One of the core sections of an EIC Accelerator application (SME Instrument Phase 2), taken from the official grant proposal template, is the commercial strategy. Such a strategy might seem very straight forward in many cases but, in order to fully advertise the impact and scalability of a project, great care should be placed into describing its key assumptions and stakeholders.
A professional writer or consultant should assure that the commercial roadmap of the company is not solely based on completing the product developments and then to simply describe what geographical market segments will be entered but to expand on the measures taken towards scaling inside these markets.
A commercial strategy should describe a network of partners which have been carefully selected and who are imperative to reaching the target customers. As such, these partners should be well-explained inside the grant application and their main roles, as relating to the commercialisation, should be outlined clearly.
Trusting in a Startup
If a new startup or Small and Medium-Sized Enterprise (SME) is entering the market, many customers might be sceptical at first. This can especially be a factor for a B2B product because most established companies have seen many new market participants come and go over the years and are not particularly interested in making any commitments towards a company that could be out of business soon.
As a result, trust is a core factor to consider when bringing a new product to the market and the best way to build it is either through social proof (i.e. validation by trusted third parties) or an impressive track record (i.e. validation through product success). Both tend to go hand-in-hand since an impressive track record usually stems from the existence of many happy customers who, in themselves, act as third-party validations.
Social proof, on the other hand, could mean that external partners who already have a significant amount of trust are willing to invest time and money into the company which, in turn, signifies trust to other interested customers. This part is essential when building a commercial strategy since it can make the difference between slow progress and exponential growth of the product’s deployment.
As a simple metaphor, there are plenty of amazing books that have never been read by more than a few hundred people while there are entirely average reads that have risen to the top and became bestsellers. A great product is of little value if its gathering dust on the shelf which is why the commercialisation has to receive as much attention as product development.
Building a Trusted Network
The ways to increase the trust customers have in the company is to consider which commercial partners hold the highest level of authority for the respective target market. A certain hardware accessory might seem less appealing if offered through a retailer as part of a larger portfolio but would be valued considerably higher if an Original Equipment Manufacturer (OEM) has taken a liking to the technology and decided to implement it directly into new products.
A new company should ask itself: Which commercial channel will build the highest level of trust with customers? Taking, as an example, a new autonomous driving technology for commercial vehicles, we can envision a hierarchy of suitable commercial strategies:
First Level: OEM
The highest level of trust would lie with OEM since they understand the customer (i.e. vehicle end-users) better than anyone and are already selling vehicles at scale. If Mercedes decides to implement a certain technology, every consumer will assume that the product is of the highest quality. The trust is already established which means that the only questions a consumer will pose are related to the product features and the pricing.
Second Level: Service
Secondary partners could be intermediaries and stakeholders who are an essential part of the value chain but are considered optional. These could be mechanics, regulators, certifiers or car renting businesses who, likewise, have a high level of consumer trust and who’s opinions hold weight.
As an example from a different industry, we can imagine a customer who is operating large pipeline networks and who wants to introduce new security measures to reduce the occurrence of damages or accidents. If a consultancy or mechanic who has been hired to find an appropriate solution was to recommend a new technology as the ideal option for this case then, once again, the attention will be placed on features and pricing but not on the technology itself since trust is already established.
Third Level: Retail / Distribution
Using distributors and retailers in this scenario is still a highly valuable commercial strategy but it might significantly impede the scalability or speed of the market entry if the chosen partners do not have the trust or incentive to recommend the product. It is useful to consider what could lead to exponential growth rather than a gradual increase in sales and which strategic partners could lead to the highest envisioned market impact.
While there are a lot of factors and nuances that flow into a great commercial strategy, leveraging the trust of partner networks is a useful approach in crafting customer relationships. It can also be a good way of thinking out-of-the-box and diversifying an existing strategy with additional partners and sales channels since, in the end, it is hard to predict which avenue will see the highest growth rate and end up being the most profitable channel:
- First Level: Original Equipment Manufacturers (OEM) who directly include technology into their existing portfolio and distribute to end-users
- Second Level: Service providers who are frequently used and can add technology to their portfolio and recommend/apply it to end-users
- Third Level: Retailers and distributors with access to large customer bases
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 likely be on March 23rd 2022, June 15th 2022 and October 5th 2022 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).
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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)