The European Commission’s Horizon 2020 programme has been extremely important in the promotion and expansion of high-tech SMEs across the EU, particularly through the EIC Accelerator (SME Instrument). The EC recognizes Research & Innovation (R&I) as being crucial to Europe’s socio-economic model and values, as well as its global competitiveness. As 2020 approaches and this highly successful funding scheme comes to an end, technology companies from across the EU are asking what’s next.
The EC recently released the interim report on Horizon 2020, which demonstrated both the successes and weaknesses of the programme and acted as a set of guidelines for shaping the future. Possibly most significantly, H2020 is on course to achieve a socio-economic value of €600 billion and to create 179,000 jobs by 2030.
The focus on excellence has enabled the first tranche of resulting scientific publications to be cited at twice the world average rate, and patents produced through the programme have been shown to be of higher quality and greater commercial value than comparable patents generated elsewhere. H2020 has also demonstrated clear EU added value through economies of scale, scope and speed compared to national and regional funding for R&I. The report did, however, highlight a need to invest more ambitiously, further simplify processes and access, and truly support breakthrough innovation.
The EC is now looking to take the best of H2020 and build on it for the future, with the exciting announcement of the new Horizon Europe scheme. Horizon Europe is a €100 billion funding scheme that will run from 2021 until 2027 as a framework for future R&I (+30% of budget has been allocated with respect to Horizon 2020!). Of particular interest to technology transfer and SMEs is the announcement of two new instruments with a total budget of €10 billion: the Pathfinder and Accelerator. They will focus on different stages of the R&I process and will aim to provide seamless support along the full innovation cycle, to TRL 9 and beyond. The Pathfinder programme is aimed at universities and research centres looking to commercialise strategic technologies on the scale TRL 2-4. This is a one-off grant aimed at projects with a high budget (€3-4 million) and a 3-4 year duration. This includes funding for R&D and also for a full technical and commercial feasibility assessment to be completed such that a detailed business plan is in place at the end of the funding period. The goal of the EC is to foster the creation of new high-growth potential companies stemming from the exploitation of the Pathfinder research results.
The Accelerator programme is aimed at start-ups and SMEs and can be considered an upgrade of the EIC Accelerator (SME Instrument) Phase 2 on which it builds upon. Accelerator will specifically target high-risk, market creating innovation. The recipient projects will feature technologies at TRL 5 – 9+, including from early commercial stages to market deployment and full scale-up. The programme will provide blended finance, which comprises a grant component and an equity investment, allowing companies to bid for up to €15 million per project. Such a high funding will have the capacity to fuel the companies until the market uptake and would probably let them crossing the chasm of early adopters’ traction. The EC will create a special purpose vehicle (SPV) with the support of the European Investment Fund to make investment decisions and provide equity finance to projects that pass the due diligence. The due diligence should be conducted only after the project receives a positive evaluation for the grant award and after the Grant Agreement is signed. The SPV will not make investments that result in the vehicle holding more than 25% of the shares in the recipient company (minority participation), and will be actively searching for more investors at due time to re-sell the shares when it is time for an exit. The purpose is to re-invest in other similarly disruptive EU SMEs.
Full details of the new programmes are set to be announced in due course, and a pilot scheme will take place from June 2019 in order to test the Accelerator. With the announcement of another huge investment, the EC has demonstrated that it is committed to driving R&I across the EU to strengthen science & technology, foster the EU’s industrial competitiveness, and deliver on the strategic priorities of the EU for the future. It is clear that the future is bright for the next-generation of high-tech European SMEs!