Part 1 (Innovation) of this article can be found under the provided link.
The suitability of a project for an EIC Accelerator grant or blended financing application (SME Instrument Phase 2, with equity option) can be difficult to assess even for professional writers or high-level consultants. For this reason, an in-depth investigation of the innovation, traction and team is a must before any work is done towards the preparation and submission of a successful grant proposal.
Even the most seasoned writers and consultants discover new aspects of the project and potential hurdles for the evaluation process during the writing itself which, in most cases, is unavoidable. This is due to the high information-density required of such an application and its inevitable reliance on the pro-active cooperation of the startup and the quality of information that is provided.
Often, consultancies prefer to charge the prospect applicants for a multi-day workshop in order to deeply assess the company and its suitability for the EIC Accelerator first but such an approach can be too lengthy and does not necessarily make financial sense for startups since writing, editing, submitting and re-submitting can often be covered instead.
In this second part of the EIC Accelerator assessment guide, the focus is placed on the principle of traction which is related to the customers of an innovation and its immediate industry demand. The purpose of evaluating a projects traction is to further validate the market need and, in turn, the market potential of the respective product or service.
Without traction, i.e. customer demand, there would be no revenues and no commercialisation or scaling to speak of. The core sub-criteria that can be used in order to evaluate the traction of a project can be classified into:
2.1 Surveys and Customer Contact
At the very least, a startup or Small- and Medium-Sized Enterprise (SME) should be in communication with their future customers via professional networks, formal surveys or other types of access such as workshops, industry events (i.e. conferences and fairs) and work relationships.
An innovation project without at least that type of traction is extremely difficult to validate since there is no justifiable way of underlining the customer need without communication with the customer. Every startup that has an innovation but no proof of its need has to work on this first before applying to the EIC Accelerator since the evaluation will place a strong focus on this aspect (i.e. customer interest is an explicit part of the proposal template).
2.2 Pilot Tests and Existing Value Chain
An improved customer validation comes in the form of pilot tests where the current TRL6 prototype (i.e. see Technology Readiness Levels – TRL) is already tested in the relevant environment on the customer’s premises or in real-life operations.
Pilot studies are very common amongst EIC Accelerator applicants since it is usually a pre-requisite for product developments and is a core factor of raising a project above the concept stage and into a commercial product. For Business to Consumer (B2C) products, pilot tests can also be justified through active users on a platform or any relevant data derived from user-interaction with the technology.
The core takeaway of this aspect of justifying the project’s traction is the acceptance by the targeted user group and the usefulness in addressing the customer pain point. As such, a pilot study has to deliver tangible data derived from a careful efficiency, cost and benefit analysis that underlines the projects innovation, value-for-money and ease-of-use.
The same reasoning can be applied to the network of adjacent stakeholders in the value-chain which have been gathered and secured in order to reach customers and streamline the commercialisation process. Such third-party validations can also be helpful since these can act as multipliers and are intimately familiar with customer needs and their pain points. Distributors, retailers and industry opinion leaders can be powerful additions to the validation of the project and should be assessed before applying to the EIC Accelerator.
2.3 Paying Customers and Letters of Intent (LOI)
Outside of simple customer contact and the first pilot tests, the most powerful validation in the eyes of investors are, of course, paying customers and those with strong interest. Signed contracts and LOI’s are a great way of demonstrating traction and can easily satisfy the evaluators while making the commercial strategy and customer profile much more plausible.
Of course, care should be placed into clarifying that, even though customers are secured, the project is still in its prototype stage and that financing by the European Innovation Council (EIC) is still required to fully realize the products potential. Non-bankability (see Buzzwords for the EIC) is still an important criterion to be aware of and the financial status and traction of the applicant should not be overstated by the consultant or a professional grant writer.
In summary, the traction of an EIC Accelerator applicant can be broadly classified into three main segments, namely:
- 2.1 Surveys and Customer Contact
- 2.2 Pilot Tests and Value Chain
- 2.3 Paying Customers and Letters of Intent (LOI)
Part 3 (Team) of this article can be found under the provided link.
These tips are not only useful for European startups, professional writers, consultants and Small and Medium-Sized Enterprises (SME) but are generally recommended when writing a business plan or investor documents.
Deadlines: Post-Horizon 2020, the EIC Accelerator accepts Step 1 submissions now while the deadlines for the full applications (Step 2) will be on June 16th 2021 and October 6th 2021 under Horizon Europe. The Step 1 applications must be submitted weeks in advance of Step 2. The next EIC Accelerator cut-off for Step 2 (full proposal) can be found here. After Brexit, UK companies can still apply to the EIC Accelerator under Horizon Europe albeit with non-dilutive grant applications only - thereby excluding equity-financing.
Contact: You can reach out to us via this contact form to work with a professional consultant.
EU, UK & US Startups: Alternative financing options for EU, UK and US innovation startups are the EIC Pathfinder (combining Future and Emerging Technologies - FET Open & FET Proactive) with €4M per project, Thematic Priorities, European Innovation Partnerships (EIP), Innovate UK with £3M (for UK-companies only) as well as the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants with $1M (for US-companies only).
Any more questions? View the Frequently Asked Questions (FAQ) section.
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by Stephan Segler, PhD
Professional Grant Consultant at Segler Consulting
General information on the EIC Accelerator template, professional grant writing and how to prepare a successful application can be found in the following articles:
- EIC Accelerator Interviews: Pitch Deck vs. Proposal Documents (SME Instrument)
- Choosing a Good Project for the EIC Accelerator (SME Instrument Phase 2)
- The EIC Accelerator Budget: Grant vs. Blended Finance (SME Instrument Phase 2)
- EIC Accelerator – Introduction and Blended Finance (SME Instrument Phase 2)
- EIC-Accelerator Writing: Providing the Missing Link (SME Instrument Phase 2)
- The Biggest Mistakes When Applying to the EIC Accelerator (SME Instrument Phase 2)
- Identifying a Broad Vision for an EIC Accelerator Project (SME Instrument Phase 2)