More than 10 billion euros available to innovative European SMEs
BY: ANA BARJASIC
There is an ongoing discussion whether governments and public institutions should intervene and financially support startups and SMEs with public money. On one side, the argument includes lack of investment ready companies, lack of experienced and risk averse investors, and most importantly, lack of money for early stage investment, especially in Europe. At the same time, opponents of public grants idea consider that innovative companies should be left at mercy of the free market. Nevertheless, Europe has set the ambition of increasing its global competitiveness and innovativeness, and it is betting on its research excellence and top-notch companies in the deep tech sector. European Commission has put the money where its mouth is and has launched a unique financial instrument, sharing the risk with the private market.
European Commission launched European Innovation Council, the most ambitious financial instrument to support innovative deep tech companies so far. More than 10 billion euros will be available to innovative small and medium enterprises from Europe and associated countries. European Innovation Council is a part of Horizon Europe, the new research and innovation programme running from 2021 to 2027. The goal of this programme is to advance European innovation ecosystem and address the financial gaps for high-risk/high-impact companies in the European venture capital market.
The European Innovation Council Fund will invest per company up to 2,5 million of non-dilutive funds and up to 17,5 million euros capital as a friendly investor. Apart from the combination of grants and equity, EIC aims to be a one-stop-shop for support of innovative technologies, with EIC Pathfinder focusing on radically new technologies emerging from research excellence, EIC Transition bringing innovation potential to research results as well as EIC Accelerator, focused on developing and scaling innovations. All selected companies will also have access to investors, corporates, partners and mentors through EIC’s acceleration programme, Business Accelerator Services.
European Innovation Council has been implemented as a pilot project over the last two years and is a successor of the equally competitive SME Instrument. The success rate of applicant companies is currently 2%, meaning that only 200-300 companies yearly manage to secure the EIC support. Overall, the initiative has supported almost 6000 companies since the beginning, which have attracted additional 5 billion euros private investment, including the innovative solutions related to COVID-19 and Green Deal challenges. Special attention is dedicated to gender balance, women-led companies and women innovators, with additional initiatives such as EU Prize for Women Innovators, Women TechEU and EIC’s Women Leadership programme.
Given all the initiatives were carefully developed and tested before forming the new instrument and represent a bespoke collaboration between the market and policymakers, there is no doubt that European Innovation Council will be a game changer for selected companies and ultimately the European innovation landscape.
