Is Support and Funding from the Government Essential for an Innovation Centre?

To differentiate themselves from other countries, many governments all around the world have wanted to build innovation centres, which contain state-of-the-art buildings, with many famous MNCs setting up shop at their countries, benefitting both themselves and the company.

What are the necessities for a successful innovation hub? First, it requires the innovators, because that is the building block for an innovation hub. When we attract more innovators into the country, a greater quantity and quality of ideas will sprout out. This means that there will be a greater possibility of a feasible, profitable businesses being created. However, the problem here is to attract not just a handful, but a critical mass of both innovators and entrepreneurs. Second, a platform needs to be provided to aid in the innovation process. Once the idea is created, a platform is needed to put that idea into action. Third, the hub needs to be sustainable. To reap the full benefits of having such an innovation centre, the plan must be a long term one. Subsequently, some form of funding is required in order to ensure that the space is well used, and overcomes the opportunity cost. The question is – do we need governments to step in to help?

The characteristic of innovation is in its flexibility, when the innovator does not face as few restrictions and limits as possible. This may not be possible if the governments step in all the time. When the government is the source of sustainability, and is the one in charge, then unspoken boundaries are put in place. Other foreign investors see that there is lesser place for them to invest, and thus the government is virtually the sole controller of the project. As a result, innovators are compelled to follow the interests of the government or their source of funding will be cut. For example, in the area of technology or new media, there is propensity for the government to say that the product that is set up must support the government as a cost for its help. This may end up restricting innovation, which disrupts the entire process, as innovators feel largely restricted. Furthermore, there can be complications in the government at certain points in time, and this unnecessarily complicates matters. On the other hand, it is possible for the innovation centre to be funded all the same – just through private funding from the richer section of society. Many rich people are interested in putting their money into innovation, and more innovators are willing to gather if this happens. A culture of innovation is instilled into the area, and it becomes increasingly well known, causing more innovators to gather there. This culture is what made America’s Silicon Valley so valuable and famous. This creates a comparatively larger pool of ideas that can be put into action, ultimately giving an increased effectiveness. When there exists such private funding that can also help to fund innovators, if not boost them, then there is clearly an alternative to things.

On the other hand, there can be cases in which private funding is not sufficient. The government is needed in certain countries where few successes have been made, so that there can be a better starting point for the country. For example, in Russia, foreign investors are unwilling to invest in Russia, because investments are risky due to few previous successes. Governments, in contrast to private funders, are much more reliable because they are more trustworthy and accountable for their actions. Private investors are seen to be more profit-oriented, out to get more money for themselves, while the government is usually portrayed to be acting for its people. This makes the innovation hub much more sustainable. Also, the government needs to springboard new innovators. Many new innovators that lack a start-off fund are disincentivised to join the centre because they can be start reaping their profits earlier due to the fact that they have the government’s aid in financial areas such as rental and tax breaks. In the case of Russia’s 400 hectare Skolkovo, the government hands out a minimum of 150,000 dollars of start-up funds for new companies and investors, and gives out generous tax breaks to the companies. The government can give such financial help on a larger scale as compared to the private funders because they have lesser processes and more freedom to carry out their policies. This better provides a platform for the innovators to showcase their ideas, and make things really happen. In certain junctures, especially the action stage, where money is obviously required the most to set the ideas in place, the government can provide more help and a better face to the rest of the world.

While we acknowledge the fact that at the beginning stage, a free flowing centre of ideas can provide a better front, and will be good to start off with, we also need to know that the innovation centre cannot do without governmental intervention. The government can provide for many new benefits, such as a real platform to dish out the ideas to make them work, and also to attract more companies and innovators as time goes by. Support and funding from the leaders of the country truly is essential to build a successful and famous innovation centre.