"The brainiest square kilometre in the Netherlands" is how Rick Harwig, former Chief Technology Officer at Philips headquarters in Eindhoven, fondly refers to his creation, the High Tech Campus. The campus is home to 7 000 researchers, developers and entrepreneurs working in an open innovation framework, which means collaborating on ideas and projects as well as sharing the risks and rewards. "A complete ecosystem of people who contribute in one form or another", adds Harwig, "but not a closed ecosystem, because universities, research institutions, contract research organisations, and small and medium-sized enterprises around the world are also part of the scientific network."

Benefits of open innovation

One of these smaller firms located at the High Tech Campus Eindhoven is priv-ID, a spin-off of Philips, specialising in privacy compliant storage of biometric information, for example on an electronic smart card health passport. The company is still young and hopes to break even in 2011. Alty van Luijt, who is part of the management of priv-ID's small team, explains the benefits of open innovation: "Start-ups cannot have essential functions like legal services, accountancy, and patent registration in-house. But all of these are available on campus. Here talent and the relevant services are at hand - software specialists, office space, you name it."

Sharing expertise, service and infrastructure

Vital elements in the campus ecosystem are Philips's laboratories, which it has opened up for others to use. The on-campus organisation MiPlaza (Microsystems Plaza), part of Philips Research, offers its expertise, service and infrastructure, making it possible for third parties to carry out high-tech research in the most efficient way. Holst Centre, also located on campus, is a client of MiPlaza's. One of the areas in which it carries out R&D concerns wireless autonomous sensor devices. When used in the health sector, these devices help measure patient data via patches on the body, without cables, allowing for permanent monitoring that is comfortable. "The crux is to achieve innovation together and in an organised way - that is not a luxury, it is a necessity," says Jaap Lombaers, who heads the Holst Centre.

Risks

But what about the risks? After all R&D is inevitably a matter of trial and error. "It is a long-term and high-risk game," explains Rick Harwig "For Philips, the return on the net cost every year is about fivefold. So it is extremely profitable, but we fail 90% of the time. That means that you have to prepare yourself for failure. For that you need risk management and you need special financial partners who are willing to take that risk."

EIB funds Philips's open innovation approach

This is where the EIB's funding comes in. Supporting Philips' open innovation approach, the EIB has recently lent EUR 200m to Philips to stimulate research and development focused on new medical devices such as image-guided intervention and therapy, home healthcare, and clinical decision support systems. This subordinated loan is part of the EIB's Risk Sharing Finance Facility, which was set up to stimulate research, development and innovation in European companies by providing long-term strategic financing.

A EUR 2bn capital cushion, co-funded by the EIB and the European Commission through the EU's 7^th Research & Development Framework Programme (FP7), makes it possible for the EIB to lend some EUR 10bn for high risk high reward investment over the period 2007-2013. The Facility is a success story. The three years during which it has been available as a financing instrument have seen a very rapid take-up: from loans worth EUR 0.5bn in 2007 to 1bn in 2008 and almost 3bn in 2009.