Tag Archives: EIC Accelerator rejection

Gender Equality Targets in the Age of Gender Identification (EIC Accelerator)

The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) is a competitive funding program by the European Commission (EC) and has always been heavily affected by European Union (EU) policies. Examples for this are the requirements to meet sustainability targets, address societal challenges and other recent developments such as the Green Deal and strict gender equity goals (read: EIC Accelerator 2021 Work Program).

Gender Equity Targets

Especially the latter has been strongly advertised by the European Innovation Council (EIC) and has proven to be very beneficial for female entrepreneurs (read: Being a Female Entrepreneur) since their normal funding rates of under 5% were effectively increased to 35% or higher (read: EIC Impact Report).

Such a strictly followed target has a tremendous impact since a female Chief Executive Officer (CEO) will have a slight but important advantage over a male CEO which can, due to the tight competition at the EIC Accelerator interviews, make the difference between being funded successfully and being rejected (read: EIC Pitch Week).

This not only affects the startups and Small- and Medium-Sized Enterprises (SME) applying for grant financing in the EU but is also impacting the focus of professional writers and consultancies since female CEO’s who are excellent and have a great project now have a lower risk profile than their male counterparts if all other variables are matched.

Unfortunately, this special advantage for women, in addition to the newly introduced coaching support for female entrepreneurs, might be shorter-lived than anticipated.

EU Definitions

In the past, the designation of the CEO’s gender in the Funding & Tenders Portal was optional and could be omitted since undisclosed was presented as an alternative option.

In 2021, the newest Horizon Europe grant proposal template changes this and asks their applicants to select their gender among the choices of male, female and non-binary. While, previously, the selection of undisclosed was effectively equal to choosing male when it comes to the evaluation process, it is difficult to imagine that choosing non-binary will have the same effect.

Gender identification and non-binary genders have emerged in recent years with more political power and influence than gender equality and feminism itself which is why this new option might radically change the EIC’s female CEO targets over the coming decade. After all, in today’s times, policies and political opinions are only one viral social media campaign away from being changed overnight.

In an official report by the European Commission’s Directorate-General for Justice and Consumers from June 2020, the term non-binary is defined as follows:

“An umbrella term for people whose gender identity is not encompassed or represented by ‘man’ or ‘woman’. Non-binary identities are varied and can include people who identify with some aspects of binary identities, while others reject them entirely.”

By simply introducing this option to the evaluation process of a financial instrument such as the EIC Accelerator, the EU might have opened the door for exploitation since gender identity is explicitly not based on biological sex or the time spent within a certain identity. To clarify this, the EC defines gender identity as follows:

“A person’s gender identity is defined as each person’s deeply felt internal and individual experience of their own gender, whether as a man, a woman or non-binary, which may or may not correspond to the sex assigned at birth.”

When the beneficial treatment of female CEO’s was announced, it was also made clear that the respective person would have to be in the CEO position for a longer timeframe and not be elected CEO just for the purpose of the EIC Accelerator submission. This covered the obvious weakness of the gender-targets and allowed female CEO’s to receive the benefits as they were intended.

Non-Binary Applicants

By including non-binary genders and by defining gender as, in the EC’s words, a “deeply felt […] experience” without limiting the time spent within that identity, the EC could be opening the door to a reshaping of the playing field. If the status of non-binary becomes equal to the status of a female due to political pressures, then there could be an incentive for all-male CEO’s to designate themselves as non-binary since being non-binary does not need to come alongside a certain lifestyle, look or behaviour.

In fact, being non-binary is subject to no restrictions or societal norms by design.

Conclusion

Of course, such a development is pure speculation and most male CEO’s would have no interest in explaining their gender in front of a jury even if a multi-million grant is at stake. Although, to think that no CEO would make that decision even after a previous rejection is unlikely as well if any critical jury question can simply be dismissed by saying “I would prefer not to discuss my gender identity“.

It will be interesting to see how the EC is handling this new development since balancing a culture of inclusion and social rights with clear-cut targets such as gender equity might not be possible in the long-term. When it comes to democratic government organisations, political pressure will always win over old policies which means that excellent female entrepreneurs should seize their opportunity to apply to the EIC Accelerator now as long as high funding rates of 35% are still enforced.

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:

The 2021 EIC Accelerator Work Programme and Newest Updates (SME Instrument Phase 2)

Update 1: The EIC Accelerator Work Programme 2021 was published on March 17th 2021.

Update 2: The EIC has presented the latest news in a YouTube leak which reveals information not found in the published Work Programme.

The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity financing) is being re-invented and is transitioning from its initial pilot phase into a fully-fledged investment arm of the European Commission (EC) and European Innovation Council (EIC). With the launch of the EIC Accelerator in 2021 having been announced for March 18th 2021, this article discusses the most important aspects of the new Work Programme (read: EIC Accelerator Introduction).

The new Work Programme includes a different application process, additional evaluation steps and significant technical changes that are relevant for both Small- and Medium-Sized Enterprises (SME) and startups as well as for professional writers and consultants focusing on preparing successful grant applications (read: Hiring a Consultant).

While the official template for the proposal documents is not published yet, conclusions regarding their set-up can be drawn from the evaluation criteria themselves. All information given in this article is still preliminary but is expected to accurately reflect how the EIC Accelerator will look like under Horizon Europe (2021-2027).

1. General Changes

1.1 Open Calls vs. Strategic Challenges

The EIC Accelerator will follow the previous SME Instrument’s strategy of imposing certain topic restrictions on applicants whereas all applicants will remain eligible for Open Calls but only select projects can apply to the Strategic Challenges. Accordingly, each funding arm will receive its own budget and be subject to specific guidelines with respect to the types of companies that are selected as well as their impact on the EU’s key policy targets.

1.2 Scoring & Ranking System

While the EIC Pathfinder and the EIC Transition will still include scoring and ranking systems, the EIC Accelerator will entirely omit such evaluation methods and solely rely on YES/NO gradings for every step. As discussed in a previous article (read: Analyzing Success Rates for Each Step), this might lead to a non-transparent evaluation process whereas rankings will have to be established internally since this is the only way of controlling the number of beneficiaries.

If there were truly neither thresholds nor rankings then there would likely be an excess of applications successfully progressing to the third evaluation step since the previous EIC Accelerator instalment already saw 30+% of all companies reaching the quality threshold of 13. Only a subsequent ranking process was able to reduce that number to a manageable amount for the interview stage.

1.3 UK Participation

After Brexit, the UK will participate in the EIC Accelerator grant but will not be eligible for equity financing (read: The United Kingdom under Horizon Europe). This, of course, is not to the detriment of UK companies since non-dilutive grants are increasingly sought after and there is no additional risk of receiving an equity-counter-offer that would replace the requested grant.

2. The Application Documents

2.1 Step 1: The Short Application

This first stage will require the preparation of a 5-pager to summarize the project in written form, a 3-minute pitch video and the conventional pitch deck which will later be used for the Step 3 interview.

≥ 5-Pager: The 5-pager does not currently have an official proposal template yet but conclusions can be drawn from the Evaluation Summary Report (ESR) criteria in the newest EIC Accelerator work packages (not shown here). The document will likely focus on the Excellence and Impact of the technology with very broad questions regarding its key aspects and why the EU should be interested in the project (see DARPA’s Heilmeier Catechism). The Implementation will receive less attention and only address the quality of the team and the overall risk level of the project (read: Assessing an EIC Accelerator Project).

The EU has additionally given hints at the 5-pager template through its public tender for an Artificial Intelligence (AI)-driven writing support tool which further illuminates the direction it will take. All in all, the 5-pager should be viewed as a compressed version of the previous full application with a stronger focus on being impressive rather than being detailed or feasible (read: Identifying a Broad Vision).

≥ Pitch Video: The 3-minute pitch video will likely have no restrictions and give full creative freedom to the applicants (read: Pitch Video Production) but it should be treated as a project pitch that is addressing all criteria rather than an advertisement (read: Pitch Video Resources).

≥ Pitch Deck: The pitch deck will likely follow the exact same structure as the previous installations of the Step 3 interviews (read: Pitch Deck Creation).

2.2 Step 2: The Full Application

Once Step 1 is passed, the applicants will be invited to submit a full application to the evaluators which will likely be a 20-30 page document that includes the business plan, financials, work packages as well as annexes that contain information on the company (read: EU Work Packages).

2.3 Step 3: The Remote or In-Person Interview

This step will follow the same structure as previous interviews (read: Preparing for an Interview & The Biggest Mistakes).

3. The Application Process

The application process will likely see great changes with the introduction of an online tool supported by an AI-interface similar to web-based word processors, a re-invented Funding and Tenders Portal as well as the introduction of freezing periods for unsuccessful applicants. It is evident that the EIC has put great thought into increasing the quality of applications but also into filtering out low-quality projects early.

3.1 AI Tool

Similar to GoogleDocs, this web-interface is meant to be used for the writing of the proposal and should give useful assessments and guidelines to support the process. The exact details and its release date are not clear yet but it could be a valuable way of providing immediate feedback to low-quality applications.

3.2 Freezing Periods

≥ Two Attempts: The general approach is to give rejected companies a second attempt while they will be blocked for 12 months from further submissions if they cannot succeed in a respective evaluation Step on their second try. The rules are more complex when it comes to the rejections in Step 3 but all applicants should assume that two attempts are all they will have available and that no submission should be wasted.

Consultants and professional writers often receive inquiries from companies who have applied to the EIC Accelerator on their own but failed, prompting them to seek support from an expert. This was always a great option for startups because there was no risk in preparing an application in-house since professionals could still be hired down the road (read: Should you apply on your Own? & Getting Good at Grant Writing).

Unfortunately, this is currently changing since the risk of failing is now associated with being blocked from any further applications for at least one year and maybe even indefinitely when it comes to a particular company or project. It is expected that many applicants will now seek professional help before even applying on their own to minimize their risk while there could also be a large number of unsuccessful companies seeking out writing support with one out of two rejections already received (read: EIC Accelerator Consulting Industry).

≥ Virgin Projects: Since such freezing periods are a new concept, there will likely be a new focus among professional writers and consultants on virgin projects which have not applied to the EIC Accelerator yet and have a lower risk for rejection. This is expected to become a major factor since success-fees and -rates are key for consultancies while investing time and resources into a project with only one remaining attempt can become an unreasonable risk.

Undoubtedly, the latter risk consideration will prompt consultancies to adjust their pricing model specifically for one-time EIC Accelerator rejectees. As with everything, good intentions can backfire and the EIC’s radical changes to the evaluation process, depending on how they will unfold, could end up harming the startups and SME’s they aim to support.

4. The Evaluation Process

Without scoring, without a transparent ranking system and with automated AI-tools, the evaluation process will change drastically. In the past, the pool of evaluators used for the assessment of applications has frequently faced criticism but the new installation of the EIC Accelerator might mitigate this depending on how the changes will be implemented. One major improvement is the introduction of concrete feedback for rejected applicants, although its exact nature is unknown at this point.

4.1 Step 1

Two evaluators will decide, unanimously, if the application is approved or rejected. If their opinions differ, two new evaluators will be added and the application will be successful if only one of them approves all evaluation criteria. This means that a proposal can win Step 1 if the result is 2/2 or if it is 2/4, provided the approvals are given for all evaluation criteria.

4.2 Step 2

Three evaluators will assess all criteria as in the previous EIC Accelerator installation. They will now also gain access to automated data analysis tools to cross-reference metrics and collect relevant data but the details for this AI tool are not known yet.

4.3 Step 3

6 jurors will evaluate the pitch and have access to all previous applications and feedback. They can also suggest lower grant amounts to be offered in case TRL8+ activities are detected or make a counter-offer consisting of equity financing but they are unable to provide more funding than has been requested (read: Technology Readiness Levels & How the EU Funds TRL’s).

5. Strategic Challenges (Topics)

Outside of the open calls, the newly introduced topics will focus on (1) the green deal, (2a) digital technologies and (2b) health care.

For (1) the Green Deal, 50% of companies invited to the Step 3 pitch have to address (a) batteries and energy stage, (b) green hydrogen and (c) renovation (read: A Proposal Narrative). For (2a) digital technologies and (2b) health care, 40% of interviewees have to address each sub-topic.

Open calls and specific topics will be available in parallel which means that companies have to decide which call they apply to.

5.1 The Green Deal Strategic Challenge (1)

The Green Deal will aim to target the following environmental goals in a similar fashion as the dedicated cut-off in May 2020 (read: The Green Deal EIC Accelerator):

  • Climate mitigation
  • Clean, affordable and secure energy
  • Clean industry & circular economy
  • Efficient building and renovating
  • Sustainable and smart mobility
  • Fair, healthy and environmentally-friendly food system’s
  • Preserving and restoring ecosystems and biodiversity
  • Zero pollution and a toxin-free environment

Specifically, the following technologies and areas are sought after under the 2021 EIC Accelerator Strategic Challenges for the Green Deal:

  • Batteries and Energy Storage: Strategic battery value chain • critical raw materials • recycling • chemical as well as physical storage (including ultracapacitors) • stationary and transport applications.
  • Green Hydrogen: Produce and store renewable hydrogen • different scales • centralized to on-demand • stationary and transport applications.
  • Renovation: Accelerate the growth of the renovation market • energy-efficient buildings • innovative technologies • financial schemes or business models.
  • Low-carbon Industry: De-carbonisation of industries • electrification • circularity • industrial symbiosis • industrial processes • carbon capture storage • digitisation of industrial processes.

5.2 The Digital Technology Strategic Challenge (2a)

≥ Digital technologies: Information and communications technology (ICT) • advanced high-performance computing • edge computing • quantum technologies • cybersecurity • artificial intelligence • block-chain • cloud infrastructure technologies • Internet of Things (IoT).

5.3 The Healthcare Strategic Challenge (2b)

≥ Healthcare technologies: AI-driven diagnostics • point-of-care (POC) diagnostics • cell and gene therapy (esp. cancer) • novel biomarkers for clinical prognosis • patient stratification/monitoring • bioprocessing 4.0 (digitalisation) • healthcare intelligence services • e-health solutions.

6. Ambitions to Control the Outcome

While the evaluation of all EIC Accelerator applicants is expected to be fair and prioritize the Excellence of the project, it is undeniable that there are policies in place that will fix the outcome. These are coming in the form of gender targets, societal impacts and related EU political agendas (read: EU Policies).

≥ Gender Outcomes: 40% all EIC Accelerator interviewee’s in Step 3 of the evaluation process must have female Chief Executive Officers (CEO) while 35% of all funded businesses must meet this criterion (read: Why it’s Great to Be a Woman). To facilitate this, special coaching will be given to female founders and the pool of evaluators, while 40% are already female, will be expanded to meet a 50% female share.

Considering that, without outcome-interventions by the EC, only <5% of beneficiaries had female CEO’s, this new target is an exceptional change but it is not clear how exactly the first two evaluation steps are affected by this Step 3 quota (read: The EIC Accelerator Performance Report).

≥ Sustainable Development: Amongst other targets, the EIC wants to support impact-oriented companies out of which 90% have to address sustainable development goals such as the Green Deal or similar targets. It is not clear how this focus will affect the EIC Accelerator.

≥ Geographic Diversity: A staggering change to the Step 3 pitch is that each EU member state and each associated country has to be represented in the interview stage with a number that is proportionate to the total number of applicants in earlier steps. This means that, for the first time, the EIC Accelerator is imposing geographic restrictions on its beneficiaries. This can be a double-edged sword since it has long been shown that some countries easily meet the 13-score funding threshold (i.e. 50% of applicants) while other countries have a more difficult time (i.e. 10%).

Countries that prioritize quantity over quality will be unfairly rewarded while countries that prioritize quality are being punished. It is still unclear at this point how strictly this rule will be enforced (read: Pre-Requisites for an EIC Accelerator Application).

7. Technical Changes

7.1 Coaching

3 days of coaching will be provided to all successful Step 1 applicants but at the costs of €1,000 per coaching day for the EC. The coaches will likely be external contractors and it is not clear how their experience could contribute to the preparation of the Step 2 application or to the practice of a successful Step 3 pitch.

7.2 Seal of Excellence (SOE)

SOE’S are awarded based on the Impact and Excellence criteria while the Implementation (i.e. risk-level and need for EU support) will be the determining factor to decide if the project is funded or if it is rejected (read: Evaluation Summary Report Analysis).

7.3 Applicants

Applicants can now, for the first time, be natural persons instead of only being Value Added Tax (VAT)-registered companies as long as an SME or Small-Mid Cap is formed prior to signing the EIC Accelerator contract. Of course, the natural person has to be a citizen of the EU or of an associated country (read: Associated Countries).

7.4 Equity

Next to direct equity investments by the EIC Fund in financing rounds initiated by the SME’s themselves (read: Inside Look into EIC Fund), convertible notes and other debt-related funding can be provided to beneficiaries. It is also finally clear that the obscure 30% co-financing of the EIC Accelerator grant can be financed through a parallel equity investment-request, thereby requiring no existing funding sources or revenues to fill the gap.

Direct equity applications without the request for grant support are now possible for applicants although the evaluation and proposal submission will differ.

Equity components can also be postponed by first opting for a grant application (i.e. grant-first) and later re-applying directly for equity-support.

7.5 The Pitch Video

This document will likely be submitted through a link since the cloud storage-needs and the requirement of government institutions to store files long-term would exceed existing capacities. One important repercussion of this decision is that, if startups can self-host their videos, enforcing a 3-minute restriction is extremely difficult since it is not possible to have an automated restriction as it exists for PDF page-limitations (read: Pitch Video Types).

The fairest way of implementing this would be to have direct file uploads to the EU platform and an automated time-trimmer to assure that all applicants only have 3 minutes to work with. If the EIC is using an AI-tool for the proposal development then introducing cloud video-hosting is only a minor challenge.

7.6 Timelines & Feedback

The Step 1 call will be open continuously and have no specified deadline. It will approximately take 4-6 weeks to receive feedback on the Step 1 5-pager whereas both successful and rejected applications will receive comments from the evaluators. For the Step 2 full application, the feedback is expected to be received 5-6 weeks from the cut-off date.

A 4-6 week feedback cycle for Step 1 does seem underwhelming since it is supposed to be a screening Step and not act as a full assessment. The estimated timing will potentially be different in practice and could be as fast as 2-3 weeks.

Face-to-face interviews will be 8-9 weeks after the Step 2 cut-offs (read: Deadlines) while 6 jury members will be responsible for the questions and assessments. EIC Fund associates can also join the pitch but they will not be in a position to ask questions or influence the evaluation result. The interview results will be ready within 2-3 weeks.

7.7 Reimbursement Advances

For short innovation life-cycles, SME’s can apply for a reimbursement advance that matches the grant condition but has to be paid back. With a 70% maximum contribution of €2.5M, the EU can provide financing that has to either be paid back (interest-free) or is converted into equity after a certain time period. The exact nature of the funding opportunity will be published soon but it will likely be at the discretion of the jury members who can directly assess the innovation life-cycle and time-to-market to make a recommendation.

7.8 Budget

Initial communications by the EC suggest that there were meant to be 3 cut-offs for Step 2 in 2021 but they then were reduced to two deadlines. The budget is already set and will be distributed across all topics. As of today, the total budget for 2021 is €1.109BN while the open calls have a €602M budget and the strategic calls share a €507M budget. Considering two parallel calls, namely the open call and the strategic challenges, this would give each cut-off an approximate budget of €554M which is significantly higher than even the COVID-relief and Green Deal cut-offs in 2020 (read: COVID and Green Deal 2020).

7.9 Inclusion of Small-Mid Caps

Historically, the SME Instrument and the EIC Accelerator have focused on SME’s, exclusively, but this will change under Horizon Europe. While SME’s are subject to specific size-restrictions that include the number of employees (max. 250), turnover (max. €50M) and balance sheets (max. €43M), Small Mid Caps can exceed these amounts. While restricted to only equity investments under the EIC Accelerator, companies can be 499-employees in size.

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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!



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:

An Inside Look into the EIC Accelerator Fund and its Equity Financing (SME Instrument)

The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity financing) is a highly competitive program that is slowly evolving into a fully fletched startup financing initiative (read: EIC Accelerator Introduction). Unfortunately, the latest developments regarding its equity financing have led to confusion and criticism as it was expressed in a recent Politico article.

The first startups and Small- and Medium-Sized Enterprises (SME) who have successfully obtained EIC Accelerator financing under the blended funding program in 2019 had to wait for over a year to receive their first equity payment which means that the funding was promised but only provided with a significant delay while some companies are still waiting for their first payment.

This, of course, can be detrimental to many businesses that have passed the exceedingly difficult evaluation process and managed to win the EIC Accelerator grant against odds of 1-5%. With the 2021 template seeing the introduction of even more steps to the process (i.e. a small application and a video pitch) and more restrictions (i.e. freezing periods upon rejection), many applicants are requesting additional clarifications before even considering to apply for the blended financing program (read: Proposed 2021 Process)

To inform applicants as well as professional grant writers and consultancies, Stéphane Ouaki, the chair of the investment committee of the EIC Fund, has been answering the most critical questions on the TechEU Podcast regarding the internal process of equity financing under the European Innovation Council (EIC) Fund as well as the remote evaluation performed by the European Agency for SME’s (EASME). This article presents a short summary of the key takeaways of the conversation.

Grant vs. Equity

> While the grant funding process is fast and has been perfected over the past decade, the equity financing is still very new for the European Commission (EC) since it is a government body and not a private investor (read: Grant vs. Equity).

> The grant financing is usually provided within one or two months through an initial upfront payment but the equity financing must undergo additional due diligence which should last 6 months on average but can also last 9-12 month in some cases. Comment: This could likely be accelerated significantly if the EIC presents a list of required materials ahead of time so that 80% of files can be uploaded as soon as the equity financing is awarded.

Due Diligence and Timing

> The equity payment is not provided in a stand-alone fashion like the grant payment but is envisioned to be supplementary to a financing round with other investors which has to be planned by the company itself. Comment: This means that, if there are no financing rounds with other investors planned, the EIC Fund will likely not invest. It also means that the financing is delayed depending on the timing of the next financing round.

> If the applicant has been successfully awarded the EIC Accelerator blended financing and coincidentally also performs a financing round at that time, the EIC Fund can directly invest in the startup, provided the due diligence has been completed.

> The full equity financing will be paid in 2-3 separate trenches in most cases.

> If the due diligence for the equity financing has a positive result but no financing round is in progress, the EIC Fund can immediately invest through a convertible note which averages 50% of the agreed-upon equity financing. Less is given through the convertible note if the due diligence deems the company to be sufficiently financed.

> Since blended financing always includes a grant component that is paid in a much faster manner, no company should be in financial difficulties once the EIC Accelerator has been granted.

Behind the Scenes

> The advisory board of the EIC Fund is having weekly meetings and is working hard on making the equity process as smooth as possible but mistakes will be made throughout this pilot phase.

> If the company performs a financing round with non-EU investors then this will not negatively impact the EIC’s equity investment.

> The due diligence can directly impact the granted equity financing whereas the amounts could be reduced or entirely cancelled if the EIC deems the beneficiary to not fit their criteria any longer.

> The EIC can place a private industry representative in the company board if it deems this to be necessary but there is currently no infrastructure available to facilitate this process at scale.

> Equity applications have not been prioritized over grants even though many rumours and experiences might suggest otherwise. If equity financing was used to fund grant-applicants then this was directly related to the Technology Readiness Levels (TRL) of the funded activities (read: TRL and TRL Funding). Comment: The TRL designations are often up for interpretation and it is possible that TRL’s were effectively used to funnel more applicants towards equity financing due to limited grant budgets.

Comments on the Politico Article

> The complaints expressed in the Politico article have not reached the EIC Fund representatives. Comment: This is understandable since business-making or -breaking money is involved and complaints will only make things worse – not better.

> Complaints regarding the due diligence and long delays are likely stemming from a comparison to the EU’s smooth grant approval process which is much simpler and faster. Comment: Saying that startups are „used to the smooth grant process“ and that this is the reason for complaints is unlikely since many funded companies are first-time EU-applicants. Even though they can directly compare grant and equity proceedings through the blended financing program, they are more likely to be used to a private due diligence process and compare the EU’s performance to that.

> Companies who were awarded the equity financing in the highly competitive process expected to receive the promised awards from the EIC Fund but were told to find other investors first. The EIC Fund’s position is that companies have to be proactive in raising investments while the EIC Accelerator beneficiaries were shocked that they did not receive the funding after having been promised a specific amount. Comment: Both are correct but the EIC should have been transparent about this from the very beginning since the way it described equity investments in its guidelines, in hindsight, was deceptive.

Vague Answers

> The question regarding the discrepancy between the grant and the equity due diligence did not receive a direct answer but it is an excellent question since both are government funds and should face similar scrutiny. The answer detailed how the due diligence for equity financing is more in-depth but it does not clarify why the grant payout is possible without it. Comment: Since equity stakes, long term associations with the EU and the potential placements of board members are involved, it is evident why a due diligence process would be necessary. In addition, the mentioned ranking system for grant evaluations performed by EASME will likely disappear in 2021 due to the absence of a scoring system. This can make the grant evaluation process less transparent and likely more ‘bumpy’ as well.

> As the last interview question, the criteria of non-bankability was further investigated. The interviewer simply asked if the EIC is looking for success cases or for non-bankability cases as their first priority (read: EU Buzzwords). The answer is: Success cases. Comment: This answer was given in a very vague manner and evaluators, either remote or in the pitch jury, might not share this priority.

Conclusion

In summary, the negative experiences of the companies that have applied for equity financing under the EIC Accelerator all stem from a lack of communication from the side of the EIC but this is understandable since the funding is called the ‘EIC Accelerator Pilot’ for a reason. The governing bodies are still in the learning process and the 2021 version of the EIC Accelerator under Horizon Europe (2021-2027) will likely remedy most of the reported issues.

Still, the EC and EIC clearly neglected their responsibility to explain the nature of the funding ahead of time. Even though equity guidelines were available specifically for this purpose, they did not include any of the critical information provided above.

Moving forward, companies have to be aware of the timing of payments, the ongoing scrutiny (i.e. pulling of funds can potentially happen at any time), the delays caused by a slow due diligence process and of the EIC’s preference to only invest in existing or planned financing rounds. The advisory board and decision-makers of the EIC Fund have learned valuable lessons in this initial pilot phase of the EIC Accelerator and are expecting to launch a more transparent and smooth version of the program soon.

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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!



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:

Why It Could Be Beneficial to Apply Early to the 2021 EIC Accelerator (SME Instrument)

The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity financing) will be reinstated in 2021 under Horizon Europe (2021-2027) with an updated evaluation process (read: Proposed 2021 Process). This will likely present new challenges to the evaluation procedure as lead by European Agency for SME’s (EASME) and the European Innovation Council (EIC) but it can also present improved opportunities for startups and Small- and Medium-Sized Enterprises (SME).

Consultants and professional writers should be aware that such a new process can artificially tilt the success chances of grant applications since a continuously open call (i.e. Step 1) can lead to a bottleneck in Step 2 which makes the timing of the application essential. The following presents a list of considerations and assumptions that can impact the evaluation process:

  • Open deadline: Since Step 1 will be continuously open, each applicant that applies early and receives a YES will have a guaranteed spot for the Step 2 evaluation
  • YES or NO grading only: Since there is no numeric scoring, it is likely that proposals will not be ranked which means that every YES will have to be invited to Step 2 (i.e. no retrospective rejection due to rankings)
  • Limited spots for Step 2: If the EIC and EASME realize in April or May 2021 (i.e. the next deadline for Step 2 is in June 2021 – see Cut-Off) that there are too many YES gradings for Step 1 already, this might significantly impact the success chances of late Step 1 applicants.

The above reasoning is highly speculative but it is likely that the new evaluation process will undergo an equilibration phase during which the thresholds need to be adjusted in some way. In the past, a score of 13 acted as the official funding threshold while the unofficial threshold (i.e. 13.5 to 14.1) was determined through rankings enabled by the scoring system. Without such a scoring system to determine the rankings, the EIC has no way of limiting the numbers of applications other than to increase the strictness of the YES/NO evaluations dynamically which can lead to unfair results.

Assuming that the EASME will not, in secret, employ an internal ranking system with scores (i.e. without communicating this to applicants) then the same logic would apply to Step 2. A single evaluation round of the full step 2 proposals could lead to an excess of applications for step 3 and, since there is no ranking, the Step 2 evaluation process must be repeated but more strictly. What strictly would mean in this case is not clear but it seems like a less transparent method of evaluating proposals compared to the 2020 process.

Conclusion

It is impossible to estimate the impact of the 2021 EIC Accelerator grant application process but this uncertainty could be mitigated through clear communication from the EASME and the EIC as to how certain thresholds are set and enforced (i.e. by providing real-time updates on YES and NO counts and thresholds). This extends to clear communication if evaluation steps are repeated internally in case applications exceed the capacities for subsequent evaluation steps. This is especially useful if an applicant can choose less competitive EIC Accelerator topics or if the timing of the application is not fixed (i.e. postponing an application to avoid the freezing period).

In summary, it could be beneficial for applicants to apply to Step 1 of the EIC Accelerator in 2021 as soon as possible since an early YES will guarantee a spot to the Step 2 evaluation while this might be significantly more difficult the later one applies.

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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!



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:

How to Select an EU Grant Financing Program such as the EIC Accelerator (SME Instrument) – Part 3

This article is a continuation of Part 2 and describes a list of considerations to be made by startups and Small- and Medium-Sized Enterprises (SME) that seek to raise grant financing from the European Union (EU). One of these options is the EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) by the European Innovation Council (EIC) and European Commission (EC) which is highly suitable for innovative companies and has a strong support network of professional writers and expert consultancies (contact a professional writer here).

8. Country Restrictions

Which countries can apply?

Country restrictions have to be considered whenever they could be applicable. As an example, there are funding programs by the EU where only a certain country can apply while others are open to non-EU countries (i.e. Tunesia, Israel, Ukraine) such as most Horizon 2020 and Horizon Europe programs (read: Countries for the EIC Accelerator).

There can also be specific restrictions imposed due to special circumstances such as Brexit. Since the United Kingdoms (UK) participation in Horizon Europe was unclear throughout 2020 and 2019, UK applicants were only allowed to apply for grant financing under the EIC Accelerator but not blended financing since the EIC did not want to take equity stakes in foreign entities. Such potential issues have to be assessed on a case-by-case basis.

9. Submission Process

How is the submission process for the grant applicants?

The requirements for grant applications can vary greatly and have to be assessed based on their submission types, evaluation process and document requirements. Such variations have to be explored for each case but the general scopes for grant application can be summarised as follows:

Submission type: Online submissions (i.e. document uploads) are possible in many cases but the submission to local contact points or federal government institutes can be required as well. The EIC Accelerator uses the Funding &Tenders Portal for fully digitized submissions (read: Financing Timeline).

Evaluation process: The evaluation process will vary depending on the type of evaluators, their numbers, backgrounds and general focus. The EIC Accelerator uses a remote pool of evaluators via the European Agency for SME’s (EASME) and in-person juries for the pitch interviews (read: Interview).

Document types: The document types that are requested under a grant, as defined by the official proposal template, will vary but a normal PDF document like a business plan or a research plan are a must in almost all cases. The EIC Accelerator additionally requests financial spreadsheets, a short summary, a video pitch and a pitch deck (read: 2021 Application Proces).

10. Local Support Networks

What local support is available for companies?

Support on a national level is well organized in the EU due to an abundance of SME contact points in key European areas. These can provide a strong support network and can provide resources that help in future applications. Such help might not be available for all grant opportunities especially if the applicant does not classify as an SME which needs to be assessed beforehand.

11. Available Consultancies

Are there many consultancies specialising in the filed?

Lastly, it is useful to assess the number of consultancies or experienced writers that are available for a specific grant so that each prospect applicant is able to have a variety of options to choose from when hiring such supporters. It can also be beneficial to assess if the consultancies are working with multiple grants so that a more suitable option can be chosen instead of the original one in case of a rejection or if a more thorough assessment warrants such a transition.

For the EIC Accelerator, there are a variety of available consultancies to choose from with varying business models and industry focus (read: Preparing an Application). To reach out to a professional writer or consultant, please use the following contact form.

Summary

When choosing an EU financing program, the following aspects should be considered:

  1. Budget: How much is the total available budget and the financing per application?
  2. Covered Costs: Are all costs covered or only a percentage?
  3. Competitiveness: How high is the success rate?
  4. Thematic Focus: What specific conditions do projects need to fulfil (i.e. innovation, Technology Readiness Levels, industry)?
  5. Local Alternatives: Are there national funding projects available with easier accessibility?
  6. Number of Submissions: How often can an applicant submit an application?
  7. Single Applicant or Consortium: Is it a single-applicant program or exclusively for consortia?
  8. Country Restrictions: What restrictions are imposed on applicants when it comes to their country of origin?
  9. Submission Process: Is an online submission possible or a complex federal process?
  10. Local Support Networks: Are there support networks available or resources for applicants (i.e. templates, proposal examples, annotated guidelines)?
  11. Available Consultancies: Are expert consultancies and professional grant writers available for hire?

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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!



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:

Proposed Application Process for the EIC Accelerator 2021 (SME Instrument Phase 2)

Attention: A new article is available detailing the changes for the 2021 EIC Accelerator Work Program.

The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity financing) will be reinstated in 2021 with a higher budget, a new structure and a different evaluation process. For startups and Small- and Medium-Sized Enterprises (SME), it is important to be prepared for these changes and to understand what requirements will have to be met for the new templates and a successful EIC Accelerator grant submission.

The exact details of the process, as defined by the European Innovation Council (EIC) and European Commission (EC), are not known yet but the general structure for an EIC Accelerator application will likely be similar to the following steps:

Step 1: Short Application & Pitch Video

Each project will begin with a short application that contains a proposal of only a few pages and also includes a pitch video that will likely focus on the founders, the innovation and the business model. The details of this step are not exactly known yet but it does add an extra layer of skill to proposal writing which is in the form of audio/video production and editing (read: Making a Video).

Depending on the restrictions of the video (i.e. what is allowed and what is not), its general competitiveness can vary greatly since larger companies with marketing departments and content creators would have a clear benefit over small DeepTech business that only employ technicians and developers. Restrictions imposed on the videos could level the plane field by disallowing the use of graphics and animations but such a process would be almost impossible to enforce by the remote evaluators.

In some way, this development is great for applicants since less effort is needed to apply for the first step while the final evaluation stage (i.e. the pitch interview in Brussels) is now already part of step 1 (i.e. the video). On the flip side, by adding another evaluation step to the process, applicants will likely have less confidence in the overall success of their application.

Step 2: Long Application

The next stage will likely be the conventional, long application which will be a detailed representation of the project, its business plan and the overall impact. Read: Visual Representation of a Proposal

Step 3: Jury Interview

The last step is expected to follow the same jury-interview model as the EIC Accelerator 2018-2020 while certain changes might be implemented as well. Read: Pitch Deck vs. Proposal

General Changes

Scoring System

Instead of providing Evaluation Summary Reports (ESR) with detailed scores between 1 and 15 as well as up to two decimals, the new EIC Accelerator in 2021 will likely use simple YES or NO gradings to assess each evaluation step. The exact details of this approach are not published yet but it will likely lead to a less transparent evaluation process and increase the perception of black box decision-making.

Freezing Periods

It is expected that freezing periods will be introduced to restrict the number of re-submissions. These can be complex depending on the stage of the initial rejection but it is anticipated that each applicant will at least have two opportunities to hand in a successful grant application.

Seal of Excellence (SoE)

SoE’s will likely remain part of the evaluation results but it is currently unknown how exactly they will be awarded since no scores are expected to be given.

Topics

Thematic topics with specific budgets and goals will be reintroduced as they have already been part of the SME Instrument in previous years. These topics will present parallel calls under the EIC Accelerator and each applicant can decide to what specific topic they want to apply to. Topics will likely vary greatly in competitiveness, evaluation and their budgets wich will make careful planning essential.

Conclusion

The new process aims to create a fairer evaluation and also reduce the work-load associated with the exceedingly larger numbers of incoming EIC Accelerator applications but it could lead to new and unforeseen problems. The number of companies receiving a YES in step 1 and 2 might exceed the capacity for the step 3 interviews since it has long been a reality that a large number of projects would reach the funding threshold (i.e. a score of 13) but had to be cut off.

If all companies that receive a YES in step 2 must be invited to an interview then this could lead to week-long evaluations that significantly overload the evaluations. If no scores are given but only a pre-defined number of applicants is making it towards step 3, then the evaluation process would be very non-transparent since it is unclear how the projects were ordered and on what basis since YES and NO should be the only criteria and not BETTER or WORSE.

At this stage, all applicants, consultants and professional writers will have to await the official publication of the EIC Accelerator 2021 Work Programme which will provide answers to the most pressing questions.

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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!



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:

How to Interpret the Evaluation Summary Report (ESR) of an EIC Accelerator Application (SME Instrument) – Part 1

The Evaluation Summary Report (ESR) provides the EIC Accelerator blended financing applicant (formerly SME Instrument Phase 2, grant and equity financing) with feedback regarding the proposal quality. While separating and grading the central sections of Impact, Excellence and Implementation, it gives additional scores on selected subcriteria (read: Using the ESR).

A professional writer or consultant is used to interpreting such documents but, for many startups and Small- and Medium-Sized Enterprises (SME) who are looking to resubmit a previously rejected application, it can be a difficult task.

The greatest drawback of the ESR is its lack of comments as part of the report. These are only provided for the pitch interview  (i.e. step 2 of the evaluation process) but not for rejections in step 1 of the process (i.e. the written application). This will likely be changed under Horizon Europe (2021-2027) by the European Commission (EC) and European Innovation Council (EIC) but, without any useful comments, the EIC Accelerator applicants are in the dark with respect to the cause for the rejection.

Interpreting the Evaluation Summary Report (ESR)

The ESR’s structure does not match the official proposal template and the overlap of the individual sub-criteria can make reading the information rather difficult (i.e. a single criterion is used to score commercialisation, financials and scaling). As a result, interpreting the ESR is not as clear or informative as some would expect but it is still possible to gain some useful information from the overall document.

1. Overall EIC Accelerator Score

A successful EIC Accelerator grant proposal has a very high score but, for companies who have re-submitted unsuccessfully multiple times, reaching a great score can be elusive. With the maximum score being 15, the official threshold lying above 13 and the unofficial threshold being above 13.6, many applicants are in need of advice as to how to interpret the ESR and improve their score.

Assessing such a score just based on a single number is very difficult because the problem could lie in a variety of different areas. From experience, there are some areas that can be adjusted based on the general score but only in the broadest way.

Any score below 12 needs extensive work and it is likely that the project is either not innovative enough for the grant if the proposal is high in quality or the proposal needs serious reworking in order to improve its quality (i.e. improved and clearer writing, design, quantifications and explanations).

An application with a score between 12.5 and 13.5 is usually sufficiently high in quality from a writing perspective but it lacks certain details to break the unofficial evaluation threshold and to receive the pitch interview invitation. These detailed changes to be made are very specific and must be customized to each individual project but below is a shortlist of common flaws found in proposals of certain score margins.

2. Scores for Sections

The second scores to investigate are the scores for the three main EIC Accelerator sections, namely Impact, Excellence and Implementation. The graphic above shows the general average score per section which can provide insight into the balance of the proposal.

Impact

If the Impact section is below the other scores then the proposal has not properly addressed the commercial and peripheral factors of the annotated proposal template such as customer needs, market, commercialisation strategy, Intellectual Property Rights (IPR), Freedom to Operate (FTO) and regulations. In addition, the European dimension could have been neglected which dampens the impact of the narrative (read: Visual Guide for an EIC Accelerator Application).

Excellence

With a low Excellence section, it is very likely that the product or service presented is not viewed as sufficiently innovative or the Technology Readiness Levels (TRL), the current stage of development or competing offers have not been presented in a clear manner. If the innovation is lacking then there is not much that can be done and it should be assured from the start that the innovation is suitable (read: Preparing an Application Internally and TRL for the EIC Accelerator).

Implementation

If the Implementation section is far below the other two then the work packages, further stages, tasks, team, partners, timing, budget or any other of the concrete development steps are insufficient. This might be due to a lack of clarification what the grant financing is used for, a lack of detail in the given tasks or major inconsistencies between different parts of the application (i.e non-bankability – read: EIC Accelerator Buzzwords).

Continuation

Part 2 of this article continues 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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!



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:

The Financing Timeline For EIC Accelerator Applicants (SME Instrument Phase 2)

The EIC Accelerator (formerly SME Instrument Phase 2) is a highly competitive grant (as well as equity) financing program by the European Commission (EC) and the European Innovation Council (EIC). Many startups and Small- and Medium-Sized Enterprises (SME), in their journey of seeking financing sources, discover this opportunity since it allows single, for-profit companies to directly apply through an online submission process (i.e. the Funding & Tenders Portal).

While the EIC Accelerator is a highly lucrative opportunity for any innovation startup (see a country list here), it should be stressed that its two-step evaluation process (i.e. the written application and the in-person interview) makes it one of the most competitive initiatives available today.

Even though the proposal template allows for a remarkable degree of creativity as to how critical sections like the current stage and the planned developments are justified, it should be noted that the jury pitch will be significantly more strict.

As such, it is beneficial to assure that the current stage of the innovation project, and especially its financing status, is aligned with the EIC Accelerator’s vision. Every applicant, consultant and professional writer should confirm that a company fits the following criteria since the current rules under Horizon 2020 will likely become more strict under the Horizon Europe (2021-2027) funding programme.

1. Beyond the Idea Stage (Seed Financing Received)

The starting point for the EIC Accelerator application is Technology Readiness Level 5 or 6 (TRL – see How the EIC Accelerator Funds Technology Readiness Levels) which means that the respective innovation should have already seen some major developments and testing.

These past developments usually go hand-in-hand with existing seed funding, past grants, angel investments or similar support which have helped in bringing the concept (i.e. idea stage) to an operational prototype.

The EIC Accelerator is not interested in financing ideas or concepts that have no real-life applications which means that every applicant should already be reasonably close-to-market (i.e. 1 to 2 years away from the market introduction) and exhibit some degree of commercial traction. If a company manages to enter the interview stage of the EIC Accelerator but does not have a functioning prototype or proof-of-concept yet while also not being able to justify a proven market need, the pitch will likely be unsuccessful.

2. Non-Bankability (No Significant Funding Available)

Non-bankability, as asked for in the official proposal template, is a very difficult criterion to address since it does not mean non-investability of the company but that a certain technology cannot be funded through conventional means (i.e. banks, venture capitalists, profits, etc.).

Going further, being non-bankable also does not mean that a certain company has never had any investments at all and is unable to raise any type of funding. This is reflected by the EC’s rule to only provide 70% of the project costs (i.e. for the grant) which makes external financing or profits a must (read more here: The EIC Accelerator: Grant vs. Blended Financing (Equity)).

This, of course, seems contradictory to some degree since any great startup with past investments could theoretically find a way to finance a project if the business plan is promising enough (i.e. convincing investors, customers, etc.).

What the EU is looking for is a financially capable company (i.e. having raised seed investments) but is still in financial need for the proposed project. Following this definition, non-bankability can be explained by justifying how a project is currently too high-risk for VC’s (or comparable financing sources) since it lacks technological maturity. Potential investors prefer further de-risking until they would be willing to invest.

Every applicant or writer should find ways to solidify such a statement on a case-by-case basis since non-bankability will be a significant factor in the evaluation process up to the interview (i.e. “Why do you need EU support?”).

3. No Major Financing Rounds Raised

Non-bankability specifically addresses the project which the applicant seeks funding for. This becomes increasingly difficult to justify if an SME generates €1m+ in profits per year or has recently raised €10m+ in a VC financing round. Any company that is able to raise funds comparable to, or in excess of, the EIC Accelerator grant (or blended financing with equity) will face significant scrutiny from the evaluators.

The simple rule should be to not perform major financing rounds while also applying to EU financing unless a rejection does not impede the overall company strategy.

This can, of course, be difficult since there are only 4 EIC deadlines  (i.e. cut-offs) per year and multiple resubmissions can easily span over the course of 15 months. If major financing rounds are planned prior to beginning the submission process then it should be decided in advance if the EIC Accelerator grant is a must-have or nice-to-have so that a potential rejection will not impact the companies financial health.

Summary

In summary, these three points should be considered when assessing a companies financing status:

  1. Past financing achieved (i.e. seed rounds)
  2. Non-bankable (i.e. unable to leverage funds from other sources)
  3. No major financing rounds (i.e. pre-VC)

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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!


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:

Finding Updates and News for the EIC Accelerator (SME Instrument Phase 2)

The European Commission has a variety of channels where updates and news are published. For the EIC Accelerator (SME Instrument Phase 2), there is not a single, centralized source of information but a variety of fragmented channels which should be scanned periodically in order to remain up-to-date on recent developments.

This is essential in preparing a successful grant (or blended finance) application since proposal template updates are usually unannounced and implementing them can be critical for success.

It is also important to always remain in the loop regarding the European Innovation Councils (EIC) newest strategies since they can make the difference between an immediate rejection (i.e. non-environmental applications during the Green Deal cut-off) and receiving a fair proposal evaluation.

Startups, as well as Small- and Medium-Sized Enterprises (SME), should be particularly careful to do not miss any details since, for example, the United Kingdom (UK) is now only allowed to apply for grant financing under the EIC Accelerator but not for equity (i.e. blended finance) for the deadline on October 7th 2020 due to Brexit. After Horizon 2020, the UK’s future is likewise uncertain as it relates to Horizon Europe in 2021-2027.

In the past, changes have also been made to the number of applicants whereas consortia were allowed pre-2019 but the current EIC Accelerator is exclusively a single-applicant program.

The following is a short collection of the most important websites and pages which are used to publicise relevant EIC Accelerator (SME Instrument Phase 2) updates. These are not only important for consultants and professional writers but also for applicants who are currently resubmitting a proposal and want to verify if templates or guidelines have changed since the last submission.

Note: The list is focussing on updates rather than informative material so manuals and general guidelines are excluded.

1. Twitter

The EIC twitter account (@EUeic) is one of the most useful resources for receiving the newest EIC Accelerator updates. Information regarding interview invitations, delays and other general changes is often published on Twitter first. It is always worth studying the account’s timeline and replies when considering to apply for the grant financing since essential updates will likely be found there (i.e. EIC Accelerator Interviewees from March Deadline Unable to Apply for May Cut-Off)

2. EIC Accelerator Call Page

The official call page for the EIC Accelerator is likewise rich in content, ranging from the current application deadlines, over documentation on the grant status to an update feed which often details the number of submissions received and sometimes includes flash reports which contain statistics on the actual call budget, above-threshold proposals and other relevant information.

The collection of documents also contains, amongst other things, a complete list of the financed companies and brief information on their respective projects. Updates are infrequent and inconsistent but valuable in most cases.

3. Google

One of the most important aspects of staying up to date with the EIC Accelerator is the official documentation for the Work Programme and the Proposal Template. Both documents are usually quietly uploaded by the EU and replace the old documents automatically which means that a writer or consultant has to periodically check if the files have changed.

The easiest way to do this is, for example, to search for EIC Accelerator template PDF on Google and to check the PDF for its current version which is given at the beginning of the document (i.e. the last update as indicated in the history table). The details of the performed changes are usually conveniently listed as well which makes studying the new template easier (i.e. view EIC Accelerator: New Proposal Template from March 20th).

The same is true for the Work Programme which is just as important as the proposal template and can be searched and investigated in the same way.

4. European Innovation Council (EIC) Newsletter

The EIC has recently created a newsletter which is designed to keep all interested parties up to date. While it might grow in the future, so far, the content has been infrequent and less informative than other outlets due to simple re-posting of existing content.

5. Newsroom: EASME and SME Instrument News

The search pages on the EU’s Newsroom can be very useful in filtering for relevant information related to topics of interest. The Executive Agency for Small- and Medium-Sized Enterprises (EASME) and European Innovation Council (EIC) are great choices to search for since they often publish EIC Accelerator- related content. Other options are keywords such as Innovation or other similar terms.

6. Related Websites or Institutions

Alternative resources for EIC Accelerator-related content are informative websites by consultancies specialised on the grant or initiatives such as Access4SMEs and Access2EIC. Social media can also be a useful way to identify quality information sources (i.e. #eicaccelerator on Twitter) and can be beneficial for both prospect- and awarded-companies.

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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!


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 (SME Instrument Phase 2) – Introduction and Blended Finance

Writing a successful EIC Accelerator (SME Instrument) application is always challenging due to the competitive nature of the grant and the 2 step evaluation process (i.e. written application and in-person interview).

Success Rates

Typical success rates range between 2% and 5% depending on the individual budget and the number of applicants but this does not mean that it’s impossible to receive the financing, it just means that you will have to be dedicated and determined to perfect your proposal until you have reached your target. To not be discouraged by setbacks and to understand that the reviewing process for the written application will require you to cover many parts which are not directly relevant to your business but are relevant to the EU.

With high-quality writing and the determination to improve the application in case of a rejection, you can increase your success rate to at least 30% but there will always be a chance for failure. Attention to detail will ultimately lead you to your goal but you must be committed to placing yourself into the reviewer’s position by not only looking at the official proposal template but by also studying the criteria which are the actual basis for your score.

Writing and Financing

Pre-empt any concerns or questions the reviewer might have by covering all grading criteria convincingly throughout the proposal. Creating a new market or a new value-chain might not be relevant to you and addressing gender equality is in no way part of your business model but if its part of your score then you must address it. Do not consider any text, image or graphic to ever be good enough but treat it as a place holder until you have created a better version.

For a single project, you are able to request up to €17,500,000 in financing (or even more if duly justified) whereas €2,500,000 is the maximum non-refundable grant amount by the European Commission (EC) while €15,000,000 is the equity component by the European Innovation Council (EIC) Fund which requires the applicant to offer company ownership (i.e. 10% to 25%) in exchange. It is possible to either ask for a pure grant or for blended finance (a combination of equity and grant) but it is not possible to ask for equity-only financing.

The grant is always paid as 70% of the presented costs which means that a project which requires €1m will be eligible for a €0.7m grant while the applicant has to explain how the 30% co-financing of €0.3m will be reached. The requested equity amount will be paid in full but there is always the option to receive a counteroffer by the EC if the project budget does not fit the jury’s expectations or assessment.

Reviewing

While the reviewing process (step 1 and 2) will remain the same regardless of choosing grant or blended finance, the contribution itself is managed by the EC in the case of a grant and by the EIC governing bodies with support from the European Investment Bank (EIB) Group in the case of equity financing. The latter is associated with a more sophisticated due diligence process and the project will be offered to a pool of private investors who can provide financing in place of the EIC.

As a result, there are different recommendations with respect to the types of projects or companies that are to be funded by each source. For example, equity financing is targeted at especially high-risk projects that are not attractive for the market yet. This criterion is also important for grant requests but equity financing further identifies companies with low or limited turnover as well as negative EBITDA as preferred targets (see Blended Finance Guidelines).

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.

Want to see all articles? They can be found here.

For Updates: Join this Newsletter!


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: