The Risk of Presenting all Risks in the High-Risk EIC Accelerator Program Posted on April 17, 2023March 30, 2023 By Stephan Segler, Ph.D. High-Risk Businesses The EIC Accelerator grant financing (with blended equity option) by the European Commission (EC) awards up to €2.5 million in grant and €15 million in equity financing per project (€17.5 million total). It is targeting high-risk projects as defined in the EIC Work Programme and strongly advertised by the European Innovation Council (EIC) in its communications and marketing: “…And the ‘EIC Accelerator’ for individual companies to develop and scale up breakthrough innovations with high risk and high impact.” This preference is likewise reflected in the EIC Accelerator’s Step 2 proposal template where a large section is dedicated to risks, probability assessments, impacts and mitigation strategies. The remote evaluators will analyze and assess this section carefully and provide grades according to the following criteria (see Work Programme): “Have the main risks (e.g. technological, market, financial, regulatory) been identified, together with measures to take to mitigate them?” “Does the nature and level of risk of the investment in your innovation mean that European market actors are unwilling to commit the full amount alone?” It is therefore essential to present key risks in the proposal template and, if risks are presented in an insufficient manner for financial, commercial and technical areas, the project will likely receive a poor score for this aspect. Risking Rejection One of the downsides of using thousands of remote evaluators in Step 2 of the EIC Accelerator application process in combination with a unanimous approval process to pass this step is that a single critical evaluation will lead to rejection. Since each evaluator has their own unique background with an uncertain degree of knowledge on the project’s subject matter, the risk section can attract unwanted scrutiny. This is aggravated by the freezing periods introduced by the EIC which limits project applicants to only two rejections in Step 2 and greatly increases the stakes of a single critical evaluation (see Resubmissions). Additionally, the EIC Accelerator Step 3 jury is very risk-averse and aims to make traditional investment decisions (i.e. low-risk, high-reward) for the companies available to them through the Step 1 and Step 2 evaluation process (see Breaking the Rules). When it comes to the EIC Accelerator, it is therefore prudent to be just risky enough to pass Step 1 and Step 2 but not too risky to pass Step 3, especially in terms of commercial and financial risks. Presenting Risk While all sections in the EIC Accelerator Step 1 or Step 2 application generally benefit from more content and more text, the risk section is unique since it is detrimental to either introduce too much or too little content. If a company neglects to introduce financial, commercial or technical risks, the project’s evaluation can conclude that it is out of scope for the high-risk EIC Accelerator program in Steps 1 and 2. It is likewise possible for evaluators to criticize that obvious risks have been neglected in the application. If a company introduces too many risks, even with thoughtful mitigation strategies, the evaluators can criticize the level of risk management and the capability of mitigating these risks – justified or not. It is therefore advisable for startups and Small- and Medium-Sized Enterprises (SME) as well as professional writers, freelancers or consultants to add essential risks for each project aspect (i.e. commercial, financial, technical) but to be conservative. It is beneficial to not maximize the presentation of possible risks in the same way development, market or technology sections are maximized since it provides an unnecessary attack surface for criticism in the evaluation. In some cases, it can even be advisable to remove risks presented in the EIC Accelerator’s Step 1 when preparing the Step 2 documents if they have led evaluators to be overly critical without providing any substantial feedback or reason for their criticism (i.e. “that is too risky”). Such changes often go unnoticed. Conclusion This is a major flaw in the application process since it forces applicants to be less transparent and under-present their risks even though the EIC Accelerator should welcome high-risk projects with suitable mitigation strategies. Interestingly, the EIC and EC representatives can even ask beneficiaries that have successfully passed all evaluation steps to introduce additional risks to project documents to be better aligned with the EIC Accelerator program even though the funding decision has already been made. Such sleight of hand illustrates that there could be a mismatch between the EIC’s funding rules and the application’s incentives. This article was last modified on Mar 30, 2023 @ 20:40 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 Open now: Apply as soon as possible to be eligible for the next Step 2 submission deadline Step 2 (closing 17:00 Brussels Time) 1st cut-off 2025: - 2nd cut-off 2025: March 12th 2025 3rd cut-off 2025: - 4th cut-off 2025: October 1st 2025 Step 3 4th cut-off 2024: January 13th to 17th 2025 1st cut-off 2025: TBD 2nd cut-off 2025: TBD 3rd cut-off 2025: TBD 4th cut-off 2025: TBD 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. Want to see all articles? They can be found here. For Updates: Join this Newsletter! by Stephan Segler, PhDProfessional 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) EIC Accelerator Horizon Europe SME Instrument / EIC Accelerator EIC Accelerator equityEIC Accelerator financingEIC Accelerator grantEIC Accelerator rejectionEIC Accelerator templateIndustries & CompaniesInvestorsWriting Tips
Horizon 2020 Directly Applying for Phase 2 Posted on March 19, 2019March 18, 2020 I am talking to a lot of startups regarding EU funding and I frequently get asked if it is possible to apply to Phase 2 of the SME Instrument directly. The answer is: Yes. Technically you can but in reality, most startups do not have enough data (market, business… Read More
EIC Accelerator Tips to Quickly Improve Grant Writing (EIC Accelerator, SME Instrument) Posted on January 4, 2021December 30, 2020 Writing an EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity financing) application can be difficult for startups and Small- and Medium-Sized Enterprises (SME) (read: Writing Internally). This can be due to a variety of factors such as a lack of grant writing experience, an absent business… Read More
EIC Accelerator EIC Accelerator: New Proposal Template from March 20th (2020) Posted on March 26, 2020October 14, 2020 The new proposal template for the EIC Accelerators Green Deal deadline on May 19th has recently been released and this article summarises the major changes. New Form Fields: The first change is found in the application forms under “Call Specific Questions” where it is now required to provide the gender of… Read More