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.
About the author: Bahman Morteza Etezadibehzadi works both as freelance green finance consultant – helping entrepreneurs and companies reach their target funds for business development – as well as a community manager at MOSAIC.
He studied Civil Engineering at Islamic Azad University (IAU), 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”.
Contact Bahman Morteza Etezadibehzadi with your possible project-specific, green finance inquiries
Sign up to meet with Bahman Morteza Etezadibehzadi on September 29, where he details the EIC Fund as part of “Financing Scaleup for a Bio-based Circular Economy”
EU investment strategy to lower the risk and a better competition with Asia and the U.S.
With the European Innovation Council Fund, in short EIC Fund, the EU allocates about EUR 3 billion for the creation of one of Europe’s biggest investment funds. In order to help companies for a better scale-up and commercialisation, the EU will in this frame become the direct shareholder in start-ups with breakthrough technologies. Early-stage deep tech companies in the areas of health, sustainability and advanced manufacturing can benefit from this investment in the form of a combination of grants and equity stakes. Being shareholder in a company, the EU intends to lower the investment risks of scientific breakthroughs, which will result in attracting other investors as well. By doing so, the EU ownership of a company is expected the range between 10 % and 25 %.[1]https://www.bloomberg.com/news/articles/2021-01-06/eu-will-become-shareholder-in-startups-for-the-first-time
EIC Key Features
In general, the European Innovation Council seeks to enhance the effective promotion of bridging research to deployment, providing the funding instruments of EIC Pathfinder, EIC Transition and EIC Accelerator.
This is the first work programme for the European Innovation Council (EIC). It builds on the EIC pilot phase (2018-20) and the advice from the EIC pilot Advisory Board. The EIC pilot phase was launched in 2018, incorporating existing instruments under the Horizon 2020 programme, in particular the SME instrument and Future & Emerging Technology (FET) programme. These funding schemes are now brought together in a single work programme to provide direct support to innovators throughout Europe.[2]https://eic.ec.europa.eu/about-european-innovation-council_en
In January 2021, the European Commission signed a Memorandum of Understanding between the European Innovation Council (EIC) and the European Institute of Innovation and Technology (EIT) to reinforce their cooperation to support the best European entrepreneurs. This will enable innovators, innovative SMEs and start-ups, higher education institutions and research organisations to receive quality support services to deploy and scale up innovations faster and with greater impact.[3]https://eic.ec.europa.eu/about-european-innovation-council_en
The EIC aims at identifying and supporting breakthrough technologies and game-changing innovations with the potential to scale up internationally and become market leaders. It supports all stages of innovation from R&D on the scientific underpinnings of breakthrough technologies, to validation and demonstration of breakthrough technologies and innovations to meet real world needs, to the development and scaling up of start-ups and small and medium-sized enterprises (SMEs).
Financial support is provided through three main instruments: the ‘Pathfinder’ for advanced research on breakthrough / game-changing technologies; ‘Transition’ for transforming research results into innovation opportunities; and the ‘Accelerator’ for individual companies to develop and scale up breakthrough innovations with high risk and high impact. All EIC funded projects and companies, as well as selected applicants, have access to a range of EIC Business Acceleration Services providing access to leading expertise, corporates, investors and ecosystem actors. The EIC also provides additional activities such as prizes.
Potential applicants who wish to apply for EIC funding will need to apply through the EIC website and the EU Funding & Tender Opportunities portal. This contains all the information necessary as well as details of the relevant National Contact Point who can provide information and personalised support in native language.[4]https://eic.ec.europa.eu/system/files/2021-03/EIC%20Work%20Programme%202021.pdf
EIC Funding Schemes based on the development stage of innovations
The EIC Work Programme 2021 provides for an integrated, agile support across the full innovation spectrum from early stage research to start-up and scale-up. The funding opportunities will be earmarked through three main instruments for both open and strategic challenges. In 2021, the available supports are as follows:
- EIC Pathfinder for advanced research to develop the scientific basis to underpin breakthrough technologies
- EIC Transition to validate technologies and develop business plans for specific applications
- EIC Accelerator to support companies (SMEs, start-ups, spin-outs and in exceptional cases small mid-caps) to bring their innovations to market and scale up
In each case, the direct financial support to innovators is augmented with access to a range of Business Acceleration Services. Linkages between these funding schemes will be maximised through proactive management and new approaches, such as additional grants to ongoing Pathfinder projects,, a Marketplace to connect preliminary and final research results with entrepreneurs and investors, and the Fast Track scheme from Pathfinder and Transition to enter the Accelerator.[5]https://eic.ec.europa.eu/system/files/2021-03/EIC%20Work%20Programme%202021.pdf
EIC Pathfinder
Purpose: For advanced research to develop the scientific basis to underpin breakthrough technologies.
Who can apply: “Consortia of at least three different independent legal entities (e.g. research organisations, universities, SMEs, industry) established in at least 3 different eligible countries. Single applicants or small consortia (two partners) may be able to apply for Pathfinder Challenges according to the call specifications.”
Funding amount and the Technology Readiness Level required: “Grants of up to EUR 3 million (open) or EUR 4 million (challenge driven) (or more if properly justified) to achieve the proof of principle and validate the scientific basis of breakthrough technology (TRL 1-4)”.[6]https://eic.ec.europa.eu/system/files/2021-03/EIC%20Work%20Programme%202021.pdf Through the EIC Pathfinder funding instrument, 100% of the eligible cost of the project’s costs can be reimbursed.
EIC Transition
Purpose: To validate technologies and develop business plans for specific applications.
Who can apply: “Single applicants (SMEs, spin-offs, start-ups, research organisations, universities) or small consortia (two to 5 partners). Applications must build on results from eligible Pathfinder, FET or ERC Proof of Concept projects.”
Funding amount and the Technology Readiness Level required: “Grants of up to EUR 2.5 million (or more if properly justified) to validate and demonstrate technology in application relevant environment (TRL 4 to 5/6) and develop market readiness”.[7]https://eic.ec.europa.eu/system/files/2021-03/EIC%20Work%20Programme%202021.pdf Through the EIC Transition instrument, 100% of the eligible cost of the project’s costs can be reimbursed.
EIC Accelerator
Purpose: To support companies (SMEs, start-ups, spin-outs and in exceptional cases small mid-caps) to bring their innovations to market and scale up.
Who can apply: “Single Start-ups and SMEs (including spin-outs), individuals (intending to launch a start-up / SME) and in exceptional cases small mid-caps (fewer than 500 employees).”
Funding amount and the Technology Readiness Level required: “Blended finance: up to EUR 2.5 million grant component for technology development and validation (TRL 5/6 to 8); EUR 0.5 – 15 million investment component for scaling up and other activities. Grant only/grant first under certain conditions. Investment component only for small mid-caps or as follow up to grant only (i.e. for SMEs, including start-ups)”.[8]https://eic.ec.europa.eu/system/files/2021-03/EIC%20Work%20Programme%202021.pdf In some justified and exceptional cases, the amount of the grant can exceed EUR 2.5 million.
Timeframe: The timeframe of projects for the EIC Accelerator should be planned for a period of 24 months. Up to 70% of the eligible costs of the projects can be reimbursed. The application process of the EIC Accelerator funding programme is evaluated in two stages. The applicants should prepare a short application by answering some questions accessible on the EU Funding and Tender Portal. During this stage applicants will get information about available funds for their ideas or concepts. If projects are selected in the first stage, then applicants need to prepare a full application proposal. For both stages the main criteria of evaluation consist of “Excellence”, “Impact”, and the “Level of risk, implementation, and need for Union support”.
Note: If your proposal received a GO at in the first stage, you have 12 months to prepare your
full application in the EIC artificial intelligence-based IT platform. To help you draft your full application, you will be entitled to receive three days of remote coaching from the EIC Business Acceleration Services.[9]https://eic.ec.europa.eu/guide-applicants_en
Specific Objectives
The EIC aims to support the rapid scale up of innovative technologies and companies (mainly start-ups and SMEs) at EU and international level along the pathway from ideas to market. In this context the EIC is also an initiative contributing the EU technology sovereignty.
Key Performance Indices that relate to the EIC work programme include among others:
- Supporting impact-oriented companies of which over 90% addressing Sustainable Development Goals (SDGs), as well as innovations that respond to EU Green Deal objectives. This KPI will be addressed in particular through the Accelerator call targeting Green Deal innovations.
- Achieving a balanced portfolio across geographical regions and with at least 35% of EIC portfolio companies led by women. The companies invited to the face to face interviews with the EIC Accelerator juries will be selected on the basis of excellence, while aiming at having 40% with female CEOs. The Business Accelerator Services will include specific services for female founders.[10]https://eic.ec.europa.eu/system/files/2021-03/EIC%20Work%20Programme%202021.pdf
Open Funding and EIC Strategic Challenges
- The majority of funding will be awarded through open calls with no predefined thematic priorities (‘Open Funding’). The Open Funding is designed to enable support for any technologies and innovations that cut across different scientific, technological, sectoral and application fields or represent novel combinations.
- The challenge driven approach (‘EIC Strategic Challenges’) provides funding to address specific technological and innovation breakthroughs. These challenges take into account EU priorities for transitioning to a green, digital and healthy society, as well as the overall strategic planning for Horizon Europe, as well as the inputs of stakeholders, experts and the EIC pilot Advisory Board.
Projects must comply with the ‘Do No Significant Harm’ (DNSH) principle of the EU Sustainable Finance Taxonomy. This means in particular that EIC funding will not be awarded to projects that contravene the objectives of the Green Deal, including any proposal dedicated to increase the efficiency of fossil fuels and related technologies for example. Where relevant, projects must also comply with the principles of trustworthiness for Artificial Intelligence as set out in Annex 2.[11]https://eic.ec.europa.eu/system/files/2021-03/EIC%20Work%20Programme%202021.pdf
Conclusion
The EIC programme focuses on breakthrough solutions based on research and innovation. Companies, especially start-ups and SMEs, can benefit from financial support in the form of grants and equity investments according to the different development phases of their projects. Consequently, the potential applicants of this programme can expect the support for R&D, validation and demonstration phases of their projects. Funding can be accessed through three themes:
- the EIC Pathfinder for TRL 1-4 projects
- the EIC Transition for TRL 4 to 5/6 projects
- the EIC Accelerator for TRL 5/6 to 8 projects
In addition, there are topics designed for open calls without predefined priorities and the calls for specific challenges related to the transition to a green, digital and healthy society.
In order to reduce the risk of the investment, in the case of companies receiving a blended fund (grant and equity), the EU will become the direct shareholder of the companies with a share between 10% and 25%.[12]https://www.bloomberg.com/news/articles/2021-01-06/eu-will-become-shareholder-in-startups-for-the-first-time
Contact:
Sign up to meet with Bahman Morteza Etezadibehzadi on September 29, where he details the EIC Fund as part of “Financing Scale-up for a Bio-based Circular Economy”
Contact Bahman Morteza Etezadibehzadi with your possible project-specific, green finance inquiries
References