The EIC Accelerator: To Disrupt or Not to Disrupt

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-first EIC 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, 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.”

– Jeff Bezos (1999)

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)
    • 1st cut-off: -
    • 2nd cut-off: -
    • 3rd cut-off: -
    • 4th cut-off: October 19th 2023 (extended)
  • Step 3 (interview)
    • 1st cut-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).

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

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by Stephan Segler, PhD
Professional Grant Consultant at Segler Consulting

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

A Quick FTO Guide for EIC Accelerator Applicants in a Rush

2023 Budget Allocations for EIC Pathfinder, Transition and Accelerator

Developing the Unique Selling Points (USP) for the EIC Accelerator

Explaining the Resubmission Process for the EIC Accelerator

A Short but Comprehensive Explanation of the EIC Accelerator

EIC Accelerator Success Cases

Deciding Between EIC Pathfinder, Transition and Accelerator

A Winning Candidate for the EIC Accelerator

EIC Accelerator Interview Preparation Process: Scripting the Pitch (Part 1)