Public grants are a popular avenue for Small- and Medium-Sized Enterprises (SME) and startups since they often provide a simple application process to receive substantial financial support. One of the distinct benefits of grant funding is its often strong policy-focus while commercial and financial factors of the business tend to be faced with less scrutiny compared to a private investor’s due diligence.
Since substantial grants tend to be available for non-profits, for-profits, early-stage companies or research institutes alike, many view them as a valuable part of their financing strategy. With a variety of consultancies and professional writers offering grant writing services and template support, it is often a given that any company will pursue this area at least once in its lifetime (read: Outsourcing an Application).
The EIC Accelerator
The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity financing) follows a single-beneficiary process, provides up to €17.5M in grant and equity financing, allows the use of an online submission process and has a strong support system through the European Innovation Council (EIC) and consultancies which makes it ideal for innovation startups (read: EIC Accelerator Introduction). If the highly selective eligibility criteria are met, any company can apply and potentially prepare a successful grant application (read: Assessing a Project).
Still, companies should not solely rely on a single grant application as their exclusive fundraising source but treat it as part of a larger financing strategy. This article presents a list of considerations that need to be made when targeting a grant and the role it can play for a company.
Competitive Evaluation Process
Many governments frown at the term free money (i.e. view the US government’s grant page) but a non-refundable grant given out to private entities or citizens in exchange for writing a document is as close to free money as possible. Of course, what the government would like its applicants to understand is that, while the money seems free, it is by no means easy nor is it for everyone.
Every grant has a success chance which is simply the number of successful beneficiaries divided by the number of applicants that apply per deadline. Some grants are less competitive while some are extremely competitive and all applicants should be aware of their realistic chances (read: Impact Report). It is therefore prudent to not rely on a single grant application for the simple reason that the grant might not be secured.
The more popular a grant program is, the longer the evaluation process takes and the more likely it is that a multi-stage process will be instantiated to increase the funding barriers. This means that not only will evaluations be delayed but there will also be different evaluation processes to go through as is the case with the former SME Instrument (today: EIC Accelerator) which grew in complexity over the past 4 years (read: Stages of the EIC Accelerator).
Creating an excact financial plan that includes a future grant is impossible since the timing will likely be off even if the grant is secured on the very first submission. Government bodies are extremely slow when it comes to bureaucratic processes which is why the EIC Accelerator’s equity investments have been delayed for over a year even after they were granted (read: Equity Controversy).
Any grant that has a success rate of under 50% should be an optional part of a companies financial strategy which is why grant applications should be pursued as part of a larger roadmap including private funding sources.
The effort placed into preparing a grant application should not be wasted by only using it for a single financing option. Once the documents have been created, they can be restructured and used as business plans for investors, marketing materials, content for social media and for any other pitching opportunity that presents itself.
This article continues in Part 2.
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) will likely be on March 23rd 2022, June 15th 2022 and October 5th 2022 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.
Want to see all articles? They can be found here.
For Updates: Join this Newsletter!
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)