EU Funding Potentials for Eco-Innovative Companies

EU funding programmes can easily feel overwhelming. In his recurring column, Bahman Morteza Etezadibehzadi helps you to maintain an overview of funding instruments, to put the informative puzzle together properly and to identify factors that can make proposal applications successful. In the end, EU funding programmes hold great opportunities, especially for eco-innovative projects.

About the author: Bahman Morteza Etezadibehzadi works as a freelance green finance consultant to help entrepreneurs and companies reach their target funds for business development. He studied Civil Engineering at Islamic Azad University (IAU) and worked as construction and technical engineer before he completed his Masters in European Studies at the International Graduate Center (IGC) of the City University of Applied Sciences in Bremen. The topic of his Master Thesis has been “The Potential of EU Funding Programs for Environmentally Friendly Companies and How to Prepare an Efficient Application for these Funds”.

You are welcome to contact Bahman Morteza Etezadibehzadi with your possible project-specific inquiries here.


European Green Deal Policies and their relation to funds

Before discussing the EU funds and their potentials, it is very crucial to know the EU policies. The EU funding programmes have been invented to support the companies, organisations, research institutes, entrepreneurs, SMEs and Startups that can help the European Union to address its challenges and implement its policies.[1]1 EUR-Lex. Environment and climate change. Retrieved 10 May 2021, from https://eur-lex.europa.eu/summary/chapter/20.html

Profound knowledge about policies helps project owners and managers to identify the main needs and concerns in the EU and gives them insights to align their innovative ideas with these needs, and finally enables them to match their projects with available EU funding programmes.

There are numerous funding opportunities in the EU that can be used by applicants to develop, scale and launch their ideas and projects into the market. However despite many opportunities, EU funding programmes are considered rather difficult to obtain.

The first question that applicants have to ask themselves is ‘Which fund is the best fit for our project?’. After identifying a suitable programme, it is very important to know the influential factors in order to prepare an effective application proposal.

Secondly, it is important to know that one of the main policy frameworks of the European Union is the EU Green Deal. The focus of this EU action plan is on boosting the economy through green technology, creating sustainable industry and transport while cutting pollution.[2]Communication from the Commission – The European Green Deal. Retrieved 10 May 2021 from: https://eur-lex.europa.eu/legal-content/EN/LSU/?uri=COM:2019:640:FIN

Any project that can help the EU turn challenges from its policy frameworks into opportunities, can potentially be considered a suitable project to benefit from EU funding instruments.[3]European Commission: The European Green Deal. Retrieved 10 May 2021 from: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en

Types of EU funds

After knowing the policies, it is very helpful to introduce the types EU funding programmes. In general, there two types of funds in the EU. The funds are either “direct funds” which can be applied for directly from the EU Commission, such as Horizon Europe[4]Horizon Europe, retrieved 10 May 2021 from: https://ec.europa.eu/info/research-and-innovation/funding/funding-opportunities/funding-programmes-and-open-calls/horizon-europe_en, or “indirect funds” which can be accessed through the managing authorities in each member state. The European Structural and Investment Funds (ESIF) are indirect funds and include regional development programmes such as the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF), the European Agricultural Fund for Rural Development (EAFRD) and the European Maritime and Fisheries Fund (EMFF). Each of these funds is therefore accessible on the basis of the different policies of the EU.[5]EU funding programmes, retrieved 10 May 2021 from: https://europa.eu/youreurope/business/finance-funding/getting-funding/eu-funding-programmes/index_en.htm

EIC Accelerator Funding Programme: Opportunities for Researchers, SMEs and Startups

One of the funding instruments that can be of interest to SMEs, entrepreneurs, and researchers with innovative projects is the EIC Accelerator[6]European Commission. European Innovation Council: EIC Accelerator. Retrieved 10 May 2021, from: https://eic.ec.europa.eu/eic-funding-opportunities/eic-accelerator_en, a direct fund under the Horizon Europe umbrella. This funding opportunity is managed by the European Innovation Council and supports projects that are ready to be commercialised in the market.[7]European Commission. Funding opportunities for small businesses. Retrieved 10 May 2021 from: … Continue reading This programme has been initiated to bridge the gap between innovation and market take-up. A project can be recognised by the EIC Accelerator programme, if the introduced technological innovation can demonstrate a high profit potential and if the project owning company is in a very early growth stage with a limited turn over.[8]European Commission. An official entity: European Innovation Council Equity Fund for high-impact innovation. Retrieved 10 May 2021 from: … Continue reading Applicants for this instrument must also demonstrate their project’s contribution to the goals of the European Green Deal.[9]de Cabo, M., 2020. The Green Deal – Challenges & Opportunities – Evolution Europe. Retrieved 10 May 2021 from: https://evolutioneurope.eu/blog/the-green-deal-challenges-opportunities/

Challenges in Obtaining EU Funds

It is generally very helpful for applicants to ask for advice from an expert who is familiar and experienced with EU funding opportunities. The next step is to know the challenges and addressing them while preparing the business plan of the aspired project. Being aware of the challenges will help project owners and managers reduce the likelihood that their application will be rejected.

The first and very important factor is the level of innovation. A project’s lack of innovativeness has proven to be a factor that would make projects absorb less than 10% of the EU funds.[10]Stolz, T., & Schrammel, T. (2014). Business Membership Organizations as a policy approach to increase SMEs’ EU funds absorption. Proceedings of International Conference for Entrepreneurship, … Continue reading Innovation is defined as implementing new technologies and techniques, introducing new products, changing infrastructures and adopting new skills and expertise.[11]Spoz, A. (2014). Significance of the EU Funds in Investments of Small and Medium-Sized Enterprises. Oeconomia Copernicana, 5(4), (p 61-74), DOI: http://dx.doi.org/10. 12775/OeC.2014.027 … Continue reading

The next challenge that applicants may face is the scattered information about EU funding opportunities.[12]Vasilescu, L. (2014) : Accessing Finance for Innovative EU SMEs Key Drivers and Challenges, Economic Review: Journal of Economics and Business, ISSN 1512-8962, University of Tuzla, Faculty of … Continue reading As mentioned earlier, knowledge of the policies and their scopes as well as information on the different types of EU funding programmes can help applicants to choose the best suitable approach.

After identifying a suitable funding opportunity, it is very important to structure and prepare the application in a way that fits the needs of the programme and fulfils its requirements. A further issue that applicants should thereby avoid is information asymmetries. This can be attributed to some factors, such as not providing very accurate information concerning the business and financial plans.13 In addition, the uncertainty about the outcome of an innovative project, the creditability of the project owners in terms of their assets and equity are the other factors that applicants should pay attention to when preparing their application proposals.[13]Vasilescu, L. (2014) : Accessing Finance for Innovative EU SMEs Key Drivers and Challenges, Economic Review: Journal of Economics and Business, ISSN 1512-8962, University of Tuzla, Faculty of … Continue reading

Factors Which Make Applications Successful

Evaluators have distinctive expertise in the fields of technology, industry, economics and finance.[14]Executive Agency for Small and Medium-sized enterprises. (2019). H2020 Programme Guide for Applicants (pp. 6-14). European Commission. … Continue reading Therefore, each of these areas needs to be precisely covered in the application proposal, which will be evaluated on the basis of:

  • excellence, impact, quality & efficiency of the implementation
  • an assessment of the operational capacity of the participant
  • an assessment of the best-value-for-money for the subcontracted tasks
  • an evaluation of the Technology Readiness Level (TRL)

Moreover, evaluators assess the quality and relevancy of the team that develops the project as well as their ability to implement the project. Subsequently, evaluators consider the impact assessment and the commercial strategy. In the excellence part, the project proposal should demonstrate the significance of innovation compared to existing models.[15]Executive Agency for Small and Medium-sized enterprises. (2019). H2020 Programme Guide for Applicants (pp. 6-14). European Commission. … Continue reading

With regards to where a project’s excellence has helped was during my assistance for an environmental company in the UK. I was asked to review the company’s evaluation report for a call under Horizon 2020 and offer solutions for developing the application in order to resubmit it. The company’s application was scored very high (12.02 out of 15). Yet, it was still unsuccessful in obtaining the requested funding, which shows how strong the competitiveness of EU funding programmes actually is. However, due to its excellence this company’s project was awarded the “Seal of Excellence”, a valuable privilege which certifies that this project has been “assessed as a high quality project proposal in a highly competitive evaluation process.” This was helpful in so far as a “Seal of Excellence” acts as recommendation for the other funding programs, especially the European Structural and Investment Funds.[16]European Commission Directorate-General for Research and Innovation. (2020). The European Innovation Council – A Vision and Roadmap for Impact (p. 3-11). Luxembourg: European Commission.

Uncertainties about the returns of the project must be addressed here as well. Applicants need to outline a prepositioning strategy about the market, and the demand for the product or service needs to be measured and communicated. The decision of the evaluators will be significantly influenced by the quality of the project, consisting of staff expertise, external information, level of business partners, collaboration with research entities and technological lock-ins.[17]Marin, G., Marzucchi, A. & Zoboli, R. SMEs and barriers to Eco-innovation in the EU: exploring different firm profiles. J Evol Econ 25, 671–705 (2015). (pp.3-8). … Continue reading

Having solid objectives, identifying target groups, choosing high level partners related to the relevant market as well as providing the outstanding differences will increase the success of the proposal.[18]Executive Agency for Small and Medium-sized enterprises. How to prepare an excellent proposal (pp. 1-34). European Commission. … Continue reading


Contact:

You are welcome to contact Bahman Morteza Etezadibehzadi with your possible project-specific inquiries here.

References

References
1 1 EUR-Lex. Environment and climate change. Retrieved 10 May 2021, from https://eur-lex.europa.eu/summary/chapter/20.html
2 Communication from the Commission – The European Green Deal. Retrieved 10 May 2021 from: https://eur-lex.europa.eu/legal-content/EN/LSU/?uri=COM:2019:640:FIN
3 European Commission: The European Green Deal. Retrieved 10 May 2021 from: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en
4 Horizon Europe, retrieved 10 May 2021 from: https://ec.europa.eu/info/research-and-innovation/funding/funding-opportunities/funding-programmes-and-open-calls/horizon-europe_en
5 EU funding programmes, retrieved 10 May 2021 from: https://europa.eu/youreurope/business/finance-funding/getting-funding/eu-funding-programmes/index_en.htm
6 European Commission. European Innovation Council: EIC Accelerator. Retrieved 10 May 2021, from: https://eic.ec.europa.eu/eic-funding-opportunities/eic-accelerator_en
7 European Commission. Funding opportunities for small businesses. Retrieved 10 May 2021 from: https://ec.europa.eu/info/funding-tenders/how-eu-funding-works/who-eligible-funding/funding-opportunities-small-businesses_en
8 European Commission. An official entity: European Innovation Council Equity Fund for high-impact innovation. Retrieved 10 May 2021 from: https://ec.europa.eu/info/news/official-entity-european-innovation-council-equity-fund-high-impact-innovation-2020-jun-22_en
9 de Cabo, M., 2020. The Green Deal – Challenges & Opportunities – Evolution Europe. Retrieved 10 May 2021 from: https://evolutioneurope.eu/blog/the-green-deal-challenges-opportunities/
10 Stolz, T., & Schrammel, T. (2014). Business Membership Organizations as a policy approach to increase SMEs’ EU funds absorption. Proceedings of International Conference for Entrepreneurship, Innovation and Regional Development ICEIRD 2014. p1-11: https://www.researchgate.net/publication/283326759_Business_Membership_Organizations_as_a_policy_approach_to_increase_SMEs’_EU_funds_absorption
11 Spoz, A. (2014). Significance of the EU Funds in Investments of Small and Medium-Sized Enterprises. Oeconomia Copernicana, 5(4), (p 61-74), DOI: http://dx.doi.org/10. 12775/OeC.2014.027 https://www.researchgate.net/publication/276345282_Significance_of_the_EU_Funds_in_Investments_of_Small_and_Medium-Sized_Enterprises
12, 13 Vasilescu, L. (2014) : Accessing Finance for Innovative EU SMEs Key Drivers and Challenges, Economic Review: Journal of Economics and Business, ISSN 1512-8962, University of Tuzla, Faculty of Economics, Tuzla, Vol. 12, Iss. 2, (p. 35-47)
14, 15 Executive Agency for Small and Medium-sized enterprises. (2019). H2020 Programme Guide for Applicants (pp. 6-14). European Commission. https://ec.europa.eu/research/participants/data/ref/h2020/other/guides_for_applicants/h2020-guide-eic-smeinst-18-20_en.pdf
16 European Commission Directorate-General for Research and Innovation. (2020). The European Innovation Council – A Vision and Roadmap for Impact (p. 3-11). Luxembourg: European Commission.
17 Marin, G., Marzucchi, A. & Zoboli, R. SMEs and barriers to Eco-innovation in the EU: exploring different firm profiles. J Evol Econ 25, 671–705 (2015). (pp.3-8). https://doi.org/10.1007/s00191-015-0407-7
18 Executive Agency for Small and Medium-sized enterprises. How to prepare an excellent proposal (pp. 1-34). European Commission. https://cupdf.com/document/how-to-prepare-an-excellent-proposal-european-commission-how-to-prepare-an.html
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