The Eurostars Programme: A Deep Dive into the Evolution, Impact, and Future of Europe's SME Innovation Engine

Executive Summary

The Eurostars programme stands as a unique and enduring pillar of the European research and innovation landscape. Launched in 2008 as a joint initiative between the EUREKA intergovernmental network and the European Union, it was conceived to address a critical gap: providing accessible, market-oriented funding for transnational research conducted by innovative Small and Medium-sized Enterprises (SMEs). This report provides an exhaustive analysis of the programme's history, its structural evolution across three distinct funding periods, its performance and impact, and its strategic trajectory.

Eurostars is defined by its innovative hybrid governance model, which combines a centralised, merit-based evaluation process with a decentralised funding mechanism managed by national agencies in its 37 participating countries. This structure has proven highly effective, making the programme accessible and user-friendly for SMEs while maintaining high standards of quality. The programme has demonstrated a consistent success rate of approximately 29%, significantly higher than many other EU instruments, and has delivered tangible economic benefits, with participants showing marked increases in turnover, employment, and market expansion.

The programme's evolution has been characterized by three phases. Eurostars-1 (2008-2013) established the model, targeting a niche of "R&D-performing SMEs." Eurostars-2 (2014-2020) scaled up the programme, significantly increasing its budget and refining its administrative processes to reduce the critical "time-to-grant." The current phase, Eurostars-3 (2021-2027), marks a strategic repositioning. Operating under the "European Partnership on Innovative SMEs," it has broadened its scope to all "innovative SMEs," removing previous R&D intensity requirements. It now functions as a strategic gateway to the wider European innovation ecosystem, offering accompanying measures like Innowwide for market feasibility studies and a "Fast Track" to the prestigious European Innovation Council (EIC) Accelerator.

Despite its successes, Eurostars faces persistent challenges. A structural tension exists between its centralised evaluation and decentralised funding, which can lead to highly-ranked projects going unfunded due to exhausted national budgets—the "funding synchronisation problem." Furthermore, a significant geographical imbalance persists, with a handful of Northern and Western European countries dominating participation and funding, a dynamic the programme is actively trying to address. The disruption of Brexit provided a stark stress test, revealing both the system's resilience and its fundamental dependence on the political and financial commitment of its national members.

Looking forward, Eurostars is navigating a new set of strategic imperatives. It is being positioned as a key feeder for the EIC, creating a coherent pipeline for high-potential SMEs. Its ambition is increasingly global, with growing participation from non-European countries. Concurrently, it faces pressure to align with top-down EU priorities such as strategic autonomy and dual-use technologies, which may challenge its traditional bottom-up, non-thematic identity. This report concludes that while Eurostars has firmly established itself as a highly effective instrument for SME innovation, its future success will depend on its ability to resolve its inherent structural weaknesses and skilfully balance its foundational flexibility with the evolving strategic demands of the European Union.

Section I: Genesis and Founding Principles: The Birth of a Pan-European SME Champion

The Eurostars programme did not emerge from a vacuum. It was the product of a deliberate, multi-year political and strategic effort to bridge the gap between national innovation support systems and the vast, often impenetrable, architecture of European Union Framework Programmes. Its creation represents a pivotal moment in European R&D policy, marking a concerted attempt to design an instrument tailored specifically to the needs of Europe's most dynamic innovators: its research-intensive SMEs.

The EUREKA-EU Symbiosis

The conceptual roots of Eurostars lie in the EUREKA network, an intergovernmental organisation established in 1985 through the "Paris Declaration". Founded by prominent political figures including French President François Mitterrand and German Chancellor Helmut Kohl, EUREKA's mission was to bolster European technological independence and foster market-oriented, industry-led R&D cooperation. For nearly two decades, EUREKA operated as a flexible, bottom-up network, distinct from the more structured, top-down Framework Programmes of the European Commission.

The impetus for a formal partnership arose in the early 2000s. The EUREKA Ministerial Conference in Paris in June 2004 explicitly called for greater coherence between EUREKA and the EU's Framework Programme to make European collaboration more effective. This call was formalized through an appeal to explore mechanisms under Article 169 of the EU Treaty (now Article 185 of the Treaty on the Functioning of the European Union, TFEU). An Article 169 initiative was a powerful tool, allowing the EU to actively participate in research programmes undertaken jointly by several Member States, thereby achieving a voluntary integration of scientific, management, and financial resources.

This political momentum culminated in the presentation of the Eurostars Programme proposal at the EUREKA High Level Group meeting in Maastricht on 29 June 2005. The proposal was met with immediate and widespread support, with 22 EUREKA member states committing to the programme financially and organizationally from the outset. This strong backing signaled a clear political will to overcome the fragmentation of national R&D support and create a harmonised, synchronised instrument dedicated to SMEs.

Core Mission: Targeting the "R&D-Performing SME" Niche

From its inception, Eurostars was defined by a sharp and specific focus. Its primary mission was to support transnational, market-oriented research and innovation projects that were not just for SMEs, but were initiated and driven by a particular subset: the "R&D-performing SME".

This was a deliberate and strict definition designed to target a niche of high-potential, technology-intensive companies. To qualify, an SME had to demonstrate a significant commitment to research, defined as investing at least 10% of its annual turnover in R&D activities or having at least 10% of its full-time equivalent employees (FTEs) engaged in R&D. This criterion ensured that the programme catered to companies that were already deeply embedded in the innovation process and possessed the absorptive capacity to benefit from international R&D collaboration.

The programme's operational philosophy was equally clear:

Market-Driven: Projects were required to be close-to-market, with the ambitious goal of commercialising a new product, process, or service within two years of project completion. For biomedical projects, this translated to starting clinical trials within two years.
Bottom-Up: In stark contrast to many thematically-driven EU calls, Eurostars adopted a fully bottom-up approach. Consortia were free to decide the project's aim, with no restrictions on the technological or market area, as long as it was innovative.
Civilian Purpose: A core tenet was that all projects must serve an exclusively civilian purpose.

This precise targeting created a unique value proposition, addressing the needs of a specific group of companies that often fell between the cracks of national funding (which could be too local) and larger EU programmes (which could be too complex and bureaucratic).

Architectural Blueprint: A Hybrid Model of Centralised Evaluation and Decentralised Funding

The most innovative feature of Eurostars is its governance and implementation structure—a hybrid model that blends centralised quality control with decentralised financial management. This architecture was designed to combine the strengths of the EUREKA network and the EU Framework Programmes.

Centralised Application and Evaluation: To ensure fairness, transparency, and a level playing field, the entire application and evaluation process is managed centrally by the EUREKA Secretariat in Brussels. Applicants submit their proposals through a single online portal, a "single entry point" that simplifies the process for international consortia. The proposals are then assessed by a panel of independent technical and business experts against a common set of criteria: Excellence, Impact, and Quality & Efficiency of Implementation. This process results in a single, binding ranking list of all submitted projects, which is endorsed by the Eurostars High-level Group.
Decentralised Funding: While the evaluation is centralised, the funding is not. The financial support for successful projects is provided by the National Funding Bodies (NFBs) of the countries where the project partners are based. Each country commits a national budget to the programme and applies its own national funding rules, rates, and procedures. This decentralised approach is a key element of the programme's success, as it allows SMEs to interact with their local funding agency in their own language and within their national financial and legal framework, significantly lowering the administrative barrier to participation.
EU Co-funding: The European Union provides a substantial financial contribution from its Framework Programme budget (e.g., €100 million from FP7, €287 million from Horizon 2020). This EU funding is used to top-up the committed national funds, providing critical leverage and demonstrating a strong EU-level commitment to the initiative. The EU contribution to any single project is typically capped at one-third of the total operational costs.

This hybrid structure was a masterful piece of policy engineering. It sought to create an instrument that was both rigorously meritocratic, thanks to the central evaluation, and exceptionally user-friendly, thanks to the decentralised funding. However, this elegant design contains an inherent structural paradox that has defined the programme's operational reality since its launch. The separation of the quality-based ranking from the national budget allocation creates a "synchronisation problem." A project consortium can develop an outstanding proposal, be ranked highly by the international expert panel, and yet still be denied funding because the national budget of a key partner country has been exhausted for that particular call. This potential mismatch between evaluation success and funding reality was identified as a challenge from the programme's earliest days and remains its most significant and persistent structural weakness. Understanding this tension is fundamental to understanding the entire history and evolution of Eurostars.

Section II: The Evolutionary Trajectory: From Eurostars-1 to the European Partnership on Innovative SMEs

The history of the Eurostars programme can be understood as a journey through three distinct, iterative phases. Each phase, aligned with a corresponding EU Framework Programme, built upon the successes and addressed the shortcomings of its predecessor. This evolution reflects a gradual process of scaling, refinement, and strategic repositioning, transforming Eurostars from a niche pilot instrument into a central component of Europe's innovation support ecosystem.

Phase 1: Eurostars-1 (2008-2013): Establishing the Model

The inaugural phase of Eurostars was launched under the EU's 7th Framework Programme for Research (FP7) and was formally established by Decision No 743/2008/EC of the European Parliament and Council. This first iteration served as the proof-of-concept for the programme's unique hybrid model.

Framework and Budget: Eurostars-1 operated with a total public budget of €400 million. This was a joint investment, with €300 million committed by 33 participating EUREKA countries and a €100 million co-funding contribution from the EU's FP7 budget. This financial structure immediately established the principle of shared commitment between national governments and the EU.
Objectives and Eligibility: The core objective of Eurostars-1 was unambiguous: to support transnational, market-oriented research and innovation projects initiated and driven by "R&D-performing SMEs" with the goal of improving their competitive position. The eligibility criteria were strict, enforcing the 10% R&D intensity rule (either in turnover or FTEs) to ensure the programme targeted a specific high-tech niche. The strong market focus was underlined by the requirement for a product to be ready for market launch within two years of the project's conclusion.
Performance and Lessons Learned: The programme quickly proved popular, attracting a high number of applications that often exceeded the available funding. An interim evaluation conducted in 2010, followed by a final evaluation, confirmed that Eurostars-1 was successfully reaching its target audience. However, these evaluations also identified critical areas for improvement. The key recommendations centered on the need to streamline and harmonise the often-disparate national funding rules and, most importantly, to accelerate the contracting process. The median "time-to-grant"—the period from application submission to the signing of the grant contract—was approximately 10 months, a duration considered far too long for the fast-paced world of innovative SMEs.

Phase 2: Eurostars-2 (2014-2020): The Scale-Up and Refinement Phase

Building on the lessons from its initial phase, Eurostars-2 was launched as part of the Horizon 2020 Framework Programme. This phase was characterized by significant growth in scale and a concerted effort to address the administrative hurdles identified in Eurostars-1.

Framework and Budget: Eurostars-2 operated as a public-public partnership under Horizon 2020, with its budget and reach expanding dramatically. The total public budget more than doubled to €1.14 billion, comprising contributions from 36 participating countries and a larger EU contribution of €287 million from the "Innovation in SMEs" part of the Horizon 2020 budget.
Objectives and Eligibility: The fundamental objectives remained consistent with Eurostars-1, maintaining the focus on supporting R&D-performing SMEs. However, a degree of flexibility was introduced, particularly regarding the FTE criterion for qualifying as "research-performing," which benefited smaller firms. A new, explicit objective was added: to bring in SMEs that had no previous experience with transnational research, signalling an ambition to broaden the programme's user base.
Performance and Administrative Improvements: Evaluations of Eurostars-2 consistently show a highly successful and effective programme. It proved to be a powerful engine for new collaborations, with 90% of participating SMEs reporting at least one new cooperation partner. The economic impact was substantial, with funded SMEs demonstrating an 11.5% higher turnover growth and 2.4% higher employment growth compared to control groups. Crucially, the programme made significant strides in administrative efficiency. The time-to-contract was successfully reduced to an average of 6.6 months, a marked improvement that directly addressed the main criticism of Eurostars-1. Overall participant satisfaction with the programme's procedures saw a notable increase.

Phase 3: Eurostars-3 (2021-2027): Integration and Strategic Broadening

The current phase of the programme, Eurostars-3, represents the most significant strategic evolution in its history. It now operates under the EU's Horizon Europe framework (2021-2027) not as a standalone instrument, but as the flagship component of the broader "European Partnership on Innovative SMEs".

Framework and Budget: The Partnership is a co-funded initiative between the EU and 37 Eureka countries, with a committed public budget of nearly €1 billion for the 2021-2027 period. The EU's contribution from the Horizon Europe budget is €250 million.
Strategic Evolution and Eligibility: The most profound change in Eurostars-3 is the redefinition of its target audience. The programme has moved beyond its original niche of "R&D-performing SMEs" to embrace all "innovative SMEs". The new definition is far broader, encompassing any SME with the ambition and capability to collaborate and innovate internationally, regardless of whether it has a proven track record of R&D activities or meets the previous 10% R&D intensity threshold. This policy shift fundamentally lowers the barrier to entry, making the programme accessible to a much wider range of companies, including younger start-ups and firms in less traditionally R&D-intensive sectors.
Expanded Toolkit: The European Partnership on Innovative SMEs provides a more holistic support structure. Alongside Eurostars, it now includes:
- Innowwide: A complementary funding scheme that provides grants for SMEs to conduct market feasibility studies, helping them assess the viability of entering new international markets.
- Investment Readiness Programme: A support measure designed to prepare successful alumni companies for engagement with private investors.
- Fast Track to the EIC Accelerator: In a crucial move to create a coherent funding pipeline, successful Eurostars-3 alumni can now benefit from a fast-track application process to the highly competitive EIC Accelerator, allowing them to skip the demanding first stage of its evaluation.

This evolution from a standalone funding instrument to a multi-faceted strategic gateway is not merely an administrative reshuffle. It reflects a sophisticated policy adjustment. The initial, narrow focus on R&D-performing SMEs in Eurostars-1 and -2 was necessary to prove the viability and quality of the hybrid funding model. The documented success of these phases gave policymakers the confidence to expand the programme's mandate. The broadening of the SME definition and the integration of complementary tools like Innowwide and the EIC Fast Track in Eurostars-3 are direct responses to the strategic need to build a more inclusive and interconnected European innovation ecosystem. Eurostars is no longer just a destination; it is now a critical on-ramp, designed to identify promising SMEs across Europe, help them build their first international R&D collaborations, support their global market exploration, and prepare them to graduate to the high-growth support offered by premier EU instruments like the EIC.

Table 1: Comparative Overview of Eurostars Phases (1, 2, and 3)
Parameter	Eurostars-1 (2008-2013)	Eurostars-2 (2014-2020)	Eurostars-3 (2021-2027)
EU Framework Programme	7th Framework Programme (FP7)	Horizon 2020	Horizon Europe
Total Public Budget	€400 million	€1.14 billion	Approx. €1 billion
EU Contribution	€100 million	€287 million	€250 million
Core SME Definition	"R&D-performing SME" (≥10% R&D intensity)	"R&D-performing SME" (with some flexibility introduced)	"Innovative SME" (ambition to innovate, no prior R&D track record required)
Key Administrative Improvement	Programme established and model proven	Reduced time-to-grant (average 6.6 months)	Integration with Innowwide & EIC Fast Track, forming a strategic pathway
Number of Participating Countries	Approx. 33	36	37

Section III: Performance and Impact Analysis: A Landscape of Winners and Losers

An analysis of the Eurostars programme's performance reveals a story of remarkable success and effectiveness, but one that is not uniform across the European landscape. The programme is highly attractive to its target audience and delivers significant economic returns. However, its benefits have been disproportionately captured by a specific group of countries and industrial sectors, creating a dynamic of clear winners and under-performing regions.

Success by the Numbers: High Attractiveness and Consistent Performance

Eurostars stands out in the crowded field of R&D funding for its high and stable success rate. Across its various phases, the programme has consistently funded approximately 29% of applications received. During the Eurostars-2 period (2014-2020), 1,546 projects were funded out of 5,891 proposals, yielding an average success rate of 27%. This rate is notably higher than many other competitive EU funding schemes, where success rates can often fall into the low single digits, making Eurostars a particularly attractive and viable option for SMEs.

The programme's impact extends well beyond the grant award. Evaluations consistently demonstrate tangible economic benefits for participating companies.

Growth: An econometric impact analysis of Eurostars-2 revealed that funded SMEs exhibited an 11.5% higher turnover growth rate and a 2.4% higher employment growth rate compared to a control group of rejected applicants. A separate joint study on Danish and Swiss participants found that funded Danish firms saw their turnover grow by an average of 67% and their exports by 76% in the three years following the project start.
Leverage: A German evaluation calculated a significant leverage effect, where every euro of public funding generated an additional €3.37 in turnover for the recipient company.
Market Expansion: The programme is highly effective in fostering internationalisation. Data shows that 69% of participating companies enter new markets, and 68% achieve improved market shares as a direct result of their Eurostars project.

Geographical Dynamics: A Tale of Dominance and Imbalance

While the overall performance is strong, a closer look at national participation reveals a significant geographical imbalance. A clear "winners' circle" of countries has consistently dominated the programme since its inception.

The Winners' Circle: During Eurostars-2, the top three countries by number of participants were Germany (779), the Netherlands (603), and Switzerland (492). These nations, along with other strong performers like Denmark, Sweden, Belgium, and Israel, not only participate the most but also achieve the highest success rates. This success is directly correlated with their commitment of the largest national budgets to the programme. For example, in Eurostars-2, Germany allocated €112 million and the Netherlands €102 million, dwarfing the contributions of many other members.
The Under-performers: Conversely, the programme has struggled to achieve deep penetration in many Southern and Eastern European member states. This "geographical imbalance," noted in official evaluations, is a persistent challenge. The reasons are multifaceted, stemming from smaller national R&D budgets, less developed national innovation support ecosystems, and consequently, a smaller pool of SMEs with the experience and capacity to mount competitive international R&D proposals.

This dynamic creates a powerful, self-reinforcing cycle. Countries with robust national innovation systems and generous R&D funding (like Germany's ZIM programme) produce a steady stream of highly competitive, "funding-ready" SMEs. These SMEs are more likely to win Eurostars grants, which in turn reinforces the value of the programme to their national governments, encouraging them to maintain or increase their budget commitments. This creates a virtuous cycle for the top-performing nations. For countries with less developed ecosystems, the opposite can occur, with lower participation and success rates making it harder to justify larger national budget allocations, thus perpetuating the imbalance. A key strategic challenge for Eurostars-3 and its successors is to break this cycle, and the broadening of the "innovative SME" definition is a direct policy measure aimed at lowering the entry barrier for SMEs from these underrepresented regions.

Table 2: Eurostars-2 (2014-2020) Performance Snapshot by Top Participating Countries
Country	Number of Participants	National Budget Allocation (€M)	Relative Success Rate
Germany	779	112	High
Netherlands	603	102	High
Switzerland	492	N/A	High
Denmark	434	N/A	N/A
Sweden	348	71	N/A
France	N/A	74	N/A
Spain	N/A	53	N/A
Belgium	N/A	N/A	High
Israel	N/A	N/A	High
Norway	N/A	59	N/A

Sectoral Gravitation: Officially Bottom-Up, De Facto Thematic Focus

A core principle of Eurostars is its "bottom-up" nature, meaning it is open to projects from all technological fields and does not have predefined thematic priorities. While this is true in principle, evaluation data reveals a clear de facto concentration in a few key high-tech sectors.

The ex-post evaluation of the Eurostars-2 programme showed a dominant focus on projects in Biological Sciences and Technologies, which accounted for 35% of the portfolio. This was followed by Electronics, IT and Telecoms Technologies at 22%. Other frequently cited sectors in which funded projects operate include Life Sciences & Health, Green & Sustainable Innovations, and Industrial & Digital Technologies. This indicates that while the programme is theoretically open to all, its structure, focus on R&D, and market-oriented goals make it most attractive and suitable for companies operating in these R&D-intensive domains.

Beneficiary Profile: The Ideal Consortium

The programme's rules mandate that the project leader must be an innovative SME. Consequently, SMEs are the primary beneficiaries, making up 66% of all participants in Eurostars-2. However, the most successful consortia typically feature a diverse mix of partners, leveraging the strengths of different types of organisations. A typical project includes not only the lead SME but also partners from universities (15% of Eurostars-2 participants), public or private research institutes (9%), and occasionally large companies (6%).

The average funded project involves a small, agile consortium of 3-4 partners from 2-3 different countries, with an average total project cost of around €1.4 million. This structure is large enough to bring together complementary expertise but small enough to remain manageable for an SME project leader.

Section IV: Navigating Disruption: The Brexit Effect and Enduring Systemic Challenges

Over its history, the Eurostars programme has demonstrated considerable resilience, but it has not been immune to external shocks and internal structural challenges. The withdrawal of the United Kingdom from the European Union created a period of significant disruption and uncertainty, providing a real-world stress test of the programme's architecture. Simultaneously, the programme continues to grapple with the long-standing, inherent challenge of its hybrid funding model.

The Brexit Rupture: From Full Member to Third Country

The UK's departure from the EU posed a significant threat to its participation in European research programmes, including Eurostars. It is crucial to distinguish the Eurostars funding programme from the unrelated Eurostar high-speed rail service, as the impacts of Brexit on the two are entirely separate. For the funding programme, the process was fraught with delay and complexity.

Pre-Brexit Status: Prior to Brexit, the UK was one of the most active and successful participants in the Eurostars programme, with a large number of applicants and a strong national support system through its innovation agency, Innovate UK.
The Period of Uncertainty: The UK-EU Trade and Cooperation Agreement (TCA), finalised in December 2020, laid the groundwork for the UK to continue participating in EU programmes as an "associated country". However, the formalisation of this association was delayed for over two years due to political disputes surrounding the Northern Ireland Protocol. This long delay plunged UK-based applicants into a state of uncertainty. During this period, UK entities were often still eligible to apply and participate in Eurostars consortia, but their funding status was precarious. For several calls, the UK was treated as not yet associated, meaning UK partners had to self-finance their project costs, a significant barrier for most SMEs. To mitigate this, the UK Government, through Innovate UK, established a "funding guarantee" to underwrite the costs for successful UK applicants who were unable to sign grant agreements with the EU.
Resolution and the New Normal: The political impasse was resolved with the agreement of the Windsor Framework in February 2023. This paved the way for the UK to formally associate with Horizon Europe, with participation effective from 1 January 2024. UK-based organisations can now once again participate in Eurostars on largely the same basis as their EU counterparts. However, the process is now governed by specific national rules managed by Innovate UK. UK applicants must meet both the central Eurostars eligibility criteria and a separate set of UK-specific requirements. For instance, Innovate UK funding is typically restricted to SMEs, excluding direct funding for academic institutions or large companies in the consortium, and requires applicants to have been a registered trading entity for at least 12 months. UK applicants must now navigate a dual application process: the main collaborative proposal to the central Eureka portal, and a national application to Innovate UK.

The Brexit saga served as a powerful illustration of the Eurostars programme's core nature. On one hand, it showed resilience; the central EUREKA mechanism continued to operate, and a national workaround (the UK guarantee) was implemented. On the other hand, it starkly revealed the programme's fundamental dependence on the political and financial stability of its individual member countries. Eurostars is not a monolithic EU entity but a federation of national programmes. The disruption in a single, major member state had direct, negative consequences for the ability of its SMEs to collaborate internationally, serving as a cautionary tale for the entire network about the systemic risks posed by national-level political instability.

The Enduring Funding Synchronisation Problem

Separate from the disruption of Brexit, the programme continues to face its most persistent internal challenge: the funding synchronisation problem. This issue is a direct consequence of its hybrid architecture, which separates the centralised, merit-based evaluation from the decentralised, national funding allocation.

Even if a project is deemed excellent and receives a high ranking from the international evaluation panel, funding is not automatic. The final funding decision rests with the National Funding Bodies (NFBs) in each partner's country, and is contingent on the availability of their respective national budgets for that specific call. This can result in a frustrating outcome where a high-quality international project is ultimately rejected because one partner's NFB has already exhausted its allocated funds. This "first-come, first-served" aspect of national funding can feel arbitrary to applicants who have succeeded in a highly competitive, merit-based evaluation.

This structural weakness has been a known issue since the programme's inception, with stakeholders highlighting the need for better synchronisation of funding in consultations as early as the design phase of Horizon 2020. While administrative improvements in Eurostars-2, such as faster evaluation timelines, have helped, the fundamental problem remains inherent to the decentralised funding model. It represents the primary source of risk and uncertainty for applicants after they have passed the quality threshold.

Section V: The Future Horizon: Strategic Direction, Synergies, and Emerging Imperatives

As the Eurostars programme operates within its third iteration, its strategic role is evolving significantly. It is being repositioned from a standalone funding instrument into a crucial component of a broader European innovation pipeline, with expanding global reach and new pressures to align with the EU's shifting geopolitical and industrial priorities.

The EIC-Eurostars Pathway: A Strategic Innovation Pipeline

A key strategic development is the deliberate cultivation of a pathway between Eurostars and the European Innovation Council (EIC) Accelerator, the EU's flagship programme for supporting high-growth, deep-tech companies. The two programmes are designed to be complementary, serving different stages and types of SME innovation.

Eurostars is tailored for collaborative, market-driven R&D projects. It is ideal for companies looking to develop and validate technology, typically advancing from a Technology Readiness Level (TRL) of 4 to around 6 or 7. It is characterized by a lower risk profile, a significantly higher success rate (around 29%), and provides grant-only funding managed at the national level. Its collaborative nature helps SMEs build international partnerships and de-risk their technology.
The EIC Accelerator, in contrast, targets single, high-risk, high-potential SMEs with "breakthrough" or "market-creating" innovations. It is designed to help companies scale up and is extremely competitive, with success rates often in the single digits. Its unique funding model is "blended finance," combining a large grant component (up to €2.5 million) with a substantial equity investment component from the EIC Fund (from €0.5 million to over €15 million).

The synergy is clear: Eurostars provides an ideal "on-ramp" for the EIC. It allows promising SMEs to mature their technology, gain experience in international project management, and build a track record of success within the European funding system. This process effectively de-risks them, making them stronger candidates for the more demanding and competitive EIC Accelerator. This pathway has been formalized through the introduction of the "Fast Track to the EIC Accelerator" for Eurostars-3 alumni, which allows them to bypass the first short proposal stage of the EIC application process, providing a tangible advantage.

Table 3: Eurostars vs. EIC Accelerator: A Comparative Framework for SME Funding Strategy
Criterion	Eurostars	EIC Accelerator
Target Applicant	Innovative SMEs, including start-ups and those without a formal R&D history	Single high-growth SMEs and start-ups with breakthrough innovations
Innovation Type	Market-driven, close-to-market R&D (typically TRL 4-7); can be incremental or disruptive	High-risk, high-gain, "deep tech," market-creating innovation (TRL 5/6 to 9)
Consortium Rules	Mandatory international collaboration (≥2 partners from ≥2 countries)	Primarily for single companies; partners/subcontractors are allowed but not required
Funding Model	National grants only (typically up to €500k per partner)	Blended finance: Grant (up to €2.5M) + Equity Investment (€0.5M - €15M+)
Application Process	Single-stage central application	Multi-stage, highly competitive (Short Proposal -> Full Proposal -> Interview)
Average Success Rate	Approx. 29%	Approx. 6% (at full proposal stage)
Strategic Role	Fostering collaborative R&D, internationalisation, de-risking technology; "on-ramp" to EU funding	Scaling up breakthrough innovations, creating European "unicorns," addressing strategic EU challenges

Global Ambitions: From a European to a Global Network

The programme's geographic horizons are expanding. Initially a pan-European initiative, Eurostars has progressively integrated non-European countries into its network. Nations such as Canada, South Africa, South Korea, and Singapore are now active participants, allowing their SMEs to form consortia with European partners. This internationalisation is a core part of the strategic vision for the European Partnership on Innovative SMEs, which explicitly aims for the programme to evolve towards a "global programme" under Horizon Europe. This reflects the global nature of modern innovation and value chains, recognizing that for European SMEs to be truly competitive, they must be able to collaborate with the best partners worldwide.

Adapting to New EU Priorities: Competitiveness, Autonomy, and Dual-Use

The broader European policy context is undergoing a significant shift. Faced with intense competition from the US and China, and heightened geopolitical instability, the EU is placing a much stronger emphasis on strategic autonomy, industrial competitiveness, and security. This has direct implications for R&D funding.

One of the most significant emerging trends is the focus on "dual-use" research and innovation—technologies that have both civilian and defence applications. The European Commission has recently published expert reports and a White Paper exploring ways to better support R&D in this area, seeing it as critical for strengthening Europe's security and industrial base.

This presents a potential challenge and opportunity for Eurostars. A foundational rule of the programme has always been that projects must have an "exclusively civilian purpose". However, as a key instrument for funding SME innovation, there will likely be increasing pressure for Eurostars to align with this new strategic priority. This creates a potential culture clash for the programme. Its historic success is built on its flexible, bottom-up, non-thematic approach, which is highly valued by its SME participants. The new strategic imperatives from the EU are, by their nature, top-down and thematic.

The future of Eurostars will be shaped by how it navigates this tension. It may be compelled to introduce more thematically-focused calls (e.g., a specific call for dual-use technologies) or to relax the strict "civilian-only" rule to accommodate projects with security applications. The challenge for the programme's managers will be to integrate these top-down strategic goals without sacrificing the bottom-up flexibility that forms the core of its identity and the basis of its enduring appeal to Europe's innovators. The potential consolidation of future R&D funding under a broad "European Competitiveness Fund" could further accelerate this integration into a more explicit industrial policy framework.

Section VI: Concluding Analysis and Strategic Recommendations

The Eurostars programme has successfully evolved from a pioneering experiment into a mature, effective, and highly regarded instrument at the heart of Europe's SME innovation policy. Its journey demonstrates a remarkable capacity for adaptation and refinement, cementing its role as the largest international funding programme specifically for innovative SMEs. However, to secure its future impact and address its inherent limitations, a series of strategic actions are required from its key stakeholders.

Synthesis of Strengths and Weaknesses

The programme's success is built on a foundation of core strengths that have remained consistent throughout its evolution:

Enduring Strengths: Eurostars' unwavering focus on the needs of SMEs, its flexible and non-thematic bottom-up approach, its high relative success rate, and its proven economic impact on participants are its defining assets. Its hybrid structure, while challenging, provides a user-friendly entry point for SMEs to engage in international R&D, often for the first time. Its recent evolution into a strategic gateway, with pathways to Innowwide and the EIC, has further enhanced its value within the European innovation ecosystem.
Persistent Weaknesses: The programme is constrained by two primary weaknesses. The first is the structural "funding synchronisation problem," where the separation of evaluation and funding can lead to excellent projects being rejected due to national budget limitations. The second is the significant geographical and sectoral imbalance, with participation and success heavily concentrated in a few countries and high-tech fields. A future challenge is the emerging tension between its successful bottom-up ethos and the EU's increasingly top-down strategic priorities.

Actionable Recommendations

To build on its strengths and mitigate its weaknesses, the following recommendations are proposed for the programme's key stakeholders:

For EU and EUREKA Policymakers:
- Address the Funding Synchronisation Problem: Explore the feasibility of creating a small, central "rescue fund." This fund could be used to provide financing for the partners of highly-ranked projects that are at risk of rejection solely due to the exhaustion of a single national budget. This would preserve the integrity of the merit-based evaluation and prevent the loss of high-potential innovations.
- Intensify Capacity-Building Efforts: Move beyond simple promotion in underrepresented countries. Develop and fund targeted capacity-building programmes that help national agencies in these regions to foster more "funding-ready" SMEs. This could include support for national proposal-writing workshops, partner-search assistance, and sharing of best practices from top-performing national agencies.
- Strategically Manage the Bottom-Up vs. Top-Down Tension: To align with EU priorities like dual-use without alienating the core user base, consider introducing a limited number of optional, thematic calls alongside the main bottom-up call. This would allow the programme to contribute to strategic goals while preserving the flexibility that is its hallmark.
For National Funding Bodies (NFBs):
- For Top-Performing Countries (e.g., Germany, Netherlands): Recognise Eurostars as a key driver of national competitiveness. Commit to larger, more predictable multi-year budgets for the programme to maximize the number of successful national SMEs and reduce the risk of turning away high-quality projects.
- For Under-Performing Countries: Leverage Eurostars as a tool for national ecosystem development. Provide enhanced national-level support, including dedicated staff to guide applicants, run partner-searching events, and offer pre-submission proposal reviews. The broadening of the "innovative SME" definition in Eurostars-3 provides a key opportunity to bring a new cohort of national companies into the programme.
For Prospective SME Applicants:
- Adopt a Business-Oriented Approach: Treat the Eurostars application as a comprehensive business plan and investment pitch, not purely as a technical research proposal. Clearly articulate the market need, the competitive advantage, and the commercialisation strategy.
- Engage Early and Often: Contact the National Project Coordinator (NPC) in your country at the earliest stage of your project idea. They can provide invaluable guidance on national eligibility rules, funding rates, and the viability of your proposal.
- Build a Strategic Consortium: Do not simply find partners to meet the eligibility criteria. Build a consortium that is genuinely complementary, where each partner brings essential, unique expertise. Ensure partners are from geographically balanced regions, as this can be viewed favorably.
- Understand the Funding Landscape: Recognise where Eurostars fits. Use it as a strategic tool to validate your technology and build international partnerships, potentially as a crucial stepping stone towards larger-scale funding instruments like the EIC Accelerator.