Startups with disruptive technologies often face the challenge of finding investors who want to get involved. While many startups receive subsidies in the beginning, there is a lack of finance between the end of public funding and the moment where venture capitalists are willing to step in. For these high-risk startups that have not yet been able to find sufficient funding, the European Commission has set up a program to help them bridge this gap and get help from the stage of idea and invention to scaling up their companies.
Currently, the Enhanced European Innovation Council (EIC) Pilot, run by the Task Force EIC, offers support to breakthrough entrepreneurs, small companies and scientists with the ambition to scale up internationally. At the moment, applications for the pilot project are not possible anymore. But in the beginning of 2021, when the new EU Research and Innovation program “Horizon Europe” starts, the fully-fledged EIC will be launched, open for applications by innovators looking for financial support.
There are two pillars of the EIC program: the EIC Pathfinder designed for researchers and technologists, and the EIC Accelerator dedicated to startups and SMEs.
The EIC Pathfinder Pilot, which is the new home for the previously known Future and Emerging Technologies (FET) program, offers grants of up to €4 million to promote collaborative, multidisciplinary research on visionary technologies. Funding is only granted to consortia of at least three entities from three different EU member states or associated countries. The subprogram FET Open supports early stage projects with a radical vision, a breakthrough technological target and ambitious interdisciplinary research, while FET Proactive addresses promising research topics that are not yet ready for being translated into industrial applications.
Compared to the previous FET program, the participants of EIC Pathfinder can now benefit from coaching services, with up to 12 days of tailor-made business development coaching. Furthermore, scientists and entrepreneurs get the opportunity to validate their prototypes during the Pathfinder Corporate Days. Moreover, they can expand their network by connecting with like-minded innovators through the EIC Community Platform.
Instead of focusing on research, the EIC Accelerator Pilot addresses high-risk startups and innovative SMEs willing to develop and commercialize new products, services and business models with a disruptive potential. There are no set topics, but negative impacts on climate and the environment should be avoided. The EIC Accelerator, built on the previous SME Instrument Phase II, supports innovative, for-profit companies that are based in EU member states or associated countries. It not only provides grants, but also blended finance in the form of grants plus investments in equity.
For startups with technological innovations that wish to apply for grants only, a Technological Readiness Level (TRL) of 6 to 8 is envisaged. This means, the technology should have already been demonstrated in an industrially relevant environment. In this case, the elected projects receive between €500,000 and €2.5 million in the form of grants, covering up to 70% of costs. In addition to the grants, startups and SMEs can also apply for investments in equity, up to a maximum of €15 million. Activities above TRL 8 – when the actual system has already been proven in its operational environment – are only funded with blended finance.
Furthermore, the EIC Accelerator participants can receive individual business coaching to help them scale up their innovation idea. Depending on the needs of the startup, three different coaching services are available: business development coaching, focusing on the analysis and evaluation of business opportunities; organization development, centered around leadership, team and organization building; and financial development coaching. At Corporate and Investor Days – which are currently being held online –, the supported startups get the chance to pitch their projects to investors and corporates.
When the full EIC is launched in 2021, the European Commission plans to simplify the application process and to further improve the funding opportunities. For example, it will be possible to apply for an equity-only support, in particular for pure scale-up operations (TRL 9 and above). As soon as the full EIC is launched, we will notify our readers again via our digital channels.
With the EIC program, the EU is taking one step forward to stimulating the innovation landscape and giving high-risk, high-potential startups better chances to grow in Europe.