The EIC Accelerator funding (grant and equity, with blended financing option) by the European Commission (EC) and European Innovation Council (EIC) is designed for startups and Small- and Medium-Sized Enterprises (SME) and provides €2.5 million in grant and €15 million in venture financing per project.
This article investigates the importance of timing and market alignment to assess the future potential of a company.
Timing is Everything
The EIC is generally looking for dynamic companies that are young (i.e. 50% are under 10 years old), timely and have high growth potential. Since timing is a critical component of every new technology development and commercialization, an EIC Accelerator project should generally present a time-limited opportunity to invest in the next big thing.
The timing will often be influenced by factors such as regulatory trends (i.e. climate change), new technology breakthroughs (i.e. scientific developments) or an increased consumer and market demand (i.e. semiconductors).
As a result, timing is generally a critical component since it means that there is a strong reason to assume that there will be a significant business opportunity and product market fit in the future even if the company is in the early stages and revenues have remained elusive.
The Living Dead
In contrast to the case described above with excellent timing, there are companies that have been around for a long time, have been continually developing a new ground-breaking technology and have filed an endless number of patents to support their commercial exploitation but without a clear product-market fit.
There is no real timing for their solution, no apparent market need and no regulatory pressure to implement the product.
Additionally, they often have a track record of starting and stopping their developments based on their funding status whereas a new fund-raising round will spring a phase of excitement followed by months or years of silence once the funding runs out.
And the technology developments are never quite finished.
Traction: A Zombies Cryptonite
Obtaining early revenues is not always feasible, especially in medical technology or hardware-heavy industries where certifications and regulatory clearance are essential but a company should aim to generate revenues as quickly as possible.
If a company has a finished prototype that can be commercialized to some degree then they should aim to generate revenues as quickly as possible to validate the product-market fit. If a product can be purchased but is not in demand then this generally reveals a poor investment opportunity.
Alternatively, the first step can also consist of prototype testing with customers or end-users to demonstrate the market need and usability even if no revenues are generated. But this should not be an excuse to hand out the product for free since no customer would buy it.
Zombie Innovation
Zombie Innovators generally lack the commercial expertise, customer demand or market incentives to generate any traction which leads to a bottomless budget for research and development that every investor will stay away from.
In their business plans, such companies will often highlight their technology, Intellectual Property (IP) and related benefits (i.e. sustainability, energy, costs) but they will rarely mention customer demand or pilot customer negotiations.
Any commercial plan will likely be reduced to the inflated market size with little or no practical plan to reach it or evidence that the market has an interest in the product.
Do Not Bite the Zombie
As a consultant, professional writer or freelancer, it is essential to identify Zombie Innovators quickly and to assess their level of traction as well as their utilization of past financing, especially when targeting the EIC Accelerator program. If investors avoid such businesses then so will the EIC Jury.
Even if early revenues are impossible, there should be an extensive number of customer relationships, early testing with end-users, agreements with value chain stakeholders and impressive Letters of Intent (LOI) to demonstrate the market need.
Zombie Innovators generally have none of these.
This article was last modified on May 26, 2023 @ 14:03
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) has undergone substantial changes over the past years, especially during the transition from the Horizon 2020 (2014-2020) to the Horizon Europe (2021-2027) framework program.
As part of the European Commissions (EC) and European Innovation Councils (EIC) portfolio of funding instruments (see EIC Programs), it supports startups and Small- and Medium-Sized Enterprises (SME) with up to €2.5 million in grant and €15 million in equity financing per project (€17.5 million total).
Keeping Up With The EIC
In contrast to many other public grant opportunities for businesses, the EIC Accelerator remains in constant flux due to varying influencing factors such as increasing marketing by the EIC, conflicts between the European Parliament and Commission as well as changes in the proposal templates, evaluation process and budgets (see Work Programme 2023).
To advise prospective applicants accurately, it is often the responsibility of professional writers, freelancers or consultants to keep track of the newest changes, trends and potential disruptions that could occur in the EIC programs.
The EIC Accelerator follows a simple but lengthy 3-step evaluation process that uses a short application (Step 1), a long application (Step 2) and a remote interview (Step 3) as its base (see What is the EIC Accelerator?).
For the first two steps, the EIC uses thousands of remote evaluators to account for the high number of submitted applications while the last step uses a small number of commercially-oriented jury members. Ideally, this process allows the EIC to vet good technologies in the first two steps and then select the best business cases in the last stage to ensure that the long-term success of the program remains high.
Since the inception of the new EIC Accelerator in 2021, the evaluation process has remained the same but the outcomes of the process have changed dramatically.
The graphic shows the selection rates for the EIC Accelerator’s full proposal (Step 2, white), the interview (Step 3, green) and the combined rates for both stages (Step 2×3, yellow).
It is evident that, while the overall success rates (yellow) have trended slightly downwards, there has been a strong trend for the increase of Step 2 and a decrease of Step 3 selection rates.
This means that the EIC is starting to rely more and more on the EIC Jury in the interview rather than the remote evaluators to assess the quality of the projects.
It likewise means that the quality of the EIC Jury is naturally being eroded since more interviews require more interviewers with a venture background but these are harder to come by than the remote evaluators.
Jury Jeopardy
The goal of the EIC Accelerator interviews is to use a small number of highly qualified experts who make the final funding decisions which increases the quality and ideally reduces the randomness of the selection process.
But, by increasing the number of jury members, the entire process will likely become even more random.
Written Step 1 and Step 2 EIC Accelerator applications present a certain degree of control and predictability whereas applicants can rely on expert proposal writers to support them. For the interview, even the most elaborate pitch coaching will still present a significantly higher luck factor and is subject to the influence of interpersonal skills that are difficult to assess and train within just a few weeks.
Even the EIC’s report on the EIC Accelerator program has revealed that the interviews are presenting a high degree of randomness when it comes to rejections and approvals (see 2020 Report). This is aggravated by the fact that applicants cannot rebut the comments of the jury members outside of being invited to an interview.
What Happened?
In 2021, everything seemed perfect: The EIC Accelerator budget was at an all-time high, Horizon Europe had just launched, the EIC had completely reinvented the submission process and global financial markets were on the good side of the economic bubble when money was available and interest rates were low.
The first EIC Accelerator deadline in June was concluded with unprecedented funding rates that were incomparable to the less than 1% observed just a few months before:
Rates in %
Step 2
Step 3
Step 2×3
June 2021
16
50
8
October 2021
19
47
9
March 2022
24
28
7
June 2022
24
32
8
October 2022
22
33
7
January 2023
33
20
7
Note: The January 2023 cut-off did not include the EIC Accelerator Strategic Challenges which might have impacted the selection rates.
16% of all Step 2 applicants were selected and a total of 50% were selected in the Step 3 interviews (see June 2021 Success). This means that one out of every two applicants was selected in the interview which is a very promising rate for interviewees.
Step 2 was still quite selective with a rate of only 16% but, over the following years, the selection rates for Step 2 gradually increased while the interview rates decreased.
Don’t Turn on the Light
There are a variety of potential explanations for this but the most obvious answer lies in the Step 2 evaluation process itself. Every company applying to the EIC Accelerator is able to see the comments and reasoning for the rejection of their proposal with great detail (see Developing the Rebuttal).
This means that the rejectee has a transparent view of what is needed to succeed in this step according to the first evaluators that have read the application. This is in contrast to the previous submission process where no comments were obtained and applicants that were rejected had to take a shot in the dark in their resubmission.
Today, a resubmission is much easier since the applicant only needs to address the evaluator’s criticisms in a logical manner to succeed while the new evaluators will likely not re-read the entire application and only rely on the conversation between the first evaluators and the applicant.
Innovation All the Way Down
But there is a second reason why this trend most likely occurred and it is directly related to the new system the EIC has created in its hunger for innovation. The previous system relied on numerical scorings to rank companies but the new system does not provide any possibility to rank the applicants.
Instead of handing out numerical scores from 1.00 to 15.00 per company, the EIC replaced this process with a binary grading (GO or NO GO). This has removed the resolution of the process since the EIC cannot introduce rankings and thresholds to account for the limited budgets.
If the current EIC Accelerator produces 500 companies for the interview but cannot differentiate between them then all companies have to attend the interview, thereby reducing the selection rates. In the previous EIC Accelerator, all projects selected for the interview could be ranked so it was possible to only allow the top 50 companies to attend the interview, thereby retaining a high selection rate.
Where Are We Going?
With the current process, there is a chance that success rates in the interview could drop into the single digits even if the EIC schedules longer interview weeks for Step 3. It is also jeopardizing the integrity of the interview sessions since the quality of jury members will be reduced by increasing their numbers and the randomness encountered in the interview can present long-term reputational damage to the EIC.
While there is no obvious solution to this problem, it is essential for the EIC to rank the applicants in some manner since it will otherwise erode the quality of the evaluation process in the long-term (see Application Process).
The best short-term approach would be to gather statistics on the rejection reasons in Step 3 and enforce them in Step 1 so that the number of applicants can be reduced early.
If teams are too small, their last funding round was too big, their industry is not attractive or other common rejection reasons are encountered then the EIC should disqualify them in Step 1 and not allow them to reach Step 3 just to be disappointed later on (see Who Should Not Apply).
The goal of the EIC should not be to market the EIC Accelerator broadly and have as many applicants as possible but to only attract the applicants that the Step 3 jury will be willing to fund. This should be reflected by the evaluation process whereas Step 1 should filter out companies based on the current criteria but also based on additional numerical criteria such as Full-Time Employees (FTE), current fund-raising, burn rate, customer traction, revenues and other simple parameters.
This article was last modified on May 11, 2023 @ 14:19
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 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 grant financing (with blended equity option) by the European Innovation Council (EIC) and European Commission (EC) funds Small- and Medium-Sized Enterprises (SME) and startups with up to €2.5 million in grants and €15 million in equity financing per project (€17.5 million total).
The EIC Accelerator sets out clear guidelines for applicants whereas it advertises to fund:
“…startups and spinout companies to develop and scaleup game-changing innovations…”
While additional information is found inside the EIC Work Programme, the general criteria are quite vague and the first hurdle for any company interested in the EIC Accelerator is to find out if the program is suitable at all (see EIC Accelerator Explained).
This article touches on common reasons why companies should not pursue the EIC Accelerator program and might be better off looking for alternatives such as EIC Pathfinder or EIC Transition as well as non-EIC grants (see One-Stop Shop).
Note: A company that is not suitable for the EIC Accelerator can be highly attractive to other investors as well as have an excellent technology and business model. The EIC Accelerator would have likely avoided funding companies such as TikTok, AirBnB, Amazon or the European Deliveroo in the TRL5-6 stage.
1. Technology
1.1 A Simple Technology
The EIC Accelerator has funded apps and pure software businesses before but this does not mean that it is easy to obtain funding with such technologies.
In a recent report on the program, common industries funded under the EIC Accelerator were in the areas of energy, agriculture, health and similar technologies which illustrates the highly technical and scientific nature of the desired products and services (see EIC Report).
The EIC Accelerator (formerly SME Instrument) has clearly become more business-focused and is now more easily swayed by good financials compared to other R&D grants but it still retains its general focus on disruptive innovations.
Every project that seeks EIC Accelerator financing should perform a realistic assessment of how sophisticated its technology is prior to applying for grant funding.
1.2 Intellectual Property (IP) and Innovation
There are a variety of industries that are very saturated or where differentiation is minuscule such as logistics-support solutions, communication tools, social networks, payment infrastructures and many others. This will render the description of the innovation and the elaboration of competitive differentiators difficult.
It is often best to apply with a grant project that has clear IP and differentiators in an industry that is less saturated. Although this does not need to be the norm since energy and battery industries are highly saturated but are repeatedly funded under the EIC.
By funding multiple projects in a single industry, the EIC is funding competitors which is effectively growing the industry rather than nurturing a single industry winner.
While competition is a reality for all businesses and should not be a reason to avoid the EIC Accelerator, it should be assessed if the market is overcrowded and if the commercial differentiators have long been eroded.
Ideally, the target market should not be in the process of being disrupted by many other startups at the time of the application.
2. Company
2.1 Small Team
Startups often have a chicken-and-egg problem whereas companies with very small teams and no track record need financing to grow but need growth to attract financing. Since bootstrapping (i.e. self-financing through revenues) is not an option in typical DeepTech companies, private or public funding is often sought out to bridge the gap.
The EIC Accelerator is funding large teams with 100+ employees but also small teams with less than 4 staff members but the latter is often a tough sell.
While Step 1 and Step 2 evaluators are happy to see that a team is having a large reach through scientists, contractors or freelancers, the Step 3 jury will likely be very critical of teams where staff members only account for 1-3 members.
It would be useful if the EIC were to publish company statistics on the beneficiaries since factors such as the team size will likely greatly influence the success chances. In general, a team of 5+ staff members would be advisable although smaller teams have also been funded.
2.2 Founded Recently
The EIC Accelerator specifically mentions startups as their ideal applicants whereas the statistics of funded projects show that 41% of companies are aged 6-10 years while only 9% are aged 5 years and below.
Still, if a company has only begun product developments recently while starting from scratch but already reached a Technology Readiness Level (see TRL) high enough for the EIC Accelerator then it might not be sophisticated or unique enough to succeed in the program.
Additionally, if a company is only a few months old, it has likely not built substantial customer interest or market traction yet which will severely limit the appeal of the project to the EIC Accelerator evaluators and jury.
Of course, an exception is a spin-off company that has been created from a larger company, University or research institute and is founded with a strong technology and market track record.
2.3 Limited Funding
The EIC Accelerator funds projects starting at TRL5 but prefers TRL6 as the starting point in most cases. To reach this level, especially for DeepTech projects, it is necessary to raise substantial seed investments to support personnel and hardware costs.
If a company has not raised substantial financing yet or has only raised the starting capital during the founding process then the technology might lack the sophistication necessary to succeed in the EIC Accelerator program.
2.4 Limited Traction or Customers
The EIC Accelerator is a market-focused funding program and, even though it explicitly foresees Research & Development work, it has a strong commercial focus. This often leads to overlaps in the judgment of the evaluators where the TRL is assessed through the use of the technology by existing customers.
This can even extend to the point where the EIC jury will reject a project for having a TRL that is too low because no customer has interacted with the prototype yet even though the validation clearly places it at TRL6.
While it is not necessary to have paying customers, it is highly beneficial to have existing customer relationships, Letters of Intent (LOI) and other proof of traction to satisfy the evaluators.
2.5 Lacking Corporate Identity
It is very common for evaluators and EIC jury members to perform an internet search of the company they are assessing. This includes the reading of website materials, LinkedIn profiles and other public company data.
If a company has no website, social presence, or even a domain name for company emails then it will place a negative light on the company itself. Since creating such online representations is simple and not costly, it is recommended to prepare them thoroughly before considering an EIC Accelerator application.
If the CEO of a company communicates using GMAIL or similar services then this is generally a sign that the project is not fit for the EIC Accelerator.
Conclusion
It will not be necessary for every EIC Accelerator applicant to implement all the recommendations above but each individual factor can be expected to impact the evaluation.
In general, it is often beneficial to err on the side of a straightforward technology with strong market interest and traction rather than a sophisticated technology with weak market interest.
Interestingly, companies with a simple technology would likely be able to raise substantial financing from private markets in a more efficient and straightforward process compared to the EIC Accelerator. But since the EIC offers non-dilutive grants, it is still useful as a funding vehicle for companies in addition to dilutive private financing (i.e. Investing in Well-Funded Companies).
Although, it is not aligned with the mission of the EIC.
This article was last modified on Apr 17, 2023 @ 19:53
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) by the European Commission (EC) and European Innovation Council (EIC) provides startups and Small- and Medium-Sized Enterprises (SME) with detailed feedback for every stage of the evaluation process (see What is the EIC Accelerator).
This feedback system is relatively new among funding programs since it enables applicants to understand why their project was positively assessed or what it was lacking.
Since the EIC Accelerator awards up to €2.5 million in grant and €15 million in equity financing per project (€17.5 million total), it is important for applicants to gain a deeper understanding of what the evaluations and the obtained scores mean to increase their chances of success.
Applicants are often less experienced in grant processes and, since the EIC Accelerator is unique in its structure, it is often useful to utilize professional writers, freelancers or consultants who have a greater depth of knowledge regarding the program (see Contact).
Evaluation Summary Report (ESR)
The ESR of the EIC Accelerator’s Step 2 generally provides applicants with detailed feedback on the evaluation in the form of 9 GO or NO GO ratings that account for 3 evaluators who address 3 distinct criteria, namely:
Excellence
Breakthrough and market-creating nature
Timing
Technological feasibility
Intellectual Property
Impact (or: Scale-up potential)
Scale up potential
Broader impact
Market fit and competitor analysis
Commercialization strategy
Key partners
Level of risk, implementation, and need for Union support
Team
Milestones
Risk level of the investment
Risk mitigation
Each of these criteria will display comments from the evaluators which are directly addressing the positive aspects or shortcomings of the EIC Accelerator proposal and therefore form the basis of the resubmission (see EIC Accelerator Evaluation Criteria).
The Effort of Resubmissions
In general, the higher the score of an EIC Accelerator Step 2 application is, the less effort an applicant has to put into the resubmission process whereas an 8/9 score will only require minimal improvements while a 1/9 score will require substantial changes (see EIC Accelerator Resubmissions).
Since each resubmission allows the applicants to provide an answer to the previous evaluation as well as a list of changes included in the resubmitted proposal, it is likely that the new evaluators will not carefully reread the entire application but focus mainly on the rebuttal and the sections that are new or changed.
As a result, the writer has a great deal of influence over the perception of the project through the responses and directions given to the new evaluators. Since the evaluators are not the same individuals who issued the initial rejection, there is likewise the benefit of not having to face evaluators who have already made up their minds or formed critical views of the project.
Very often, a previous criticism that has been unfair or incorrect can be easily addressed through a simple response and the fact that the new evaluators have no attachment to the old evaluation.
The Focus of Resubmissions
While each individual EIC Accelerator application is different, it is possible to draw general conclusions regarding the ESR. The Step 2 business plan is exceptionally long but it can be broken down into critical and less important sections to simplify the improvement process.
In many cases, it is possible to estimate the proposal quality and sophistication of sections based on the individual scoring for each of the three major ESR criteria.
This article will generalize proposals from different industries and of different quality levels so it should be noted that the recommendations will not be true for every application. It will also focus on the larger sections rather than listing every possible eventuality suggested by a negative ESR assessment.
1. Excellence
The excellence section focuses on the criteria of (1) Breakthrough and market-creating nature, (2) Timing, (3) Technological feasibility and (4) Intellectual Property.
Very often, a lacking excellence section reflects (i) the description of the technology, (ii) the need for the technology and (iii) how the technology is compared to existing solutions.
There are a variety of overlaps between all criteria since the market is mentioned in Excellence while it is also part of the Impact section and even the Risks through the mentioning of market risks. This, of course, makes it difficult to identify the source of the criticism but it can be helpful to imagine the highest level of the main criteria:
Is this an excellent technology?
If NO GO gradings were obtained then the evaluators had their doubts. Often, these stem from:
1.1 Features and Use Cases
This section is the purest technology section of the EIC Accelerator grant proposal since all other sections are heavily focused on the value chain, competition or development roadmaps.
While the features and use cases are likewise touching on these aspects, they are most suitable to explain why this technology is sophisticated and difficult. The EIC Accelerator is aiming to fund DeepTech projects that have a long time-to-market and require extensive capital investments before significant revenues can be generated.
While this mission is not entirely matching reality for Step 3 (see Breaking the Rules), it is still a focus of the evaluation process at least in Step 1 and Step 2. This means that the evaluators must see why the project fits this mission.
The features and use cases should be used to explain the technology from scratch and not be limited to the way it is used by customers.
For example, smartphone use cases would focus on the way users interact with the device but would not describe the Operating System (OS) development, data usage, app ecosystem, hardware specifications and other parts.
It is possible to prepare an EIC Accelerator application that perfectly answers all of the questions given in the lengthy proposal template but never really explains what the backend looks like and what is unique about the technology.
This is what the features and use cases can be perfect for.
1.2 Value Chain
The value chain is another example of a section where the excellence of a technology can be highlighted since it heavily focuses on the innovation of the product, the customer pain points and the unique value presented to the customers. While it is less suitable to elaborate on the technology back-end, it is highly suitable for the contextualization of the innovation.
This section will define why the innovation is unique, why it is delivering value to the customers and how it fits into the current economic, environmental and social environment.
If the excellence criteria was insufficient, it could likely be caused by an insufficient presentation in these sections.
1.3 Competitors
The competitor section is very comprehensive in the EIC Accelerator Step 2 proposal since it is distributed into two large sections as well as a variety of other sections that are directly connected to it.
The excellence of a technology and project is often assessed in contrast to existing technologies since it will directly impact its novelty. The iPhone 1 was groundbreaking in 2007 but it is barely usable as an alarm clock today.
If the competitor section is not sufficiently contrasting the excellence of the product and services then it can be responsible for a low grading in this aspect.
2. Impact (Scale-up Potential)
The impact section focuses on the criteria of (1) Scale-up potential, (2) Broader impact, (3) Market fit and competitor analysis, (4) Commercialisation strategy and (5) Key partners.
In short, it answers the following question:
How will this product change the market and lives of customers?
There are a variety of sections that are touched on by this criteria but the following key aspects are often lacking if a low score is obtained. Since it is impossible to generalize such vague criteria, the following list will not be true for all projects.
2.1 Traction
The greatest argument for why a product is needed by the market is a long list of customers, either prospective or paying, that have only good things to say about the technology. Commercial traction is proof that there is, in fact, a product-market fit and that the customers find the new product superior.
If a company has obtained a low impact score then customer traction is an important section to investigate since it might have been lacking. This includes Letters of Intent (LOI), existing customers, case studies, early revenues and general customer feedback or validations.
2.2. Market
Since the remote EIC Evaluators are not psychics, the market dynamics and current state have to be explained in detail to reflect why the project will have a strong impact. If the market analysis is poor or lacks quantifications as well as insights that support a large-scale customer deployment then this can cause a low score.
2.3 Technology Adoption Lifecycle (TALC)
While there are many other sections that will influence the impact criteria such as the scale-up potential or the partners, the TALC will greatly influence the perceived sophistication and strategy of the scale-up.
While commercial strategies do not receive substantial scrutiny in Step 2 due to the technology-heavy backgrounds of the EIC Accelerator’s remote evaluators, it is still important to clearly explain how the product will be commercialized.
3. Level of risk, implementation, and need for Union support
This section focuses on the criteria of (1) Team, (2) Milestones, (3) Risk level of the investment and (4) Risk mitigation.
There are clear objectives for the EIC Accelerator regarding the risk and need for support by the EIC since the program is aiming to fund projects that are otherwise not able to raise investments (see To Disrupt or Not To Disrupt).
In reality, the projects funded under the EIC are not all fulfilling this criterion since only funding high-risk projects is, well, too risky even for the EIC (see Breaking the Rules).
Still, great care should be placed into the sections relating to the need for EIC support since the evaluators will read them carefully and assess if the EIC is the only viable option to fund this project.
Other important sections that are commonly insufficient if a low score is obtained for this segment:
3.1 Workpackages
Many of the questions under this evaluation criterion are targeting the implementation of the project and aim to assess if the competencies of the team fit the ambitious goals and work plan. It is therefore essential to have clear and detailed workpackage descriptions.
Since the EIC Accelerator Step 2 proposal has gained in complexity over the years, it seems excessive to introduce many workpackages, tasks, costs, intermediary deliverables, final deliverables, mandatory milestones, custom milestones and even thoughtful descriptions for each but it will increase the chances of a good evaluation.
3.2 Risks
The EIC Accelerator is designed for high-risk and high-reward projects (see EIC Accelerator Risks). Still, this section is unique since it should not be too comprehensive and not be too lacking. It should be well balanced so that the project appears risky but very well mitigated.
There should always be extensive risk mitigation strategies for each risk and it is not advisable to include as many risks as possible.
If the criticism in the ESR notes that the project is “not risky enough” then this generally means that the financial, commercial and technological risks were not well presented.
If it is claimed that the project is “too risky” then either the mitigation strategies were lacking or the applicant was oversharing everything that could possibly go wrong and edged on pessimism.
3.3 Team
Of course, the team section is a highly important part of the evaluation since it is presenting the members that will implement the action. It is always critical to present a large team with all required competencies as well as to identify how missing competencies will be filled through hiring.
Since the EIC Accelerator application requires each team member to be added individually through an interactive form field, it might seem tedious to add dozens of team members but it is still recommended to present them in full except for larger companies.
Conclusion
The tips presented in this article are simple suggestions as to how certain sections can impact the scores of the EIC Accelerator grant proposal but they will not be true for every project. A successful EIC Accelerator application will depend on a variety of factors that are often unique to a particular project.
Standardizing the structure of an EIC Accelerator proposal is possible to some degree but it is often the customization and creative writing that will present a grant proposal in the best possible light.
This article was last modified on Apr 6, 2023 @ 19:24
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) by the European Innovation Council (EIC) and European Commission (EC) is a selective program designed for startups and Small- and Medium-Sized Enterprises (SME).
The funding per project can reach €17.5 million in total (€2.5 million in grant and €15 million in equity) and applicants often rely on professional writers, freelancers or consultants to support their applications since the evaluation criteria are often obscured in the EIC’s communication (see Evaluation).
This article presents a short list of what a company needs to succeed in the EIC Accelerator program. While the following list will not be true for every successful company, it is a useful guide to adhere to when venturing into the lengthy and high-risk EIC Accelerator evaluation process (see Winning Candidate).
1. Letters of Intent (LOI) and Traction
While it is possible to succeed in Step 1 and Step 2 of the EIC Accelerator with a poor commercial description, it is very difficult to succeed in the Step 3 interviews without clear commercial traction and strategies (see Interview Preparation). This is due to the background of the remote evaluators for Step 1 and 2 in comparison to the Step 3 jury whereas the former often lacks commercial expertise while the latter lacks technical expertise.
Still, LOI’s are helpful in Step 2 and Step 3 of the evaluation process since they demonstrate a market need and real customers who have an interest in purchasing a product. They also allow the applicants to introduce case studies that can further elaborate on the impact of the innovative solution.
Any EIC Accelerator applicant should assure that they have commercial traction in some capacity since the program is designed to scale up rather than seed-fund companies. The general rule is to obtain as many support documents as possible whereas contracts, letters of intent, letters of support, customers lists and even informal email requests are helpful.
2. Clear Disruption Potential
There should be clear evidence that the innovation has the potential to disrupt the status quo which can be based on political pressures (i.e. climate, semiconductors, vaccines, AI) or can be focused on an isolated industry (i.e. real estate, computing, diagnostics).
The narrative should contain a broad explanation of the current state of the industry and clearly explain what is missing or what the lynchpin of disruption will be. If an industry is saturated, has many competing offerings and differentiation is not easily understood (or absent), then a disruptive potential will be difficult to argue for.
Clarity and simplicity are the keys in this aspect since, if the evaluator is confused about why the project is important, they will not provide a good review.
3. Innovative Technology
In the EIC Accelerator program, there is no way around a sophisticated technology. While it is clear that not all funded companies fall into the DeepTech category, no company’s technology will be funded if it was not complex and very difficult to copy.
While the narrative should be broad but easy to understand, the technology should be explained in all of its complexity. The EIC Accelerator template often requests that no jargon is used but no evaluator will ever admit that they are too ignorant to understand something.
If a technical description is too sophisticated for them, evaluators will often accept it at face value and leave a positive review. Of course, this is only true if the technical description is well-structured and -written, even if complex.
On the other hand, if a technical description is simplistic and not comprehensive, the evaluators will claim that it is not innovative or that it is incremental rather than ground-breaking.
4. Consistent and Detailed Descriptions
A very common cause of a bad evaluation in the EIC Accelerator program is a lack of text and arguments. Since the proposal is extremely lengthy (see Timeline), applicants who do not contract professional grant writers or consultants often try to cut corners.
This is, of course, to the detriment of the perceived project quality.
It is important to decide, in the beginning, on the clear messages and quantifiers that need to be presented. The problem should be well quantified from a global, EU and customer perspective. The same is true for the solution which must have clear quantifiers for the benefits of the product and the needs of the market.
These numbers and facts should be used throughout the application and can be repeated in every section which benefits from them. If something is true and impactful, evaluators will generally not complain even if they have read the same statistic dozens of times.
Since the application is very long, the most important numbers and facts should be repeated the most often so that they will not be missed. Of course, this should not be an excuse to copy/paste the same text everywhere but should be an incentive to answer questions in a new way using consistent data.
This article was last modified on Mar 27, 2023 @ 18:56
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 by the European Commission (EC) and European Innovation Council (EIC) awards up to €2.5 million in grant and €15 million in equity financing per project (€17.5 million total).
Startups and Small- and Medium-Sized Enterprises (SME) often rely on consultants, professional writers or freelancers to support them in preparing impactful grant applications due to the many difficult aspects that have been introduced in 2021.
The Evaluation
The EIC Accelerator grant financing (with blended equity option) is a highly selective funding program and, due to the high degree of subjectivity combined with a pool of anonymous and remote evaluators, rejections are a very common occurrence (see Resubmissions).
Due to the difficulties that the EIC encounters in creating an efficient and affordable evaluation process, it is often a necessary evil to use evaluators who are not experts in a field or are too busy to read the entire application carefully.
As a result, each evaluation can contain criticisms that are wrong or simply reveal ignorance regarding core industry functions. This, of course, does not mean that evaluators are always wrong since there are many projects that do not fit the program and are rightfully rejected because of a lack of innovation, company traction or a poor business model.
This article focuses on projects that are a great fit for the EIC Accelerator but are, often unfairly, rejected by a close margin in Step 2 of the application process (see Evaluation Criteria).
It also focuses on the second step of the process since Step 1 is very easy to pass and any rejection in this stage is a clear sign that a company has little appeal to the EIC or has not prepared a diligent application.
The Rebuttal
The rebuttal is a special section of the proposal template that allows applicants to (1) respond to the evaluation of the previously rejected proposal and (2) explain what is different about the current application. This is an essential section since it will be prominently displayed on top of the proposal as it is viewed by the evaluators and the reviewers might focus their assessment largely on the rebuttal rather than reading the entire application as closely as the first reviewers did.
Evaluations can be frustrating since the reviewers can make critical mistakes in their evaluation by misquoting LOI’s, misreading FTO’s, claiming that data is missing even though it was present or simply making logical flaws in their arguments which are easily identified through critical thinking.
Yet, the EIC is generally declining any re-evaluations for applicants who complain of material mistakes made by the evaluators and just refers them to the rebuttal in the next application deadline. But of course, if a company has been rejected twice, it will have to wait another 12 months until they are able to re-apply.
Note: There are rare exceptions where the EIC will allow Step 2 proposals to be re-evaluated in case the evaluators made a critical mistake regarding the rules of the EIC but it is extremely rare and decided on a case-by-case basis.
Crafting the Rebuttal
1. Read the Evaluation Summary Report (ESR)
The first step in crafting an impactful rebuttal is to read the ESR carefully. Based on the score obtained in the evaluation, it will be evident if a rebuttal can make a positive impact or not since a narrow rejection will be more malleable while an overwhelming rejection will not be.
Step 2 of the EIC Accelerator provides 9 individual GO criteria which are distributed over 3 evaluators and 3 topic areas, namely:
Excellence
Scale-Up Potential
Level of risk, implementation, and need for Union support
If an ESR signifies that an application has obtained 1 out of 9 possible GO criteria (i.e. 8 NO GO) then no rebuttal will be likely to convince future evaluators. In fact, the lower the number of GO gradings is, the more the main Step 2 proposal must be improved to compensate for the lacking presentation.
The higher the number of GO criteria is, the less the application needs to be adjusted and the more can be conveyed through a rebuttal.
There are a variety of tips regarding the improvement of the main proposal which can be found in the articles on this website (see Articles).
2. Extract the Criticism (and Sometimes Praise)
Every ESR will contain criticism. It is even a common occurrence that an evaluator provides a GO grading but still introduces critical points that place the project in a negative light. While it would be convenient to ignore such harmless criticisms, one must still address them in the rebuttal since these will raise doubts in the next evaluator’s minds.
It is important to go through the entire evaluation and carefully mark every single negative point. Less important but still useful is searching for positive remarks by the evaluators that have additional weight attached to them.
An example could be that an evaluator identifies themselves as part of the customer group, a scientific researcher in that field or suggests they have any other source of insider knowledge which gives credibility to their positive assessments.
Such statements should be highlighted in the rebuttal, if positive.
In the case of narrow rejections, it is very often one evaluator who continually criticizes the project while the remaining two evaluators remain positive. Nonetheless, all criticisms must be addressed irrespective of the GO or NO GO criteria.
3. Highlight the Good
A powerful start to any rebuttal is to first highlight the positive. This, of course, is generally reserved for projects that have been rejected narrowly with 7 or 8 out of 9 possible GO’s. The first sentence can then stress that the response was overwhelmingly positive with a few minor criticisms by a single evaluator who did not fully understand the project.
It should then be followed, if available, by positive remarks from an evaluator with insider knowledge. Highlight how an evaluator who has insider information immediately grasped the impact of the product while an evaluator who was unaware of the industry used, as an example, Google for a quick search which led to misinformed comments.
If an evaluator added a powerful quote, it should be added to the rebuttal since it can preempt the following evaluators with a perception of high quality.
4. Highlight the Ignorance
Since the thousands of EIC evaluators are subject to only minimal due diligence and their work is generally underpaid with an increasingly high workload, the evaluations are often not of the highest quality.
In general, the tone of the rebuttal should be professional and polite with an objective view of what was missing and the changes that have been made. It should also objectively clarify misunderstandings or criticisms that were encountered in the ESR.
Still, there is a place to highlight the ignorance of particular evaluators if they made obvious logical flaws. This can be in cases where an evaluator mentioned a competing product but misrepresents the product offering, misquotes a Letter of Intent (LOI), calculates a fictitious case study but makes a numerical error or simply presents an argument based on publicly available data which, after investigation, was incorrect.
In such cases, the rebuttal should use every chance to state that this evaluator was factually incorrect. It is beneficial to make clear and logical arguments why this evaluator was wrong.
The rebuttal should also point out whenever information that the evaluator claimed was missing was already part of the previous submission. This casts additional doubt on their critical comments.
It has the impact of (1) showing future evaluators that the previous negative assessment was wrong and (2) communicating to evaluators that they should think deeply before criticizing the project since they must be sure to not make logical errors.
Still, the rebuttal should be fair even to the critical evaluators so as to not antagonize future evaluators but, in all likelihood, the new evaluators will be on your side if the rebuttal uses logic to dismantle previous criticisms – even if it is harsh.
5. Add Minimal Changes
For close rejections where the number of critical points is limited and the score in Step 2 amounted to 7-8 out of 9 GO’s, it is sufficient to leave the majority of the proposal as is and simply make minor adjustments based on the feedback.
Such changes can be the introduction of new deliverables, milestones, patent information, visual data, case studies or any other points that were identified as lacking by the evaluators.
Often, it is sufficient to introduce very small additions since the new evaluators generally want to see that changes have been made rather than requiring the changes to be extensive.
In contrast, an application that has received a low score in the Step 2 evaluation will likely have to introduce substantial changes and often requires reshaping of key sections of the application such as the features & use cases, competitors, value chain, market and work plan.
This article was last modified on Apr 5, 2023 @ 16:40
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:
This article presents a perspective on how a project for the EIC Accelerator funding (grant and equity, with blended financing option) by the European Commission (EC) and European Innovation Council (EIC) can be shaped. The EIC Accelerator awards up to €2.5 million in grant and €15 million in equity financing per project (€17.5 million total) and is designed for Small- and Medium-Sized Enterprises (SME) and startups, often supported by freelancers, professional writers or consultants.
Risk and Disruption
The EIC Accelerator is aiming to fund disruptive innovations with a high risk profile, often from a scientific or DeepTech space.
In reality, high-risk projects are less attractive to the EIC jury as is seen in select companies being downgraded from blended financing to the grant-firstEIC Accelerator mode due to their high risk which is a sign that most funded projects have a medium risk profile at best (see 2022 Success).
Similarly, funding disruptive innovation makes for good marketing for the EIC but, in reality, disruptive technologies are generally ambitious and unproven in the market, two criteria the EIC jury will negatively assess.
An example is Tesla which has extensive proof of market traction in terms of vehicle sales and charging infrastructures but it has yet to prove its Robotaxi technology.
Still, if Tesla were to realize its vision for Robotaxis and could successfully implement it at scale, it would be truly disruptive. But without proof of success, the EIC jury would likely avoid investing in such a disruptive innovation by itself since it prefers lower-risk propositions as do most other investors.
To Be or Not to Be Ambitious
True disruptive innovations emerge out of unforeseen areas and are extremely difficult to predict. Even Jeff Bezos, founder and ex-CEO of Amazon, candidly said in a CNBC interview right before the DotCom crash in 2000 that they could fail and that their success is not guaranteed:
“Long-term, I believe, that it’s very easy to predict that there are going to be lots of successful companies born of the Internet. They’re going to have very large market caps and so on. I also believe that today where we sit it’s very hard to predict who those companies are going to be. So you know you can make bets on these things and I think that Amazon.com, if we don’t if we’re not one of those important lasting companies born of the Internet, we will have nobody to blame but ourselves and we will be extremely disappointed in ourselves. But there are no guarantees. It’s very very hard to predict.”
Clearly, it worked out well for Amazon but it was a very risky proposition. The core problem with disruption is that the more certainty an investor wants to have, the less disruption they will end up looking for. An investor wants to see validation and proof because they are looking for a Return on their Investment (ROI).
Disruptive innovation generally lacks such proof since it has not disrupted anything yet. The danger of investing in truly disruptive innovation can be seen in Cathie Wood’s Ark Invest since the high level of volatility and risk can have severe downsides in times of uncertainty.
Aiming to predict true disruption can lead to swings between genius picks and severe gambling losses.
Disruptive innovation has a chicken-and-egg problem where it is often only attractive for funding after it has been funded or succeeded.
In the same way, the EIC’s Step 3 jury prefers already proven and validated commercial strategies over truly disruptive innovation since it is the safer bet. This is why an extremely well-funded company can obtain an EIC Accelerator grant two weeks after it raised $25+ million from private investors (see Breaking the Rules).
This is not the advertised mission of the EIC but it is what any smart investor would do so one cannot blame the EIC. If the EIC funds 80% safe technology projects and 20% high-risk innovations then it is still a great win for the European innovation ecosystem.
Reality Check
If the mission of the EIC sounds too good to be true…
“The EIC Accelerator focuses in particular on innovations, building on scientific discovery or technological breakthroughs (‘deep tech’) and where significant funding is needed over a long timeframe before returns can be generated (‘patient capital’). Such innovations often struggle to attract financing because the risks and time period involved are too high. Funding and support from the EIC Accelerator is designed to enable such innovators to attract the full investment amounts needed for scale up in a shorter timeframe.“
…it probably is.
Based on experience, any company that is unable to obtain financing outside of the EIC Accelerator has a low chance of being successful in the EIC Accelerator program.
For an EIC Accelerator application, companies should make sure that extensive validation of both the technology and especially the business model has taken place. While Step 1 and Step 2 of the evaluation process will heavily focus on the innovation and technology aspects, the Step 3 interviews will show a strong preference for financial and commercial validation.
If a revenue stream is unproven, customer interest is uncertain or the market is newly created then the jury will likely not be interested in funding this project.
A good rule of thumb for the EIC Accelerator is to have a complicated and innovative technology but a clear, proven and simple commercial strategy. While the Step 3 jury will have a high tolerance for uncertainty when it comes to technology developments, it has a strong aversion to uncertainty when it comes to commercial strategies.
This article was last modified on Mar 27, 2023 @ 18:56
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) by the European Commission (EC) and European Innovation Council (EIC) is designed for startups and Small- and Medium-Sized Enterprises (SME). It provides €2.5 million in grant and €15 million in venture financing per project and is often supported by professional writers, freelancers or consultants (see Comprehensive Explanation).
This article presents a brief explanation of the timeline for the EIC Accelerator and aims to clarify how much time is needed to prepare all documents and go through the complete process.
Step 1: The Short Application
The Step 1 proposal for the EIC Accelerator requires 3 core documents, namely the proposal text, the pitch deck and a short video. In general, one can begin the writing and preparation process with any of these documents but it is recommended to begin with the written proposal, followed by the pitch deck and, lastly, the pitch video.
The reason for this order is that the written proposal will be the frame for how the application is presented to the EIC which will likely require adjustments of existing presentations and documents that a company might have available. An existing pitch deck might not be suitable for the EIC Accelerator so it is advisable to first frame the text in the most beneficial way and then move toward the annexes.
Since the pitch video is the most difficult to change in post-production, it is recommended to record it in the end so that there are no open questions regarding the presentation of the project to the EIC.
1.1 Proposal Text
The proposal text follows an online form on the EIC’s website which consists of a variety of questions. Each question provides a certain space (i.e. 1,000 or 500 characters) for a response which inherently limits the comprehensiveness of the application. The total number of text boxes that need to be written will depend on a variety of interactive functions such as the number of features & use cases, the risks and the staff.
In general, if a writer has a deep understanding of the company and the technology beforehand and is a fast as well as efficient writer then the text can be prepared in less than one week. If the project still lacks research and requires re-developments or customizations of the market, technology or the overall narrative then at least two to three weeks are necessary.
Note: Many companies have large amounts of data and texts from other proposals or presentations available but these generally cannot be used directly in an EIC Accelerator application without re-writing them due to the specific questions and space restrictions.
1.2 Pitch Deck
The pitch deck for Step 1 of the EIC Accelerator is generally limited to 10 slides (i.e. 11 slides incl. the title page). This reduces the amount of work needed for this document but can also introduce additional restrictions in case a company only has a variety of longer pitch decks available (see Read Deck).
The pitch deck often requires the professional grant writer to summarise existing pitch decks and to re-shape them into a narrative that is aligned with the EIC Accelerator. Even with a broad set of existing slides and pitch decks, this task can still require at least one or more days.
1.3 Pitch Video
While shooting a video for the EIC Accelerator can seem like a complex task, it is relatively simple and the process complexity will largely depend on the desired outcome. Since the EIC Accelerator videos will not be graded on their production quality, it would be sufficient to simply record a video call and upload it (see Video Preparation).
Still, some minimal production quality and editing are recommended since the video will likely be watched in each subsequent step of the evaluation process even up to the final Step 3 interviews.
In some cases, companies already have certain video footage available and, since there are no rules regarding what is and what is not allowed, they are free to simply use advertisements, interviews or other footage to present their project without recording any new material.
For all companies that do not have sufficient footage available, the general tasks for the pitch video creation are:
Scripting
Recording
Editing
1.3.1 Scripting
Once the main proposal document has been completed, the scripting for a 3-minute video can be completed within a single day (see Scripting the Video).
1.3.2 Recording
The recording session with the key team members can likewise be performed in a single day since the footage per team member will be limited to one minute on average in the case of three participants.
1.3.3 Editing
The editing of a video generally requires more time than other parts but, since the video will have a maximum length of 3 minutes, it will still be possible to complete the post-production (i.e. cutting, titles, footage, color grading, audio) in a single day.
This timeline would increase if the editor creates animations or uses external footage to improve the video which is a creative process and will require more work.
1.4 Financials & Deliverables
While not part of the submitted Step 1 documents, it is critical to plan certain aspects of the project in Step 1 even though they will only be requested in Step 2. Such documents are related to the budget, the financials and the deliverables.
While it is unlikely that the evaluators would care if these aspects have been changed from Step 1 to Step 2, it is useful to already align all project cornerstones in the first Step. If this point is neglected, an evaluator might leave a criticism in the Step 1 evaluation which will be read by the Step 2 evaluators and might add additional scrutiny.
It is useful to decide on the general budget of the project (i.e. grant and equity – see Explanation), the financials of the company (i.e. preparing preliminary financial projections) and to prepare a general structure of the workpackages which must be presented as deliverables in Step 1.
These tasks are part of the writing process for the main proposal text.
1.5 Total Time for Step 1
1.5.1 Duration
An EIC Accelerator applicant should plan 1 month for the Step 1 document preparations but it is possible to prepare the documents in under 2 weeks if no research or re-development are needed.
1.5.2 Evaluation
The evaluation of the Step 1 proposal can take just a few days or multiple weeks depending on the workload experienced by the EIC’s remote evaluators. In general, a duration of 3 weeks should be expected but, if an applicant already has all the necessary templates, they can begin the Step 2 writing process as they wait for the Step 1 result.
Step 2: The Business Plan
The business plan is the most difficult and lengthy step in the EIC Accelerator process which consists of a main document and a variety of annexes such as:
Letters of Intent (LOI)
Pitch Deck
Freedom to Operate Analysis (FTO)
Data Management Plan (DMP)
10-Page Annex
Financial Spreadsheet
2.1 Proposal Text
The proposal text is provided through an online form similar to the Step 1 application. In fact, some sections from Step 1 are automatically added to Step 2 since they present the same questions.
In general, the proposal text for Step 2 is very long and far exceeds the length of the documents prior to 2021 when the complete EIC Accelerator application template was reshaped.
2.2 Annexes
The EIC Accelerator’s Step 2 application allows a variety of mandatory and optional annexes to be uploaded which include Letters of Intent (LOI), a Freedom to Operate Analysis (FTO – see FTO Guide), a Data Management Plan (DMP), a financial spreadsheet, a pitch deck (see Pitch Interview) and a free 10-page overview.
2.2.1 Letters of Intent (LOI)
It can generally take weeks or even months to obtain LOI’s from relevant stakeholders since every company is busy and will likely not act rapidly. It is therefore advisable to send out requests for LOI’s as early as possible to maximize the chances of obtaining them before the Step 2 deadline (see Cut-Off’s).
This upload section dedicated to LOI’s can also be used to include documents such as contracts, customer lists, patent applications or other critical documents (i.e. translations).
2.2.2 Pitch Deck
The Step 2 pitch deck will follow a similar structure as the Step 1 pitch deck, albeit the page restriction has been removed which allows longer presentations and a rich appendix.
2.2.3 Freedom to Operate Analysis (FTO)
Most companies in the DeepTech or innovation space have an FTO available since it is a critical component of any innovative venture. For any company without an FTO, it is advisable to either prepare one in-house (see FTO Analysis) or to contract a law firm for the preparation.
2.2.4 Data Management Plan (DMP)
The DMP can be easily obtained through an online template but, in case a company has no DMP prepared, the EIC Accelerator allows a simple description of data handling to be added through a few sentences that can be prepared in under 30 minutes.
2.2.5 10-Pager
A 10-page annex can be uploaded which can be prepared in a single day since it will heavily feature images and photographs rather than additional text. This is due to the restriction of the EIC Accelerator’s main proposal text which is devoid of any images. The 10-pager, therefore, acts as a visual guide to the proposal, a company overview and a reference library.
2.2.6 Financials
The financial template consists of a single spreadsheet that must be filled. Since every company should have ample financial data in-house, it can be prepared rapidly. For applicants inexperienced with the EIC Accelerator, it can still be difficult to adjust to the particular format but an experienced grant writer can prepare the document in a single day.
2.3 Total Time for Step 2
2.3.1 Duration
Each applicant should allocate at least two months for the preparation of the EIC Accelerator Step 2 application.
2.3.2 Evaluation
The evaluation will approximately take 3-6 weeks after the submission of the EIC Accelerator Step 2 application but can also take longer. Since the Step 2 deadlines are set, in contrast to the Step 1 application which is open anytime, there are pre-defined time slots for the Step 2 applications and Step 3 interviews. As a result, the evaluation of Step 2 can take longer or be faster depending on the duration until the next Step 3 interviews.
Step 3: The Jury Interview
The preparation for the jury interview should be extensive and contain at least 5 practice calls while more are advisable (see Interview). It should likewise include a detailed analysis of all proposal materials in case some of the interviewees are unfamiliar with them.
3.1 Duration
The time needed for this preparation will depend on the speed of the EIC’s Step 2 evaluations and the available time until the interview week. At least 2 weeks should be planned for the interview preparation.
3.2 Evaluation
It generally takes 3-6 weeks until the Step 3 results will be published.
Resubmissions and Freezing Periods
The presented timelines in this article are indicative and there are a variety of factors that have not been discussed but can greatly change the time required for an application. There are fast-track programs that allow applicants to skip Step 1 of the application process, freezing periods of 12 months that block further submissions in case of multiple rejections, Step 2 deadlines that might be removed and other variables that must be taken into account.
There is no normal EIC Accelerator timeline for rejected or funded companies since there is a high degree of randomness in the evaluation process. Rejections and resubmissions are very common and can easily prolong the duration by multiple months.
For example, if a freezing period that prohibits further submissions for 12 months is reached then the application timeline will be prolonged by a year.
Conclusion
The EIC Accelerator remains a high-risk program and it is generally advisable to contract an external consultant for the preparation (see Contact) since it is lengthy, unpredictable and often tedious.
Additionally, any company that has a high chance of obtaining the EIC Accelerator funding is often too busy working on their innovation to spend multiple months or years with the EIC’s lengthy application process which renders outsourcing an essential step.
A company starting in Step 1 and obtaining the Step 3 GO grading (i.e. approval of funding) within 6 months is considered fast and this is generally only possible if no rejections occur in any of the three Steps. In contrast, obtaining at least one rejection in Step 2 or Step 3 is common and timelines for most applicants are often significantly longer than 6 months.
Additionally, the issuance of the grant and equity financing will likewise incur certain delays whereas the former is often obtained fast while the latter will be subject to additional due diligence.
This article was last modified on Mar 27, 2023 @ 18:56
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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