Tag Archives: Grant Amount

The EIC Accelerator Budget: Grant vs. Blended Finance (Equity, SME Instrument)

The grant and the equity contribution for the EIC Accelerator are sourced from different funds (i.e. the EC and the EIC, respectively) which means that the budget is also separated into two components. The grant will need to be defined in a budget table in Part A of the administrative forms which include the individual personnel, indirect, direct and subcontracting costs while the grant amount is defined as a maximum of 70% of the given project costs.

For example, if the total project costs for the grant-side are given as €1m then the grant contribution cannot exceed €700k. The proposal itself (i.e. Document 1) will detail the grant with respect to subcontracting, workpackage budgets and resources through a list of items including justifications. The equity financing will be requested separately as a flat sum (i.e. €2m) in the administrative forms but without any other segmentation. It will also be briefly defined in the respective equity section and in the workpackages.

In total, the overall project costs will be the sum of the grant (i.e. 70% or €700k – by the EC), the grant co-financing (i.e. 30% or €300k – by the applicant) and the equity financing (i.e. €2m – by the EIC) while the total financing requested (i.e. €2.7m) will be the sum of the grant (i.e. €700k) and the equity financing (i.e. €2m). The sourcing of the remaining 30% (€300k in this example) must be addressed in the proposal and it should be presented, in a believable way, that the expensed can be covered by revenues, investors or by other means.

These tips are not only useful for European startups, professional writers, consultants and Small and Medium-Sized Enterprises (SME) but are generally recommended when writing a business plan or investor documents.

Deadlines: Post-Horizon 2020, the EIC Accelerator accepts Step 1 submissions now while the deadlines for the full applications (Step 2) will be on June 16th 2021 and October 6th 2021 under Horizon Europe. The Step 1 applications must be submitted weeks in advance of Step 2. The next EIC Accelerator cut-off for Step 2 (full proposal) can be found here. After Brexit, UK companies can still apply to the EIC Accelerator under Horizon Europe albeit with non-dilutive grant applications only - thereby excluding equity-financing.

Contact: You can reach out to us via this contact form to work with a professional consultant. 

EU, UK & US Startups: Alternative financing options for EU, UK and US innovation startups are the EIC Pathfinder (combining Future and Emerging Technologies - FET Open & FET Proactive) with €4M per project, Thematic Priorities, European Innovation Partnerships (EIP), Innovate UK with £3M (for UK-companies only) as well as the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants with $1M (for US-companies only). 

Any more questions? View the Frequently Asked Questions (FAQ) section.

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

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by Stephan Segler, PhD
Professional Grant Consultant at Segler Consulting

General information on the EIC Accelerator template, professional grant writing and how to prepare a successful application can be found in the following articles:

EIC Accelerator (SME Instrument Phase 2) – Introduction and Blended Finance

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

Success Rates

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

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

Writing and Financing

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

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

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

Reviewing

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

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

These tips are not only useful for European startups, professional writers, consultants and Small and Medium-Sized Enterprises (SME) but are generally recommended when writing a business plan or investor documents.

Deadlines: Post-Horizon 2020, the EIC Accelerator accepts Step 1 submissions now while the deadlines for the full applications (Step 2) will be on June 16th 2021 and October 6th 2021 under Horizon Europe. The Step 1 applications must be submitted weeks in advance of Step 2. The next EIC Accelerator cut-off for Step 2 (full proposal) can be found here. After Brexit, UK companies can still apply to the EIC Accelerator under Horizon Europe albeit with non-dilutive grant applications only - thereby excluding equity-financing.

Contact: You can reach out to us via this contact form to work with a professional consultant. 

EU, UK & US Startups: Alternative financing options for EU, UK and US innovation startups are the EIC Pathfinder (combining Future and Emerging Technologies - FET Open & FET Proactive) with €4M per project, Thematic Priorities, European Innovation Partnerships (EIP), Innovate UK with £3M (for UK-companies only) as well as the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants with $1M (for US-companies only). 

Any more questions? View the Frequently Asked Questions (FAQ) section.

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

For Updates: Join this Newsletter!


by Stephan Segler, PhD
Professional Grant Consultant at Segler Consulting

General information on the EIC Accelerator template, professional grant writing and how to prepare a successful application can be found in the following articles:

SME Instrument Phase 1 vs. Phase 2 (EIC Accelerator)

Since Phase 1 (€50,000) of the EUs start-up grant will be discontinued after September 2019 but Phase 2 (€2,500,000) will remain open, here is an overview of the main differences between the applications.

 

While Phase 1 &2 proposals do follow almost the exact same template, there are important variations to consider:

 

  • Feasibility vs Implementation: Phase 1 is granted for a feasibility study of the project while Phase 2 is for the implementation of all technical and commercial developments.
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  • Grant amount and competitiveness: Due to the higher grant amount, Phase 2 is more difficult to achieve than Phase 1
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  • Funding threshold: The official threshold for funding is 13/15 for Phase 1 and 12/15 for Phase 2
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  • Interview: Phase 2 requires an in-person interview before the grant is approved
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  • Proposal length and additional sections: The main document is 10 pages for Phase 1 while Phase 2 is 30 pages.
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  • Value for money of subcontracting is rated: The subcontracting in the proposed project must be described and justified according to its best value for money.