The EIC Accelerator (formerly SME Instrument Phase 2) is a highly competitive grant (as well as equity) financing program by the European Commission (EC) and the European Innovation Council (EIC). Many startups and Small- and Medium-Sized Enterprises (SME), in their journey of seeking financing sources, discover this opportunity since it allows single, for-profit companies to directly apply through an online submission process (i.e. the Funding & Tenders Portal).
While the EIC Accelerator is a highly lucrative opportunity for any innovation startup (see a country list here), it should be stressed that its two-step evaluation process (i.e. the written application and the in-person interview) makes it one of the most competitive initiatives available today.
Even though the proposal template allows for a remarkable degree of creativity as to how critical sections like the current stage and the planned developments are justified, it should be noted that the jury pitch will be significantly more strict.
As such, it is beneficial to assure that the current stage of the innovation project, and especially its financing status, is aligned with the EIC Accelerator’s vision. Every applicant, consultant and professional writer should confirm that a company fits the following criteria since the current rules under Horizon 2020 will likely become more strict under the Horizon Europe (2021-2027) funding programme.
1. Beyond the Idea Stage (Seed Financing Received)
The starting point for the EIC Accelerator application is Technology Readiness Level 5 or 6 (TRL – see How the EIC Accelerator Funds Technology Readiness Levels) which means that the respective innovation should have already seen some major developments and testing.
These past developments usually go hand-in-hand with existing seed funding, past grants, angel investments or similar support which have helped in bringing the concept (i.e. idea stage) to an operational prototype.
The EIC Accelerator is not interested in financing ideas or concepts that have no real-life applications which means that every applicant should already be reasonably close-to-market (i.e. 1 to 2 years away from the market introduction) and exhibit some degree of commercial traction. If a company manages to enter the interview stage of the EIC Accelerator but does not have a functioning prototype or proof-of-concept yet while also not being able to justify a proven market need, the pitch will likely be unsuccessful.
2. Non-Bankability (No Significant Funding Available)
Non-bankability, as asked for in the official proposal template, is a very difficult criterion to address since it does not mean non-investability of the company but that a certain technology cannot be funded through conventional means (i.e. banks, venture capitalists, profits, etc.).
Going further, being non-bankable also does not mean that a certain company has never had any investments at all and is unable to raise any type of funding. This is reflected by the EC’s rule to only provide 70% of the project costs (i.e. for the grant) which makes external financing or profits a must (read more here: The EIC Accelerator: Grant vs. Blended Financing (Equity)).
This, of course, seems contradictory to some degree since any great startup with past investments could theoretically find a way to finance a project if the business plan is promising enough (i.e. convincing investors, customers, etc.).
What the EU is looking for is a financially capable company (i.e. having raised seed investments) but is still in financial need for the proposed project. Following this definition, non-bankability can be explained by justifying how a project is currently too high-risk for VC’s (or comparable financing sources) since it lacks technological maturity. Potential investors prefer further de-risking until they would be willing to invest.
Every applicant or writer should find ways to solidify such a statement on a case-by-case basis since non-bankability will be a significant factor in the evaluation process up to the interview (i.e. “Why do you need EU support?”).
3. No Major Financing Rounds Raised
Non-bankability specifically addresses the project which the applicant seeks funding for. This becomes increasingly difficult to justify if an SME generates €1m+ in profits per year or has recently raised €10m+ in a VC financing round. Any company that is able to raise funds comparable to, or in excess of, the EIC Accelerator grant (or blended financing with equity) will face significant scrutiny from the evaluators.
The simple rule should be to not perform major financing rounds while also applying to EU financing unless a rejection does not impede the overall company strategy.
This can, of course, be difficult since there are only 4 EIC deadlines (i.e. cut-offs) per year and multiple resubmissions can easily span over the course of 15 months. If major financing rounds are planned prior to beginning the submission process then it should be decided in advance if the EIC Accelerator grant is a must-have or nice-to-have so that a potential rejection will not impact the companies financial health.
In summary, these three points should be considered when assessing a companies financing status:
- Past financing achieved (i.e. seed rounds)
- Non-bankable (i.e. unable to leverage funds from other sources)
- No major financing rounds (i.e. pre-VC)
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) are January 11th 2023 (only EIC Accelerator Open), March 22nd 2023, June 7th 2023 and October 4th 2023 under Horizon Europe. The Step 1 applications must be submitted weeks in advance of Step 2. The next EIC Accelerator cut-off for Step 2 (full proposal) can be found here. After Brexit, UK companies can still apply to the EIC Accelerator under Horizon Europe albeit with non-dilutive grant applications only - thereby excluding equity-financing.
Contact: You can reach out to us via this contact form to work with a professional consultant.
EU, UK & US Startups: Alternative financing options for EU, UK and US innovation startups are the EIC Pathfinder (combining Future and Emerging Technologies - FET Open & FET Proactive) with €4M per project, Thematic Priorities, European Innovation Partnerships (EIP), Innovate UK with £3M (for UK-companies only) as well as the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants with $1M (for US-companies only).
Any more questions? View the Frequently Asked Questions (FAQ) section.
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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)