Research and innovation

Financing for SMEs with the new Horizon Europe

The “Horizon Europe” framework, with an estimated budget between €80 and €90 billion, establishes the EU’s research and innovation programme for the years 2021-2027. Furthermore, an additional €30 to €50 billion investment contribution is expected from the private market. Following the steps of its predecessor, the Horizon 2020 programme, the aim is to significantly boost investment in technology and business growth across Europe.

During the last 7 years, the Horizon 2020 programme has been financing R&D projects. Over €46 billion have been distributed to projects in areas such as health, food security and ICT innovation. Across Europe, small and medium sized enterprises (SMEs) have submitted around 170.000 applications. As a result, more than 25.000 innovation projects have been financed.

The Programme

Compared with the Horizon 2020 programme, the European Commission has proposed an even larger research and innovation agenda to continue its successful results. Horizon Europe is structured according to 3 main pillars on which most of the program’s budget is focused: Excellent Science, Global Challenges & European Industrial Competitiveness, and Innovative Europe.

In addition to these three pillars, Horizon Europe envisages activities through direct actions from the European Research Area.

Horizon Europe Pillars
Source: European Commision

Opportunities for small and medium companies

The main goal of the program is to bring to life innovative ideas that place Europe at the forefront of technology worldwide. To this end, the European Commission seeks to provide funding to SMEs with innovative ideas under development. Two instruments will make possible the access to European investments:

Pathfinder Instrument

The Pathfinder instrument will provide financial support to projects in research stage. Under Horizon 2020 the support was provided as a grant of up to €4 million per project. These grants are for consortia of at least 3 entities from 3 different Members States and associated countries. The EIC Pathfinder offers grants to promote collaborative, inter-disciplinary research and innovation on science-inspired and radically new future technologies.

This funding line will not cover the commercialization costs of the product, only the costs of personnel, materials, equipment and, if strictly necessary, subcontractors, derived from the development of the project

The programme also features ‘targeted calls’ based on topics or challenges identified by the European Union. These topics include:

  • Artificial Intelligence for advanced manufacturing
  • Breakthrough zero-emissions energy generation for full decarbonization
  • New biomedical technologies to enhance life quality

Accelerator Programme

The EIC Accelerator programme builds on the SME Instrument Phase II and provides grant-only support as well as support in the form of blended finance (combining grant and equity)Applicants for funding must be established in an EU Member State or an associated country. The objective is to allow the transition from the prototype to a consolidated product while implementing a strong go to market strategy. 

The financial support will cover the costs of personnel, materials and possible subcontractors, derived from the development of the project through grant and offer the equity option for those costs derived from commercialisation activities.

According to the information available so far, the evaluation process will have 3 phases. A first pre-selection stage (short application), a proposal stage (full application) and an interview stage. 

Horizon Europe is scheduled to launch the 1st of January 2021. As we approach the launch date, more information on the budget and priorities will be published, and many details will continue to be worked out after January 2021.

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