HKFIH: Igniting the Entrepreneurial Rockets

IGNITING THE ENTREPRENEURIAL ROCKETS

Startup companies can greatly contribute to the GDP growth of a country. They can generate high income with low investment and they can create jobs. In order to foster creative thinking and the startup culture, it is of utmost importance for the young generation to be open to innovation, and to be able to make a profit from their ideas. Krisztián Kölkedi, head of department at the National Research, Development and Innovation Office (NKFIH) and head of the Hungarian University Startup Program (HSUP) talks with the Budapest Business Journal about making that reality.

By Kálmán Béres

BBJ: The NKFIH not only supports the innovation of existing companies, but also the spread of a new approach. What is at the core of this new initiative?

Krisztián Kölkedi: The aim of the office is to go beyond the role of a funding agency, towards a service agency in R&D and innovation. This means that it provides not only the classic financial resources, but handles the whole innovation ecosystem as one process, thus offering complex solutions to those interested. We believe that innovation does not start with SMEs or with companies: there is an increasing focus on the youth, the innovators of the future. Our concept is that we need to present the available opportunities as early as possible, already in high school, so that we can teach students in higher education applied courses. This year, we will offer in high schools the InnoGEN platform, while university students will have access to the more complex Hungarian Startup University Program (HSUP), allowing them to become innovative entrepreneurs.

BBJ: Using web browsers, young people can access any information. What is the “plus” that this program offers?

KK: First, we need to separate the two programs. Since the information available is decentralized and their availability is relative, those searching for information do not know where they can find it. It would be useful for the young to have a platform where they can reach all the information in one place: competitions, scholarships, applications, everything that this generation needs in terms of innovation. That is why we developed the InnoGEN platform, which aims to be an umbrella brand and a community where the common denominator is a solution-centered, innovative approach. This way innovation can become a bridge between generations. Under this umbrella we gather the “brands” for the young, be it a program, contest or scholarship, or really anything that is related to RDI and connects generations to the ecosystem and helps them. One of the most recent and spectacular result of this effort is HSUP, the program created by NKFIH together with universities and companies. Here we offer not only information and knowledge sharing, but a very elaborated, two-semester course available at 21 universities. Four other universities already signed up for the program and the list is expanding further.

In the current pilot year, more than 1,700 students registered for the course. It has three very basic goals. The first is to allow as many young people as possible to understand the importance of innovation and the opportunities within. It is not our aim to make everybody an entrepreneur, but to show them the full spectrum of opportunities. If they come to realize that this is not for them, no problem. But if they are interested and come up with an idea, they have our full support. Not forcing anything, but giving them a chance to grow. This is the first course available countrywide, unified and complex. The curriculum is fully online, available by e-learning, everything is the same for all 21 universities across Hungary. The first semester is about raising awareness and offering basic information. At the end of the first semester the students will take an

exam, and they need to elaborate on the business solution for a practical problem. The most viable projects will be assigned teams, which will be elaborated further with a mentor and some state funding. A student can receive up to HUF 150,000 so that one will not be forced to take a part-time job, and instead can concentrate on the studies. By the end of the second semester the project ideas will turn into a prototype, or MVP, which will be presented by the teams “live”, to business experts. The students present the project and the experts will evaluate it, advise them, or, if it is already in an advanced status, they will be invited to an incubator program. Those eligible can even receive investment funds to enter the market.

BBJ: There are some who are talented in innovation, but less inclined to business...

KK: Obviously, our main goal is not to turn everyone instantly into a startupper. If we manage to have 1520 companies out of 6,000 students, then we can say that we have a working system. But the student, no matter if one became an entrepreneur or not, will get familiar with a creative way of thinking, centered on solutions. And later, when he encounters a problem, will not look for excuses, but for solutions. And even if one will not succeed, he or she will go through a huge development. But if one does, and the project will be prone for an innovation viable for market, then we will support them in any way we can to succeed.

We consider equally important that if a startup will start growing, it should be able to reach other state and private investors, and the NKFIH should just give the starting impetus with the scholarship. We are just one element of the system, which will add later to a company, an incubator, a capital fund, so we, together, will be able to finance the project.

BBJ: Why are startups important? How much is international presence desirable?

KK: The more startups are successful, the bigger potential they represent to the national economy. The more that young people become entrepreneurs, the more innovative companies start, which will later become motors of the economy. Probably eight out of 10 startups will not survive but the remaining two will bring gains for the other eight as well, while the necessary initial investment is minimal. Thus, young entrepreneurs are creating jobs not only for themselves but potentially for another seven-to-eight graduates. Of course, it is important for us to have as many startups alive and growing as possible, and to support those growing efficiently. We always tell startups: do not get stuck at a comfortable, yet low level, as startups can grow exponentially. The rockets will be ignited fully only when the company goes abroad. There are countless startups started in Central and Eastern Europe that became global firms, because they offered solutions to problems that may not even be relevant locally or, if in case they are, they won’t achieve more than just becoming a test market. So if they remain inbound, they may stagnate at best. People usually invoke the Estonian example: there is almost no internal market in the country, and the Estonian startup scene is so successful exactly because, right from the start it aims at the international market.

BBJ: What are your future plans?

KK: We would like to have project groups not only within one university, but groups that connect students of different areas, complementing each other. A medical innovation can co-opt an engineer, a law or financial student, each of whom can bring a new dimension to the project. We are already negotiating to expand HSUP with the support of one of the most important players, the European Institute for Innovation and Technology (EIT). For now we are talking about organizing multiplicator events with EUR 1 million in funds next year, providing access to the mentor network. But this is just the future, for now.

Krisztián Kölkedi