MONDAY, 17 FEB 2020



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Invest Cyprus 30/04-30/03/2019

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Baking the Cyprus Innovation Cake

Baking the Cyprus Innovation Cake

Having spent a week in Israel touring various innovation agencies, organisations and start-ups, Alexandros Charalambides, Associate Professor at the Cyprus University of Technology, has returned to Cyprus feeling more optimistic. This, he says, is because he realised that the country has all the ingredients needed for us to make our own ‘innovation cake’.


It became apparent from the very first meetings that for an ecosystem to develop, one needs three main assets – infrastructure, intent and capital – and we have all of them in Cyprus. There are three public universities, a plethora of private research and innovation centres and, more recently, six centres of excellence. Their annual budget is of the order of €150 million and we also have the industry to support part of the work of these institutions. This might come as a surprise but we do not lack in that sector either.

The Government is also very supportive of the innovation ecosystem. We now have a Chief Scientist and a planned new Deputy Ministry of Innovation and Digital Policy, while the Research and Innovation Foundation of Cyprus issues specific calls for funding not only research but also innovation activities. This, too, is a clear indication of the Government’s intention to support this sector. Finally, we have initiatives to embed entrepreneurship into the thinking of high school students, such as Junior Achievement, accelerators, incubators and other grant schemes and new laws are being drafted to enable investors to take the leap and invest in start-ups. These are the right measures to increase capital (in human and monetary terms) for innovation.

So, in a nutshell, all the ingredients are there. Can we do things better? Of course we can, but the important thing is that all the ingredients are there. We might then ask, “Where is the cake, then?” and here’s where the tricky part comes in. We already have a cake but it’s not an innovation one. It took Silicon Valley 60 years to develop its area of expertise and it took Israel 50 years to develop its area of expertise. Likewise, it has taken Cyprus decades to develop its own areas of expertise (in the maritime and legal & financial services sectors). It was definitely not a case of ‘overnight success’ and it took all the interested parties to work together for years to make Cyprus well-known in these sectors.

In contrast, however, with Silicon Valley and Israel, we do not market our expertise properly. I have never heard of anyone from another country saying, “We need to study how Cyprus developed its Maritime sector” or “How did Cyprus manage to attract all those ship management companies?” or “Why are so many Venture Capitalists directing their investments through Cyprus?”. And no, the answer is not simply “Cyprus has low taxes” because a plethora of other countries have the same tax regime and yet are not as developed as our country.

Cyprus has no reason to be envious of Silicon Valley or Israel. When we needed to diversify our economy away from farming and tourism, we turned to where we could excel. And excel we did. However, it is now time to diversify again and I hope that we can all agree on the need to focus on innovation. We need to diversify the economy so as not to rely only on just one or two sectors and to secure a future for Cyprus over the next 50-100 years. We can’t put all our eggs in one basket. And of course, we are not talking about abandoning the maritime and legal & financial services sectors but about adding the innovation sector to our economic activities mix.

So, the right question to pose to ourselves is, “What is preventing us from baking Cyprus’ innovation cake, since all the ingredients are there?” For the answer, we need to consider three elements: quantity, quality and time.

From the presentations and discussions I attended at the Hebrew University of Jerusalem, the numbers are staggering: 55 years in operation, €1,000,000,000 in annual funding, 20,000 students, 2,000 academics, 300 departments and 100 research centres resulting in 10,000 patents, 150 spin-offs formed, 10 very successful companies and 1 unicorn that was sold for $15billion. Compare that to Cyprus and we lack in numbers.

Furthermore, in Tel Aviv, I met with the Executive Chairman of Team8, a think tank, incubator and investor that builds companies by developing transformative technologies to drive enterprises forward. It is one of the most successful companies in its field. The secret? It hires those who have served in the Israeli Intelligence Corps Unit 8200, which is responsible for collecting signal intelligence, and who are in the top 1% of the population when it comes to intelligence and unorthodox thinking. So quality is of the uppermost importance.

And finally: time. It took Israel years of methodical planning to get to where it is today. The Be’er Sheva innovation ecosystem, for example, is still being developed, although it took its first step 50 years ago, with the establishment of Ben-Gurion University. Infrastructure is still being built, companies are still establishing a presence there and a great deal still needs to done. It has not been an overnight success.

Bearing all this in mind, how can Cyprus improve the quality and quantity of those involved in the innovation sector? And do we have time? To answer that, we also need to understand that innovation cannot happen across all sectors. For example, there are already so many established ecosystems around IT innovation, such as Ireland and South Korea, that I strongly doubt whether we could ever compete with them. However, this does not mean that we should not invest in excellent research and innovation in all sectors, otherwise we might not have companies like NIPD Genetics being founded. But focus is needed. We have to concentrate on what we are already good at (i.e. the maritime and legal & financial services sectors), on areas that will affect us directly as a country over the next 50-100 years (i.e. in climate adaptation, renewable energy production and water shortage issues in remote isolated regions – and as I am working on one of these, you may say that I am a little biased!) and, as Smart Specialization Strategy methodology specifies, on a combination of sectors (e.g. in the Legal Tech sector).

If we can agree on the above, we then need to focus on increasing both the quantity and quality of the infrastructure and capital in those sectors in Cyprus. I will not address the issue of increasing funding to universities and research centres or on offering more incentives to private companies – not because this is not needed but because this is well-known and action is already being taken. I will primarily address the step of creating a critical mass of excellent students. Without them, no matter how much money you dump into an ecosystem, things are bound to fail. If we look back at the example of the Hebrew University of Jerusalem, where 55 years of innovation and more than 2,000 academics have resulted in a total of 150 companies (not start-ups), even assuming that we do everything at least equally as well, we should not expect Cyprus to spin off more than one company every few years.

In order, therefore, to attract excellent students, let me propose some concrete and easily applicable measures. I believe it is of the utmost importance that we implement them as soon as possible:

Departments and/or classes should address bigger audiences of 100+ students. For example, all engineering departments can offer joint classes in the first years to accommodate interaction between fields.
The number of places offered by Greek Universities to Cypriot students should be reduced. From the 2019 results (and a small study I conducted), almost all those who applied were offered a place in Greece and therefore turned down places at universities in Cyprus.
State Universities should offer attractive courses in English, both at undergraduate and postgraduate level, so as to attract students from around the world. 
Scholarships should be provided for excellent students (regardless of their country of origin) to study in Cyprus. Whether we like it or not, most of the top high school graduates in Cyprus study abroad (in Greece, UK, USA), and we need to retain some of them. Almost no foreign students come to study at state universities in Cyprus.
Non-competitive PhD Scholarships should be offered to the best students studying abroad to enrol in a PhD program in Cyprus. This measure will attract excellent students back to Cyprus, bringing their experiences and knowledge from abroad. If we are honest with ourselves, no student from MIT or Cambridge is going to write a proposal and wait for six months for it to be evaluated, just so that they can do a PhD in Cyprus.

Having spent a week in Israel, hosted by the Tel Aviv Hub of the European Institute of Innovation and Technology, and having experienced the hospitality of Yoni and Adi, I have returned to Cyprus feeling more optimistic and proud of what we have achieved as a country over the past decades. And I am sure that our grandchildren will be proud of what we will have achieved over the next decades.




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