The enhanced European Innovation Council incorporates important novelties in its pilot
The Enhanced European Innovation Council (EIC) pilot supports researchers and innovators developing high-risk, breakthrough innovations with the potential to create new markets and boost jobs, growth and prosperity in Europe.
A main objective of the European Commission (EC) is to strengthen the innovative and European technological entrepreneurship ecosystem. To do this the EC intends to develop a strong and favourable business and financing environment for the emerging of disruptive technology-based companies that develop in rapidly expanding markets.
The EC launched in 2017 the European innovation council (EIC) now in its pilot phase and will be a reality under the Horizon Europe framework (2021-2027). The EIC support top-class innovators, entrepreneurs, small companies and researchers with bright ideas and the ambition to scale-up internationally. Faithfull to this philosophy, the EIC has announced three determining novelties for its pilot consisting on: new funding instruments; reinforce its support to high-risk projects and fast-moving technologies and markets; and integrate within its governance structure an Advisory Board with a clear high-level expertise profile.
In this sense, the EC, through the EIC has allocated 2 billion euros to launch two lines of financing that will be the protagonists of the next Horizon Europe: Pathfinder and Accelerator. The first one is science driven and the last one market driven. The following table reveals the objective and scope of both lines for the period 2019-2020.
These proposals for the last phase of the EIC pilot retain the essence of two precursor instruments: FET (Open and Proactive) and SME Instrument. Then, what is new in Pathfinder and Accelerator with respect FET and SME instrument?
ACCELERATOR VS SME INSTRUMENT
Innovative technology-based SMEs still are in the limelight in Accelerator. Regarding the type of financing, in SME Instrument the funding consisting of a grant of 50,000 € for phase 1 and between 0.5 and 2,5 million € for phase 2. As from June the 5th, you can opt to a blended finance option where the grant component is limited to 2.5 million € combined with an equity component of up to 15 million €. The type of financing will strongly depend on the level of maturity of actions to be implemented. Projects with close to market activities (TRL 9 or above) will receive only equity funding.
In SME Instrument, depending on the state of maturity in the development of your business plan, it was possible to opt for a phase 1 or a phase 2. As from September the 5th, Phase 1 will be discontinued and the window for financing will be unique. Thus, if you need to validate your business plan, there are two pending opportunities in May the 7th and September the 5th.
In SME Instrument, there was the possibility of proposing a project in cooperation while Accelerator seeks to boost the market uptake of individual companies.
Regarding the evaluation, in SME Instrument, the impact criteria was the key and the protagonist with 50% weighting while in Accelerator, the excellence criteria recover the interest and the three sections (excellence, impact and implementation) share 1/3 weighting. The technological disruption and innovation will be a key component in all financing instruments for the EIC under the Horizon Europe.
The great novelty in Accelerator is the establishment of a Special Purpose Vehicle (SPV) that will manage the equity component according to an Investment Strategy that will be defined during the next few months. This SPV will be structured in such a way that it can attract other public or private investors in order to increase the leverage effect of the Union contribution. The role of this new body is still under discussion and its setting-up is being finalized but in principal, it will be created for the next purposes: investment strategy definition, due diligence, co-investment, follow-on investments, investment management and exit strategy.
WHAT DOES PATHFINDER OFFER?
The EIC Pathfinder pilot targets high-risk cutting-edge projects exploring new territories aiming at developing radical and innovative technologies. It encompasses FET-Open and FET-Proactive.
FET-Open supports the exploration of radically new technologies, which may become the game-changers of the future allowing to work on the next wave of innovation. FET-Open could be considered as an enabler between the “Dream” and the “New Technology” and FET-Open is the facilitator towards the “Application”. FET-Proactive aims to identify the future and emerging technological paradigms with highest potential for Europe’s economy and society.
They both (Open and Proactive) are complementary in order to provide a smooth and continuous funding path between the disruptive idea and the validation of the technology.
What financing tools do Open and Proactive offer?
- Challenging current thinking. RIA and collaborative projects focused on radically new future technologies that promotes interdisciplinary collaborations that dissolve the traditional boundaries between sciences and disciplines.
- Innovation Launchpad. CSA and individual and collaborative projects focused on turning results from FET-funded projects into genuine societal or economic innovations.
- Emerging paradigms and communities. RIA and collaborative projects aiming at demonstrating cutting-edge high-risk/high-reward science-based projects that aim to approach a new technological paradigm. Targeted emerging areas are: human centric artificial intelligence; implantable autonomous devices and materials; and breakthrough zero-emissions energy generation for full decarbonization.
- Transition to Innovation Activities. RIA and collaborative projects built on results from an ongoing or finished project (Open or Proactive). The targeted technology should be in one of the following areas: micro- and nano-technologies; artificial intelligence and advanced robotics; technologies for the life sciences, health and treatment; energy technologies; interaction technologies.
The EIC will have 10 billion euros for the next multiannual financial framework, of which, 70% will go to SMEs and start-ups. Although the risk/financial viability/private investment components come into play, which makes the EIC a very selective and unique funding instrument, it is also a very powerful tool for launching market-creating innovative companies. Furthermore, the EIC becomes the patron of high game-changing technological disruption whatever its technological maturity level covering TRLs from 1 to 9.