Along with other Commission initiatives, the creation of the EIC fund will be vital to building the European technology champions of tomorrow.
The European Innovation Council (EIC) pilot has taken an important step forward in its development with the establishment of the EIC Fund, a legal entity tasked by the European Commission (EC) with finalising and managing equity stakes in SMEs and start-ups. The European Investment Bank will serve as investment advisor to the EIC Fund and in this role will manage the ownership stakes on behalf of the EC.
A key focus of the EIC pilot under Horizon 2020 is providing support to SMEs and start-ups in their scale-up phase, as they begin commercialising their product and expanding their operations. With this objective in mind, the EIC pilot has introduced so-called blended financing (see SwissCore article), combining the more traditional grant funding with awards of equity funding of up to €15 million. A total of 102 companies so far have been “pre-selected” for such equity financing (including six Swiss companies) amounting to nearly €400 million under the EIC Accelerator pilot, since its inception in late 2019. With the establishing of the EIC fund responsible for handling those investments, these companies will now go through a due diligence process managed by the European Investment Bank before the funding is approved and disbursed. The EIC Accelerator Pilot will preselect further companies in July (in Green Deal areas) and November.
As the fully fledged EIC ramps up under the next EU research and innovation framework programme, Horizon Europe, in 2021, the EIC fund will continue to play an important role. It is expected that at least one third of the EIC budget, currently proposed at €10 billion, will be in the form of equity managed by the EIC Fund. Furthermore, the EIC Fund will increase financing for high-impact innovation by crowding-in private investment, co-investing with venture capital funds, national promotional banks, corporate venture funds and other private investors. The EIC is actively seeking interested parties to co-invest.
In addition to the EIC Fund, many other initiatives have been launched by the EC in support of scaling up European breakthrough innovations. The EIC is building networking platforms and new funding instruments:
- The EIC COVID-19 platform was created as a follow-up to the EUvsVIRUS hackathon. It constitutes a collaborative space where public and private procurers, regional and national agencies can setup challenges. In respnse innovators, companies and researchers can forward their solutions. Sponsors have the possibility to pledge their support.
- The EIC Planet.tech initiative is specifically focused on the EU Green Deal, with the objective to develop impactful Proofs of Concept (PoC). It involves 40 high-level representatives and experts from four corporates (AB inBev, DEME, Nestlé, and P&G) meeting online with 28 EIC-beneficiaries (i.e. companies awarded under the Accelerator programme or its predecessor SME instrument). The reverse pitches, business meetings and presentations allow the start-ups and SMEs to interact with and understand the implementation needs of large corporates.
- ScaleUp EU is an automatic match-making service based on investor and company profiles, to facilitate partnerships between EIC funded companies and investors. Participating companies and investors can visualize key information to assess potential partners and launch contacts via the platform.
- The newly launched EIC Scalator pilot will focus on beneficiaries that are ready for funding rounds above €50 million, following their initial funding rounds provided by the Pathfinder and the Accelerator instruments. The EIC will fund a consortium that can propose services to up to 30 promising EIC beneficiaries, helping them to connect to corporates and investors, international markets and stock exchanges, thereby accelerating their access to such later stage funding.
- The European Investment Fund (EIF) is piloting the ESCALAR programme to address the financing gap experienced by high growth European companies (scale-ups). ESCALAR invests in funds focused on such scale-ups, supporting both new funds needing to achieve a larger critical mass to support such companies in their future portfolio, and existing funds seeking additional capital to make follow on investments in scale-ups in their existing portfolio. With up to EUR 100 million in single fund commitment possible, ESCALAR’s investment is intended to substantially increase fund resources, thus allowing larger investment tickets and creating greater capacity for making (follow-on) investments in scale-ups. The EIF investments will be structured with an attractive risk profile, which should stimulate crowding in of further private capital.