Europe rethinks innovation funding, an audit of past spending highlights gaps in bringing research to market and knowing what works.
To borrow an old British saying, the proof of the pudding is in the eating. An audit of €17 billion in EU “industrial leadership” funding suggests that too little is known about what it actually delivered.
The pudding in question is the €17 billion “Industrial Leadership” strand of Horizon 2020, the EU’s eighth Framework Programme (2014–2020). Its aim was to help European companies turn research into new technologies and a stronger competitive position. In a recent special report, the European Court of Auditors (ECA) does not question that ambition but asks whether the funding was designed around it. The verdict was less positive than one might hope.
First, the funding was not sufficiently market oriented. Although stakeholders were consulted on industrial needs, the ECA could not establish how their input shaped the final calls. The funding pattern also remained some distance from the market: only around half of the support went to close-to-market activities, while many calls targeted intermediate Technology Readiness Levels (TRLs), useful for validation and demonstration but not yet for commercialisation and scale-up. The ECA concludes that this limited the programme’s commercial potential from the outset and notes that the focus on intermediate TRLs has not significantly changed under Horizon Europe, Horizon 2020’s successor. Neither project selection nor industry participation reliably closed the gap. Furthermore, impact was not a deciding factor in funding considerations, SMEs rarely coordinated the collaborative projects that absorbed almost 80% of Horizon 2020 funding, and more than a third of those SMEs in the auditors’ sample participated mainly to network rather than to innovate. Research–industry contact building may have benefited, but market uptake was another matter.
Second, the mechanisms intended to take innovations towards the market produced mixed results. The SME Instrument supported technology transfer, but market uptake remained constrained by financing difficulties, weak exploitation planning, regulatory barriers and limited technology-transfer capacity. Tools such as the Innovation Radar were meant to help funded results find users, yet limited visibility hampered their reach. Producing a result and placing it somewhere a company might or might not discover it was not enough to bring it to market. The auditors also look beyond Horizon 2020 to its successor Horizon Europe. New tools such as the European Innovation Council’s (EIC) Transition scheme aim to bridge this gap between research and market uptake, but the ECA finds that their effectiveness has yet to be demonstrated.
Third, the Commission could not properly tell whether the funding made companies stronger. Horizon 2020 monitoring did not effectively track whether participating firms became more innovative or performed better economically, and the ex-post evaluation did not assess the programme’s contribution to either. That gap matters beyond this audit. Debates on knowledge valorisation, spotting the next critical technology and allocating constrained budgets all turn on evidence: where does potential lie, what support does it need, and what can limited public funding achieve? Looking ahead requires more than looking back, but knowing which earlier investments strengthened companies, and which failed to do so is essential. The uncomfortable contrast is between the cry for increasingly ambitious evidence-informed funding choices but, on the other hand, incomplete evidence on what previous choices actually delivered. One might say: The next recipe is being debated before the last pudding has been properly tasted.
The audit sets a clear test for the next funding reforms: can they bring research to market and show what works? The EIC’s 2026 Advanced Innovation Challenges pilot already brings potential users in early and funds projects in stages. From 2028, the Commission wants to take this approach further. Alongside a stand-alone Horizon Europe, the proposed European Competitiveness Fund would offer grants, loans, equity and procurement. Each tool serves a different purpose: grants support research, investment helps companies expand, and procurement can provide a first customer. The negotiations must now define how projects move between these tools and how their results will be tracked.