European Commission selects 75 companies with scale-up potential. Half were awarded direct equity investments for the first time.
The pilot phase of the European Innovation Council (EIC) Accelerator has completed its largest and most ambitious funding round so far. It has awarded more than €278 million to 75 start-ups and SMEs with potential ground-breaking innovations to help them accelerate their growth. The ambitious nature also lies in the funding instrument itself: for the first time, 39 of these companies have been awarded blended finance in the form of grant and direct equity investment. These investments will be managed by the European Investment Bank (EIB) in a dedicated EIC Fund, which will conduct the necessary due diligence in order to make the first equity investments in the spring of 2020.
The novel blended finance instrument allows for a much higher level of funding, complementing the grant component of up to €2.5 million with equity of up to €15 million. This significant funding capacity will help to bridge the so-called “valley of death” in the European funding landscape for start-ups. A lack of scale-up stage funding has been identified as one of the main problems to be addressed to make the European innovation ecosystem more able to compete with their American and Chinese peers. The pilot phase will include 4 more cut-offs for applications in 2020 with more than €600 million in direct funding made available.
The 75 companies selected span 15 Member States and five associated countries. Among the associated countries, Switzerland and Israel are hosts to the most awardee companies, with nine each. Swiss companies received only grant funding, while Israel along with France hosts the most projects awarded blended finance with six each. Third-country appropriations from SME-related programmes were disbursed and amply covered the amounts awarded to companies from associated countries. The success of the pilot in terms of the strong demand for blended finance from companies both in EU Member States and in associated countries demonstrates the attractiveness of this new funding model and of collaboration with the EU.
The attraction of the EIC is not limited to the funding itself. The beneficiaries will have access to coaching, networking and business acceleration services to help them build their businesses. Significantly, the EIC Fund will actively seek to bring in co-investments and follow up investments by private investors and others on attractive conditions. The goal is to mobilise the high potential of the European financial ecosystem in funding disruptive innovation and so ensure that European companies can compete in the development of new technologies and new markets.