The EIC Accelerator – a funding opportunity for Small and Medium Enterprises (SMEs) with game-changing innovations that are not yet ready to be commercialised, to scale-up and deploy them on the market – was officially launched in March 2021 as part of the European Union’s Horizon Europe Research & Innovation Programme. With an annual budget of approximately €1 billion (€1.16 billion in 2022) it is the EU’s most ambitious initiative supporting innovation. Under the programme, companies can receive financing of up to €17.5 million.
Any SME from the European Union or an Horizon Europe Associated Country can apply to the EIC Accelerator. Since launching, 164 companies have been funded, with the next submission deadlines scheduled for June 15th and October 5th this year. The EIC Accelerator will run until 2027, with cut-off dates from 2023 and onwards still to be announced.
Raising more than €275 million to date, Alien Technology Transfer has supported SMEs through the EIC Accelerator since its first iteration – the SME Instrument – was launched in 2014. The programme’s goals have remained mostly constant since 2014. It fills the funding void faced by SMEs with the potential to preserve European competitiveness but struggling to attract financing elsewhere due to the high risk and long time period. However, the new EIC Accelerator presents the most sophisticated iteration yet – particularly with the release of the 2022 Work Programme.
More flexible funding opportunities
While the SME Instrument (2014-2019) initially only provided grant funding up to €2.5 million [1], the transition to the EIC Accelerator Pilot in 2019 saw the introduction of the EIC Fund - a dedicated fund for investing in companies selected, with the support of the European Investment Bank. This led to the availability of blended financing to applicants. Alongside requesting a grant, they could simultaneously request up to an additional €15 million in equity funding through a single application. The progression into the fully-fledged EIC Accelerator in 2021 retains the grant and blended financing options for innovations not yet ready for the market. However, it is more inclusive by allowing slightly earlier stage innovators and small mid-caps [2] to compete and further expands on the funding modalities to suit a wider range of cases. The cards below summarise how the funding options have evolved.
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The technology readiness level (TRL) scale ranging from TRL1 – TRL9, originally developed by NASA in the 1970s, measures the maturity of technologies.
Refined evaluation process
Throughout the programme’s history, the approach to evaluating applicants has also become more comprehensive. The application process featured additional steps that companies have to complete in 2018 and again in 2021. These, summarised in the table below, have the aim of ensuring only the most committed and suitable applicants will secure an award under the programme.
By the end of the EIC Accelerator Pilot, the programme had become heavily subscribed to. It counted more than 4,200 applications submitted in October 2020 compared to just 580 applications submitted at the beginning of the programme in October 2014. With an increasing number of applications and limited funding, the programme-level success rate for applicants fell from 14% in October 2014 to <1% in October 2020. While the programme had never been more popular, with accumulating legacy applicants, new companies reported an unwillingness to participate due to the significant effort for such a slim chance of success.
The EIC Accelerator aims to attract only the most promising projects and restore the success rate through a number of steps:
- The introduction of the shorter application that also requires a video submission as an initial screening step. This aims to filter out less committed applicants and also it means that lower quality applicants can be quickly rejected without needing to review a complete proposal. About 60% of applicants are approved at this initial step.
- Following 2 unsuccessful applications at either the short or full application stage, applicants are prevented from applying again for 12 months. It is understood that, besides the increasing popularity of the programme, the continuous increase in applications with each cut-off was a result of unsuccessful applicants simply resubmitting the same (or minimally adjusted) proposal each cut-off. Now, applicants should also include a description of how they have improved their proposal compared to their previous unsuccessful attempt.
So far, these measures appear to have been effective. Indeed, since the start of the EIC Accelerator in 2021, the number of full proposal submissions in a single cut-off so far peaked at 1,098 in October 2021, with a corresponding funding rate of 9.02%. In the March 2022 cut-off there were 1,093 applicants, the evaluators have invited 266 to pitch and haven't announced the final results yet at the time of writing this article.
Priority areas
The 2022 Work Programme introduces key challenges that it intends to address through the EIC Accelerator including:
- Technologies preserving Europe’s open strategic autonomy against world economic rivalries. This category covers key strategic areas including components, technologies and systems for the pharmaceutical industry, new applications of quantum technologies, and space technologies;
- Technologies strengthening Europe’s green transition, allowing it to achieve a net reduction in greenhouse gas emissions of at least 55% by 2030.
The EIC Accelerator has designated €536 million of the annual budget solely to fund SMEs addressing these specific challenges. Alien Technology Transfer has helped secure funding for many companies that align with these priorities, with enGenome, Oledcomm, Aquabattery, Fimuskraft, Circular Materials, and Magment being among the most recently funded in 2021.
Women-led companies
To avoid under-representation, the EIC intends to improve the gender balance of funded companies and in 2022 is looking to have 40% of companies invited to pitch be women-led (CEO, CTO or equivalent). Despite this goal, so far women-led companies represent only 14% of applicants in 2022. As a woman-led organisation, Alien Technology Transfer is fully committed to supporting other woman-led companies (such as Cutiss, Scandinavian Real Heart, and Filterlex) through the EIC Accelerator.
Switzerland and the UK no longer Associated Countries
Under the SME Instrument and EIC Accelerator Pilot, Switzerland and the UK were eligible for funding via an Association Agreement with Horizon 2020. However, under Horizon Europe, both countries have yet to sign an Association Agreement and until then neither can receive funding from the EIC Accelerator. Nonetheless, Alien Technology Transfer remains committed to supporting Swiss and UK SMEs. UK companies can still submit proposals to the EIC Accelerator and will be funded through a guarantee from UKRI (a UK government body that directs research & innovation funding) in the case an Association Agreement is not reached. Alien Technology Transfer recently helped secure €2.5 million (the maximum grant available) for hydrogen technology storage developer H2GO Power - one of only five UK companies funded in 2021. This month, Alien Technology Transfer also supported Swiss SMEs in preparing proposals for the inaugural round of the Swiss Accelerator. Innosuisse (the Swiss Agency for innovation support) is funding the Swiss Accelerator, offering up to 2.5 million Swiss Francs in grant funding.
Delayed implementation process
While the option of receiving grant and/or equity finance has been attractive to innovators, the mechanism through which this is provided has yet to crystalise. While under Horizon 2020 the time-to-payment from award confirmation was about 3 months, the first Horizon Europe EIC Accelerator awardees, approved for funding almost 8 months ago, continue to wait for their first payment tranche.
The delays are due to internal dissensus at the European Commission regarding how to authorise contracts for companies approved for equity financing. In April, the European Commission sent companies a letter apologising for the delay. The Commission is currently negotiating with an external fund manager of the EIC Fund and expects to conclude these negotiations by 30 June 2022 at the latest. Alien Technology Transfer is monitoring this situation closely to ensure both awardees and prospective applicants stay up-to-date and can plan their projects according to the timeframe within which they can expect to receive funding. In the meantime, AlienTT is providing direct support to navigate the administrative steps required so that companies can swiftly access their funding once the European Commission reaches a a resolution. With the new procedures in place, the Commission expects that the waiting time for awardees will “improve progressively”. These delays are inherent to applicants that have requested equity financing as Grant Only and Grant First awardees are already receiving payments.
By: Steven Kiberd, COO
If you are an innovator and would like to learn more and better understand if your project is suitable for the EIC Accelerator, we invite you to contact us here.
FOOTNOTES
[1] In very specific cases it was possible to request more than €2.5 million.
[2] Companies that do not comply with the definition of an SME but have fewer than 499 employees
