Zombie Innovation: EIC Accelerator Funding for the Living Dead

The EIC Accelerator funding (grant and equity, with blended financing option) by the European Commission (EC) and European Innovation Council (EIC) is designed for startups and Small- and Medium-Sized Enterprises (SME) and provides €2.5 million in grant and €15 million in venture financing per project.

This article investigates the importance of timing and market alignment to assess the future potential of a company.

Timing is Everything

The EIC is generally looking for dynamic companies that are young (i.e. 50% are under 10 years old), timely and have high growth potential. Since timing is a critical component of every new technology development and commercialization, an EIC Accelerator project should generally present a time-limited opportunity to invest in the next big thing.

The timing will often be influenced by factors such as regulatory trends (i.e. climate change), new technology breakthroughs (i.e. scientific developments) or an increased consumer and market demand (i.e. semiconductors).

As a result, timing is generally a critical component since it means that there is a strong reason to assume that there will be a significant business opportunity and product market fit in the future even if the company is in the early stages and revenues have remained elusive.

The Living Dead

In contrast to the case described above with excellent timing, there are companies that have been around for a long time, have been continually developing a new ground-breaking technology and have filed an endless number of patents to support their commercial exploitation but without a clear product-market fit.

There is no real timing for their solution, no apparent market need and no regulatory pressure to implement the product.

Additionally, they often have a track record of starting and stopping their developments based on their funding status whereas a new fund-raising round will spring a phase of excitement followed by months or years of silence once the funding runs out.

And the technology developments are never quite finished.

Traction: A Zombies Cryptonite

Obtaining early revenues is not always feasible, especially in medical technology or hardware-heavy industries where certifications and regulatory clearance are essential but a company should aim to generate revenues as quickly as possible.

If a company has a finished prototype that can be commercialized to some degree then they should aim to generate revenues as quickly as possible to validate the product-market fit. If a product can be purchased but is not in demand then this generally reveals a poor investment opportunity.

Alternatively, the first step can also consist of prototype testing with customers or end-users to demonstrate the market need and usability even if no revenues are generated. But this should not be an excuse to hand out the product for free since no customer would buy it.

Zombie Innovation

Zombie Innovators generally lack the commercial expertise, customer demand or market incentives to generate any traction which leads to a bottomless budget for research and development that every investor will stay away from.

In their business plans, such companies will often highlight their technology, Intellectual Property (IP) and related benefits (i.e. sustainability, energy, costs) but they will rarely mention customer demand or pilot customer negotiations.

Any commercial plan will likely be reduced to the inflated market size with little or no practical plan to reach it or evidence that the market has an interest in the product.

Do Not Bite the Zombie

As a consultant, professional writer or freelancer, it is essential to identify Zombie Innovators quickly and to assess their level of traction as well as their utilization of past financing, especially when targeting the EIC Accelerator program. If investors avoid such businesses then so will the EIC Jury.

Even if early revenues are impossible, there should be an extensive number of customer relationships, early testing with end-users, agreements with value chain stakeholders and impressive Letters of Intent (LOI) to demonstrate the market need.

Zombie Innovators generally have none of these.

This article was last modified on May 26, 2023 @ 14:03

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: -
    • 2nd cut-off: -
    • 3rd cut-off: -
    • 4th cut-off: October 19th 2023 (extended)
  • Step 3 (interview)
    • 1st cut-off: -
    • 2nd cut-off: -
    • 3rd cut-off: October 2nd to 6th (extended)
    • 4th cut-off: November 27th to December 8th

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:

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)