A new investor is in town and it is not the typical one. The European Commission enters the space of startup investment with a fresh new innovation programme: the EIC Accelerator. European founders have today the possibility not only to get innovation grants but also investment through the European public funded Horizon 2020 programme. The bold new initiative led by the European Innovation Council (EIC) is poised to ameliorate the funding gap that European disruptive startups face when trying to get their innovations to the market.
European startups have always suffered a lack of early stage capital when compared to other, more entrepreneurial countries, such as the US. The situation is not at all homogeneous across Europe. While some countries can be proud of their startup investment sector like Sweden or Finland, others are like capital desserts for founders.
The European Commission has since several years supported many innovative startups with innovation grants, namely through the very popular SME-Instrument that supports small companies with grants of up to 2.5 million euro. Now, the European Commission is exploring an unknown territory by offering not only non-reimbursable grants but also equity investments to the startups. On top of the grants, startups can also apply for investments of up to 15 million euro to further fuel their go-to-market strategies.
For European entrepreneurs the question remains the same: is it worth trying? Most European startups know what this is about. European innovation grants have always been deemed as highly bureaucratic processes with a very low success rate (only around 4% of the proposals get funded). The EC is in fact under very high pressure to ease the access to innovation capital while still providing diligent but fair evaluation mechanisms. Indeed, the evaluation process is now so fast that applicants get the results in about a few weeks.
On paper, every innovative highly-scalable business could apply for investments and grants. In reality, not many companies should actually try to get this funding; only those that are truly disruptive, and specially the ones that are trying to transfer R&D to the market or exploit a unique IP portfolio.
In my opinion, entrepreneurs should honestly try to answer these questions before entering the very competitive world of the EU funding programmes:
– Are we developing a unique technology that dramatically outperforms everything that is today on the market?
– Is the future business highly scalable?
– Are we a top-class technical and management team?
– Do we need between 1 and 17 million euro to get our innovation to the market in the best possible conditions?
– Have we tried to obtain this funding from the market but was not possible or, if possible, the investment round would severely damage our vision?
If the answer to all these questions is yes, you can give me a call 😉 , you actually have a fair chance with the new Accelerator programme.