How Grant-First Projects get Equity Investments (2023 EIC Accelerator Work Programme Part 2)

The EIC Accelerator funding (grant and equity, with blended financing option) awards up to €2.5 million in grant and €15 million in equity financing per project (€17.5 million total). It is a popular funding instrument specializing in DeepTech startups and small mid-caps which aim to finalize their product developments, enter the market and scale globally.

The EIC’s 2023 Work programme

While the European Innovation Council (EIC) has remained silent regarding the 2023 Work programme that is yet to be released, ScienceBusiness has published the second draft of the highly anticipated document dated July 2022. This article series is exploring some changes and interesting aspects of the EIC Accelerator that are relevant for startups and Small- and Medium-Sized Enterprises (SME) and for professional writers, freelancers or consultants.

ScienceBusiness has likewise published the entire library of Horizon Europe documents by the European Commission (EC) that are mostly in draft form and can be found here.

All the information and conclusions provided in this article are subject to change and the opinion of the author. The following statement by the EIC is part of the 2023 EIC Work Programme draft that this article is based on:

“This document represents a working draft of the EIC work programme for the purpose of feedback and comments from members of the Horizon Europe Programme Committee for the EIC and European Innovation Ecosystems. This draft has not been adopted or endorsed by the European Commission. Any views expressed are the views of the Commission services and may not in any circumstances be regarded as stating an official position of the Commission. The information transmitted is intended only for the Member State or entity to which it is addressed for discussions and may contain confidential and/or privileged material.”

Financing Modes

The introduction of new funding modularities such as grant-first, grant-only, equity-only and blended financing has created confusion and added a variety of conditions that need to be considered (read: 2021 EIC Accelerator Work Programme). These especially relate to the Technology Readiness Levels (TRL) and timelines expected from the applicants (read: Technology Readiness Levels). The success rates have historically differed among these options based on data published by the EIC (read: 2022 Results) although these statistics are incomplete due to the ability of the Jury to change the funding request during the Step 3 interviews (read: Changing Grant Requests).

Grant-First Financing

An interesting development of the EIC Accelerator is the introduction of the grant-first application. As opposed to grant-only applications which foresee applicants to reach TRL9 at the end of the project (read: Funding TRL’s), grant-first is designed for very risky projects which need to define and reach important milestones before follow-up equity financing can be issued. The outcome of the grant-first project is expected to be TRL8 and should be accompanied by a milestone which can be assessed and allows the applicant to become eligible for equity investments by the EIC Fund.

In theory, the EIC Accelerator should only fund high-risk projects since the risk level is part of the evaluation criteria. In fact, the 2023 Work Programme writes:

“Financial support is provided through three main funding schemes: the ‘EIC Pathfinder’ for advanced research on breakthrough / game-changing technologies; ‘EIC Transition’ for transforming research results into innovation opportunities; and the ‘EIC Accelerator’ for individual companies to develop and scale up breakthrough innovations with high risk and high impact.”

This is its mission since low-risk and high-return projects are financed by private markets and banks. In reality, the Step 3 EIC Jury will often prefer lower-risk and high-impact projects of companies that are already interesting to private markets so it is common that a company financed by the EIC would have raised private capital anyways as well as cases such as a recently funded software company that has raised €30+ million in the past and then received grant-only support by the EIC in 2022.

It is difficult to imagine that such a company was unable to leverage financing below €2.5M from private markets after raising over €30M in the past.

It could be argued that grant-first support is the original vision of the EIC Accelerator since these projects are the riskiest and most groundbreaking projects that require a safety net in the form of milestones to assess the progress on-the-fly before further funding is committed.

“Grant First: Your innovation is based on a scientific discovery or novel technology and still requires significant work to validate and demonstrate in relevant environments in order to properly assess its commercial potential.”

If the commercial potential for high-risk grant-first projects is uncertain but, on the other hand, it is clear for other projects (i.e. equity-only, grant-only, blended) then the latter should be medium-risk at best by way of comparison since all projects must have functioning technologies already (i.e. TRL5/6:  validated/demonstrated in the relevant environment).

Path to Equity Financing

For grant-first projects, the new 2023 EIC Work Programme now outlines how a company can access the equity component which allows it to reach TRL9. What is interesting is that no re-application via the 3-step EIC Accelerator application process using the online template is required (i.e. at least it is not explicitly mentioned). Instead, a formal assessment is performed which is followed by due diligence conducted by the European Investment Bank (EIB).

“Grant First: Grant-first companies are eligible for a follow on equity component subject to a milestone assessment attesting that the innovation activities are well under way and that the innovation has the potential for deployment or the interest shown by potential strategic/lead investor(s) in co-investing with the EIC into the company, as a sign of maturity of the innovation and of deployment perspective.

If the milestone assessment for a Grant First proposal is positive, you will be:

  • required to demonstrate that you have sufficient financial means (e.g. revenue flow, existing investors or shareholders) to finance or any remaining innovation activities and the deployment and scaling up of your innovation; or
  • invited to enter due diligence and negotiations to receive an EIC equity investment, including to complement any other third party investments if insufficient. Allocation of the equity investment is conditional to the due diligence assessment.

In your proposal for grant-first support, you will have to include a milestone at mid-term or at the latest 6 months before the end of the project, for the EIC to assess and decide whether to proceed or not with the negotiation and the award of an investment component.”

Considering this process, it is reasonable for all new applicants applying for blended finance or grant-first to directly include the respective milestones in the applications albeit this can also be done after the Step 3 interview has been passed successfully.

Limitations of Grant-First Projects

What is interesting to note is that, while equity financing can be used for all activities from TRL5 to TRL9, grant-first applicants are limited to only the grant component which technically limits the maximum budget that can be requested to reach TRL8 to €2.5M (including loans if they become available in the future).

For a blended finance project, financing TRL5 to TRL8 can be supplemented with equity investments which makes the maximum budget to reach TRL8 significantly larger. Considering that grant-first applications are only for the highest-risk projects, this means that the EIC will prioritize the allocation of its budget to medium and low-risk projects that receive blended financing without additional milestones.

A company with high-risk developments for artificial organs or new cancer treatments at TRL5 will be difficult to finance under the EIC because of the substantial funding requirements at low TRL’s, the need for long and expensive clinical trials as well as the limitation of grant-first applications to only obtain a grant to finance the activities.

Even in a less capital-intensive field, a project that requires €10M to reach TRL8 could not be funded without loans from other sources since grant-first applications have a maximum budget limit of €2.5M. There are still cases where an applicant can ask for larger funding amounts but this is only available in rare cases and is unlikely to be significantly higher.

There are mentions of loans provided by the EIC but these will only be available in the future since it is still vaguely described in the Work Programme. In fact, the rule that grant funding can only cover 70% of the costs is still in place so a grant-first applicant also needs sufficient co-financing or a loan by default.

“To provide for the co-financing of TRL5 to 8 activities, the EIC may introduce the option for grant-first applicants to request in their full proposal an investment component to co-finance the 30% of the costs for their TRL5 to 8 activities not covered by the grant component. If and when this option becomes available, the application form will be modified accordingly.”

Grant Budget Amounts

The 2023 EIC Work Programme also outlines the conditions for the request of higher grant amounts and longer durations:

“The grant component should normally be less than EUR 2.5 million but may be for a higher amount in exceptional and well justified cases. The innovation activities to be supported should normally be completed within 24 months but may be longer in well justified cases. “

This article is part of a series whereas the remaining articles can be found here, once published:


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) are January 11th 2023 (only EIC Accelerator Open), March 22nd 2023, June 7th 2023 and October 4th 2023 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: