How cascade funding supports innovation

Cascade funding is a financial support model for innovation projects. Under this approach, the European Union facilitates access to funding for SMEs, startups, and other smaller entities that develop innovative projects. The goal is to optimise the distribution of funds and promote the growth of technological and research initiatives across various sectors.

Cascade funding is a mechanism that organises the distribution of funds into several stages or levels. In this context, funds are channelled through a main entity that manages the funding and are then distributed to final beneficiaries through specific calls for proposals. These beneficiaries may include SMEs, startups, and other organisations that meet the criteria set in each call. This system is distinguished by its ability to simplify the process of accessing funding and ensure that funds are used effectively.

What is cascade funding?

The cascade funding model is characterised by its hierarchical structure. At the top of the hierarchy is the main funding body, which may be a government agency, a research institution, or a consortium. This main body receives and manages a significant allocation of funds and is responsible for distributing them through a set of intermediary entities. These intermediary entities, in turn, are responsible for distributing the funds to the final beneficiaries.

Final beneficiaries are typically projects or entities seeking support for the development of innovative technologies, applied research, or the improvement of existing processes. Each level of the funding process has specific requirements concerning the applicants, the types of fundable projects, and the evaluation criteria.

Funds from the European Commission are distributed among final beneficiaries in small amounts, generally ranging between €500,000 and €200,000. The primary objective is to support the incorporation of novel technologies and promote startups and pioneering sectors, with a significant focus on the digital area (Industry 4.0, data), blockchain, energy savings, or health pilots.

Advantages of cascade funding

Cascade funding offers several advantages for entities seeking financial support.

• Simplified access to funds. Cascade funding facilitates access to funds by reducing the number of intermediaries and simplifying administrative processes. Smaller entities can access resources without having to navigate complex national or European processes.
• Flexibility in fund distribution. Cascade funding allows for flexible distribution of funds, adapting to the specific needs of each project. This is particularly useful in research and development, where requirements can vary significantly between different initiatives.
• Promotion of innovation. By providing funding to smaller projects and early-stage developments, the model fosters innovation and the creation of new technologies. SMEs and startups, which often lack access to substantial financial resources, can benefit greatly from this type of support.
• Efficiency in resource management. The hierarchical structure allows for efficient management of financial resources, ensuring that funds are used effectively and distributed according to the priorities set by the main funding body.

Applications and practical examples

Cascade funding is utilised in various initiatives and programmes within the European Union. A notable example is the Horizon Europe programme, which supports research and innovation projects in key areas such as technology, health, and the environment through cascade funding.

Among the various services it provides daily to its clients, Zabala Innovation can also act as an intermediary entity for cascade funding. The consultancy regularly organises cascade funding calls as part of a wide range of projects. For instance, the Wasabi project, which focuses on advanced functionalities in digital assistance solutions, offers up to €125,000 to selected SME projects. Similarly, the Women TechEU programme provides €75,000 per winning proposal to support female founders and entrepreneurs leading deep tech startups in Europe.

All open cascade funding calls managed by Zabala Innovation are listed here and are constantly updated. Be sure to take a look!