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Financing innovation: are business leaders putting the state on trial?

In other words, they criticize the government for not putting enough money in their pockets to help them with their innovation projects. This criticism is particularly interesting when, at the same time, 84% of companies shun the public aid for innovation already in place. So how to explain this paradox? Let’s decipher it.

Is this a French disease? It’s the habit of never being satisfied, of finding greener pastures elsewhere, of seeing the glass as half empty. When it comes to innovation, France is probably the most generous European country. There is plenty of support available to companies, from tax credits (such as the CIR) to subsidies (such as the French Tech grant) to loans (such as the Bpifrance innovation development grant). There is something for everyone, for every budget. Yet this is not enough. Two-thirds of SME managers complain about a lack of support. This dissatisfaction is even more difficult to understand when you see that only 15% of companies have already applied for public aid for innovation. But how do the leaders do it? Well, they finance themselves and grit their teeth! Indeed, to carry out their new projects, companies rely primarily on self-financing. And when they have recourse to external aid, it is most often a bank loan. As a result, 37% of SMEs are experiencing financial difficulties in completing their innovation projects.

At this point, a question arises: why don’t managers seek out the very public assistance designed to promote innovation?

Managers’ miscalculation

There are several reasons for this lack of interest. Most often, it is a lack of internal resources. That is to say, a lack of time, a lack of personnel to be assigned to the subject, or approaches that are considered too complex. As a result, managers decide to abstain. And if they were right? Maybe these aids are not so interesting? What a mistake! For example, tax incentives for innovation (research tax credit, innovation tax credit and young innovative company status) represent an average of 50,000 euros per year for an SME. For how much time to devote to it? A week at most, so the return on investment is quite interesting! It’s worth putting some files on hold for a few days to get into the process. But the lack of means is not the only reason that prevents managers from accessing this aid. There is another big explanation and for the blow, the State carries a responsibility.

The State must do more… in communication!

If a good number of companies miss these aids, it is also because they are not aware of them. The perfect illustration is the innovation tax credit (CII). Only 4 out of 10 managers know this scheme by name and only 1% have already benefited from it. This is a sad fact when you consider that this aid was set up precisely for SMEs and that it is very accessible. Indeed, it is enough to design a product bringing an element of novelty compared to the competition (in technical terms, functionality, ergonomics or eco-design) to benefit from it. In short, an activity that corresponds to the reality of many companies. It is estimated that more than 100,000 SMEs miss out on the ITC every year!

And this is where the State has a role to play. It must communicate more and better on the subject. During the COVID crisis, the government multiplied the announcements and communications around the PGE and partial unemployment. Today, everyone knows about these measures, which were widely used. But this was a crisis communication intended to put forward “defensive aids” to enable companies to resist. Why not apply these methods to publicize “offensive measures” and thus stimulate business innovation and thus ultimately growth? When we see that the State almost constantly forgets the innovation tax credit in its reports and studies on tax policies, there is still a long way to go…

*Survey conducted by OpinionWay for Self & Innov in December 2021.

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