European funding opportunities for innovative SMEs

Three years ago, the European Commission published its strategy for Europe’s SMEs, a detailed action plan to help these companies adapt and thrive in an increasingly digital and sustainable world. One of its pillars is improving access to finance, an essential aspect in which Zabala Innovation has extensive and recognised experience.

When it comes to accessing European funding, innovative SMEs will not have to meet any essential requirements. This means that it is not necessary to have previous experience in national grants, to have a network of European partners, to be able to lead a consortium of several partners with a large budget, or to have a product close to the market or an idea that is not very mature but technologically disruptive. These aspects, however, may be relevant when choosing the most suitable option for each SME. These are the most popular opportunities and the elements to consider taking advantage of them.

EU funbding for SMEs: Cascade funding

The European Commission uses cascade funding – also known as financial support for third parties – to distribute public funds in lesser amounts, between €50,000 and €200,000, in an agile way. Its main objective is to support the incorporation of novel technologies, and the promotion of startups and pioneering sectors, mostly in the digital area (industry 4.0, data), blockchain, energy saving or health pilots.

As it is a simple procedure that does not require previous experience in European projects, cascade funding is the ideal option if you do not have too many resources. These calls are less well known than regular calls, so the chances of successful proposals increase. However, they tend to focus on specific topics, so it is important to check the conditions in each case in detail.

European Innovation Council (EIC)

The European Innovation Council (EIC) was established with the purpose of identifying, developing, and scaling up innovative technologies and companies, which are considered essential for EU policies to achieve the digital and green transition, and to ensure future strategic autonomy in key technologies.

The EIC is divided into three main programmes. The EIC Pathfinder (advanced research to develop the scientific basis underpinning innovative technologies), the EIC Transition (to validate technologies and develop business plans for specific applications), and the EIC Accelerator (to bring technologically disruptive innovations from SMEs, start-ups, and spin-offs to market and scale).

It is important to note that the EIC Pathfinder requires the participation of a consortium of three independent entities from three eligible countries unless the project applies to a specific challenge. In this case, it is possible to apply individually or under a consortium of two entities. Any type of entity can participate, be it a company or a university or research centre. The project will focus on an immature but disruptive technology.

As for the EIC Transition, the eligibility of the project is conditional on it being based on the results of a previously funded European project (FET, Pathfinder and ERC proof-of-concept, or any Horizon Europe project with low levels of technological maturity, among others), which is a significant barrier.

In short, if you are a research centre, or an SME with good relationships with European partners that are developing disruptive innovations in less mature states, the EIC Pathfinder may be a good option. The EIC Transition will be the step to take after having obtained positive results in other European projects.

EIC Accelerator

Are you an SME with a proven, disruptive technology and the capacity to generate a major market impact? Do you have a unique value proposition and a clear competitive advantage? If the answer is yes, the EIC Accelerator may be a good option for you to take the definitive leap to the market.

Its high funding capacity (up to EUR 2.5 million in grants and EUR 15 million in equity per project) makes it one of the most sought-after SME programmes in the European context. This popularity is a double-edged sword, as the success rate is below 5% and the three-stage procedure is complex and highly demanding.

A successful EIC Accelerator project must focus on a clear technological innovation compared to the state of the art. It must be evaluated in a relevant environment, allowing the expected impact and competitive advantage of the proposed solution to be quantified. The team must be at the forefront and all aspects of the business plan must be well thought out.

In addition, a project can only be submitted twice to this programme, so if all the above conditions are not met, it may be best to wait or look for other, more accessible programmes.

Eurostars

Within the Eureka framework, the Eurostars programme supports innovative SMEs and their partners (large companies, universities, research, and other organisations) by funding international collaborative R&D&I projects that result in the creation of new products, processes and services that can be rapidly commercialised in European and global markets. The project can belong to any civil sector.

The consortium must be led by an innovative SME and include at least two independent entities from two Eurostars member countries. The average budget per project is €1.5 million. The intensity of the grant depends on the country of each entity.

Beyond the fact that it has a higher project approval rate than other programmes such as EIC Accelerator, compared to Horizon Europe, for example, Eurostars also has the advantage that the consortia formed are more manageable, as there are usually between two and four partners.

Because of its size, its success rate (around 30%), and its flexibility, Eurostars is a great option for an SME mature enough to lead an intermediate project.

Investment readiness programme

Eureka also supports SMEs with more mature solutions seeking commercial relationships and private investment through the Investment readiness programme. It does this through two tools:

• International missions for SMEs to meet key investors and strategic partners outside the EU.
• Guided sessions (workshops) where SMEs can approach corporate investors and multinationals to establish business partnerships with them by solving a challenge for these corporations.

European project partner

The main advantage of the Eurostars programme is the fact that the SME coordinates the project, i.e., it has the capacity to drive the main idea and transform it into a competitive project with the help of European partners. For the SME to participate as a partner in a larger European project, however, the right circumstances must be in place. This video explains in detail the steps to follow to be part of a consortium.