SME Instrument

The EIC Accelerator’s Evaluation Problem in 2022

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In 2021, the EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) has completed its first year under the new application framework (read: Application Process). With 2 cut-offs in 2021 (June and October), it presented a steep learning curve for Small- and Medium-Sized Enterprises (SME), professional writers and the European Innovation Council (EIC). A new online process for EIC Accelerator applications was rolled out and it was continuously improved in parallel to the first grant submissions which presented unique challenges to the way the EIC and consultants communicated towards potential applicants. Deadlines were shifted, leaked information was more reliable than official EIC press releases and the comments provided by the evaluators led to some controversy. While more transparency is generally a positive step, especially for a public institution funded through the citizen’s taxes, it can backfire if it exposes significant inconsistencies. This article aims to explore some of these inconsistencies. The Application Steps The European Innovation Council and SME’s Executive Agency (EISMEA), European Commission (EC) and EIC have come up with a new application process that involves 3 distinct steps (note: these are unrelated to the Phases of 2020). This new process heavily relies on the use of an online submission form and has phased out most of the PDF/Document-type formats that applicants used prior to 2021. In summary, the current steps are: Step 1: A mini-application (text, video, pitch deck). At least 2 out of 4 evaluators must approve of the application to succeed. Step 2: A long application (text, support documents, pitch deck). At least 3 out of 3 evaluators must approve of the application to succeed. Step 3: A remote or in-person interview. All jury members must approve of the application to succeed. Startups have to successfully pass all three steps in the designated order to receive the EIC Accelerator financing. Each attempted step, successful or not, will likewise receive detailed comments from the evaluators or jury members. Note: Through the fast-track program implemented by the EIC, some companies can skip certain steps if the respective conditions are met. Step 1 Step 1 is designed to pique the evaluator’s interest as the EIC has stated. It is a very short version of a business plan and provides no detailed information on finances, the planned workpackages or other critical parts of the innovation project. Even the pitch deck is reduced to a 10-slide document that will be read and not actually pitched. The Step 1 success threshold is very easy to pass since only 2 out of the 4 remote evaluators must provide a favourable review which will allow an applicant to move towards Step 2 (see success rates). Step 2 Step 2 is a very in-depth presentation of the proposed innovation project since it requires the creation of a business plan which almost exclusively consists of text, provides very little visual data and asks the applying SME’s to answer many detailed questions. These include the value chain, product descriptions, technical backgrounds, market analyses, commercial strategies and many more details. This Step has proven to be the most selective and also the most work-intensive stage of the EIC Accelerator. Step 3 Step 3 is a remote or in-person interview which consists of a 10 minute pitch and a 35 minute Q&A session. The interview will be based on the submitted Step 2 application and pitch deck but the jurors might not be intimately familiar with all of the provided content. Linear Progression Between Steps While the new process for EIC Accelerator applications looks and feels modern, it has added a new layer of problems that is interlinked with its 3-Step structure. When generating an application process that screens companies over multiple months, it is important to make sure that each evaluation step presents a linear progression from its predecessor. If the assessments of Step 1 and Step 2 are too different then this will inevitably lead to wasted effort for both the applicants and the reviewers. To be transparent about this fact, the EIC should publish quality control data where the results of all three steps, if available for each applicant, are correlated to identify if a section was evaluated consistently across multiple steps. If all evaluators approve a very detailed business model in Step 2 but the jury members unanimously question its quality in Step 3 then the process would be flawed. Based on the first applications in 2021, it is clear that the three steps have different degrees of depth, a different focus and they use different evaluator pools which inherently leads to significant limitations. As a result, the process is not fully linear. Conflicts Between Evaluations A linear application process would see a project with a perfect score in Step 1 do well in Step 2. A project which has presented dozens of pages on the commercial strategy and has received a perfect score by evaluators in Step 2 should not have this review be reversed in Step 3. While the difference in quantity between Step 1 and Step 2 is significant and can lead to shifts in the perceived quality, the difference between Step 2 and Step 3 should be minuscule. In a linear process, there should never be a case where a revenue model was graded perfectly in Step 2 only to be rejected with poor reviews in Step 3. But such cases do occur frequently since an approximate 50% of applicants will be rejected in Step 3 with the top reasons being commercial aspects. If the project has not changed in between the two steps then how is it possible that the Step 2 evaluators grade a project so differently from the Step 3 Jury? The Step 2 application is presenting an unprecedented level of detail compared to earlier years so a lack of content would be a poor reason for the discrepancy. It is also unlikely that an applicant will intentionally submit false information or act fraudulently so how can such a result be explained? EIC Jurors … Read more

The New Technology Readiness Levels (TRL) for the 2021 EIC Accelerator

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The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) has made significant changes in 2021 and has successfully passed its first submission- and approval-cycle for new beneficiaries (read: Re-Inventing the EIC Accelerator). Out of over 1,500 startups and Small- and Medium-Sized Enterprises (SME) that have applied since April 2021 (read: AI Tool Review), 65 have now been selected for funding since they have successfully passed Step 1 (short application + video), Step 2 (long application) and Step 3 (VC-type in-person interview). Technology Readiness Levels (TRL) in 2021 While many changes have been made, one of the changes most relevant to prospect applicants, professional writers and consultants are the Technology Readiness Levels (TRL). An analysis of the previous iterations of the TRL’s can be found here: Technology Readiness Levels (TRL) for the EIC Accelerator (SME Instrument) How the EIC Accelerator Funds Technology Readiness Levels (TRL) (SME Instrument) Since 2021, their new definitions are as follows: Basic Research: Basic principles observed Technology Formulation: Technology concept formulated Needs Validation: Experimental proof of concept Small Scale Prototype: Technology validated in lab Large Scale Prototype: Technology validated in relevant environment (industrially relevant environment in the case of key enabling technologies) Prototype System: Technology demonstrated in relevant environment (industrially relevant environment in the case of key enabling technologies) Demonstration System: System prototype demonstration in operational environment First Of A Kind Commercial System: System complete and qualified Full Commercial Application: Actual system proven in operational environment (competitive manufacturing in the case of key enabling technologies; or in space) The Starting-TRL for the EIC Accelerator For the EIC Accelerator, it is recommended to start with a TRL of 5 or 6 since this is generally the prototype level that warrants further grant financing and subsequent equity investments for the scaling of operations. Since the EIC Accelerator also allows equity-only applications, the upper limit for the starting point of an EIC application is TRL8. The specific rules for this process are outlined in the Work Programme published by the European Commission and the EIC: The EIC Accelerator supports the later stages of technology development as well as scale up. The technology component of your innovation must therefore have been tested and validated in a laboratory or other relevant environment (e.g. at least Technology Readiness Level 5/6 or higher). This extract indicates the starting point for technologies financed under the EIC Accelerator. All innovations must have reached TRL5 at least. Differences Between Equity and Grant Financing Up to EUR 2.5 million grant component for technology development and validation (TRL 5/6 to 8); EUR 0.5 – 15 million investment component for scaling up and other activities. This means that the grant component is strictly targeted at all activities that end at TRL8 or lower. The equity component does not have any restrictions and can be applied towards the whole life-cycle from TRL5 to TRL9. You may request a grant component only or grant first (i.e. maximum EUR 2.5 million to cover TRL 5/6 to 8 and without requesting an investment component for TRL 9) if you have not previously received EIC Accelerator grant-only support. If only a grant is requested (and no equity) then the end of the project will be TRL8 as far as the EIC is concerned. Further justifications on how TRL9 is reached must be included by the applicants. If the proposal receives a GO and is recommended for funding, the jury may recommend lowering the grant amount if activities above TRL 8 are detected The TRL8-rule for the grant financing is strictly enforced so no applicant should aim to circumvent this (i.e. by trying to finance TRL9 activities through a grant). [Equity] is intended to finance market deployment and scale up but may also be used for other purposes (including co-financing or even fully financing innovation activities) It is clearly stated that the EIC Accelerator’s equity financing is also applicable to activities between TRL5 and TRL8 (innovation activities). Summary In short, the respective funding provided by the EIC for an EIC Accelerator project is separated into: Equity (by the EIC Fund): Finances TRL5 to TRL9 activities Grant (by the European Commission): Finances TRL5 to TRL8 activities When applying to the financing, requesting both grant and equity is possible (i.e. blended financing) while either is optional since an applicant can also request one without the other (i.e. equity-only, grant-only or grant-first).

On Hiring a Consultant or Grant Writer for the 2021 EIC Accelerator (SME Instrument)

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The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) has introduced a new stage to the application process in 2021 which acts as a mini-proposal termed Step 1 (read: Re-Inventing the EIC Accelerator). It includes materials such as a written grant application, a video pitch and a pitch deck which must be submitted to the European Innovation Councils (EIC) AI platform (read: AI Tool Review). With this change, the EIC Accelerator now has three Steps that must be passed, namely Step 1 (short application), Step 2 (full application) and Step 3 (face-to-face interview) (read: Recommendations for the EICA) but many startups and Small- and Medium-Sized Enterprises (SME) are unsure what these Steps mean and what deadlines and timelines are associated with them. As a short guide, applicants can refer to the following notes: Step 1 is a short application that can be prepared in less than 30 days and can be submitted any time without a fixed deadline (read: Pitch Video Workflow) Step 2 is a very long application that can only be submitted if (i) Step 1 has been approved and (ii) the EIC has published a fixed deadline. In 2021, there were two cut-offs, namely June and October. The minimum time to prepare the Step 2 application should be 60 days but more is recommended. Step 3 is a face-to-face interview that uses the pitch deck submitted in Step 2. It is only available to projects that have been approved in Step 2 and the dates for this Step are fixed to be right after the Step 2 evaluations are released (i.e. the pitch week). The preparation for this Step can be performed in 14 days. What to Develop Alone and What to Outsource There is no general rule as to when a consultant or professional writer should be hired or if one is needed at all. The official proposal templates, work program and guidelines (i.e. for the EIC fund and the AI tool) are publically available which means that every company is technically able to apply on their own. Considerations must be made regarding the resources available and the timing of the grant writing. For Step 1, the effort is comparatively small: Benefits of Developing Step 1 In-House Step 1 requires comparatively little time-effort Step 1 is relatively easy to develop No money is wasted in case the project is not suitable for the EIC Accelerator (i.e. some consultancies will onboard low-success cases) Full control over the outcome Benefits of Hiring a Consultant A consultant can shape the project and make it more impactful as well as avoid red flags Being part of Step 1 will simplify the Step 2 process Optimize the automated scoring on the AI platform based on experience Time savings Close contact with the EIC to be prepared for unexpected changes Consultants will re-submit a proposal if rejected while a rejected project will have a difficult time hiring a consultant The downsides of each approach are the reverse of each other meaning that what is a benefit of hiring a consultant will be the downside of preparing an application alone. For Step 2, the comparison would be as follows: Note: The comparison for Step 2 assumes that applicants have successfully applied for Step 1 by themselves and are considering hiring a Step 2 partner. Benefits of Developing Step 2 In-House Cost savings Full control over the outcome Benefits of Hiring a Consultant A consultant can shape the project and make it more impactful as well as avoid red flags Organizing the project development and collaboration between the management team to meet the deadline Time savings Close contact with the EIC to be prepared for unexpected changes There are a variety of considerations to be made alongside the general tradeoffs of hiring a consultancy listed above. One of these is the way companies assess their own capabilities and the way they judge their performed effort. It is not uncommon for a consultant to be contacted by a client who wants to apply to Step 1 by themselves while casually mentioning that they have scored B or C in all AI tool segments even though the project is highly qualified for the EIC Accelerator. Just because Step 1 is relatively easy to prepare does not mean that it is a low hanging fruit. One must place significant effort into the preparation of the application regardless of its simplicity. Yes, the EIC wants to make it easy for applicants to apply and wants to avoid them wasting their time on a long application if there is no chance for them to succeed. But this does not mean that evaluators will get a project with minimal input or read between the lines. Companies that are very busy often think that preparing a quick application will be good enough but this does not apply to EIC grants. A company should be prepared to go the extra mile with the application and fill out every section with a maximum amount of attention and effort. Conclusion The best way to answer the question as to when a consultant should be hired would be to first decide if an in-house proposal preparation is an option at all (i.e. time availability, skilled staff). Secondly, the company should talk to consultancies to identify if the project has appropriate chances for success (i.e. multiple opinions are recommended since some consultancies are not selective enough). Thirdly, the company must weigh the tradeoffs of in-house proposal writing which are the intense time requirements, especially for Step 2, but also the workload on the management team which might be better-advised focusing on business-relevant tasks instead of writing.

Keyword and Evaluator Selection for EIC Accelerator Applications (SME Instrument)

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The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) allows all applying startups and Small- and Medium-Sized Enterprises (SME) to add keywords into the platform which will be used to select expert evaluators (read: AI Tool Review). In the past, this feature was a black box function since professional writers and consultancies did not know how different evaluators would grade an application or if it made a difference at all (read: Re-Inventing the EIC Accelerator). The common approach was to select the most relevant keywords that reflect the project (i.e. battery technology, machine learning, biomass) and hope for the best. While this is still a proven way to follow, this article presents an opinion on how keywords could be selected to maximize the success chances of a submission. Evaluator Pool and Keywords The total evaluator pool contains thousands of experts who will be selected based on availability and, importantly, the keywords entered into the platform. These keywords are selected from a dropdown list whereas multiple parent keywords contain multiple child keywords while a total of 3 parent- and child-keyword-pairs are selected for a project in a specific order. In addition, free keywords can be added to supplement the initial keyword selection. When selecting keywords, there are usually multiple options since an AI-battery startup can lead with Energy followed by Battery and then Machine-learning or could reverse this order. But what if the market is PropTech or real estate in particular since the project provides energy storage solutions for backup systems in commercial buildings? Then keywords could also focus on the real estate industry, certain customer segments (i.e. utility companies) or similar aspects. There are many different options to choose from but, thus far, it was unknown how they would affect the evaluation of the application since trial and error were hindered by the non-transparent evaluations, the randomness of reviews and the scarce deadlines in 2020. Evaluators’ Feedback The European Innovation Council (EIC) has introduced a feedback feature into the evaluation process which allows reviewers to leave comments for the applicants in a very detailed manner. While their identity and background are unknown to the applicant, the specific comments of evaluators often reveal the angle from which an evaluator is looking at the innovation. If it is someone who has a scientific perspective, a technical view or is embedded into the industry then comments will often focus on this aspect. For better or worse, the type of evaluator can have a significant impact on how the proposal is reviewed. After having studied multiple Step 1 evaluations, it is evident that evaluators have very different perspectives. The same aspect of a project can be praised or criticised in the same review which makes the viewpoint, not just the project quality, critical. From experience, positive Step 1 reviews were often praising the impact, feasibility and vision of the project if evaluators saw that there is a strong potential for disruption while critical reviews tended to be focused on isolated technical or commercial aspects. A Different Approach Instead of asking oneself: What keywords describe my project best? It seems to be a better approach to ask: What background does an evaluator need to be the most impressed? Very often, a machine-learning scientist might not be impressed with a certain AI application while someone from the industry it targets would immediately see the benefit and have a positive view. But the opposite could also be true if the industry impact is more difficult to imagine than the cutting-edge nature of the technology which would make a scientist have a better impression compared to an industry participant. The aim of selecting evaluators should be to pick experts who will understand the vision the company has and will view the innovation in a positive light. What should be avoided are thoughts such as: The back-end is sophisticated, follows a unique approach and disrupts a market but I do not think that it is cutting-edge enough from a scientific perspective The product is scientifically sound but how will you convince me to buy it? Especially when it comes to software solutions, there can be purists who neglect the EIC’s focus on industry disruption and new business models just to criticise an isolated aspect of the project. Conclusion It makes sense to think deeply about the keywords one chooses prior to submission and to make sure that the potential background an evaluator will have matches the scope and focus of the application. This approach is not a proven method of getting good evaluators but can clearly impact what the evaluation result will be. Every professional writer has seen applications with evaluations that are contradictory and lack consensus. Often, the reason as to why this is the case is very obvious from the evaluator’s comments and it always comes down to their perspective as defined by their background. Unfortunately, this approach will likely be very short-lived. The EIC is already collecting keywords throughout Step 1 of the EIC Accelerator and manually selecting additional keywords does seem redundant at this stage. Still, as long as the selection of evaluators can still be influenced, it should be done carefully.

On the EIC Accelerator’s 2021 Success Rates (SME Instrument)

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The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) has reinvented itself in 2021 with a new submission process, a larger budget and new success thresholds (read: AI Tool Review). The latter is significant since they directly define how much time companies will need to spend on an application and how much time would have been wasted in case of a rejection (read: Companies That Should Not Apply). With the success rates having approximated 5% for many years and them having seen a steep decline in 2020 from 2.7% in January to <1% in October, it is likely that these success rates are now moving towards an all-time high. A previously published article investigated the potential success rates and predicted workloads of the individual stages, namely Step 1 (short application), Step 2 (full application) and Step 3 (face-to-face interview). The analysis looked at the best outcomes for applicants since the analysis directly correlated the success rates with the workload imposed on applicants and concluded that the most selective barriers should be in the beginning rather than in the end to avoid months worth of wasted effort. The 2021 Success rates With many startups and Small- and Medium-Sized Enterprises (SME) having applied to the 2021’s EIC Accelerator either by themselves or via consultants and professional writers, it is now possible to draw conclusions on the overall distribution of the success rates (read: Re-Inventing the EIC Accelerator). Since Step 1 is continually open for submissions, the approval rates are constantly changing but as of May 15th 2021, 67% of companies have passed with 755 out of 1,114. This number is expected to remain relatively constant over the coming months since it is also the threshold the European Innovation Council (EIC) had targeted. Step 2 results have only recently been published and they might not be representative for the coming cut-off’s since (i) the preparation time for applicants was less than 30 days, (ii) it was the very first call with a new application process and (iii) the feedback of the Step 3 interview juries might influence future Step 2 evaluations. Nonetheless, in June, 130 out of 801 applicants were selected for Step 3 which means that 16% of companies were successful in this stage. Note: Out of the 130 interview invitations for the EIC Accelerator’s Step 3, 24 Swiss startups were deemed ineligible due to the recent decision of the Swiss authorities in relation to Horizon Europe (2021-2027). This would yield a 13% success rate in this Stage considering that only 106 companies will participate in the interviews in mid-September. Combining the success rates of Step 1 and Step 2 yields a total success rate of 11% leading up to Step 3, and, considering that the success rates of the interview stage (Step 3) have historically been between approximately 50% in 2018/2019, it can be assumed that the overall success rate will regain a 5% total for the EIC Accelerator. Note: While interview success rates were approximately 50% in 2018/2019, they have oscillated between 30% and 50% in Q4 2019 and throughout 2020. Due to the high budgets and the dropout of 24 Swiss applicants (18% of all invitees) after the Step 2 evaluations, Step 3 success rates could potentially reach 70%, yielding a 7%+ funding rate. Conclusion It remains to be seen how the actual success rates will unfold in Step 3 and how future changes in the submission forms, the official proposal template and in the evaluations (esp. with jury feedback) will affect these thresholds. The budget of €1B for only 2 cut-offs in 2021 is likewise extremely high which means that this 2021 gold rush might be short-lived. One thing is for certain: The EIC Accelerator has never been as accessible as it is today with many great projects having higher chances to receive funding. What remains to be seen is if the EIC stands by their commitment and does not rank proposals against each other but retains its individualised GO & NO-GO methodology. If this is the case then the EIC accelerator could stay as accessible as it is now for the entirety of Horizon Europe (2021-2027) since no amount of applicants or competition would impede an individual projects chances of success. Even though this does seem like the ideal scenario, it remains to be seen if this is feasible. If the GO’s in Step 2 or 3 exceed the budgets then there are only three options: (1) Reject GO applicants based on discriminating factors (i.e. industry, costs, gender), (2) create a waiting list for approved proposals either in Step 2 or 3 (i.e. before the interview or after the interview) or (3) change the back-end evaluation prior to publishing the results to reject otherwise funded applicants retroactively (i.e. making the jury evaluation stricter). One last thing to mention is that some government agencies are forced to completely spend their annual budgets since it is directly related to their allocated budget in the following year so the October 2021 cut-off of the EIC Accelerator might see a surprising number of funded companies if the June cut-off does not spend its available €500M.

A New Approach to Developing EIC Accelerator Projects under Horizon Europe (SME Instrument)

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The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) can be viewed as an entirely new funding program under Horizon Europe (2021-2027). It has not only changed its grant proposal submission process but also its evaluation which will likely see significant changes in the types of companies selected as beneficiaries (read: Re-Inventing the EIC Accelerator). This article aims to contrast the previous workflow of professional grant writers and consultants with this newest iteration of the European Innovation Councils (EIC) startup and Small- and Medium-Sized Enterprise (SME) funding arm (read: AI Tool Review). Since innovation is on the minds of both writers and evaluators at all times, making necessary changes and adapting to a new and unpredictable environment comes as second nature. As such, even large consultancies have already adapted their workflow and have started to change their internal processes to retain efficiency and quality. How Grant Proposal Writing Looked Like In 2020 In 2020 and the years under Horizon 2020 (2014-2020), the process of writing EIC Accelerator (or then SME Instrument) applications was rather straightforward. The collaboration would begin with a Kick-Off Meeting (KOM), the transfer of relevant files and then the writers would get to work – mostly autonomously. Due to the limited space available and the lack of depth regarding the technology, there was little reason to have excessive input from the company themselves since the proposal focused on a short, narrative description over technical segmentations. In 2021, this approach has changed since the application itself is structured differently. This article aims to highlight how the old way of proposal writing is now replaced by a more modern and nuanced approach that requires more collaboration, depth and sophistication. Why The Old Approach Stopped Working 1. Text Requirements and Length The 2020’s EIC Accelerator proposal was relatively long with 30 pages as the main document but the 2021 version has increased that number tremendously. This is due to the abundant text boxes of mostly 1,000 characters that must be filled throughout the application while some segments also amount to 5,000 characters, 10,000 or unlimited spaces. As such, descriptions are much more detailed and must often be developed for the proposal itself since companies do not always use certain types of segmentations. Examples are the features and use-cases, Technology Readiness Level (TRL) milestones, Total Available Market (TAM), Serviceable Available Market (SAM), Serviceable Obtainable Market (SOM) or the Technology Adoption Life-Cycle (TALC). 2. Technical Detail & Depth Many sections in 2020 were rather surface-level and writers often struggled to allocate more than 1 DINA4 page for the technology description, including images, due to the strict limitations. With the new features and use cases model, one can easily set up 10 features with 7,000 characters each, yielding 70,000 characters for the technology description alone. Considering the need to describe the Freedom to Operate (FTO), the currently existing knowledge, bottlenecks and the added value for each feature, it is evident that there is an unprecedented level of depth that is required. Assuming 140 words per 1,000 characters and 750 words making up a block of text on a DINA4 page (using the 2020’s EIC Accelerator margins without images), this would yield 13 DINA4 pages of pure text for the features alone. Comparing this to the previous single page which had to include images, the change is quite drastic and the 13 pages would not even cover the entire description of the solution since it must be described elsewhere as well. This level of depth is impossible to fill without strong collaborations with the Chief Technical Officer (CTO) and sufficient research. Considering that all sections that are covering the market, financials, commercial strategy and others have likewise increased in size, it is clear that the 2021 EIC Accelerator proposal has easily quadrupled in size compared to 2020. 3. More Scrutiny Towards Commercial Strategies Commercial strategies and market analyses were usually quite limited due to the page restrictions of the 2020’s EIC Accelerator. With the now bloated Step 2 process, this has changed significantly. The market sections and especially the TALC require a detailed breakdown of how customers will be reached with specific market penetration expectations. As such, the strategy will require plans that exceed simplified notions like: We want to start in the European Union (EU) and then go global We have local distributors who can help us We expect to reach 100 customers in 3 years We will develop a customer network The new template asks the applying startups and SME’s to define each penetration segment and even to give cash flows (operating, investing and financing) for each, including a timeline and Profit and Loss (P&L). Especially the P&L, even though the new spreadsheet is now simplified, will need an additional breakdown to account for the figures given in the TALC which can span 10+ years into the future while the P&L usually only views 5 years. 4. Other Sections Outside of the Go2Market and the technical parts, there are a variety of figures and considerations that need more input from applicants since they were more surface-level in 2020. Especially the risk section, the investment needs and the competitors (i.e. pains and gains) require strong input from the companies management team. How To Structure Project Development in 2021 As a result, the previous hands-off approach of outsourcing proposal writing to a consultant is impossible but it is replaced by a more collaborative approach where the company must be actively engaged in discussing the needed input and be brought in for the structuring of the entire application. The greatest change in 2021 is the collaboration between consultants (or professional writers) and clients. Instead of drafting a business plan autonomously, the consultants have to bring their clients into the process and, since the management team of a scale-up is usually quite busy, display excellent project management throughout the process. These changes are still quite new but major improvements over the old methods could be: Multiple Kick-Off Calls for Dedicated Sections … Read more

Looking at Innovation From a New Angle: Changing the Evaluation of EIC Accelerator Proposals (SME Instrument)

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The EIC Accelerator blended financing (grant and equity) has undergone a dramatic transition from its first inception out of the now obsolete SME Instrument Phase 2 in 2019 and its following test phase as the EIC Accelerator Pilot in 2019/2020. With a new application process that includes multiple steps, an online AI platform for the submission and a video pitch, it has changed not only its process but also its outcomes (read: AI Tool Review). With the evaluation and the proposal template having changed alongside this newest iteration, it is clear that what worked in 2020 and earlier phases might not be applicable in 2021. Clearly, the proposal looks different, prioritises a pre-determined structure over a free business plan narrative and defines a specific roadmap that all companies have to adhere to. But the factor that might have the most significant impact on the newest changes of the EIC Accelerator might be the evaluation itself. Moving away from the SME Instrument Phase 2 and EIC Accelerator Pilot The aim of the new Step 1 of the EIC Accelerator is a quality check of applications to identify if the project is of interest to the EU and if it fits the general risk, innovation, team and market criteria. As such, it was initially advertised as being a way of emulating the old Seal of Excellence* which was awarded to 2020 projects with an evaluation score of at least 13 out of 15. Historically, 30% to 50% of all submitted projects between 2018 and 2020 reached this level. The current Step 1 success rates of 60-70% match this threshold rather well although one could argue that the equivalent old score would rather correspond to a 12.5 and not a full 13. Still, Step 1 acts as a threshold that is partially replacing the old scoring but also has a distinctively different focus when it comes to project quality. This quality aspect can be investigated through a simple question: Will resubmissions of 12.5+ scored applications from 2020 automatically do well in the 2021’s Step 1? *Note: The new Seal of Excellence is now only awarded to some companies that reach Step 3 of the evaluation process, namely the interview stage. The 2021 Seal of Excellence is not associated with the Step 1 short application or with any type of scoring but acts as a useful analogy to the previous iterations of the funding program prior to 2021. Transitioning from 2020 to 2021: Thresholds and Quality The EIC has stated that Step 1 is designed to “trigger the interest of evaluators” which means that it is a very surface-level assessment compared to even the old SME Instrument Phase 1. There are only 5 simplified evaluation criteria in Step 1 while the 2020 evaluations had to address 17 very detailed criteria. One could argue that the newest evaluation criteria which directly define the success of projects are now heavily favouring innovation, risk and the market while the old criteria were looking at every aspect of the company and project with equal weights. Without a judgement as to the benefit or tradeoffs of this approach, it clearly impacts what types of projects will succeed and it will likely be very different from what was observed in 2020 as well as the decade before (read: Recommendations for the EICA). Some interesting cases of applicants who have applied to the EIC Accelerator have surfaced whereas a 2020 submission that showed low scores of 10 to 11 out of the maximum of 15 passed Step 1 in 2021 with very positive reviews. What is interesting is that such low scores in 2020 were often treated as a lost cause in the eyes of professional writers or consultancies since it means that either the project lacks the sophistication needed to convince the European Innovation Council (EIC) or the startup or Small- and Medium-Sized Enterprise (SME) does not have a well-thought-out business model or financial planning. Changing the Evaluation Criteria With the first stage being designed to only peak the evaluator’s interest, many projects which would not have been considered for funding in 2020 even if the European Commission (EC) had excess financing available can now easily pass the first stage. How this will change in Step 2 is unclear but what can be said is that the evaluation criteria have changed significantly. In 2020, there were 17 detailed criteria that covered the entire business model ranging from the subcontracting over the partner network to the details of the customer base (read: Companies That Should Not Apply). Questions were highly detailed and covered: Why would customers buy from you? Is your business model able to scale your company? Is the strategic plan for the commercialisation sufficient? Are any IP or licensing issues addressed? Is the product easy to use? … This has been replaced by 13 criteria in Step 2 and only 5 in Step 1. Instead of asking very nuanced questions to the evaluators who have to grade the complete project in increments, the new criteria are simplified and focus on many of the same questions albeit with less detail. Interestingly, the new criteria omit gender equality, broader benefits in the EU and societal challenges. These were explicit in the old evaluation criteria but are now non-existent even though they must be described in the Step 2 application. This is likely due to the new Strategic Challenges and female-CEO quota that is enforced in the back-end and must not be re-iterated in the evaluations front-end. The “Go” Criteria There clearly is a different focus in the new evaluation criteria with a strong preference for the risk, market, innovation and the team with instructions for evaluators being that a Step 2 Go should correspond to what would have been a 4.5 to 5 score under the 2020 rules.** To revisit the anecdote mentioned above, an application with a score of 10.5 would have had average scores of 3.5 for each section which means that it should not stand a chance to … Read more

Workflow for Creating an EIC Accelerator Pitch Video (SME Instrument)

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The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) has gained a mandatory video pitch in 2021 and many applicants are uncertain as to how such a video should look or be prepared. While the official proposal templates and guidelines by the European Innovation Council (EIC) do not give an answer to this question, the following article aims to present a simple workflow that can be used by prospect applicants, professional writers or consultancies. Since many Small- and Medium-Sized Enterprises (SME) and startups have some experience with video creation or editing due to social media platforms like YouTube, Facebook or Twitter, this article will omit tools like Adobe Spark or Loom which are used to simply record a speaker on top of a slideshow. This article will focus on video cutting and effects tools as well as a simple workflow to bring all essential parts together in an efficient manner. The software that is discussed is exchangeable for the most part but, due to their compatibility, we focus on Adobe Premiere Pro, After Effects and Illustrator. Note: There are excellent tutorials on YouTube for each of these steps and the following article aims at giving an overview of the workflow without detailing the exact mechanics of video editing in Adobe CC. 1. Adobe Premiere Pro (PP) Premiere Pro (PP) is used as the main video creation dashboard and cutting tool. Here, everything is prepared, brought together and will be finalised for export. The most important tasks to be done are: Note: A simplified version of this software is available under the name Adobe Rush. 1.1 Importing the Video Footage Once the video has been recorded, it will need to be imported into PP. What needs to be considered is that every video might have different resolutions and frame rates which will appear different in the respective timeline. The way PP works, a timeline is created that has a defined frame rate and resolution. The frame rate or Frames Per Second (FPS) defines how many frames (or images) are present in each second of video footage. Standard FPS’s are 23.976, 24 or 30. The former two FPS’s yield more of a natural motion blur while the latter (or higher FPS) will appear sharper during motion. For an EIC Accelerator video, using 23.976 or 24 will be sufficient. For the resolution, the video should be at least Full HD which translates to dimensions of 1920×1080. If no FPS or resolutions are specified prior to importing the clips, the sequence will automatically adapt to the clip’s original settings once it is dragged into the timeline. It is advisable to already decide on FPS and the resolution prior to the shooting. 1.2 Synching the Video to the External Audio (optional) If the video has been recorded separately from the audio (i.e. with an external microphone that was not connected to the camera during the recording) then the audio must be matched to the video in post-production. This is optional and not needed in cases where a shotgun microphone is mounted and connected to the camera or a wireless condenser microphone is used. To sync the external audio clips to the built-in audio of the video, they must be placed into the same timeline in PP and the two can be matched with the synchronisation feature. This usually works well but, especially for shorter clips, it can be necessary to manually adjust the positioning. For this, it is always advisable to have an orientation point in the video and in the audio to simplify matching. This can simply be in the form of clapping hands at the beginning of the recording so that the built-in microphone and the external microphone pick up the same sound which can be used as a matching point in post-production. To finalise the linking of the external audio with the video clip, the two can be linked (not grouped) so that all cutting and moving is always applied to audio and video as a joined unit. 1.3 Cutting to 3 Minutes The next step after the video and timeline have been prepared is the cutting to 3 minutes in total which means that all videos must be trimmed to that time. This is also an opportunity to already plan where certain video clips can be inserted to demonstrate the product, showcase the office or related parts. Cutting down the footage is a challenge in and of itself but thoughts on this process can be found here: Why an EIC Accelerator Video Editor Should be a Proposal Writer or Story Teller To circumvent the difficulty of this step, it is also possible to only record exactly 3 minutes of footage but this might be more difficult than the cutting process itself. 1.4 Colour Grading the Footage After the footage has been prepared and trimmed, it should be colour graded by using Lumetri colour or a similar effect. The general goal is to make the lighting and shadows look well contrasted and to have sufficient saturation and balanced skin tones in the final video. As there are plenty of high-quality tutorials out there on colour grading so it will not be detailed here. Note: Adobe Photoshop can be used to create Lookup Tables (LUT) based on a video screenshot which can be directly imported into Lumetri colour inside PP. The LUT’s act as a filter for the video footage inside PP which can use the benefits of the image editing features native only to Photoshop. Note 2: If multiple clips require identical colour grading, an “Adjustment layer” can be placed on top of the respective clips. The effect can then be applied to the adjustment layer alone which will apply it to all clips below in the timeline. 1.5 Audio Enhancement Depending on the source of the audio and the microphone settings, it is usually advisable to perform a voice enhancement. There are a variety of tutorials and guidelines on YouTube but examples of general enhancements are: … Read more

Recommendations for Selected Changes on the EIC Accelerator Platform (SME Instrument)

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The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) has transformed greatly in 2021 and its new AI tool has been used by thousands of applicants in a matter of weeks. While the previous article pointed out some of its shortcomings and the overall experience, the following article aims to make suggestions for its improvement (read: Reviewing the EIC Platform). From a business perspective, startups and Small- and Medium-Sized Enterprises (SME)’s have to, by necessity, pursue a realistic and business-focused approach to succeed in their venture but if a grant application forces them to create a project analysis that is neither relevant for their business nor to investors or customers then it cannot be a useful approach overall. From the public funding agencies perspective, the great challenge of creating a framework for grant applications is to encourage the right companies to apply but to also have sufficiently high barriers in place that can filter based on factors other than the budget alone (i.e. we do not want to fund you vs. we do not have enough money for you). Many companies look at the EIC Accelerator and immediately dismiss it because it is time-consuming and the chances for success are too low for the current stage of their business. They need to protect their time and resources since what they work on is cutting-edge and has a high risk of failure. There is a risk that competitors are getting ahead and it can often be more valuable for the company to convince risk-averse Angel investors or customers as opposed to spending many months in filling out EIC form fields just to fail because the CEO has the wrong gender, an evaluator does not understand the 1,000 characters on the customer pain or the Technology Adoption Lifecycle (TALC) just makes no sense for their particular commercial model. While many great companies have been funded by the SME Instrument and EIC Accelerator, there clearly is room for improvement for the European Innovation Council (EIC) and European Innovation Council and SMEs Executive Agency (EISMEA). Here are some suggestions as to what could make the process easier of applicants and evaluators: Guidelines and Templates While working with an official proposal template for the EIC Accelerator is now redundant since the EIC platform acts as an on-the-fly guideline, there is still a need for further explanations as to what is needed in each section. What is a suitable gender equality strategy in the eyes of the EIC? Since this is not taught in MBA’s and practically no VC would ever ask this question – what does a DeepTech cutting-edge business working on a disruptive innovation need to display to satisfy the EU? How does the EIC want applicants to quantify their cash flow projections for The Chasm or The Gap between Early Adopters and the Early Majority? How is the space between two market adoption segments meant to be quantified in the eyes of the EIC? What market activities are needed before TRL8 in comparison to market activities in TRL9 as these are mandatory? How should the mandatory project management differ between TRL5-8 and TRL8-9? These are examples of questions that could be addressed in a grant application template or guideline which helps applicants to address questions they, frankly, will never need to answer outside of the European Commissions (EC) funding arms. Being More Reader and Writer Friendly When the EIC announced that it would create an AI Tool and interactive application platform that aims to make everything easier – it seemed like a great idea. Writing a business plan was tedious and took a lot of time which meant that applicants had to spend valuable resources on writing that could have been spent on growing their business or technology. Adding video pitches, a short application as a teaser and integrating an automated AI assessment that screens patent and scientific databases seemed like great news for applicants. For a brief moment, it seemed like many applicants could finally prepare great applications on their own without the reliance on professional writers or consultancies. But this turned out to be a very short-lived scenario. As opposed to making the applications more writer- and reader-friendly, it became even harder to read and to write. Instead of adding more audiovisual content to the applications, heavily relying on graphics and making things easy to digest, the EIC removed all of the images, formatting, hyperlinks and headings to yield an application that is 99% plain text. No formatting. No colour. No graphics. No hyperlinks. No references. Just plain text. More Images The solution is simple: Allow the upload of graphics and illustrations in key sections. Do you have a software with a UI? Upload up to 5 screenshots, please. Do you have a reactor? Please provide photos of the prototype. Do you have an AI-driven infrastructure innovation? Please upload a schematic view that conceptualises your product. Do you have competitors? Please upload a comparison table. Note: There is an auto-generated competitors table on the Step 2 platformin but it only shows checkmarks or crosses – no nuance. It comes as a surprise to many that allowing image uploads was not in the top 5 of features to be added to the EIC Accelerator platform as soon as it was launched. Yes, there is a pitch deck and yes, there is an Annex in Step 2 of 10 pages but there is no guarantee that the evaluators will read the text and then search for a relevant graphic in the other documents. In fact, graphics are supposed to compliment the text as it is being read. They should not be an afterthought. It is hard to believe that the EIC consulted their evaluators regarding the AI platform in any way. No evaluator would have ever supported the removal of all visual support materials just to end up with a 99% plain block of text. Minimize the Text What is urgently needed is to remove text segments that have … Read more

The Profile of a Company That Should Not Apply for the EIC Accelerator (SME Instrument)

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The EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) is a highly competitive but also highly popular grant and equity financing scheme by the European Innovation Council (EIC). Many startups and Small- and Medium-Sized Enterprises (SME) in the EU but also in associated countries such as Israel or Norway are interested in applying to the funds but many would be better off seeking out other options. While grant consultancies and professional writers all have different approaches to the selection of suitable EIC Accelerator applicants, there are some common themes that are shared among success-oriented grant consultants. Since the official grant proposal template for the EIC Accelerator does not clarify such nuanced points in-depth, the following article aims to give an overview of the types of companies that should not apply. For any startup or scaleup that is recognising themselves in any of the points listed below, it would be advisable to refrain from hiring a writer or consultant since time and resources can be better spent elsewhere. Note: The EIC does not primarily select great companies, it primarily selects companies that fit a certain mould. Having low chances for success under the EIC does not mean that the company or project are bad. The EIC would have never financed social networks like Facebook or Twitter and even industry-specific unicorn companies like Epic Games or Instacart. Yet, these are all success cases on a level the EIC dreams of. The list below is designed to highlight the first impression that consultants and grant writers often face when a client first comes into contact. Since the demand for grant writers is generally very high, this first impression will likely define how interested the consultancy is in a particular project. How do they present their company or technology? Why do they need EIC Accelerator support? What needs to be financed? 1. An Inquiry Uses a Gmail or Similar Domain Address While this is not a strong red flag – it suggests that the company or project is not fully formed yet. Buying a domain and creating a private email account usually precedes even the company registration since it is so simple (and cheap). If an inquiry lacks a private domain then this is usually a sign that a project is in the idea stage. Very few founders would contact investors or customers with a Gmail address which means that any inquiry from such an address is a tell for an ineligible project. Since 2021, the EIC Accelerator also funds non-incorporated natural persons but, due to the competitiveness of the grant, this does not mean that a single person without backing, traction or support networks will be able to be successful. Every inquiry that comes from a domain that is not privately hosted and is not attached to a Corporate Identity (CI) will likely be ignored by selective consultancies. 2. The Prospect EIC Accelerator Applicant is in the Idea Stage The new EIC’s AI platform aims to display the journey from Ideation towards Go-to-Market but that does not mean that a natural person can be successful with a pure idea. The Technology Readiness Levels (TRL) clearly outline the stage a technology has to be in with TRL5 being the minimum for the EIC Accelerator and lower TRL’s only being possible in EIC Pathfinder and EIC Transition programs. The current diagnostics and ideation parts of the EIC Accelerator application are misleading since they can give the impression that projects can still be in the idea stage and is then transformed into a commercial product once Step 3 is reached but this is not the case. The applicant’s project will not make significant changes from Step 1 to 3 – the only thing that will change is the amount and depth of data that is provided to the EIC for evaluation purposes. The EIC Accelerator, also a misleading name, is not a traditional accelerator that aims to help startups succeed by helping with product development, investor relationships or customer contact. The primary resource, outside of limited coaching, will be financial which means that the applicants need a business plan, the right commerial strategy and must have all it takes to implement the project. The EIC will not hold the beneficiaries hands albeit they will aim to create networking opportunities if it matches current political agendas such as the Green Deal, COVID-19 relief or similar trends. Having an idea and reaching out to a consultant with a half-formed business plan will likely be insufficient and be ignored by most selective writers. 3. The Company has no Website or Social Presence It is understandable that many companies are in stealth mode especially when it comes to DeepTech products in the area of biotechnology or pharmaceuticals where large competitors spend billions on R&D and could copy a technology quickly – patented or not. Still, even if a company has no interest in marketing itself or in publicising its technology, every company that has sufficient seed funding and the degree of traction needed to succeed in the EIC Accelerator should have a website and a LinkedIn page at the very least. There can be exceptions but no presence at all often means that founders view this project as a side business or are not invested in its success. One additional exception to this is a newly formed company that is a University spin-off or subsidiary of another company. In the latter case, the prospective applicant can usually provide a website link for the parent company while, in the former case, they could be too early stage for the EIC Accelerator but can be eligible for the EIC Pathfinder. 4. Based on Research that is not Theirs (a University Non-Spin-Off) What can often be encountered is a company that is basing its technology on University research that is not theirs but also does not exist in the market yet. This, in and of itself, does not mean that it is ineligible for the EIC Accelerator but … Read more

On the EIC Accelerator’s New AI Platform – Bugs and Review (SME Instrument)

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In 2021, the EIC Accelerator blended financing (formerly SME Instrument Phase 2, grant and equity) launched its new AI Tool which is an online platform for proposal submissions. Due to its delayed launch and the interactive nature of the tool, many bugs and errors were encountered by prospect applicants. While it is clear that both the European Innovation Council (EIC) and Innovation Loop have put great work into this elaborate project – it still left many applicants confused and frustrated. Reviewing the Platform If the aim of the EIC was to reduce the reliance of startups and Small- and Medium-Sized Enterprises (SME) on third parties such as professional writers or consultancies then this might have backfired. While every CEO understands the need to create a business plan and upload the document, very few have the time or patience to fill out seemingly endless forms that far exceed the work placed into writing a grant proposal. In fact, feedback from CEO’s has been that the mandatory milestones, the 12 pre-defined steps of the innovation and, especially, using the Technology Adoption Life Cycle (TALC) to define a market entry and financial projections was not applicable to their business. The overall structure of the platform, especially for the full application in Step 2, gives the impression of an MBA student having been assigned to try and make all innovation businesses fit into a single mould. This one-size-fits-all approach has led to the objectification of innovation which, by definition, defeats the purpose of seeking out innovators in the first place. It assumes that every company will inevitably face customer segments characterized as innovators, early adopters, the chasm, early majority, late majority and laggards which is not a relevant distinction for the boots-to-the-ground commercial strategy of most businesses. On this particular point, not only must market and financial projections such as revenues and cashflows be planned for each listed step but it is mandatory to address each of these segments without exception. Frequent complaints on this part have been: What if a company has no interest in spending significant marketing and sales expenses on reaching laggards who are hard to convince? What if the chasm is not relevant for a specific commercial strategy that has large scale distributors and retailers – thus allowing vertical scaling? What does the cash flow of the chasm look like if it is supposed to be a gap between two segments and not a segment of its own? It seems like the TALC is an analysis tool that is conventionally used to look backwards at an innovation rather than a tool that is integrated into an early-stage business plan to estimate an innovation and its market uptake. Identifying what a future barrier or risk could be is important but to include a gap between the early adopters and the early majority according to a book published in 1991 (“Crossing the Chasm” by Geoffrey A. Moore) seems redundant. Estimating a cash flow and revenues for a potential gap seems unnecessary at best. The Template and Content While the official proposal template and guide for applicants do reflect the content needed for the full application, the platform requests a high quantity of content with very strong overlaps between sections. While it was clear that the 2020’s EIC Accelerator applications were already very text dense, the EIC seems to have asked themselves: How about we remove all images, formatting and links from the application and have even more text? Needless to say, it is obvious that evaluators were not consulted in this decision. The EIC should, for the sake of their applicants and evaluators, update the platform and allow applicants to add images and graphics into key sections of the applications. Many sections should also be removed since they likely frustrate evaluators more than applicants but a future article will follow with specific recommendations. Bugs and Errors The following list of errors and bugs is by no means complete but reflects the experience of a small number of applicants who have used the platform thus far. The European Innovation Council and SMEs Executive Agency (EISMEA) have already been notified of these bugs and some of the errors have already been fixed in the past weeks. Note: It is easy to point out 1% of mistakes if 99% was very well executed. The EIC Platform looks very well-designed, is elaborate and does present a well-planned snapshot of an innovation. Still, it remains to be seen if this is the right path for the EIC moving forward. 1. Deleted Text One applicant had all their risks in Step 1 removed during the submission. This was evident when comparing the screenshots of the submission window with the resulting proposal as it is shown after the submission. Risk analysis is a critical issue for the EIC Accelerator which makes such a glitch extremely harmful but, luckily, the applicant presented a strong case in other sections and passed regardless. 2. Auto-Save Often, the platform in Step 1 and 2 did not auto-save properly which resulted in the browser window scrolling back up to the top and displaying a generic error message. Reasons for this were entirely bug-related since trial and error showed that, very often, having 1000/1000 characters blocked auto-save while 999/1000 passed successfully. Alternatively, removing all the line breaks from a paragraph also worked in some cases if the window did not auto-save properly. This, of course, made the text hard to read for the evaluator but applicants had no other option. 3. Error-Messages In the value-chain, the main stakeholder could be declared as both “part of the problem” (mandatory for the main stakeholder) and as “impacted by the solution” (optional). If both options were selected, the item received an error message regardless of where it was in the value chain – before or after the solution. 4. Team Allocation The team in Step 2 did not save its data when it came to the work package allocation (i.e. selecting the specific work packages for each … Read more

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