The European Commission (EC) and European Innovation Council (EIC) provide €2.5 million in grants and €15 million in venture financing per startup or Small- and Medium-Sized Enterprise (SME).
This article discusses highlights from the 2022 impact report on the new EIC Accelerator program (grant and equity, with blended financing option).
1. The EIC Fund’s Mission
“In 2022, the EIC made a major development by establishing the EIC Fund as an investment vehicle for high risk, high-potential startups in their early stages of development.”
The EIC Fund is a great addition to the EIC’s portfolio of funding arms since it enables larger funding amounts and closer relationships with companies through ownership stakes, deep due diligence and board seats.
Unfortunately, it is currently not aligned with the needs of high-risk and early-stage startups due to many delays, a long backlog of unfunded companies spanning multiple years into the past and a distorted selection process that often abandons the idea of DeepTech (see Breaking the Rules).
2. Industries and the EIC’s Role
“Whether it’s the energy crisis, the food crisis, or the path towards economic resilience, the EIC is helping to find solutions to these deep societal challenges by identifying investment opportunities and catalysing private investments in deep tech startups that can scale in global markets.”
It is clear that many of the EIC Accelerator portfolio companies focus on very technical fields in the areas of health, energy, computing, space technology and others, often including hardware developments. This is a great accomplishment since pure software companies would be less risky and easier to scale in comparison.
Still, it remains to be seen if the EIC is crowding-in private investments or if private investors are crowding-in the EIC.
There are cases in which companies raised substantial capital before or during the EIC Accelerator approval process so it is likely that the EIC is pursuing a safe strategy of piggybacking on private markets while also following a risky approach of betting on disruptive technologies in parallel.
This is, of course, a very reasonable approach since disruptive DeepTech is too risky to be the exclusive priority of any investment vehicle, including the EIC.
While it is easier for the EIC to advertise results from EIC Pathfinder and EIC Transition due to the filing of patents and the publications of scientific papers, the EIC can only advertise results from the EIC Accelerator through valuations, scaling and revenues which are difficult to achieve (see The EIC Portfolio).
This places a major burden on the EIC since obtaining financial success cases is extremely difficult and creates distorted incentives where the evaluation prefers companies that are already successful rather than those that will (potentially) be. It also requires a near-unreasonable level of risk mitigation from companies that are expected to have signed contracts with major industry stakeholders or customers even at TRL5.
3. Stealing Thunder
“To date, the EIC has supported a portfolio of over 1 600 startups that have helped generate 12 deep tech Unicorns and 112 Centaurs here in Europe. EIC companies have attracted over EUR 10 bn of follow on investment and the valuation of the EIC portfolio of companies stands at over EUR 40 bn.”
Interestingly, the EIC lists a company called TWAICE as an example of a centaur but this is quite deceptive since, according to Crunchbase and public data, the company raised $30 million before obtaining EIC funding and no funding afterward. This would suggest that their valuation had already reached the centaur status, potentially exceeding the status of an SME, while the EIC support had little or no effect.
This casts doubt on the EIC’s unicorn or centaur claims and a thorough investigation of the EIC’s role in their growth and success is warranted.
4. Diversity
“The EIC also continues to outperform the market in supporting women-led companies and entrepreneurs from all regions of the EU – factors essential for a balanced and diverse innovation chain better addressing the needs and reflecting capabilities of our citizens.”
It is quite clear that the EU member states and associated countries are not equally represented in the portfolio of EIC-funded companies. Of course, this is not avoidable since different countries have varying startup ecosystems and low-GDP countries will generally struggle to create cutting-edge DeepTech startups.
Diversity goals, including gender targets, are generally driven by political agendas and it remains to be seen if such goals, as they are applied to technology investments, will have a positive impact on all citizens in the long term.
5. No Country for Old Companies
There is a preference for companies within a certain age range whereas the majority of funded businesses are 6-10 years old and a total of 50% of companies are below 10 years of age. This, of course, can stem from the fact that many older businesses are not incentivized to innovate while it is often startups that are in a position to disrupt industries with ground-breaking technologies.
6. Congesting Innovation
“The first EUR 260 m in investments through the EIC Fund has resulted in 92 investment agreements. 48 investments by the EIC Fund have been sufficiently mature to leverage just under EUR 500 m in co-investments by private and other funds, resulting in a leverage of 2.6 times the value of the EIC Fund equity investments. 2022 also saw the largest investment round involving the EIC Fund: a EUR 100 m fundraising round by SiPearl. 44 investment agreements signed by the EIC Fund have taken the form of convertible loans. These act as a bridge to the next fundraising round, which is expected to fall within 12-18 months of receiving EIC support.”
It is no secret that the EIC Fund has had a difficult past (see An Inside Look). Confusion and disappointment among beneficiaries as well as delays in the issuance of funds are still plaguing startups even 4 years later.
Most companies are still waiting to receive their equity investments and the EIC is still making structural changes to the fund which will likely lead to more delays – i.e. handing the EIC Fund to the European Investment Bank (EIB).
“Since September 2022 it has been fully functional and is in the process of taking investment decisions on 179 companies selected by the EIC Accelerator for equity support in 2021 and 2022.”
It is likely that the EIC Accelerator will undergo substantial changes over the coming years which will reshape the evaluation process and especially the selection procedure.
Considering the current evaluation process, the EIC is putting the cart before the horse by performing the due diligence on a company after the funding decision has already been made.
While the EIC Fund can still decide not to invest in a company, it is not how the program was intended to function.
Currently, a subjective assessment process using conflicting criteria in 3 steps screens companies while final investment decisions are made based on a 35-minute interview. Only then will months of due diligence be performed. This is, of course, highly uncommon in the investment industry.
7. Turtles Investing In Hares
“Operational Excellence: Including time from application to grant for Accelerator, 6 months for Transition, and 8 months for Pathfinder”
Days-to-Grant by Program
2021
2020
EIC Accelerator
300
152
EIC Transition
91
–
EIC Pathfinder
167
207
Due Diligence*
>720
180-360
*Days-to-Termsheet
The statistics on the application durations are quite revealing since they suggest that the average beneficiary was rejected at least once in the process. For a company applying to the EIC Accelerator, it is possible to move from the beginning of Step 1 to the final funding decision in Step 3 within 6 months if no rejections are received. Afterward, 2+ months can be expected to access the funding.
Since the average duration given by the EIC is 300 days or 10 months (100% higher than in 2020), it seems that either the projects are rejected before obtaining funding, applicants skip deadlines due to the higher workload or the EIC caused substantial delays in the issuance of the financing.
Still, it is unclear what this timeline actually represents since it does not clarify the start and end points (i.e. Step 1, Step 2, Step 3, money in the bank).
But it is possible that the numbers reflect rejections faced by beneficiaries which highlights the inaccuracy of the evaluation process and the persistent luck factor of obtaining funding.
This article was last modified on May 1, 2023 @ 19:40
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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 EIC Accelerator funding (with blended financing option) by the European Innovation Council (EIC) and European Commission (EC) is providing startups and Small- and Medium-Sized Enterprises (SME) with up to €2.5 million in grants and €15 million in equity financing per project (€17.5 million total).
The program is often supported by professional writers, freelancers or consultants to navigate the complex proposal template and EIC requirements.
This article presents a summary of the 2022 EIC Accelerator report and is discussing insights regarding the success of the pilot program leading up to 2020.
“It needs to considerably speed up the process leading to the signature of the financing agreement. In the pilot phase, delays were due to the novelty of the instrument, both for the EC and the beneficiaries, whereas in the current programming period there were legal difficulties in transitioning the Fund under Horizon Europe.”
The current status of the EIC Fund, with all its troubles and delays, is on display in a recent 2022 impact report on the EIC Accelerator (see How Deep Is Your Tech?), the EC website (here) and in a recent media article (here). While over 90 investment decisions have been made, the funding has not reached the bank accounts of beneficiaries in most cases.
While grant payments have been made effectively, albeit with some delays, the equity investments have been hampered, likely due to a combination of structural difficulties and the inexperience encountered by the EU operatives.
Of course, including the beneficiaries as a reason for the delays is not entirely accurate since the delays were caused by the EIC, primarily.
1.2 Communication
“Stakeholders’ expectations about the benefits and implications of receiving the Fund’s support could be managed by further communication through national contact points, SME and start-up associations.”
The EIC has historically struggled with properly communicating what the EIC Accelerator is seeking and what applicants should expect. This is likely due to the nature of public institutions that often prioritize political agendas and communications over clear and pragmatic advice.
As an example, it is in the interest of the EIC to communicate how it funds disruptive innovations that the private market is ignoring but it is not in their interest to admit that the evaluation process often prioritizes low-risk investments, even going as far as giving grants to companies that received €20M+ from private markets just days before (see Breaking the Rules).
The EIC has even listed a portfolio company as an example of a supported centaur (i.e. €100M+ valuation) even though the company likely had this status before the EIC funding was obtained, according to public data.
Since the EIC has encountered difficulties in clearly communicating with future applicants, likely due to potential conflicts with political appearances, it is increasing its reliance on National Contact Points (NCP). The EIC has already made data sharing on the platform mandatory for all applicants and NCP’s often have access to beneficiary lists before results are officially published.
To communicate more clearly, the EIC should publish detailed but anonymous information regarding the rejection reasons of applicants especially in the interview stage. If the evaluation process is in fact consistent, then it should be possible to give superior guidance directly.
As an example, if companies are rejected because of their small teams, then there should be a clear cut-off that applies to all companies. If a company is rejected because they have raised €15 million just before the interview, then this should be consistent among applicants as well.
1.3 Conflicting Agendas
“A contentious point on the Fund structure pivots around the interpretation of two eligibility rules: non-bankability and co-investment. The two criteria respond to the need to identify investment-worthy projects with traction from private investment, but that cannot be financed through traditional debt instruments. The first criterion addresses the lack of additionality observed in the SMEI and reflects the need to ensure that the Fund is not competing with the market by supporting projects that financial intermediaries could have financed. The second criterion ensures that market players do not see the recipient companies as publicly subsidised entities. It also guarantees that the European Commission remains a dormant investor in the company, till it may exit, due to the entrance of new investors.”
In the previous EIC Accelerator pilot phase, the non-bankability criterion was still present but it has now been removed from both the official EIC Work Programme and from the evaluation criteria. The term was used to refer to companies that cannot receive funding from private sources such as banks or institutional investors since they are too high risk.
Regardless, the current proposal template is still asking all applicants to explain why they need funding from the EIC which is consistent with the removed non-bankability rule.
The independent report points out that forcing companies to obtain co-investments for the EIC Fund on their own opposes the narrative of being solely dependent on the EIC. Upon closer investigation, there is a narrow role for the EIC to play even if a company is non-bankable since the grant and equity components can de-risk the project for outside investors.
In reality, the EIC has not honored that role and, by diluting the non-bankability criterion, has allowed itself to provide grants for companies that have easy access to private capital (see Investing in Well-Funded Companies).
It is interesting to see that the independent investigators were able to predict such an outcome based on 2020 data. The EIC had to decide between risk (non-bankability) and success (co-financing, private investor interest) and it chose the latter.
2. Gender
2.1 Changing the Goal to Reach the Goal
“The EIC Pilot has made commendable efforts in trying to achieve more balanced participation, especially for women.”
The EIC has set mandatory targets for female participation in the EIC Accelerator even during its pilot period but it is unclear to which degree they have increased the number of female-led applicants as opposed to the number of female-led winners.
In 2020 and prior, the EIC used different thresholds for male and female participants which effectively increased the difficulty for male while reducing the difficulty for female CEO’s. The EIC has further loosened its criteria on what a female-led company means and expanded the definition to also include CTO and CSO positions instead of just the CEO position.
This is an interesting development since changing the definition of the goal is not the same as reaching the goal.
It is also unclear if such outcome-driven goals will benefit future female founders or if they create the wrong incentives and hurt the long-term diversity of the ecosystem.
Increasing the number of applicants from widening countries and the number of applying female CEO’s could be a more sustainable option rather than changing the definition of the goal or forcing certain outcomes. Additionally, the EIC could subsidize consulting fee’s for female CEO’s or implement similar programs to encourage an increase in applicants instead of distorting evaluation criteria.
2.2 Eroding DeepTech
“Nevertheless, identifying attraction and inclusiveness as the programme’s KPIs creates possible conflicts with the award criteria for project selection and in particular with excellence in science and innovation.”
Interestingly, the above quote from the independent report was given twice in the document, verbatim. It highlights the general conflict of impact investments or Environmental, social, and corporate governance (ESG) policies since they can erode investment decisions.
Investors generally have to prioritize profits and shareholder value but introducing an additional target can jeopardize such priorities. This is true for both the focus on DeepTech and gender targets since they present impacts outside of financial success.
For the EIC, it is unavoidable to have such conflicts since it is not a typical investor but focuses on difficult-to-finance and high-impact DeepTech projects. As such, profits are already being jeopardized.
Introducing gender targets to this equation is further eroding potential profits since it presents additional restrictions on investment decisions.
In the end, something will have to give since the EIC must now:
Maximize success for political appearances (i.e. unicorns, centaurs, follow-up funding)
Focus on high-risk DeepTech
Increase female participation
Of these three targets, the second goal of high-risk DeepTech investments is the most endangered since it is very easy to sweep inconsistencies under the rug (i.e. Breaking the Rules) while advertising success and diversity.
This has already been predicted by the independent report based on 2020 data from the EIC Accelerator Pilot.
Ironically, the incentives created by the EIC might hurt the DeepTech ecosystem in the long term because it is unlikely that any institutional investor will take more risks than the EIC. If the EIC Fund avoids high-risk projects to prioritize diversity and fast success then it might send the wrong signals to private markets.
This would render the advertised €2.6 of private capital for every €1 invested by the EIC a crowding-out of innovation funds into regular investments rather than a crowding-in of private capital into high-risk DeepTech.
3. Industries
The projects funded under the EIC Accelerator Pilot are aligned with the general focus on technology-driven projects with strong representations of optics, robotics, energy, health and climate tech.
4. Evaluation
4.1 Luck and Randomness
“The outcomes of the evaluation process were often unpredictable, especially for the Accelerator. In interviews, participants reported a sense of randomness in project selection. Some beneficiaries reported that it was possible to succeed with a resubmitted proposal including minimal or no changes at all. This fact has somehow undermined the credibility of the evaluation process and created a sense of haphazardness in project selection where the “luck factor” determined the difference between a selected and a non-selected high-quality proposal. Feedback provided by the evaluators was not considered sufficient to improve rejected proposals. At the same time, case study feedback on the jury panel was mixed. Whereas in some instances, the selected teams were impressed by the competence of the jury members, in other cases, they were left disappointed by the insufficient understanding of the more technical aspects.”
Unfortunately, the luck factor and randomness in the evaluation process have remained intact throughout the entire EIC Accelerator program. It is still a reality that companies are rejected or funded with inconsistent feedback. A company can be rejected because it raised €10 million in funding while a company can be funded even though it just raised €30 million.
Since there is no accountability for the EIC regarding the consistency of the process and the rejected applicants are generally not incentivized to make their rejections public, it is often only consultancies and professional writers who collect such case studies.
Still, the feedback from evaluators has greatly improved after 2020 and it is a positive sign that the EIC is rising to the ambitious challenge of reinventing itself.
4.2 Third Time’s a Charm
“In the case studies, 9 of the 15 projects analysed required 3 to 5 attempts before being funded. Similar feedback was also collected through the survey and the interview programme.”
The current evaluation process is restricting re-submissions but, back in 2020, it was still possible to re-submit proposals indefinitely. Even though the evaluation process has changed dramatically since 2021, it is still a reality that funded projects will encounter rejections along the way.
Considering that the majority of projects required 3 to 5 submissions means that the process is too random to deliver consistent and desirable results. Unfortunately, this likewise means that there are many projects that are eligible for funding but were unlucky in the evaluator or jury selections.
The EIC could aim to mitigate such issues if they were to assess which evaluators and jury members provided wrong assessments.
As an example, a NO GO grading by an evaluator in Step 1 or Step 2 for a project that would succeed in Step 3 can be represented as a strike for that evaluator. In the same way, a GO grading for a project that would be rejected twice in the interview can likewise be represented as a strike.
The same can be implemented for individual jury members who reject a project in the first interview which is then funded in the second interview with no meaningful changes.
This would allow a degree of communication between the Step 1 and 2 remote evaluators and the Step 3 jury members who have very different backgrounds and funding criteria.
There should likewise be a degree of consistency among all evaluation steps regarding rejection reasons. If a company is rejected for a specific factor then the evaluators and jury cannot fund projects that exhibit the same factor (i.e. team size, amount of funding, etc.).
This would reduce the luck factor.
4.3 High-Risk, Low-Reward
“Low success rates were not commensurate with the efforts required by the application process. Oversubscription was driven by the programme’s success and popularity, but also by a large number of re-submissions, with more than one out of 10 applicants applying more than five times between 2018 and 2020. Two-thirds of the Accelerator participants were successful at their first, second or third submission.”
Figure: Funded applicants that had to submit multiple times.
Since resubmissions have now been restricted, this graphic is generally cut after the first two attempts which shows that there are likely a variety of eligible applicants that are being rejected. This is aggravated by the tendency of most companies to lose interest over time which leads to an even higher number of companies that could have been funded with more persistence.
4.4 A Fair Lottery
“The fully-fledged EIC has significantly improved the EIC application process. According to [consultants], the new application system saves considerable time and effort for both the implementing agency and the applicants. Moreover, the new system is likely to favour the best applicants by reducing the “noise” of unsuitable applications that also contributed to reducing the programme attractiveness by keeping unnecessarily low success rates.”
The confirmation by consultants that the application process saves time is quite odd since the system established in 2021 is significantly longer and requires more effort than the 2020 system. It has increased the reliance of applicants on consultants greatly since the time to prepare an application now takes multiple months instead of weeks.
While success rates started out higher than in 2020, they are gradually falling and have recently fallen below 5%, thereby reaching similarly low levels compared to the old system. Over time, the success rates might become as competitive as the previous EIC Accelerator Pilot.
4.5 The Pitch
“Finally, success in the interview requires personal skills (e.g., English fluency, presentation and communication skills) that are difficult to acquire in a short time.”
There is likewise a strong likeability factor in the interviews where the interviewers will be more inclined to fund a project if they like the team. Agreeable and friendly speakers are often favored over disagreeable speakers which is rather unfortunate since many of the great entrepreneurs of our era, if not all, were highly disagreeable (see EIC Accelerator Interview Preparation).
5. Pay-to-Play
“More than 70% of survey respondents stated that they hired a consultant to prepare an application for the EIC.”
The EIC Accelerator is time-consuming, complex and obscure. Applicants generally start by reading the official EIC communications but, due to their focus on promotional materials, this often leads prospective applicants to have more questions than answers.
Unfortunately, this fact can also be exploited by consultancies since many applicants are greatly overestimating their chances of success based on their review of the EIC guidelines regarding innovation, high risk, a lack of funding and DeepTech definitions.
6. The Reality
6.1 Does the EIC Accelerator Work At All?
“The majority of Accelerator projects included in the case studies showed progress with their core technology assets but with no evidence yet of scaling up. At the time this evaluation was carried out, almost all projects achieved a TRL between 8 and 9. Two projects were expected to licence production and four to achieve production on a larger scale.”
The EIC Accelerator is designed for the purpose of scaling up disruptive innovations. The guidelines are clear in that TRL8 has to be reached after a grant project and an equity injection should propel the project to TRL9 (see Technology Readiness Levels).
Defining the TRL’s is often very subjective but if, after 2 years, no evidence of scaling has been observed then this could be a negative sign.
“Case study analysis showed that projects progressed in upgrading and improving their core technology assets, but there is no evidence yet on commercialisation, although some companies reported that they were ready to scale up production and staff or to licence production.”
In contrast, this lack of scaling is likely a positive as opposed to a negative result since it shows that these projects are, in fact, difficult to execute and require extensive development times. If the EIC Accelerator funds high-risk and disruptive innovations then this is exactly the result one would expect. Most DeepTech projects cannot be completed in 2 years which is why they are called DeepTech.
DeepTech will require more time than a SaaS business that can scale vertically in a matter of months. What is ironic is that this lack of scaling is seen as negative while it should be viewed as a good first step since the TRL8 levels were effectively reached.
The EIC generally expects 2-year projects but this should not be the norm. It should be aware that DeepTech projects can take 5 years to reach TRL9 and should inform the jury and remote evaluators that the length of the project should have no impact on the evaluation, especially in the final interview.
Now, the EIC has 2 general options:
(1) Improve their support for commercialization such as custom business coaches who are industry authorities, helping companies to gain more customers at TRL6-7 and adjusting the EIC communication to focus on commercial/scaling strategies and not on vague concepts such as disruption, innovation and diversity which are not helping companies to succeed.
(2) Abandon DeepTech investments and fund companies that are already scaling to gain success cases quickly.
Unfortunately, it seems like the EIC is gradually moving toward the second option.
6.2 Do EIC Portfolio Companies Grow?
“Based on Dealroom data, in July 2021, 27 Accelerator beneficiaries reached a valuation of more than €100M. They represent 7% of the sample on which data are available in Dealroom (N=410) and 4% of all Accelerator beneficiaries (N=768).”
Such a result should not be negatively assessed. EIC Accelerator beneficiaries can have valuations as low as €1 million at TRL6 since there are few restrictions regarding the project maturity, company age and team size.
“Around 30% of the companies receiving a grant in 2018 saw their employees grow, on average, at a rate above 20% in the three following years”
The problem with any KPI introduced by the EIC is that it will become the focus irrespective of the EIC’s mission. Diversity, gender ratios, valuations, global scaling and similar metrics are all used by the EIC to assess companies but this will, in the long term, only encourage the evaluators to select companies that already score high in these areas instead of helping SME’s to reach that target or to foster innovation.
KPI’s are important but they need to be part of the project execution (i.e. actively supporting business growth) rather than the application process since it will otherwise exclude many startup companies that are genuinely at TRL6 rather than TRL8-9 companies pretending to be.
6.3 Are the EIC Accelerator and the EIC Fund Actually Supporting DeepTech?
“Literature shows that deep tech VCs need to work with a 10-15-year lifetime investment. The profitability of equity investments also tends to be negative in the first years (generally up to five) because the investee company is not able to yield a positive return.”
The romance of DeepTech is well presented by the EIC through unicorns (€1 billion valuation), centaurs (€100 million valuation), disruption and events where much is said about innovation but the reality looks different.
Disruption starts at a point where very few, if anyone at all, can see the vision or wants to invest. If they do recognize a superstar in the making and want to invest, they usually do so with smaller amounts since the risk remains too high.
Peter Thiel saw the immense potential of Facebook in 2004 but only invested $500,000 into the company regardless. He understood that success will take more validation and he can always invest more later.
Negative profits for 5 years are to be expected in DeepTech but the EIC’s selection criteria seem to favor commercial success more and more after every submission cycle. Even the mandatory financial template that the EIC uses only accounts for 5 years of predictions.
According to DeepTech literature, no company should break even during this time but the EIC Jury would not fund such companies.
It would be beneficial for applicants if the EIC would publish statistics regarding the financials submitted by EIC beneficiaries and provide information regarding break-even-points, annual growth rates, start-end-revenues and margins to assess what the EIC is looking for and how much DeepTech they are comfortable with.
6.4 What Happens To Rejectees?
“Around 60% of high-scoring declined Accelerator proposals were implemented at a smaller scale, with less substantial results and benefits, resorting to private financing (business angels, friends or family, or venture capital investors) or a combination of private and public funds. The absence of alternative forms of funding is the most common reason why declined proposals were not implemented.”
This is quite interesting since it demonstrates that there is a role to play for the EIC and that even the high-scoring companies (i.e. above the funding threshold but rejected) will struggle to attract financing and are therefore truly non-bankable.
Through the EIC Fund and its pressure on companies to demonstrate extensive traction (i.e. customers, signed contracts, LOI’s) as well as source co-investors for the EIC Fund even before the project is granted, the EIC is clearly starting to align with private markets rather than the other way around.
One statistic that would be an interesting and insightful addition to this report would be to identify which companies have raised financing right before obtaining the EIC Accelerator grant or those who have been part of a due diligence process leading up to the funding.
Such statistics would reveal the dark number of how many companies could have succeeded without the EIC and can be contrasted to the number of projects that are not implemented without EIC support.
This article was last modified on Apr 17, 2023 @ 19:57
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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 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.”
Evaluation Criteria for the Short Application (Step 1)
The evaluation criteria for the EIC Accelerators short application have remained largely consistent whereas the 2023 EIC Work Programme outlines the following scoring criteria for Step 1 applications.
1. Excellence
Breakthrough and market creating nature: Does the innovation have a high degree of novelty – compared to existing products, services and business models – with the potential to create or significantly transform markets?
Timing: Is the timing right for this innovation in terms of market, user, societal or scientific of technological trends and developments?
2. Impact
Scale up potential: Does the innovation have scale up potential, including the potential to develop new markets and impact on the growth of the company? Does the company show a clear and convincing vision, taking into account its current level of development and maturity, in relation to the targeted market, the business model and growth forecasts?
Broader impact: Will the innovation, if successfully commercialized achieve positive broader societal, economic, environmental or climate impacts?
3. Level of risk, implementation, and need for Union support
Team: Does the team have the capability and motivation to implement the innovation proposal and bring it to the market? Is there a plan to acquire any critical competencies which are currently missing, including adequate representation of women and men?
Complaints and Rebuttals for Step 1 Rejectees
In 2021, the EIC has made a significant step towards transparency by allowing all EIC Accelerator applicants to view comments from the evaluators who have reviewed their proposals. While this is of tremendous benefit to applicants, it has likewise exposed a certain degree of randomness in the way applications are graded including mistakes, negligence or plain ignorance.
This is, of course, to be expected and only natural when facing thousands of applications and multiple reviewers per proposal. Still, this has inevitably led to complaints regarding specific Evaluation Summary Reports (ESR) and especially the remote evaluators.
While the EIC has tried to investigate such complaints in the past, the vast majority of applicants were simply told to re-apply to the next cut-off and summarize their rebuttal in the resubmission of their proposal (i.e. via the email of the European Innovation Council and SME’s Executive Agency: support@eic.eismea.eu).
The new 2023 Work Programme is outlining the conditions for issuing a formal complaint as opposed to relying on the resubmission of rejected Step 1 proposals.
“You may file a complaint if you believe that the evaluator(s) made an incorrect assessment on the following grounds:
a factual mistake;
absence of information which is not required at short proposal stage; and
a manifest error of appreciation on the scope and purpose of the Accelerator.”
Unfortunately, this has only limited use since the EIC Accelerator’s Step 1 is by far the easiest step. If the same rule was applied to Step 2 full applications then the EIC would likely find themselves with a valid complaint for the majority of rejected applicants since it is common to encounter at least one factual mistake in any given Evaluation Summary Report (i.e. misreading Letters of Intent, Freedom to Operate analyses or missing critical information).
In case a rejected Step 1 application is retroactively given a GO grading (i.e. passing the step successfully) then they are able to apply to Step 2 at the original deadline that was reachable in their previous submission.
“If your proposal is reevaluated as a GO, you will be eligible to introduce your full application to the same cutoff date that you would have been able to submit to, with a GO from the initial evaluation.”
This second quote from the EIC’s 2023 Work Programme draft is obscure but this can be understood as the EIC allowing Step 2 applicants to hand in applications past the deadline in case a complaint was approved. But this seems unrealistic due to time constraints in the preparation of Step 2 applications and the limited time window of the evaluation prior to the fixed interview deadlines.
Evaluation Criteria for the Full Application (Step 2)
For the EIC Accelerator’s Step 2, the evaluation criteria are defined as follows
1. Excellence
Breakthrough and market creating nature: Does the innovation have a high degree of novelty, compared to existing products, services and business models, with the potential to create or significantly transform markets?
Additional sub-criterion for EIC Accelerator Challenges ONLY: How relevant are the proposal objectives in contributing to the specific objectives of the Challenge?
Timing: Is the timing right for this innovation in terms of market, user, societal or scientific of technological trends and developments?
Technological feasibility: Is the innovation based on a technology or technologies that have been adequately assessed at least in a laboratory environment and relevant environments to characterise the potential and assess the level of risk (at least TRL 5/6)? Is the technology developed in a safe, secure and reliable manner?
Intellectual Property: Does your company have the necessary Intellectual Property Rights to ensure freedom to operate and adequate protection of the idea?
2. Impact
Scale up potential: Does the innovation have scale up potential, including the potential to develop new markets and impact on the growth of the company? Are the associated financial needs well assessed and realistic?
Broader impact: Will the innovation, if successfully commercialised achieve positive broader societal, economic, environmental or climate impacts?
Additional sub-criterion for EIC Accelerator Challenges ONLY: Does the proposed application have the potential to contribute to the expected outcomes and impacts set out in the Challenge?
Market fit and competitor analysis: Has the potential market for the innovation been adequately assessed, including conditions and growth rates? Has a competitive analysis been thoroughly performed, including identification of potential customers and relevant types of users, including women and men, definition of unique selling points and key differentiation from competitors?
Commercialisation strategy: Is there a convincing and well thought-through strategy for commercialisation, including regulatory approvals/compliance needed, time to market/deployment, and business and revenue model?
Key partners: Have the key partners required to develop and commercialize the innovation been identified and engaged, including their roles/competences and a sufficient level of commitment and incentivisation?
3. Level of risk, implementation, and need for Union support
Team: Does the team have the capability and motivation to implement the innovation proposal and bring it to the market? Is there a plan to acquire any critical competencies which are currently missing, including adequate representation of women and men?
Milestones: Is there a clear implementation plan with defined milestones, work packages and deliverables, together with realistic resources and timings?
Risk level of the investment: Does the nature and level of risk of the investment in your innovation mean that European market actors are unwilling to commit the full amount alone? Is there evidence that market actors would be willing to invest, either alongside the EIC or at a later stage?
Note: Small mid-caps will be expected to provide documentary evidence that their bank has refused the financing needed for the project.
Risk mitigation: Have the main risks (e.g. technological, market, financial, regulatory) been identified, together with measures to take to mitigate them?
Step 3 Interview Criteria
For the Step 3 interviews, the same vague criteria used in the previous iterations of the EIC Accelerator apply (read: How to Prepare for the Interview). An interesting feature of the Step 3 interviews is that the EIC Jury can consult external analysts who will assess the project prior to the interview.
“Jury members will also have access to analyses (for example on financial metrics) generated by the EIC AI-based platform and in certain cases the independent assessment of a specialised expert in the field of science or technology. Such analyses will be made available to applicants after the decision.”
This might provide only limited usefulness since it would be more beneficial to make the scientific and technical aspects a fundamental part of the Step 3 selection rather than an optional add-on.
Otherwise, a groundbreaking battery startup without revenues or customer commitments could consistently lose against a software company with excellent financial health and competitive advantages but only limited technological or scientific breakthroughs. In the same way, a scientific team with only 2 or 3 employees will have a difficult time convincing the EIC Jury while a technical Jury member might be impressed by the technology and achievements while being more optimistic.
Through the outsourcing of the EIC Fund’s management to the European Investment Bank (EIB) and Alter Domus (Luxembourg), the EIC could become more risk-averse and, while it claims to fund DeepTech at TRL5, it might end up only picking projects that are already in the market or have significant customer commitments.
This article is part of a series whereas the remaining articles can be found here, once published:
This article was last modified on Nov 5, 2022 @ 10:17
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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 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.”
Equity Financing under the EIC Accelerator
Equity financing is limited to a €15 million contribution by the EIC Fund but it is possible to request higher amounts in certain cases and especially those linked to the EIC Accelerator’s Strategic Challenges.
“The minimum investment component is EUR 0.5 million and the maximum is EUR 15 million. A more than EUR 15 million investment request is allowed in duly justified cases for: proposals in technologies that are strategic for the Union; where there is a global competition; and where the funding needs significantly exceed what is available in Europe.”
In the past, the EIC Fund had a variety of problems since applicants were not aware of how the equity financing would be implemented (read: An Inside Look into the EIC Fund). Successful EIC Accelerator blended finance applicants were under the assumption that the granted funding would be issued without additional conditions only to be asked to find their own lead investors. This became detrimental to some companies in this first batch because a lack of investor interest was why they applied to the EIC Accelerator in the first place and this is also what they explained in the application.
The EIC Accelerator required companies to justify why they cannot be funded elsewhere but then demanded they find funding elsewhere. Of course, the nuances are now clearer and the EIC has become more transparent which is of great benefit to applicants. The application template now clearly outlines the role the EIC aims to take and the conditions are well-described.
What is interesting is that the rule that the EIC Fund wants to invest with an external co-investor might change in the future, at least from the perspective of the applicant.
“The investment component of the EIC is designed to fill the funding gap for high risk innovations to a stage where they can be co-financed or financed under the InvestEU programme or by private investors alone. As the EIC accelerator is designed to bear the risk of potential breakthrough market creating innovations in order to attract alternate private investors in a second stage, the lack of such investors at the initial stage would not prevent the EIC investment to be agreed.”
While the definitions of the first and second stages are not clear (i.e. grant and equity, respectively), it can be interpreted as the EIC Fund investing in a company without any co-investors as a general rule. This could be in the form of a convertible note or loan as it was implemented previously or entail a direct equity investment.
Finding Co-Investors
The EIC has already outfitted their online platform with a list of investors and it is likely that the EIC wants to become a one-stop-shop for the full investment lifecycle. Especially past co-investors who have undergone due diligence alongside the EIC and European Investment Bank (EIB) can be collected and repurposed for future investments, thus generating a large network of compatible and strategic investors over time.
“You will also be offered the opportunity to share certain data and information with investors who have undergone a prior EIC due diligence process and who may wish to invest in your company or project and assist you in developing your idea into a business plan. You will also be asked to agree to share your relevant data with alternative funding bodies of your Member State or Associated Country.”
The language of developing your idea is interesting since the support of a strategic investor (i.e. those offering strategic support alongside financing) is very beneficial in early-stage projects stemming from Universities and other scientific institutions. If the EIC manages to build a network of strategic investors based on thematic areas (i.e. battery technology, ICT, medical devices, etc.) then this can greatly enhance the success of the funded projects and turn the EIC Accelerator into an actual business accelerator and not just in name.
The term idea is used very loosely by the EIC since TRL1 projects at the idea stage are not funded. It would be advisable if the EIC removes the term idea from the online platform as well since any company that is developing an idea from Step 1 into a business plan in Step 2 of the EIC Accelerator for the first time would likely not be successful.
The language should reflect that the project is far beyond the idea stage and has reached at least Technology Readiness Level (TRL) 5 or 6 and Business Readiness Level (BRL) 5 or 6.
Aligned with the approach of building an index of strategic investors, the 2023 Work Programme draft likewise outlines that the EIC will actively search for co-investors for the applicant.
“During this stage, and in particular if you have not yet secured other investors, the EIC Fund or the Agency will also look for other investors. You will be asked for your consent before other investors are contacted or engaged in negotiations.”
Loans from the EIC Fund
While the equity investments made by the EIC Fund already use in-direct modalities such as convertible notes or loans, it is still lagging behind in realising loans as a standard investment mode. Loans are expected to be released in 2022 or 2023 although these are of the same amount as the grant funding and seem to replace it with a repayable loan while their issuance is at the discretion of the jury in the Step 3 interviews of the EIC Accelerator.
“Reimbursable advances may be introduced during the course of 2022/23 in which case the terms and conditions will be made available on the EIC website. Once introduced, they would be considered by the jury in cases where the innovation cycle (market deployment) is short. The amount would be limited to a maximum of EUR 2.5 million and will reimburse up to 70% of the eligible costs of innovation activities. The reimbursable advance will have to be paid back to the EU on an agreed schedule as an interest-free loan. In case you are not able to reimburse or do not want to reimburse, the reimbursable advance will be transformed into equity. In case of bankruptcy, the reimbursable advance will be considered as a grant and hence written off.”
This approach seems to be a way of converting grant requests into loans which allows the EIC to fund more projects that they would have otherwise rejected (i.e. not innovative and DeepTech enough but a good business model or strong financial health).
It also allows the EIC to openly fund projects with lower risk profiles which is beneficial for Public Relations (PR) since these companies are more likely to be successful and funded by the EIC at no real cost.
It can also be a way to have more female CEO’s funded under the EIC which has been a priority and challenge for many years as well as allowing more funding for UK companies who are currently limited to grant-only support (read: UK Participation & Female Entrepreneur).
On the other hand, it is unfortunate that grant applicants now face the risk of receiving a loan after spending months in the application process and reaching the less than 10% of companies that make it to the Step 3 interviews. It would be reasonable if such counter offers are only formed in case the initial application has been officially rejected in Step 3 instead of the jury forcing a company to accept a loan in the interview prior to making a decision.
This article is part of a series whereas the remaining articles can be found here, once published:
This article was last modified on Nov 5, 2022 @ 12:52
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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 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.”
Technology Readiness Levels (TRL)
In the new 2023 EIC Work Programme, the Technology Readiness Levels (TRL) have been slightly simplified from the previous iteration whereas the new TRL’s are as follows (read: How the EIC Funds TRL’s):
basic principles observed
technology concept formulated
experimental proof of concept
technology validated in lab
technology validated in relevant environment
technology demonstrated in relevant environment
system prototype demonstration in operational environment
system complete and qualified
actual system proven in operational environment
Deadlines
Unfortunately, the newest deadlines or cut-offs for the 2023 EIC Accelerator have not been published with the released draft of the EIC’s Work Programme. Once they are known, they will be available here: EIC Accelerator Deadlines.
While the draft of the 2023 Work Programme is still unofficial, it contained a hint that the EIC Accelerator’s first cut-off will only focus on the EIC Accelerator Open while the Strategic Challenges do not apply to the first date.
“[Cutoff dates to be inserted] [for first cut-off, only Accelerator Open (not Accelerator challenges)]”
For the EIC Pathfinder Open, the first deadline in 2023 was given as:
“The deadline for submitting your proposal is 7 March 2023 at 17h00 Brussels local Time.”
Timelines
The timelines outlined in the 2023 Work Programme for the evaluations of EIC Accelerator proposals are 4 weeks for Step 1 and 6 weeks for Step 2 but these times can vary greatly depending on the workload encountered by the EIC.
The timing is also affected by the set dates for the Step 3 interviews whereas the EIC will be faster on occasions when the interview week is close while they can be slower if the interview week is far out.
EIC Accelerator Step 3 Interviews and Budgets
The EIC’s 2023 Work Programme defines priority orders in case of limitations in the budget or interview slots encountered by applicants. If the number of applicants or their budget requests exceeds the available resources, the applications will be prioritized by their recommendation status for the interview, the sex of the company’s CEO and the timing of the initial submission.
The priority order is:
“All companies that were invited by the jury to resubmit directly to one of the next interview sessions;
Gender balance: women-led companies (up to 40% of invited companies is reached);
Submission date and time: any remaining companies will be prioritised based on the date and time submission of their short proposal.
The remaining batch of companies to interview will be invited to a further set of interviews to be organised before the interviews of the next cut-off date.”
And this priority order also applies for the budget allocations:
“In case the amount allocated to GO applicants is above the budget available, then a number of applicants corresponding to the unavailable budget will be awarded funding using the available budget of the subsequent cut-off. Such applicants will be identified using the ordering set out above for the invitation to interviews.”
This article is part of a series whereas the remaining articles can be found here, once published:
This article was last modified on Nov 5, 2022 @ 10:15
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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:
In this fourth part of the EIC Accelerator interview guideline, the focus is shifted to specific training tools targeted at improving how questions are answered. Startups and Small- and Medium-Sized Enterprises (SME) can use these tools to better prepare for their own pitch event, investor conversations and, of course, interviews by the European Innovation Council (EIC) or European Commission (EC).
Introduction
The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) is a highly selective funding program and, even though the chances of receiving funding in Step 3 can be as high as 50%, it should not be left to luck if one will be successful or not since up to €17.5M are at stake.
Note: If the previous steps are included, the overall success rate is 5% or below.
The ideal scenario is to have a consultant, professional writer or pitch coach take the lead in the preparation process since identifying weak spots and fixing them with improved answers or arguments can be difficult for a company.
The following training tools are presenting a way of preparing for interviews but they are by no means the only way and not using them will not lead to a guaranteed rejection. Examples for each segment of the training tools and recommendations on how to practise them will be given in a future article. This article will only provide a general description of such training tools.
What To Practise (Improving Answers)
No Flaws
One important rule for the EIC Accelerator Questions and Answers (Q&A) session is to not display critical flaws. This has been elaborated in earlier parts of the guide and it is relating to every time the interviewees are caught off-guard, have no answer or are unable to refute a negative point (i.e. you are not innovative).
While the jury will be perfectly polite and respectful, there might be one or two jury members that have already decided that the project is insufficient and are finding fault in everything they hear. As a result, they might swing the opinion of the other jury members which will, inevitably, lead to a rejection.
Address the Concern
This is one of the greatest tools for an EIC Accelerator pitch interview. It is too easy to neglect the concern behind a question and just answer it on a surface level which can lead to a dissatisfied questioner or, in the worst case, unwanted follow-up questions. The idea of this tool is to ask yourself: “What concern does the jury member have to ask this question?” And to then address that as opposed to the question being asked. One could say that you are exchanging the posed question with what you deem to be the real question.
Pitfall Answers
Answers can be worse than questions because, instead of addressing the original concern, they can create many additional concerns.
Why? Because an answer can unwillingly reveal ignorance, weaknesses or present an attack vector for critical jury members. It is impossible to prepare for every single question since, while some will be foreseeable, the majority will be unpredictable. This is especially true for follow-up questions since, while the starting question can be obvious, the two or three follow-ups afterwards can be entirely unpredictable since they can have little to no relationship with the original question.
This can be viewed as a chaotic system where prediction is possible in the early stages but becomes increasingly difficult and eventually impossible the further the system progresses. An example of this is the Double Pendulum which can be predicted in its earliest swings but rapidly becomes too chaotic to make any accurate predictions.
To avoid pitfall answers, the strategy should be to (1) control the topics of the conversation as much as possible and (2) avoid giving any answers that can render the jury members less confident in the team or project.
Zoom Out
While someone like Elizabeth Holmes (former CEO of the disgraced blood-testing BioTech company Theranos) is a poor role model for entrepreneurs due to her history of deception and ongoing fraud trial, she was able to demonstrate that you can raise $1.4B in financing without providing any real answers, technology or even allowing due diligence.
Being the technical lead of a BioTech company as a college drop-out was clearly a warning sign but she would have likely excelled in marketing or investor-relations positions since she accomplished what most companies cannot. There are many excellent companies that are applying for €2M under the EIC and are rejected while Holmes raised 700-times that amount without as much as a proof of concept.
Even though the source of this insight literally has blood on its hands, there are lessons to be learned. The way she emotionally directed conversations exceeds the scope of this guide (i.e. slowed speech, staring to trigger a change of topic, very long answers without specifics) but the simple tactic she often used was this: Zooming out.
When asked a specific question on how the technology worked, she would elaborate on her vision. When asked about her customers, she would expand on what she wants to bring to the world. She would always zoom out and take a birds-eye or distant view.
While this approach should not be used by any entrepreneur as a default response (i.e. Pfizer and other consultancies caught her very early on during their due diligence), there is one part that builds trust with investors that many DeepTech companies lack. It is the confidence and the great vision.
This should be used sparingly but it can be essential if the jury feels like the team lacks the ambition to implement a project or see it through until the end. It can also be a great last resort in case the interviewee is stuck and has to answer a difficult question on something not entirely relevant to the project or catches the team off-guard.
Controlling the Follow-Up
A simple but effective habit in answering questions is to carefully consider what a follow-up question could be. If someone responds to my question on the financials and mentions low-profit margins then I will follow up on it. If someone, instead of the profit margins, mentions the year-by-year growth potential of the company then I would be inclined to follow up on that.
The point of controlling the follow-upquestion is to only mention things that you want to be asked about. The question will, by design, ask for information on a certain topic but the interviewee can decide which angle to take. This especially goes for the ending of the sentence. If one says “We do A and B but we currently mostly focus on C because C is very important” then it is more likely to get a follow-up question on C rather than A and B.
Being Self-Centered
Every company should have a balanced view of their competitors, industry trends or market threats but it can be a significant flaw to overly focus on them. Especially when it comes to startup’s in highly technical fields, there is often a sense of respect for other companies who are innovating in similar areas or for new technology trends that are unrelated to the applicant’s business.
No matter what the reason would be, if a company only has 35 minutes to convince an EIC jury to make a funding decision then the interviewees should refrain from overly focusing on other things. In fact, if a CEO were to praise their competitors and mention that they are “developing amazing technologies” and starts to describe them then this will likely be a poor use of the available time.
Every question has an underlying concern and it will never be “Is your competitor good at what they do?” but more likely be “Can you overcome competitive threats?”. While both questions have their topic in common, they will have very different answers. Whatever the question might be, the interviewee should lead it back to why the project is great.
Are you asked about the market? End with why you are perfectly positioned to enter or create it. Asked about competitors? Mention who they are and then elaborate on why you are better. Asked about your co-investors for the EIC Fund? Mention who they are and then highlight how further de-risking through the EIC is needed before they will invest.
Always bring the conversation back to what is beneficial to you.
The Confused Question
Every once in a while, a jury member will not be an expert on a certain technology but still ask a highly technical question. If this happens, there is a possibility that they have already misunderstood certain aspects of said technology but ask a follow-up question regardless. The interviewee has to always ask themselves: “Does their question reveal their ignorance on a certain subject?” If the answer is yes, then one must take a step back and first explain the concept again but in the simplest terms possible.
This part is critical since highly technical founders with not only a high level of expertise in a scientific field but also exclusive knowledge regarding the innovation will often be too far ahead to understand the viewpoint of someone entirely new to the field. Just answering the question and highlighting the benefits of the technology might not be enough which is why a simplified explanation is in order.
Practise “Dumb” Questions
The EIC jury members are intelligent and highly competent professionals with a great deal of experience. Still, one should prepare for questions that a startup might not view as relevant or simply disregards as unimportant. This can be a question on the safety of using AI if the application is simplistic or the gender balance among the engineering team. There can be many questions that can catch the interviewees off-guard so it is beneficial to practise them.
Prepare Standard Answers
There are many questions that will certainly be asked (i.e. business model, traction, non-bankability, risk, …). While it is not possible to know all questions in advance, one should script out the answers to questions that have a high likelihood of being posed. The same is true for all questions that have been revealed as critical during the practice sessions.
Demeanour of the Answering Person
Depending on the personality of the interviewees, there can be issues that should be addressed in advance. These can be dismissive body language, disengagement from the conversation (i.e. turning away, sighing) or a generally combative nature when faced with criticism.
While the pitch preparation will not be comprehensive enough to change such long-standing habits, it is beneficial to avoid negative body language during the interview.
Short Answers to Pre-Empt Interruptions
A general rule for the EIC Accelerator Q&A is:
There will be more questions than answers.
Often, answers are too elaborate or aim to explain too many things before getting to the point. This will prompt the questioners to keep interrupting and ask follow-up questions because, while the pitch time limit of 10 minutes can be stressful for the interviewees, the Q&A time limit of 35 minutes can be stressful for the jury.
The interviewees are only focusing on presenting their project but the jury members have the difficult job of making a significant funding decision within only 45 minutes. If answers are too long and never get to the actual question then this might frustrate the jury members – something that should be avoided. If you are asked a specific question then answer it briefly first and only then elaborate.
If you are interrupted while you elaborate then you have at least given a short but precise answer in the beginning already. If the brief answer were to be missing and you are interrupted by a follow-up then this would mean that the question was not answered at all.
The Process
Have fun. While being nervous (or excited) is normal in a stressful situation, one should always remember to have some enjoyment for the process. One must have the attitude: “I am happy to explain what we do to an interested audience.” While the jury will heavily assess the technology and suitability of the project for the EIC, it will also be screening the team and its motivation. Both aspects can make or break a funding decision which is why developing some natural enthusiasm is essential.
This article was last modified on Oct 26, 2021 @ 14:52
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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 EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) has finally completed its first iteration in 2021 despite the delayed launch of Horizon Europe (2021-2027) and only two deadlines in this first year. With the application process having changed dramatically after Horizon 2020 (2014-2020) ended, many professional writers and consultants had to adapt their approach to grant preparations (read: Re-Inventing the EIC Accelerator). With a longer proposal document, new templates, pitch videos, read-only pitch decks and more supporting information being requested, it was an interesting experiment for both the applicants and the European Innovation Council (EIC).
Many Small- and Medium-Sized Enterprises (SME) and startups have applied to the EIC’s grant and, as has always been the case, only a fraction has been successful. The following article describes one of these success cases as well as the overall statistics of the June 2021 EIC Accelerator call.
The June 2021 EIC Accelerator Call
With the application process having changed dramatically, it comes as no surprise that there were many differences compared to the 2020 cut-offs. One of these differences is that the final statistics for the June deadline are not as clear as they were in 2020 since the new 3-Step process has an obscured number of total applicants.
This is due to the fact that there is no Step 1 deadline and it is unknown how many of the approved Step 1 projects actually applied to Step 2 in June since a significant number might have delayed the application to October 2021. The information communicated by the EIC is also limited with makes a detailed look at the overall statistics difficult.
Nonetheless, with the information that is available today (Linkedin: Nicolas Sabatier and EIC Support), one can conclude that:
Step 1
On May 17th, 67% or 755 out of 1,114 applicants had passed the threshold and received a GO for Step 1. With the Step 2 deadline having been on June 16th, this number continued to increase since at least 1,523 total Step 1 applications had been submitted at this point in time (but not all were evaluated yet). It is unlikely that all Step 1 successes decided to apply to the June deadline since, due to the limited time, many might have postponed the application to October 2021. If the success rate of selected applications has remained the same and 801 applicants eventually applied to Step 2 then an approximate 1,196 applicants have applied to Step 1 with the intention to apply to Step 2 in June 2021, yielding 801 approved projects and a 67% success rate for Step 1.
Note: To calculate a success rate for June 2021, one has to filter the number of applicants who applied to Step 1 and aimed for the June 2021 cut-off. It must also be considered that many rejected companies might not have applied to Step 2 even if they were selected. Since there is no publically available data on this, the numbers given here are estimated.
Step 2
With the deadline having been on June 16th 2021 (it was delayed by 7 days from its original date), the number of applicants amounted to 801. It was later announced that 130 applicants were selected for the interviews, thereby yielding a 16% success rate for this Step.
Step 3
The EIC Accelerator pitch week occurred via remove video calls with the EIC Jury and was conducted in mid-September 2021. Out of the 130 candidates, 65 were able to convince the Jury and succeed in gaining the EIC Accelerator funding. This yielded a 50% success rate for this Step although 24 Swiss applicants were excluded from the process due to the political developments between the EU and the Swiss government.
Step 1-3 Total
With success rates of 67%, 16% and 50% for the respective Steps, the overall success rate for the June 2021 EIC Accelerator was an approximate 5.4% with 65 out of an estimated 1,196 applicants having been successful.
Additional Statistics
Budget
The original budget in the official EIC Accelerator Work Programme (read: The 2021 EIC Accelerator Work Programme) was set at €500M+ but, due to the lack of excellent cases, it was reduced in retrospect (i.e. only €360M+ were allocated to successful candidates). This is a very interesting development since the 2020 applications tended to have far more suitable candidates while budgets were generally too low.
In fact, all 2020 projects with a score of over 13 out of 15 were technically eligible to receive funding, pending the Jury assessment, and the total budgets requested by said projects were, as an example, €1.8B in January 2020 or €2.7B in May 2020. If a Jury assessment were to be applied and only 50% of selected companies were approved, it would still yield budgets that far exceed the 2021 numbers.
It is clear that the EIC Accelerator has become more selective. But it has also become less selective in some ways.
It is more selective since it had an excess budget but deemed most companies to be unsuitable to receive this funding. It has become less selective since success rates have exceeded 5% while 2020 saw rates between 1% and 3%.
A reasonable conclusion to make is that the new barrier for the EIC Accelerator is not the chasing of decimal points (i.e. a 2020 score of 13.7 could be invited to the interviews while 13.6 is not) but the effort applied to preparing the proposal documents for each step. Since many companies have no interest in spending such an extreme effort for almost a year, the pool of serious applicants will be minimized. If this is a good process will remain to be seen but, clearly, the European Innovation Council is not afraid to innovate.
Note: As this was the first cut-off of the new EIC Accelerator, the success rates and budget allocation might differ greatly for the October deadline and those in 2022.
Gender
The EIC has managed to gain a 20% ratio for female entrepreneurs amongst all beneficiaries (i.e. female CEO’s) due to its strict gender equity goals.
Top 3 Countries
Clear winners during this 2021 Call in June were France (18% of the successful beneficiaries), Germany (17%) and the Netherlands (12%).
Type of Funding
92% of successful applicants received both grant and equity financing (blended finance) according to the EIC’s Twitter account but this data does not seem to fit the beneficiaries list. The more accurate and official list of all beneficiaries shows the following statistic:
31/65 blended (48%)
5/65 grant-only (8%)
24/65 grant-first (37%)
5/65 equity-only (8%)
Note: The given statistics of 92% of applicants receiving grant and equity financing would fit if either the 8% grant-only or the 8% equity-only was excluded from the total. Although, this does not seem to yield an accurate statement and is likely an error.
EIC Accelerator Success: STABL Energy GmbH
One of the 11 funded German projects is STABL Energy GmbH which has been among the 5% of selected applicants. During the 6 month process after Step 1 opened in April 2021, they were able to successfully pass all three Steps of the EIC Accelerator evaluation and succeed in securing blended financing under the EIC.
STABL is developing innovative power electronics for Battery Energy Storage Systems (BESS) and, with their modular approach, they are able to deliver unprecedented benefits to the industry such as higher energy efficiency, software control, unique data services and lifecycle extensions through second-life use cases.
Why STABL was the perfect fit for the EIC Accelerator
STABL is enabling a sustainable, versatile and future-proof energy storage ecosystem that serves all relevant industries such as utilities, renewables and electric transport. As such, it was able to be part of the Green Deal Strategic Challenge and was an ideal fit for the subsegment of Battery and Energy Storage which was amongst the preferred project types (read: EIC Accelerator Work Programme).
In addition, STABL is a startup with high-level partnerships, traction and an excellent management team. The EIC aims to fund ambitious companies such as STABL that have a strong vision and the capability to realise them as well as the ability to change the European technological landscape for the better.
Note: Segler Consulting has supported STABL Energy GmbH for the entire application process.
This article was last modified on Feb 19, 2023 @ 23:34
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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:
In 2021, the EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) has been re-launched into its most sophisticated iteration yet. With a new AI Tool, a semi-automated evaluation process and a clear focus on disruptive projects, it has now opened its doors for Small- and Medium-Sized Enterprises (SME) and startups in the European Union (EU) and associated countries (read: New Process).
Right after the launch of this new platform, many applicants as well as professional writers, freelancers and consultants have noticed that there were still quite a few errors and glitches that showed up. This article presents a shortlist of noticeable areas that were affected by such glitches and also discusses some of the changes to the 2021 Work Programme which differ from the unpublished draft version discussed earlier (read: The Work Programme).
Changes & Glitches
Geographic Restrictions & Diversity
The draft version of the EIC Accelerator Work Programme discussed the requirement for geographic diversity which meant that all applicants applying to the grant would need to be invited to the Step 3 interviews in proportion to the number of received applications (read: Interview Preparation & How To Succeed). This would have been an extreme measure since it could have incentivised countries to prepare many low-quality applications to boost their chances in Step 3 of the process. Luckily, this rule was removed.
Non-Binary Gender
The latest template for the EIC Accelerator’s AI Platform and the draft for Horizon Europe proposals indicated non-binary as an option for the gender selection of the applicant’s CEO (read: The EIC Youtube Leak). This, of course, was an example of the European Union being too progressive for its own good (read: Gender Identification vs. Gender Equality).
The EU’s strong gender equity agenda enforces the funding of 35% female CEO’s under the EIC Accelerator which presents 7-times the number at which female CEO’s would naturally be funded in the program. If a non-binary CEO who was born as a woman was treated like a man with respect to this agenda or, even worse, a transgender person identifying as a woman was treated like a man – the EU would have a political disaster on their hands.
Eventually, the European Innovation Council (EIC) has decided that this political double bind between gender identification and gender equality was too much to handle and reverted back to giving only a single third gender option: Unspecified – which is treated as male and lacks the benefits of choosing female.
TRL Descriptions
The Technology Readies Levels (TRL) and Market Readiness Levels (MRL) have been changed even after the opening of the call on April 9th whereas on Friday, it still stated that TRL6 required 100 customers, while on Monday, it reverted back to only requiring pilot studies and a prototype. This is significant since the change happened after the call was already open which means that many applicants could have applied under false premises (read: TRL Levels Explained).
AI Tool Diagnostics Results
Another change over the weekend after April 9th was that the Diagnostics evaluation feedback by the AI Tools changed drastically. The technical breakthrough scorings were quite easy to ‘max out‘ to the top of the A-chart while breakthrough scientific scores were much harder to increase. On Monday, the scoring difficulty was reversed even though no changes were made to the proposal text.
On Monday, an A in technical scores can have turned into a B while the scientific scores saw the opposite change happen. Once again, there are a number of applicants who might have applied under false premises since the call was already accepting submissions.
Budget & Evaluation
The Work Programme has seen some minor adjustments in the budgeting and evaluation process but these were not dramatic and will not significantly impact the success chances of applicants.
One relevant part of these changes is the automatic coverage of the 30% co-financing of the grant by the equity financing if blended financing is selected. This means that, if an applicant wants to request €5M in equity from the EIC Fund then this will be in addition to the 30% of the grant contribution (read: EIC Fund Behind the Scenes). Applicants also have to estimate the co-financing of their Series A or similar round and identify the outside contributors.
Glitches and Errors
Since the AI Platform for the EIC Accelerator is new, it is expected that bugs and errors will be encountered frequently. Still, there was a discrepancy in the performance between different accounts whereas one account had a smooth opening and saving of the proposal while others were exhibiting long loading times, errors and shutdowns.
One of the most severe glitches observed was the replacement of the Abstract of the proposal by the Solution section which ended up appearing twice in the final proposal. This was an automatic replacement that happened in some accounts over the weekend after April 9th.
For all applicants who have applied early to the EIC Accelerator, it is worth looking back at their submitted application and double checking if their Abstract was affected. If it was, it is advisable to contact support@accelerator.eismea.eu as soon as possible to correct this error so that the evaluation will not suffer from this mistake.
This article was last modified on Apr 20, 2021 @ 13:18
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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 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.
“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.
This article was last modified on Mar 14, 2021 @ 13:25
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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 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).
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.
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.
This article was last modified on Oct 26, 2021 @ 11:13
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) under Horizon Europe are:
Step 1 (short proposal)
open now
Step 2 (business plan)
1stcut-off: -
2nd cut-off: -
3rd cut-off: -
4th cut-off: October 19th 2023 (extended)
Step 3 (interview)
1stcut-off: -
2nd cut-off: -
3rd cut-off: October 2nd to 6th (extended)
4th cut-off: November 27th to December 8th
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).
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:
Professional Grant Proposal Writing for the EIC Accelerator and Horizon Europe Programs (SME Instrument)
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