EIC Accelerator has landed. October-2019 witnessed the first deadline with a brand new template and lots of new written and non-written rules that will strongly influence the selection of candidates for funding.
If I had to highlight the most important changes and differences from the former SME-Instrument Phase-2 (I will not enter into aspects that have not changed, e.g. the importance of the right team in place, the credible ambition to become an global market leader, nor other minor changes, mostly related to how to organise the information to build the proposal), I would focus on the following 4 points:
Mono-beneficiary scheme. No consortiums allowed. This is understandable: I guess they do not want to deal with a consortium, but with a single entity, when the time comes to sign the equity component agreement (if asked). If you really needed to collaborate with other SMEs, you should start thinking about creating a new company (may be a joint-venture?). Making it clear that the grant has to be signed by a single juridic entity is a great idea. However, they give us a few more freedom degrees at the application stage. The proposal can be submitted by the actual beneficiary, sure, but they also allow it to be submitted by one or more natural persons or legal entities intended to establish or support the actual beneficiary (HE Proposal Reg. Art. 43.1). In particular, they allow the proposal to be submitted by investors, including public innovation agencies, which can be a common situation.
Deeper tech. It might not be politically correct to say so, and I remember the audience that this is just my personal subjective opinion, but I feel that the EIC is no-longer welcoming "just" profitable innovations: they require that the technology the innovation is built upon is really deep-tech, and preferably coincident with the European Commission strategic areas of interest. We can search for guidance in the EU Strategic Research Agenda (please, do not interpret this a a hard stopper, but if the innovation is not really based on "deep-tech", we better excel at the rest of evaluation criteria).
Cancellation of Phase-1. SME Instrument Phase-1 is no longer with us, but that DOES NOT mean you do not need to prepare a very thorough feasibility study, upon which preparing a preliminary business plan (including a preliminary commercialisation and communication plan), upon which (finally) you should prepare the actual proposal. Indeed, it was evident as per statistics coming from SME Instrument, that those companies coming from a Phase-1 were more successful (in average) at being funded in their Phase-2 than those not coming from a Phase-1. My humble opinion is that the reason behind these statistics is that the companies receiving funds to carry out a SMEI Phase-1 feasibility study, made a good homework that made their Phase-2 proposals stronger. I think it had sense to cancel SMEI Phases-1: although it had a strong impact in some countries to creating business culture, and it was very beneficial for microSMEs and start-ups (specially those born at the academy), the truth is that entrepreneurs and companies at State Members are far from being homogeneous, so in some cases Phase-1 was not really necessary, while in others it came short. I guess it has sense that each country prepares their own roadmap to help their companies approximate to the border of the so-called "Valley of Death" and an homogeneous programme like EIC accelerator to help them to cross it. I would like to stress that it is of the utmost importance to make a good preliminary work prior to preparing a proposal. In some cases, the SME will be ready, but in others, they can be really far from being mature enough. It is critical that the applicants take their time to make a very thorough feasibility study and business plan, acquire the right competences, strengthen their team and avoid at all costs presenting a fast and badly-prepared application as only bad things can happen then, the worst of them, being funded to carry out bad-planned actions.
A new blended finance scheme that requires the beneficiary to be due-diligence-ready. It really helps me to understand this program to visualise a company with an innovation at TRL5-7 that is planning to grow through a sequence of three stages, requiring an investment round for each of them. The goal of the first investment round of up-to €2.5M, will be reaching TRL8. The funding will follow the old SME Instrument rules, a 70% funding scheme (~ seed). The second investment round has the goal to really, REALLY, be market-ready, and will give the beneficiary up-to €15M in exchange for up-to 25% equity (~series A). Finally, a third investment round (the one the former 2 aims at preparing us for) to fully uptake the international market (~ series-B). This is key: understanding that the underlying goal of the EIC Accelerator Pilot (I insist this is my very personal take) is covering the first 2 rounds to help those companies that find hard for whatever motive to find private investors, to achieve those objectives that will help them to be attractive for a private ~series-B investment round. For all this to happen, we need to be due-diligence ready, and not only do a good homework in regards to our financial plan, but also prepare our company structure to be investible: think about those tricky company statutes that can make an investor raise a red-flag, that IP we have an issue with a former employee/founder... is there anything that can be a no-go for an investor? We better deal with that prior to applying!
Note. In the near? future, I will try and elaborate a detailed guide on how to maximise your chances when preparing an EIC Accelerator Proposal.
This article reflects my very personal and subjective opinion on some aspects of the Accelerator Pilot based on my experience as a business coach for this programme. It is by no means an official opinion. As a matter of fact, I strongly recommend any one interested in presenting a proposal to the EIC Accelerator Pilot in 2020 to contact their National Contact Point and to thoroughly study the official website, template, self-evaluation form, and the excellent resources available at Access4SMEs.
This article only focuses on some of the key differences between the extinct SME Instrument Phase-2 and the brand new EIC Accelerator Pilot. Some of them might not seem that important, but believe me when I say that they can strongly influence the full proposal's narrative, and indeed may end by changing even your business model.
This post was first published as an article on my LinkedIn account