The European Innovation Council (EIC) has matured into a full innovation ecosystem for startups and Small- and Medium-Sized Enterprises (SME), often supported by professional writers, freelancers or consultants.
Today, the EIC has three flagship, non-dilutive funding programs for companies at all stages of development. These are the EIC Pathfinder, EIC Transition and EIC Accelerator which are designed to bring technologies from Technology Readiness Level (TRL) 1 to 9 (see TRL 2023).
The programs are supposed to create a gap-free pathway for companies to access financing independent of their current stage of development or their industry. This comprehensive framework developed by the EIC is designed to commercialize breakthrough science and innovation and to develop excellent businesses that are otherwise struggling to raise private financing in Europe.
For early-stage ideas, concepts or scientific breakthroughs, the EIC Pathfinder program funds innovation activities from TRL1 to TRL4. Often, such projects are University or research institute spin-offs or projects from scientific departments of companies.
Since the technology is in the early stages, the main criteria for the evaluation focus on scientific and technological excellence rather than commercial traction which renders a strong research component essential. The EIC lists the following core criteria for access to EIC Pathfinder grants of up to €3 million:
- Convincing long-term vision of a radically new technology that has the potential to have a transformative positive effect to our economy and society.
- Concrete, novel and ambitious science-towards-technology breakthrough, providing advancement towards the envisioned technology.
- High-risk/high-gain research approach and methodology, with concrete and plausible objectives.
In 2023, the EIC Pathfinder’s budget amounts to €179.50 million for the Open and €163.50 million for the Challenge Call, each with a single available cut-off (see 2023 EIC Budget). This accounts for 21% of the total funding distributed between the EIC Pathfinder, EIC Transition and EIC Accelerator programs.
For companies that have already performed extensive validations but are yet to reach an active or testable prototype, the EIC Transition program can bridge the gap of developing a Minimal Viable Product (MVP). It is restricted to projects that build on past funding programs such as the EIC Pathfinder or the European Defence Fund.
EIC Transition is designed to bring companies from TRL4 to TRL5-6 which allows early-stage companies to build and validate product prototypes and become eligible for scale-up financing. The EIC presents the following questions to assess the eligibility of applicants:
- Is this novel technology ready for the next steps toward its maturation and validation in some specific, high-potential applications?
- Have you performed early exploration of potential markets for your innovation as well as potential competitors?
- Do you envisage building a motivated and entrepreneurial team to develop and drive the idea toward commercialization?
In 2023, the EIC Transition’s budget is €67.86 million for the Open and €60.5 million for the Challenge Call with 2 cut-offs each and grants of up to €2.5 million per project. This accounts for only 8% of the total funding distributed between the EIC Pathfinder, EIC Transition and EIC Accelerator programs.
The EIC Accelerator is the largest funding program among the three financing options and is providing the highest financial contributions to companies starting at TRL5-6. It has multiple funding options while also combining non-dilutive and dilutive funding mechanisms with grants of up to €2.5 million and equity injections of up to €15 million.
Its non-dilutive grants options are “grant-only” and “grant-first” which can be selected based on the applicant’s financing needs as well as certain geographic restrictions (i.e. the UK is only eligible for grant-only applications).
Grant-first applications are designed for companies that aim to reach TRL8 but have not secured or fully planned the scale-up financing and pathway to reaching TRL9. This format is especially useful for companies that are in the early stage, lack secure commercial traction or still require extensive technology validation or clinical trials.
A frequent occurrence in past EIC Accelerator cut-offs has also been a conversion of “blended financing” applications (see below) into “grant-first” applications since the EIC Accelerators Step 3 jury deemed the project to be too risky for immediate equity injections (see Step 3 Interviews).
Grant-first applications that have been financed successfully will have the option to apply for equity financing at a later stage through a special financing pathway (see Grant-First Work Programme). It therefore can be seen as similar to the “blended finance” model but with a postponed equity injection.
Grant-only applications are pure grant’s that are available to companies that do not need equity injections from the EIC Fund or are not eligible to receive them. While the EIC’s grant funding supports activities up to TRL8, such companies have to demonstrate that they have available follow-up financing to reach TRL9 without the EIC Fund’s support.
Dilutive Equity Injections
The EIC Accelerator’s dilutive funding options are “equity-only” and “blended financing” whereas the former is equivalent to a standard Venture Capital-type investment in exchange for company equity while the latter is a combination of equity and a non-dilutive grant.
Blended financing has become the most popular funding modality of the EIC Accelerator since it conveniently allows companies to de-risk their technological developments via grant funding and then create an additional safety net for outside investors by onboarding the EIC Fund as a co-investor.
The blended financing option foresees that the EIC Fund is acting as a participant in a financing round, thereby encouraging external investors to proceed with investments and supporting the applicants in raising a larger financing round.
In 2023, the EIC Accelerator’s budget is €611.75 million for the Open and €523.49 million for the Challenge Call with 4 and 3 cut-offs, respectively (see Updated Deadlines). This accounts for 71% of the total funding distributed between the EIC Pathfinder, EIC Transition and EIC Accelerator programs.
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:
January 11th 2023(only EIC Accelerator Open)
- March 22nd 2023
- June 7th 2023
- October 4th 2023
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:
- EIC Accelerator Interviews: Pitch Deck vs. Proposal Documents (SME Instrument)
- Choosing a Good Project for the EIC Accelerator (SME Instrument Phase 2)
- The EIC Accelerator Budget: Grant vs. Blended Finance (SME Instrument Phase 2)
- EIC Accelerator – Introduction and Blended Finance (SME Instrument Phase 2)
- EIC-Accelerator Writing: Providing the Missing Link (SME Instrument Phase 2)
- The Biggest Mistakes When Applying to the EIC Accelerator (SME Instrument Phase 2)
- Identifying a Broad Vision for an EIC Accelerator Project (SME Instrument Phase 2)