An interesting initiative: the SETT
In 2000, with the Lisbon Declaration, the EU set the goal of becoming "the most competitive and dynamic knowledge-based economy in the world." We've already reached 2025, and we're not. But we are a knowledge-based economy, since, as everywhere, knowledge permeates everything around us. It's what gives us prosperity and well-being. It's also what gives us headaches. For Europe, the demanding challenge today is whether we will be significant producers of knowledge and whether, with the many levers at our disposal, we will know how to leverage it to generate high-value intellectual property (IP), as well as the economic activity that makes it profitable. The competitiveness and strategic sovereignty agendas converge on this objective.
In Spain, it's the same, except that strategic sovereignty makes more sense at the European level than simply at the Spanish level. The objective for Spain must be to integrate well into European value chains, creating skilled, well-paid jobs.
To promote this objective, it is necessary that our authorities stimulate the extraction of knowledge from the research ecosystem, in order to generate IP (patents) and promote startups and scale-upsThis requires public aid, especially in the early stages, and therefore taking risks. If the risk-return equation is always resolved with subsidies, the aid will be too costly for public administrations. If it is always resolved in loans, even soft loans, the aid will be too costly for the private recipient. A good compromise is to have an instrument that allows risk sharing: capital contributions. However, in Spain we do not have enough experience with this type of aid.
That said, we now have an interesting initiative of this type. It has led to the decision to allocate a considerable amount of the available resources from the European Next Generation funds to technological transformation. On July 30, 2024, the Spanish Society for Technological Transformation (SETT) was established to manage it, reporting to the Ministry for Digital Transformation. It has approximately €16 billion to invest in deep tech and audiovisual.
From their website I gather that the SETT has currently distributed €381 million between venture capital funds (€200 million), seven companies and (with €62 million) a photonic chip program assigned to a network of research centers (which includes the ICF0). Companies and networks are spread across seven autonomous regions, which would be eight if we take into account an already decided investment (the implementation of IMEC in Malaga) but which has not yet received funds. The company where the most investment is being made is Multiverse Computing (€60 million), surely the greatest success so far of a scale-up Spanish in deep tech. In Catalonia they have received Sateliot (13.8) and Wallbox (8.4).
My conclusions
1. It's important, as a precedent, that this initiative works well. It won't be easy because a lot of money will have to be distributed in a short time. The total amount is considerably larger than what has already been distributed. Given the doubts about the administration's ability to execute, I have no doubt that it will be executed down to the last euro. The question is whether it will be done well. We'll see over time. It must be said that it's important for the SETT to build a good portfolio of holdings, but beyond that, it's also important that it be able to avoid interventionist or administrative-oriented tendencies when managing it.
2. The first year has been a learning experience. It seems clear that spending on companies won't continue and that investment will be directed toward funds, which makes sense because the funds have the necessary experience to make good selections. It also removes the selection process from political and territorial considerations.
3. However, there is a relevant territorial consideration. No matter how well it is used, the objective of the SETT cannot simply be to maximize revenue. It must be primarily to generate good economic activity in Spain. The fund route improves the expected return of the portfolio, but carries greater risk in terms of economic impact in Spain. The dilemma: do we trust in the quality of our projects and assume the risk, or do we play it safe and select funds to avoid it?