Accessing the first 10Bn€ of EU capital for breakthrough innovation
On March 18, EU commissioner Ursula von der Leyen announced the launch of the European Innovation Council (EIC), a new entity within Horizon Europe — the EU’s umbrella program to fund innovation across the continent––focused on identifying and supporting breakthrough technologies coming out of Europe. With a budget of €10 billion for the period 2021–2027, the EIC is certainly the most ambitious innovation initiative the EU has taken to date.
Behind the big announcement, however, lies quite a bit of complexity. It’s challenging for many of the companies we meet to understand the landscape and figure out how to access these new pools of funding. How to decrypt the EU machine to understand whether you’re a good fit and how to apply? Why is the program split across pathways called “Pathfinder”, “Transition” and “Accelerator”? Why are “calls”, “open calls”, “challenge calls”, and what’s best for you? How do the EU’s missions fit into all for this?
On March 30, we teamed up with EIC team members Francesco Matteucci and Antonio Pantaleo, as well as Caroline Bergaud from Bergaud Partners, to present the EIC, decrypt the new guidelines, and share best practices for anyone looking to apply through a webinar. Here are the key outcomes. You will also find their full presentations and the full video below.
The European Innovation Council
What is it?
The European Innovation Council is a €10 billion program of EU funding meant to identify, develop and scale breakthrough companies in Europe.
It provides flexible funding––that can take the form of grants or equity or both––to European companies that (a) are deeptech companies i.e. have developed knowledge intensive technologies, (b) are developing and commercializing breakthrough innovations (as opposed to incremental innovations), and (c) can demonstrate in a sophisticated way that they support the EU’s strategic autonomy and technological sovereignty (though, of course, the EU won’t necessarily express it in that way).
The EIC is part of a much broader European initiative called Horizon Europe that seeks to enhance and develop scientific discovery and innovation across the continent. The EIC is part of what is called “Pillar III” — focused on funding companies that are close to or in the market.
Note that though the EU famously worked with Mariana Mazzucato to define 5x core missions to support through Horizon Europe — i.e. commitments to solve some of the greatest challenges facing our world like fighting cancer, adapting to climate change, protecting our oceans, living in greener cities and ensuring soil health and food––these are nowhere to be seen in the Horizon Europe (which I think is a bit of a shame).
EIC calls: Pathfinder, Transition, Accelerator
EIC funding can be accessed through 3 funding pathways (i.e. “Calls”), which are broadly aligned with the maturity of applicant companies (i.e. Technology Readiness Level or TRL):
- Pathfinder → TRL 1–3: early stage research, with grants of 3–4m€
- Transition → TRL 3–6: proof of concept to validation, with grants up to 2.5m€
- Accelerator → TRL 6+: development and scale-up, with grants up to €2.5 million and equity investment up to €15 million
Note: Transition is structured to supply more capital to companies that have previously received Pathfinder (or ERC Proof of Concept) funding. The EIC can fund more than 1x project coming from the same Pathfinder group if that group produces more than 1x idea that is suitable for further funding.
Open Calls & Challenge Calls
Within EIC, and under any of the three Calls — Pathfinder, Transition and Accelerator––you can then apply under an Open Call (also called bottom-up) or a Challenge Call (also called top-down).
Concretely, in addition to financing innovation broadly, the EIC is also looking to push specific technological developments. This is what they call “Challenge Calls”.
As examples in 2021, the EIC is openly calling for companies in themes like:
- Pathfinder → “Tools to measure & stimulate activity in brain tissue”, “Emerging Technologies in Cell & Gene Therapy”, “Novel routes to green hydrogen production”, or “Engineered living materials”.
- Transition → “Energy harvesting and storage technologies” — as defined by (a) innovative technologies and systems combining energy harvesting and storage, which are efficient, clean, high energy density and low-cost, integrated for stationary or mobile applications, (b) innovative concepts and techniques for the combined harvesting and storage of solar energy (in the form of heat or solar fuels), geothermal or waste heat, including topics such as long-term thermal storage, cooling and cryogenic storage, building integrated solutions, thermo-electricity, advanced heat transfer, power to heat to power, and thermo-mechanical energy storage and conversion, and (c) advanced materials and devices for electro-chemical storage (other than Li-Ion batteries), at utility scale, mobile or distributed/micro scale level, integrated to PV/wind energy systems or for other intermittent sources.
Applying through an Open Call means applying without any topic prescription.
Open Calls and Challenge Calls have different deadlines for Pathfinder. The first deadline for Open Pathfinder is 19th May 2021. Challenge Calls are due on 27th October 2021.
Note: since Pathfinder is built to support breakthrough innovation in low TRLs, it is also meant to be collaborative. While you can apply as a single company to Pathfinder Challenges, you will need to partner as a group of 3+ entities or partners to apply to Pathfinder Open, with the aim of funding a common research & development goal.
It’s important to note that while the EU is putting meaningful capital to work here, the goal is to work with and “crowd in” private investors––partly by providing a layer of scientific and technical validation. The goal is, quite explicitly, to generate 3–5 euros of private investment for every euro of public capital put to use.
A quick note on the UK
Since there were questions on UK eligibility, it is worth mentioning that UK companies, whether applying on their own or through consortiums, are eligible for grant (non-dilutive) funding, but they are not eligible for equity funding.
Keys to success
After Francesco and Antonio provided us with a detailed overview of the new program, Caroline provided an appreciation for what the EIC had done to improve their application processes and, most importantly, provide tips for how to succeed an an applicant.
As Caroline highlighted, competition is so fierce with success rates expected to be around 1%) that to win you have to obsess over standing out — every step of the way.
She shared many strong recommendations, and I thought it would be worthwhile summarizing 5x that stood out to me:
- Content is king, and so are comms. The new EIC application system processes applications through an “AI platform” that focuses on your textual submissions. No longer can you enhance your application with graphs or other visual cues. In this new world, quality of content determines the quality of your proposal. Similarly, remember that you will have to convince several parties — including 3 judges––to succeed. Becoming excellent at effectively communicating your vision and business is as important as your technological edge.
- Applying is a high performance sport. As with any highly competitive process, you have to commit to win. Your founding and senior leadership team has to be fully engaged throughout the process, and you have to strive for excellence at every step of the way to stand a chance. Never lose sight of this.
- The devil is in the details, and every detail needs to be backed up. Every detail in the submission matters. Teams are sometimes interrogated in the interview phase on specific numbers in their business plan, or asked to comment on sources they have referred to. Similarly, make sure you can prove every single of your claims with clear facts.
- Every team member matters. While it’s not unusual to see teams with one or two particularly outstanding members, the process is so competitive that cracks start to appear if some members of your team’s aren’t pulling their weight.
- Demonstrate EU alignment. Looping back to where we started, ensure you demonstrate in a sophisticated way how you support the EU’s technological sovereignty and broader strategic goals.
Finally, I was thrilled to learn that 40% of applicants invited to the interview phase will be female CEOs. While this does not mean that 40% of funded projects will be led by women, it does mean that female scientists, innovators and entrepreneurs have a much higher chance of being funded within the EIC than in the market. This is a welcome improvement on previous guidelines, especially in light of the latest data revealed by Atomico’s latest State of European Tech report, which exposes a challenging situation for diversity, including gender diversity, in European tech:
I hope this quick summary of the session helps entrepreneurs and applicants understand the process. Applying for EIC funding is undeniably a challenging endeavour — but the process will crystallize your business strategy and plan, and success will be seen as a seal of excellence. Antonio, Francesco, Caroline and I are available for follow up questions so do not hesitate to reach out.
Full video here:
Full EIC slide deck here:
Full slide deck from Caroline Bergaud:
