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European technology strategy & funding needs

Thanks to Cap Digital, last week I had the chance to meet with Olivier Bringer from the Next Generation Internet initiative. I had the chance to be able to give feedback about our experience with NGI through the prize we got for CryptPad and through our first "cascade funding" grant with NLNet.

We also had the opportunity to exchange about Open Source, Open Data, Cloud and Technology strategy in Europe. I decided to write a blog post to capture these thoughts.

"Cascades Fundings" are very positive for SMEs and for Open-Source

Following the "NGI Privacy and Trust Enhancing Technology" prize, we have answered to the NGI Zero PET call managed by NLNet at the first call in February. We have been awarded a 50k funding for which the development has started. We are very grateful to NGI for the visibility we got from the prize and for this funding which is helping us develop CryptPad.

Our feedback on cascade fundings is very positive. The time spent to answer is limited, which is very interesting for a starting project like CryptPad (we only have a team of 2). This type of funding also allows to evaluate the risk of winning/loosing which is important given the time spent answering. For a project which produces technologies coming from a software company, we find the hope of winning interesting compared to larger collaborative H2020 projects. The administrative load of the grant is light which allows to spent the effort on actual work.

The only negative point is the lack of visibility on longer term financing. It is necessary to candidate again for additional funding which is often limited to 200k. A project like CryptPad managed by a 40 people company like XWiki has ambitions and has the possibility of scaling. It is hard to hire with a visibility over 50k for a duration of 6/9 month. An H2020 project with a 400k subsidy gives more visibility but the investment is more important and the risk of win/loss is much higher. However in our case, this funding has given us a key answer to being able to continue to develop CryptPad by financing the team while usage continues to grow and subscriptions and crowdfunding revenues slowly grow (our strategy is a cloud one towards end-users/independents/SMEs with 5Euros/month subscriptions which takes time to scale and demands to focus on the service adoption through communication and improvements of the software itself).

Seen from the point of view of Europe, I find that the money spent on cascades fundings is much more efficient in terms of technologies production. A higher share of the money is actually used for practical implementation of technologies delivered, in particular for Open Source projects. On a collaborative H2020 project, we will find often one third of the partners will produce actual technologies and even at the partner level less actual production will happen. Of course, collaborative projects have their advantages like making European actors work together.

It would be helpful to have a way to help promising projects in the crowdfunding and help them find bigger financing allowing them to accelerate their development. NLNet and other cascade fundings projects could for example been asked to detect the promising projects to bring them to other financing instruments.

We are very happy that Europe supports Privacy and Open Source

We are very happy that the EC is supporting the Privacy initiatives and also Open-Source (like the NLNet fund). We do not see these direct initiatives at the national level in France, where the financing of "cyber-security" are more directed towards detection and protections from intrusions. We haven't seen financing for solutions that are by themselves more secure and more respectful of user privacy. We also find less support of Open-Source and Open-data at the national level than we had in the past.

NLNet has the advantage of bringing users and organisations that did not come to H2020 fundings before and actively contribute to the Open Source movement because it is key for society to keep control of technology and also a efficient model to increase the impact of your work. Open-source and Open-data are also favorable to the economic activity as any companies, organisations and researchers can reuse the work produced by these projects. The value of Open-source and Open-data is often under-estimated, because it is hard to measure, as many of the benefits are indirect and spread. These benefits are however very important as many can build on top. A Havard study has measured positively the effects of the "Ayrault Circulaire" in France (https://hbswk.hbs.edu/item/government-technology-policy-social-value-and-national-competitiveness?cid=wk-rss).

Which financing instruments could be useful ?

Mainteners of commons (open-data & open-source) are currently lacking independent funding

Open-source & Open-data are commons. Many very well known Open-Source & Open-Data projects have in reality very little independent funding. While companies might invest into making the common respond to their needs, contributing to it in some cases, and not in some other, and users might volunteer to maintain it, the core group of independent maintainers usually has very little funding. Therefore some highly used tools and databases are very well known but the majority of its users don't really know how well it's funded. This has been the case with OpenSSL for which it has been revealed when the HearthBleed security issue came out, that there was very little investment in it's maintenance, although it was used to secure millions of web-sites. I personally know the Open-Food-Facts organisation, as it's run by friends and I recently joined it's board. Open Food Facts is a open-data food information database used by mainly mobile applications. It is well known, however its funding has always been limited to donations to maintain the servers. The organisation has been finding some funding to be able to pay for permanent employees allowing to develop the organisation. 

Some new mecanism are emerging to crowd-fund commons maintenance (Open-Collective, HelloAsso, GitHub Sponsors). It would be interesting that Europe funds directly maintenance of commons as these are important for the users and the economy. A funding program for mainteners would allow them to candidate to a funding based on the importance and popularity of the common they are maintaining and their involvement in the common.

SMEs would need help to find the right financial instruments allowing to accelerate

There seems to be multiple financing methods. However it is not easy from the stand point of an SME to find the right how to invest its time in. It would be really interesting to have a more proactive approach to help relevant projects and companies.

Donations & tax treatment at the European level

In France we have a tax credit to the donator for donations made to public interests NGOs. However things become much more complex if the donation comes from out of the country, as it is the local tax rules that would apply to the donation of that person.

This has a negative effect on NGOs, which includes Open Source or Open Data foundations. Of course, tax rules are the prerogative of local governments, but it would be interesting to encourage a global rule in this area to allow European Open Source foundations to be able to get help from any individuals across Europe with the same tax benefits.

Il would also be interesting to allow corporations that reuse the funds for Open Source development to not have to add VAT to these donations.

EuroTech should win over FrenchTech

The tech-industry in Europe suffers fragmentation and internal competition. In each country, each government is trying to push to have local champions. The companies of the tech industry in Europe are very national, and initiative like the "French Tech" is reinforcing this national aspect. Personally, having spent 10 years of my youth in Germany, being running a company with half our employees in France and half in Romania, I don't recognise myself in the "French Tech" label. I strongly believe our future has to be European and that our companies need to be supported globally around Europe if we want them to compete with our Americans counterparts. The "French Tech" initiative is however efficient, as it helps the startups being visible and get the support they need. I'd like to see a "Euro-Tech" initiative and also initiatives that favor bringing together companies around Europe to be global European champions for which it won't be said "they are French, German or Italian".

Also a lot of the communication around startups is about how much these startups have raised. However there is a huge risk today that, given the complete absence of local champions, it will be impossible to find another buyer than the GAFAMs for our local startups that have raises money. We are vaguely hoping that a lot of jobs will stay when these companies will be acquired. 

On our side, we have chosen to adopt an auto-financing strategy with XWiki allowing us to keep our independence. It would be interesting to have specific financing means for such companies that prefer control and European independence over growth at any cost.

Cloud and Free Software/Open Source support is needed to keep control

Software can be delivered either as packaged software, or as a service over Cloud platform. These two infrastructures are key as they are the way both big companies are building their new generation systems and the way startups are building new services.

Currently we have close to now control on the Cloud industry. The Cloud platforms market is dominated by the US companies (AWS, Azure, Google Cloud), and on the software market the only part we partially control is Open Source.

The European Cloud hosting & cloud providers are however fragmented: 1&1 Ionos, OVH and many smaller ones, and have difficulties to invest in the software stack that the American cloud providers have, which spans from proprietary and Open Source cloud computing software services (VM or container systems, Storage & Cache services, Databases, Machine learning and so on) as well as SaaS services (Office 365, Google Apps) with some of them both for Enterprises and Consumers (Youtube, Google or Bing).

Given the incredible size difference between the biggest European Cloud companies (1&1 Ionos with 4 Billions Euros revenue, OVH 400M$) and the biggest American ones (AWS, 25B$), it seems hard to see how our providers will be able to invest to catch up on the software. 

On the Enterprise and Public Services area, our companies have very little control on proprietary software, but they do have the option of Open Source which is more and more popular. Public services are very heavy users of software and also need for certain areas (security, military) to keep a high level of control on the software that are used. It makes a lot of sense for the states to invest in Open Source software both for control and costs. Major companies in Europe have also decided to move to Open Source as a way to keep control: Société Général has a strong Open Source strategy. CERN has recently decide to move away from Microsoft solutions. Moreover the Open Source services industry is well developed in Europe.

Open Source is the only chance to have a software industry which won't be built on top of Cloud services we don't control

However we are lacking a clear Open Source & Cloud strategy. I see two different actions that I believe are very important:

1/ Favor European consolidation or collaboration of Cloud actors and Open Source companies

Cloud actors and Open Source companies lack European visibility and size. Collaboration between these companies is needed in order to compete with the large providers. Consolidation should also happen when the actors are too small and lack European visibility.

This collaboration should go through Open Source technologies which are largely reusable by all providers, by companies, by the state and by end users.

2/ Help build the missing pieces that Cloud providers can't pay for:

Some services are kept proprietary by American cloud providers (SaaS services for example, or Enterprise end user services), and some others are enhanced by them based on major open source softwares.

Europe could open an Open Source Research Center that would study the missing pieces and invest key resources in partnership with Cloud providers, large companies, state users and local Open Source software companies. Experts from each user group and from the research center would choose on which technologies most of the investment is needed. 

A specific "cascade funding" towards Open Source Cloud technologies and interoperability of Open Source technology would help bring the technologies to the local actors.