H2020 - SMEs Instrument and Access to risk finance

Pierre Marro

CONNECT F2 / Innovation

20 % budgetary target in

LEITs & SC

'Innovation in SMEs'

SME support

Grants

Financial instruments, indirect implementation

8 cut-offs

/year

Easy to plan

Ph1 results in 1M

Rapid

High threshold

Compe-titive

Call planning 2016 SME instrument

Phase 1:

24 Feb, 3 May, 7 Sept, 9 Nov

Phase 2:

3 Feb, 14 April, 15 June, 13 Oct

• Targeted at all types of innovative SMEs showing a strong ambition to develop, grow and internationalise

• Only SMEs will be allowed to apply for funding and support, particularly Start-Ups.

• Single company support possible

• No obligation for applicants to sequentially cover all three phases; each phase open to all SMEs

• 70% funding (exceptions possible)

Main features

5

SME Instrument Main Features

SME Instrument – ICT 2016-17

Relevant topics (739 M€ overall)

• Open Disruptive Innovation Scheme (126 M€)

• Accelerating the uptake of nanotechnologies advanced materials or advanced manufacturing and processing technologies by SMEs (67 M€)

• Accelerating market introduction of ICT solutions for Health, Well-Being and Ageing Well (30,5 M€)

• Stimulating the innovation potential of SMEs for a low carbon and efficient energy system (96 M€)

• Small business innovation research for Transport and Smart Cities Mobility (119 M€)

• New business models for inclusive, innovative and reflective societies (22 M€)

• Engaging SMEs in security research and development (30 M€)

6

WHY/Objectives: • Nurture promising ICT based disruptive ideas; • Support their prototyping and iterative validation in real world/working

conditions; • Facilitate faster market uptake and wider deployment

HOW/Implementation: • Via the SME instrument • Managed centrally by one agency (EASME) • No restriction on ICT area, Focus on Disruptive ICT innovation • Bottom-up approach (ODI) complemented by societal challenges (eg

ICT in health)

Budget: 90M € for 2014-15 (45 M€ per year)

126M € (60M € for 2016 and 66M € for 2017)

Funding: lump sum 50k€ phase1;

0.5 to 2.5 M€ phase2; 70% of eligible costs

ODI Main Features

7

ODI Phase I and II

Phase I

• 3.135 ODI proposals out of 10.404

• Highest submission rate 30% of total SME inst. submission

• 372 proposals above threshold

• 168 proposals pre-selected for funding (49% from above threshold proposals)

• 90% of time to Grant within 3 month

ODI figures after the 1rst full year

• 838 ODI proposals out of 2.726

• Highest submission rate = 31% of total SME inst. submission

• 265 proposals above threshold

• 39 proposals pre-selected for funding (15% from above threshold proposals)

• 90% of time to Grant within 6 month

Phase II

PROPOSALS Examples

ACRONYM PROPOSER COMPANY AREA(s) SECTORS PROPOSAL TTM

LIRON-2020

Woodrow Scientific Limited

(UK)

R&D spin-off/ 2 y trading

Photonics/smart cities

Energy &

Environment/water

resources

Disruptive Technology for

the Global Cleaning Equipment Market

2/3 Ys

PASTGUIDE

Pixel Legend (PL)

R&D spin-off/ 5 y trading

Media &

Data, Creativity

http://www.pastguide.co

m/

Mobile apps,

cultural heritages, geospatial

Mobile app providing

tourist spatial location and 3D scene with events and people who lived in that historical location in the

past.

3-4 Ys

ODI Main Features

PROPOSALS Examples

ACRONYM PROPOSER COMPANY AREA(s) SECTORS PROPOSAL TTM

TORUS PROJECT

TORUS (ES) R&D spin-off/ 15 y

trading

Media & Data Big

Data, supercomput

ing, high speed IP

Biotechnology, defence,

Disruptive high-speed

communication protocols for high performance

communication applied to financial services &

big data

4-5 Ys

GALNIMBUS Galcon (IL) R&D spin-off/ 5 y trading

Software & Services,

Cloud

Agriculture, geospatial,

water resources

Disruptive cloud-based irrigation controller to

optimize water use efficiency in agriculture

4-5 Ys

ODI Main Features

SMEs Instrument Lessons learned

• Open Disruptive Innovation, is the most popular topic within the SME instrument , attracting more than 1/3 of applications almost double the share of ICT budget (18%) with this pattern being maintained throughout all cut-off-dates

• Similar patterns in all CoDs so far, in terms of level of submission, topic & country coverage

• The general evolution of submissions is promising, although with a slightly lower submission rate to the benefit of better quality proposals and better understanding of the instrument

• Unsuccessful Proposals:

• Still much focus on technology rather than business opportunity

• Not enough info on USP (Unique Selling Proposition)

• Missing market analysis to assess competition

• Innovation dimension still rather incremental improvement

• Not enough emphasis on commercialisation

SME Instrument

Access to Risk Finance

Intermediated

SME/Mid-Cap Financing Direct Corporate Lending

SMEs and small Mid-Caps

< 500 Employees Large Caps

Typically > 3,000 Employees

Intermediated and/or direct

Corporate lending

Mid-Caps

< 3,000 Employees

• Delivers direct loans and guarantees from EIB for larger projects (€ 25-300 million)

• for R&I projects emanating from larger firms; universities and public research organisations;

R&I infrastructures

First InnovFin Large Project with Belgian biopharmaceutical company UCB (€75 million)

15

• rolled out through financial intermediaries (guarantees and counter-guarantees on debt

financing <€50 million)

• for innovative midcaps (< 3000 FTEs) not eligible under the InnovFin SME Guarantee

• Direct long term senior, subordinated or mezzanine loans from EIB (€7.5 to 25 million)

• for innovative larger midcaps (< 3000 FTEs), but also SMEs and small midcaps

First InnovFin MidCap Growth Finance transaction with Rovio

(EUR 25 million facility to support Rovio’s technological innovations in various

entertainment sectors)

EIB: specific loans for projects > €7.5m

Tech. Transfer

16

EIF: For "small" players

Bank

Venture capital

Fund

European

Union

budget

Startups

SMEs

SMEs &

Small mid-caps

Invests

Invests

Lends

Provides funds

Guarantee Society

Counter or Co-Guarantees

Business Angels

Indirect implementation

H2020, COSME…

21 Centrale Partners SA Generalist 360 Capital Partners ICT 3T ICT Abingworth Bioventures LLP Generalist Activa Capital ICT Acto Mezzanine II Generalist Alcuin GP III LLP Generalist Alven Capital IV Generalist Argos Soditic Generalist Aster Capital Partners Cleantech Atalante SAS Generalist Atomico (UK) Partners Ltd ICT Banexi Ventures ICT and Life Sciences Beechbrook Capital LLP Generalist Bridgeport Development Capital Generalist Close Growth Capital Generalist Dawn Capital Generalist Demeter Partners S.A. Cleantech DN Capital ICT Dundedin Capital Partners Ltd Generalist Dunedin Capital Partners Limited Generalist EarlyBird ICT and Life Sciences Eckert Wagniskapital & Frühphasen-Finanzierung GmbH Generalist Elaia Partners SA ICT Emertec Gestion SA Generalist Forbion Capital Partners Life Sciences Gilde Investment Management Life Sciences HBM Partners Life Sciences HealthCap Life Sciences Highland Europe CPCP Limited ICT Global Cleantech Cleantech Go Capital Life Sciences Indigo Capital France SAS Generalist

Industries & Finances Partenaires Generalist Inflexion Managers Limited Generalist Initiative & Finance Invest. Generalist Inventure ICT IT Translation ICT IP Group Generalist ISIS Equity Partners Generalist Keensight Capital ICT Kennet Capital Management ICT Kreos Capital Group Limited Generalist Lyceum Capital Partners LLP Generalist Mangrove Capital Partners ICT MML Capital Partners Generalist NeSBIC CTe Fund ICT Nordic Biotech AS Life Sciences NorthEdge Capital Generalist Notion Capital ICT Partech International Generalist Perfectis Generalist Praesidian Capital Generalist Prefequity Generalist RJD Partners Ltd Generalist Rock Spring Ventures GP Ltd Life Sciences Robolution Capital Generalist Rutland Fund III Generalist Scottish Equity Partners Generalist Seedcamp Limited Partner ICT Sofinnova Partners ICT and Life Sciences Sixth Element Capital LLP Life Sciences Sovereign Capital Generalist Trocadero Capital Partners Generalist Ventech SA ICT

WHEB Ventures Ltd Cleantech …

Fund management companies & Sectors (not exhaustive)

More…

http://www.eib.org/products/blending/innovfin/

To facilitate initiatives/project/firms financing (not the banker or VC) Awareness raising, identification of potential candidates, links between R&I providers and the financial stakeholders…

Which role for CNECT?

http://www.eif.org/what_we_do/index.htm EIF

EIB

http://europa.eu/youreurope/business/funding-grants/access-to-finance/index_en.htm

EU Access to finance portal

1. European Fund for Strategic Investments (EFSI)

EFSI risk-bearing capacity € 21bn

EIB / EIF financing € 61 bn

Investments value over 3 years € 315 bn

3x

5x

EU Budget Guarantee

EIB Own resources

Infrastructure & Innovation

window

SME window

INFRASTRUCTURE AND INNOVATION WINDOW

SOURCES OF FUNDING

TYPICAL PRODUCTS OFFERED

PROJECTS IN ELIGIBLE SECTORS

Long-term senior debt for higher

risk projects

Equity and quasi-equity

Subordinated loans

Other

investors

join in on

a project

basis

Transport

Energy infra, Renewable

Energy, Energy Efficiency

ICT

Environment and

Resource efficiency

Human capital and social

sectors

Research, Development, Innovation

SMEs

The Fund

serves as credit

protection for

new EIB

activities

European Fund

for Strategic Investments

Project cycle for an EFSI Project

STEP 1 Proposal

STEP 2 Appraisal

STEP 3 EIB Management Committee

STEP 4 Investment Committee Approval

STEP 5 Signature

STEP 6 Disbursement

STEP 7 Monitoring

and reporting

STEP 8 repayment

EFSI PROJECT

CYCLE

Project Promoters present proposal to EIB Group directly

- financial - economic - environmental - social - and technical assessment

EIB Management Committee approval

- Investment Committee assessment and approval

- Final approval by EIB / EIF Board of Directors

Financing contract is agreed

SMES AND MID-CAP WINDOW

SOURCES OF FUNDING

TYPICAL PRODUCTS OFFERED

Guarantees

European Fund for Strategic Investments

FINAL RECIPIENTS AND EXAMPLES

SME

e.g. micro-loans to a SME

Venture Capital

Growth finance

Securitisation

Mid-cap company

e.g. equity in a

start-up

e.g. loans for R&D project

e.g. venture

capital for a prototype

The Fund serves as credit

protection for new EIF activities

Other investors join

in on a project basis

WHAT IS THE ADVISORY HUB?

PROJECT PROMOTERS PUBLIC AUTHORITIES MEMBER STATES PRIVATE SECTOR DEMAND

Project support throughout the project cycle

Support to Financial instruments

Enhance access to finance

Existing advisory programmes and activities

European Investment Advisory Hub

(EIAH)

New investment support also in areas relevant to the scope of EFSI (could be delivered by EIB advisory or operational teams)

Identification of needs as they arise

Network of institutions incl. EIB Group, EC, National Promotional Banks, etc.

European Commission

Integrated collaboration model

Additional advisory and technical assistance

EIAH’s partner institutions’ expertise

SUPPLY

WEB CONTENT + WEB PORTAL + SUPPORT TEAM

ACCESS P

OIN

T

DELIV

ERY C

HAN

NELS

WOULD YOU LIKE TO KNOW MORE?

CONSULT THE HUB’S ADVISORY OFFER

REQUEST SUPPORT FROM THE HUB

Contact the Hub for more info

www.eib.org/eiah

eiah@eib.org

www.eib.org/eiah/contact

THANK YOU FOR YOUR ATTENTION MORE INFORMATION AVAILABLE AT:

http://ec.europa.eu/invest-eu http://www.eib.org/about/invest-eu/index.htm

#investEU #EFSI

CONTENT

Thank you!