BBVA Research: Deep science is essential for achieving a more sustainable EU

Deep science involves disruptive innovation in physical or tangible technologies such as advanced materials.Or nanotechnology, biotechnology, microelectronics, nanoelectronics or photonics. It is a complex process that involves many actors and stages: it begins with scientific research and succeeds only when real growth occurs. The deep science ecosystem includes three stages: science, value creation, and economic growth, and in the second stage, investors play an essential role in making the project successful.

According to a report BBVA Research And Pebble Capitaland innovation, especially deep science, It plays an essential role in addressing major European challenges and uncertainties, such as geopolitical tensions, climate change, aging populations, inequality and disruptive technologies.. Innovation enables the EU to better prepare for future systemic crises and enhances resilience and internal cohesion. Moreover, it is necessary to promote advanced manufacturing industry.

The European Union's strategy in this field is based on three pillars: Sustainability, competitiveness and resilience. “Europe has taken a step forward in addressing these challenges, with innovation as a key driver, by launching Horizon Europe in 2021, an ambitious program that complements other research and innovation-oriented initiatives,” the authors point out.

Europe emerges at the first of the three stages of the deep science ecosystem, the scientific research stage, with an established talent base in disruptive and environmental innovation. The European Union has been a pioneer in recognizing and addressing environmental challenges. Its commitment to green innovation has seen it maintain a dominant position in the field of environmental patents, although the global landscape has recently undergone significant changes, with a notable recovery in China, even reaching the United States.

The European Union, which has fallen behind due to lack of funding

Despite Europe's strength in the first stage, the report warns that in the next two stages, Value creation and growth, where the EU lags behindThis is mainly due to lack of financing and restrictions on the capital market. According to the authors, there is a new asset class to achieve funding, namely science funds (‘science stocks’), which differ from other unlisted financing instruments, such as venture capital (‘private equity’ and ‘venture capital’). Exclusive dedication to funding early-stage deep science projects.

“Scientific contribution allocates more funds more efficiently, allowing companies to focus their initial efforts on their projects rather than managing their recurring funding needs,” the report notes. “It represents a powerful tool for improving innovation processes and increasing competitiveness.”

The report points out two strategic policies that the European Union should implement to encourage innovation: Direct investment and capital market development. “While national policies act as a key driver of climate action, the focus in deep science is on promoting ‘scientific equality’, as the main challenge facing Europe is the funding gap,” the report said.

To meet this challenge, specific strategies are needed, such as direct investment, especially in the early stages, and improving the capital market, which requires strengthening the participation of institutional investors and progress towards the European single market. All of this could provide the financial support needed to cover funding gaps and stimulate progress in deep science in the EU.

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