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 €2.5 million grant component for technology development and validation (TRL 5/6 to 8); €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 €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).
