The EIC Accelerator grant financing (with blended equity option) by the European Innovation Council (EIC) and European Commission (EC) funds Small- and Medium-Sized Enterprises (SME) and startups with up to €2.5 million in grants and €15 million in equity financing per project (€17.5 million total).
The EIC Accelerator sets out clear guidelines for applicants whereas it advertises to fund:
“…startups and spinout companies to develop and scaleup game-changing innovations…”
While additional information is found inside the EIC Work Programme, the general criteria are quite vague and the first hurdle for any company interested in the EIC Accelerator is to find out if the program is suitable at all (see EIC Accelerator Explained).
This article touches on common reasons why companies should not pursue the EIC Accelerator program and might be better off looking for alternatives such as EIC Pathfinder or EIC Transition as well as non-EIC grants (see One-Stop Shop).
Note: A company that is not suitable for the EIC Accelerator can be highly attractive to other investors as well as have an excellent technology and business model. The EIC Accelerator would have likely avoided funding companies such as TikTok, AirBnB, Amazon or the European Deliveroo in the TRL5-6 stage.
1.1 A Simple Technology
The EIC Accelerator has funded apps and pure software businesses before but this does not mean that it is easy to obtain funding with such technologies.
In a recent report on the program, common industries funded under the EIC Accelerator were in the areas of energy, agriculture, health and similar technologies which illustrates the highly technical and scientific nature of the desired products and services (see EIC Report).
The EIC Accelerator (formerly SME Instrument) has clearly become more business-focused and is now more easily swayed by good financials compared to other R&D grants but it still retains its general focus on disruptive innovations.
Every project that seeks EIC Accelerator financing should perform a realistic assessment of how sophisticated its technology is prior to applying for grant funding.
1.2 Intellectual Property (IP) and Innovation
There are a variety of industries that are very saturated or where differentiation is minuscule such as logistics-support solutions, communication tools, social networks, payment infrastructures and many others. This will render the description of the innovation and the elaboration of competitive differentiators difficult.
It is often best to apply with a grant project that has clear IP and differentiators in an industry that is less saturated. Although this does not need to be the norm since energy and battery industries are highly saturated but are repeatedly funded under the EIC.
By funding multiple projects in a single industry, the EIC is funding competitors which is effectively growing the industry rather than nurturing a single industry winner.
While competition is a reality for all businesses and should not be a reason to avoid the EIC Accelerator, it should be assessed if the market is overcrowded and if the commercial differentiators have long been eroded.
Ideally, the target market should not be in the process of being disrupted by many other startups at the time of the application.
2.1 Small Team
Startups often have a chicken-and-egg problem whereas companies with very small teams and no track record need financing to grow but need growth to attract financing. Since bootstrapping (i.e. self-financing through revenues) is not an option in typical DeepTech companies, private or public funding is often sought out to bridge the gap.
The EIC Accelerator is funding large teams with 100+ employees but also small teams with less than 4 staff members but the latter is often a tough sell.
While Step 1 and Step 2 evaluators are happy to see that a team is having a large reach through scientists, contractors or freelancers, the Step 3 jury will likely be very critical of teams where staff members only account for 1-3 members.
It would be useful if the EIC were to publish company statistics on the beneficiaries since factors such as the team size will likely greatly influence the success chances. In general, a team of 5+ staff members would be advisable although smaller teams have also been funded.
2.2 Founded Recently
The EIC Accelerator specifically mentions startups as their ideal applicants whereas the statistics of funded projects show that 41% of companies are aged 6-10 years while only 9% are aged 5 years and below.
Still, if a company has only begun product developments recently while starting from scratch but already reached a Technology Readiness Level (see TRL) high enough for the EIC Accelerator then it might not be sophisticated or unique enough to succeed in the program.
Additionally, if a company is only a few months old, it has likely not built substantial customer interest or market traction yet which will severely limit the appeal of the project to the EIC Accelerator evaluators and jury.
Of course, an exception is a spin-off company that has been created from a larger company, University or research institute and is founded with a strong technology and market track record.
2.3 Limited Funding
The EIC Accelerator funds projects starting at TRL5 but prefers TRL6 as the starting point in most cases. To reach this level, especially for DeepTech projects, it is necessary to raise substantial seed investments to support personnel and hardware costs.
If a company has not raised substantial financing yet or has only raised the starting capital during the founding process then the technology might lack the sophistication necessary to succeed in the EIC Accelerator program.
2.4 Limited Traction or Customers
The EIC Accelerator is a market-focused funding program and, even though it explicitly foresees Research & Development work, it has a strong commercial focus. This often leads to overlaps in the judgment of the evaluators where the TRL is assessed through the use of the technology by existing customers.
This can even extend to the point where the EIC jury will reject a project for having a TRL that is too low because no customer has interacted with the prototype yet even though the validation clearly places it at TRL6.
While it is not necessary to have paying customers, it is highly beneficial to have existing customer relationships, Letters of Intent (LOI) and other proof of traction to satisfy the evaluators.
2.5 Lacking Corporate Identity
It is very common for evaluators and EIC jury members to perform an internet search of the company they are assessing. This includes the reading of website materials, LinkedIn profiles and other public company data.
If a company has no website, social presence, or even a domain name for company emails then it will place a negative light on the company itself. Since creating such online representations is simple and not costly, it is recommended to prepare them thoroughly before considering an EIC Accelerator application.
If the CEO of a company communicates using GMAIL or similar services then this is generally a sign that the project is not fit for the EIC Accelerator.
It will not be necessary for every EIC Accelerator applicant to implement all the recommendations above but each individual factor can be expected to impact the evaluation.
In general, it is often beneficial to err on the side of a straightforward technology with strong market interest and traction rather than a sophisticated technology with weak market interest.
Interestingly, companies with a simple technology would likely be able to raise substantial financing from private markets in a more efficient and straightforward process compared to the EIC Accelerator. But since the EIC offers non-dilutive grants, it is still useful as a funding vehicle for companies in addition to dilutive private financing (i.e. Investing in Well-Funded Companies).
Although, it is not aligned with the mission of the EIC.
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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: (early 2024)
- 2nd cut-off: -
- 3rd cut-off: -
- 4th cut-off: -
- Step 3 (interview)
- 1st cut-off: -
- 2nd cut-off: -
- 3rd cut-off: -
- 4th cut-off: January 29th to February 9th 2024 (extended again)
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: