The Enhance EIC Pilot rationale

Stéphane OUAKIHead of Unit Financial InstrumentsEuropean Innovation Council Task ForceDG RTD

What’s holding back Europeaninnovation?

Who will lead the next wave of breakthrough and disruptive innovation?

Examples taken from WIPO, MIT, WEF, OECD, etc.

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15.116.5

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4.6

2.63.3 3.5 3.2 3.5

4.8 4.96.0

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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United States EU(1)

Financing gap: venture capital in US vs EU

Venture capital raised. Data: Invest Europe, NVCA / Pitchbook. (1) EU does not include HR, CY, MT, SI, SK.

Global fast-growing innovative companies

Dr. Holger Schmidt (December 2017)

Foreign backers of Europe‘s techscale-ups

Map of the 476 European cities with at least one scale-up company, Startup Europe "Startup City Hubs in Europe" 2018 report

European tech ecosystems are rich but can only reach their full potential if better interconnected

The European Innovation Council

One stop shop for breakthrough & disruptive innovators

Agile funding from idea to investment

Open to all innovators, in any field, at any time

Highest potential innovators selected on basis of ideas and team

Pathfinder grants for advanced research on emerging technologiesAccelerator funding for innovative start-ups (<€2.5 million grant, <€15 million equity) Crowding in private investment (VC, Invest EU)

Access to mentoring and advisory services and to knowledge partners (e.g EIT)Expert Programme Managers to engage with projects and communitiesPrizes for breakthrough technologies

Building ecosystems and communities

Tested under Horizon 2020, fully incorporated in Horizon Europe

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200

400

600

800

1000

1200

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2018 Pilot 2019 Enhanced Pilot 2020 Enhanced Pilot

Total estimated budget, M€

First phase launched in 2018

Bringing together relevant Horizon 2020 schemes in one place (SME

instrument, Fast Track to Innovation, FET Open, Prizes)

Introduction of open support for Start-ups and SMEs (no predefined themes)

Introduction of interviews with experienced innovators to select SMEs for funding

Launch of major prizes for breakthrough innovations, e.g low cost space

launcher (€10 million prize); artificial photosynthesis (€5 million prize)

6000 applications received by start-ups or SMEs (for SME phase 2 grants)

Majority combining different fields: digital, energy, manufacturing, health, etc.

520 interviewed & 250 awarded funding (budget €450 million)

Fast process (grant awarded in under 4 months)

Total budget in 2018 of €778 million for all EIC pilot actions

Second phase launched in 2019

Increased budget of €2.2 billion (€1.0bn in 2019; €1.2bn in 2020)

Introduction of pilot pathfinder, with 6 strategic emerging technologies targeted (human-centric AI, novel medical devices, zero-emission energy generation, etc

Introduction of pilot accelerator with option to apply for blended finance (combined grant and equity)

New EIC Advisory Board to bring in leading innovators for ongoing design & implementation

First EIC programme managers recruited to actively engage with pathfinder projects

Full EIC under Horizon Europe (2021-27)

Proposed budget of €10 billion

Dedicated governance with EIC President and Advisory board

More flexible rules for funding (ability to stop or reorient, links to Invest EU) with increased role for expert programme managers

Full accelerator funding with both grant and blended finance

Full pathfinder scheme for grants in advanced research and transition activities

Fast track access for Horizon grant holders (incl. European Research Council) and certified national schemes

Creation of EIC Forum with Member States innovation agencies

Nicklas Bergman Paddy Cosgrave Gráinne Dwyer Hermann HauserMartin Bruncko

Marjolein Helder Taavet Hinrikus Ingmar Hoerr Bindi Karia Jana Kolar

Jim Hagemann Snabe Constantijnvan Oranje

Roxanne VarzaCarlos Oliveira Kinga Stanislawska

Designed together with leading innovatorsAccelerating breakthrough innovation report, January 2018

EIC Advisory Board

CHAIRMark Ferguson

Entrepreneur, Science Foundation Ireland

VICE-CHAIRHermann Hauser

Co-founder of Amadeus Capital Partners

Kerstin BockCEO of Openers

Jo BuryManaging Director of Flanders Institute of

Biotechnology

Dermot DiamondPrincipal Investigator:

INSIGHT Centre for Data Analytics, Dublin City

University

Laura Gonzalez-Estefani

Founder and CEO at TheVentureCity

Jim HagemannSnabe

Chair Siemens AG, Chair AP Moller Maersk

A/S

Ingmar HoerrFounder and

Chairman of the Supervisory

Board of CureVacAG

Fredrik HörstedtVice president of utilisation

Chalmers University of Technology

Heidi KakkoPartner of

BaltCap Growth Fund

Bindi KariaEuropean Innovation

Expert + Advisor, Connector of People

and Businesses

Anita KrohnTraaseth

Former CEO Innovation

Norway

Jerzy LangerPhysicist, Emeritus

Professor at the Institute of Physics of the Polish Academy of

Sciences

Ana MaiquesChief Executive

Officer, Neuroelectrics

Marja MakarowBiochemistry/

molecular biology, director of

Biocenter Finland

Carlos OliveiraSerial Entrepreneur, Innovator, Executive

President of José Neves Foundation

Valeria NicolosiChair of

Nanomaterials and Advanced

Microscopy

Bruno Sportisse

Chair and CEO at INRIA

Kinga Stanislawska

Managing Partner and Founder of

Experior Venture Fund

Roberto VergantiInnovation

academic, former RISE group

Martin VilligCo-founder of Bolt (formerly

Taxify)

Yousef YousefCEO of LG Sonic

EIC Key elements on Horizon Europe

• Proposed budget of €10 billion

• One-stop shop for innovation to help small companies to innovate and scale up

• EIC Pathfinder for bottom-up proposals from small consortia

• EIC Accelerator to provide three types of support: blended, grants-only and

equity only

• Fast track procedure for:

• SMEs already funded under H2020 or Horizon Europe

• National or regional projects stemming from certified programmes

• Time-to grant not exceeding 6 months

Pillar 3 - OPEN INNOVATION:Stimulating market-creating breakthroughs and ecosystems conducive to innovation

European Innovation Council

Support to innovations with breakthrough and market creating potential

Europeaninnovationecosystems

Connecting with regional and national innovation actors

European Institute of Innovation and Technology (EIT)

Bringing key actors (research, education and business) together around a common goal for nurturing innovation

€ 10 billion € 500 million € 3 billion

European Innovation Council

The EIC will support innovations with breakthrough and disruptive nature and scale up potential that are too risky for private investors.

Pathfinder:Grants

(from early technology to pre-commercial)

Accelerator:Grants or equity only

& blended finance(from pre-commercial to market & scale-up)

European

Innovation

Council

Helping innovators create markets of the future, leverage private finance,

scale up their companies.

Two complementary instruments bridging the gap from idea to investable project

Innovation centric, risk taking & agile, pro-active management and follow up

Source: COM (2018) 436/2

EIC: Direct funding to high-potential innovators

Simple - Open to all areas of innovation• No prescriptive topics – to grasp interdisciplinary• Access from other initiatives (ERC, Pillar II, EIT, National and Regional)• No geographical constraints (within EU, possibly open to AC)• Selection by interview – focus on innovator with excellent ideas and scale-up

potential

Agile - Pro-active management • Key role of Programme Managers• Flexibility to stop, or change direction• EIC business acceleration services - mentoring, coaching, fellowships

Innovator - centric • Flexible blended instruments (grants, equity, loans, reimbursable advance, etc)• Adequate business support service i.e., mentors, coaches, advice support through

NCPs and EEN

The Pathfinder for Advanced Research

Simple - Open to all areas of innovation

• A continuous open call for bottom-up proposals

• Open to all types of innovators, from individuals to universities, research organisations and companies, in

particular start-ups and SMEs, and from single beneficiaries to multi-disciplinary consortia

Agile - Pro-active management

• Regrouping of selected projects into thematic or objective driven portfolios

• Pathfinder's Transition activities:

• Help innovators develop the pathway to commercial development, such as demonstration activities and feasibility studies to assess potential business cases, and support the creation of spin offs and start-ups

• Complementary grants to top-up or enlarge the scope of previous and on-going actions

• Pathfinder will provide for competitive challenges to develop key strategic objectives calling for deep-tech and

radical thinking.

Innovator – centric

• Grants from the early technology stage (including proof-of-concept, technology validation) to the early

commercial stage (early demonstration, developing a business case and strategy).

The Accelerator – Funding to Scale Up

Simple - Open to all areas of innovation• A continuously open and (mainly) bottom-up call• EIC blended finance combining:

• Grant or reimbursable advance• Investment in equity or loans

Agile - Pro-active management • Single process and with a single decision, providing the supported innovator with a single

global commitment to financial resources

Innovator - centric • The combination and volume of financing will be adapted to the needs of the firm, its size

and stage, the nature of the technology/innovation and the length of the innovation cycle• For deep tech, a grant component will be always be included

Accelerator Evaluation Process

Business Acceleration Services

Principles

• Smart money - maximising impact of funding

• Business intelligence for better services - activities proposed based on your needs (Coaching, Mentoring, Networking events, such as Corporate Days, EIC Community Platform etc)

• Unique selling point with different paths for different clients

€3 billion-pilot package to support bottom-up ideas

Visionary idea for developing radical and innovative technologies

Radically new, highly risky ideas commercially viable and with a potential to scale up

FET OPEN + FET Proactive

Future and Emerging Technologies(grant-only)

SME Instrument Phase 2 / Fast Track to Innovation (FTI)

(grant-only)

€ 1.500 million Approx. 700 projects

€ 700 million Approx. 180 projects

EIC Horizon Prizes + Support actions€50 million

PATHFINDER Pilot

Coaching, mentoring and business acceleration services for all SMEs

ACCELERATOR Pilot

Blended finance

(grant + equity)

OR

EIC Pilot 2018 – 2020: State of the Play

EIC Pilot 2018-2019 - Global results

* First blended cut-off not included

Enhanced EIC Pilot - First blended cut-off

Topics

EIC Accelerator Pilot - EIC Fund

Context

• Mission: to deliver efficiently with high quality on closing the gap between the (financial) needs of high potential innovative SMEs and the current offer by the (private) market

• Set-up as another type of indirectly managed financial instrument under the running H2020 Delegation Agreement with the EIB Group (EIB and EIF)

• Purpose: disbursement (and management) of the equity part of requests for blended finance by SMEs

• H2020 indicative budget: + € 100 million

Timeline

• Creation (incorporation): 31/01/2020

• First equity decision by EIC Board of Directors: at the latest May 2020 (within 6 months after Jury decision)

EIC Accelerator Pilot - EIC Fund

Main characteristics

• Anonymous company with variable assets capital (established under Luxemburg law)

• Development of a lean, efficient, equity process with following characteristics

• Perform due diligence with the objective to define a tailor-made investment fitting the needs of the company and of the project

• Equity amount and time-line delivered within 6 months after the panel decision

• Search for co-investors for the selected proposals

• Leveraging via private capital ((co-)investment) in the EIC Fund/beneficiaries

• Maximise the potential along the life cycle (patient capital approach)

Due Diligence for blended finance

• Performed by the “EIC Fund”

• Goal: Define a tailor-made investment that fits the needs of the

company and the project.

• Focus mainly on evaluating compliance and risk level as well as:

- Confirming the investment amount and structure

- Estimation of the total financial effort

- Defining equity “tranches” and key milestones

• Additional information may be requested from applicants

Sneak peak 9 October cut-offHigh demand for equity

• 1.852 applications received

• Total amount of requested €5.2 billion, out of which:

- €2.83 billion for blended finance (500 companies):

– 66.9% for equity, representing €1.899 billion

– 33.1% for grant, representing €0.939 billion

- €2.36 billion grant only (1.350 companies):

– Two thirds allowing possibility to receive a counter offer from the Commission

(€1.62 billion)

EIC and InvestEU

• In close synergy with InvestEU, the EIC Accelerator, in its blended finance and equity financial support, should finance SMEs, including start-ups, and, in exceptional cases, projects by small mid-caps, which are either:

• not yet able to generate revenues, or

• not yet profitable, or

• not yet able to attract sufficient investments

to implement fully their projects' business plan.

• Such eligible entities will be considered as non-bankable, while a part of their investment needs could have been or could be provided by one or several investors such as a private or public bank, a family office, a venture capital fund, a business angel, etc.

EIC and InvestEU - Synergies

Case 1: Proposals deemed ‘bankable’ during evaluation

• In the context of the initial assessment under the Accelerator, a project that is deemed bankable will be channelled towards InvestEU.

• No obligation for InvestEU to select such project (InvestEU rules apply).

Case 2: Proposals requesting grant and debt form of financial support

• Case of normal blended finance, in which company requests a grant plus debt instead of equity.

• Such proposals will be channelled towards debt products established under InvestEU.

• No obligation for InvestEU to select such project (InvestEU rules apply).

Case 3: Following scale up, the beneficiary / project becomes bankable

• Commission will identify appropriate InvestEU product that would lead to subsequent equity or debt finance. Once again, InvestEU rules apply.

• InvestEU financial intermediary could replace EIC Fund in equity stake with entrepreneur’s agreement.

For further information

EIC website

European Funding and Tender portal

EU Science & Innovation

@EUScienceInnov

#EU_EIC

@H2020SME

EU Science & Innovation

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