The European Innovation Council (EIC) pilot is preparing for a significant change in its SME Instrument Phase 2 programme, under which it can currently give grants of up to €2.5 million to promising startups. The new program, called the EIC Accelerator, is expected to start in 2021, with a pilot possibly kicking off next year.
Part of the Horizon 2020 EU framework, SME Instrument offers grants for small and medium enterprises, from €50,000 in Phase 1 (early stage) to up to €2.5 million in Phase 2, which target more mature companies. Since its inception in 2014, the Instrument has given €1.6 billion in grants to some 3,800 companies.
In the framework to succeed Horizon 2020, the EIC pilot is proposing to change the way SME Instrument Phase 2 works. The outline of the new programme, called the Accelerator, was presented by Jean-David Malo, Director of Open Innovation and Open Science at the European Commission, at the EIC Innovators’ Summit in Berlin in early September.
Essentially, the idea of the Accelerator is to move from the grant system to equity investments without changing much in the mission and vision of SME Instrument. The qualifying startups would receive “blended financing” that consists of a grant and loan or equity investment of up to €15 million to bridge the financial gap between late-stage R&D and market adoption.
The proposal of the Accelerator includes a twofold budget increase as well. After the EIC exits, the returns would be reinvested in the programme.
“We want to only intervene at the public level when and where it’s necessary, and stop when the private sector can [step in],” Julien Guerrier, director of the Executive Agency for Small and Medium Enterprises told tech.eu. (You can listen to the full interview in our recent podcast.) “It will be quite a challenge to determine what KPIs we need. Contrary to private investors, we’re not in a logic of making money; what we want is take risks where the private sector won’t.
“For public investments, failure is the measure of success; if we were to succeed disproportionately, it’d mean that we just displaced private investment.”
Although the new framework will only start in 2021, Guerrier believes a pilot of the Accelerator could launch as early as 2019. More details on the budget and procedures around that are expected to be published by the end of this year.