horizon 2020 european grants: should your portfolio companies apply?

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Should your Porfolio Companies Apply for EC Funds?

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Page 2: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Agenda

• EC funding myths vs reality

• SME instrument overview

• SME instrument evaluation process

• SME instrument statistics

• Selecting the right companies in your portfolio

• Selecting the right topic and phase

• Learning from successful applications

Page 3: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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• Success Fee Model

- We only get compensated when and if you receive the funding, an attractive proposition for SMEs who wish to avoid high upfront payments and reduce the cost of failure.

• Global Reach

- Our far-reaching networks allow us to develop balanced consortiums (in terms of geographies and organizations) in record time, a key requirement to successful proposals.

• Interdisciplinary Excellence

- Our interdisciplinary team (composed of experts in the ICT, health, transport, manufacturing, energy, and environmental fields) is able to build proposals with the highest standard of scientific excellence

• Public-Private Funding

- We develop a long-term relationship with SMEs, matching the fund raising efforts with their development maturity (public funding + private fund-raising) based on our extensive database of public calls and private investors.

Success Fee-based Engagement Model

Page 4: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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- Low success rates (~5%)

- Time to grant (6-12 months)

- Application complexity

- Reporting overhead

- Funding instalments

- Close to market innovation

- Non-dilutive

- Non-reimbursable

- Effort-based (not result-based)

- Clear yes/no after submission

- Significant (up to €2.5M)

- Pre-financing (up to 35%)

Pros and Cons of EC Funding

Page 5: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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EC Funding Myths vs Reality

• MYTH: you need to lobby in Brussels to get your application funded#1

REALITY: Applications are evaluated by third-party independent evaluators

who are not EC employees and are not known by the applicants.

• MYTH: Applicants from certain countries have an advantage#2

REALITY: Countries with the highest absolute number of grants are also

the ones with the highest absolute numbers of applications. The success

rate of an application is directly related to the use of specialized

consultancies, which are more popular in certain countries. The

evaluation process is country-neutral.

• MYTH: EC funds are always late compared to the company needs#3

REALITY: Successful projects receive 35% at project start and around 50%

half way through the project

Page 6: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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EC Funding Myths vs Reality

• MYTH: The EC funding process has too much red tape#4

REALITY: The process has been streamlined in H2020. Standard project-

based accounting is required, in line with good corporate practices.

Specific technical reporting is required as the grant is effort-based.

• MYTH: EC funding levels are too low#5

REALITY: A single company can receive up to 2.5M Euros for a 2 year

project. Costs are reimbursed on the basis of 70% of direct costs + 25%

overhead, meaning an effective funding rate of 87.5%. In addition, SME

founders without a salary can claim their time as actual costs.

• MYTH: The EC only funds research#6

REALITY: The new SME instrument is focusing on close to market

innovation (less than 2 years from market launch).

Page 7: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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SME Funding Alternatives

Research & Innovation

Funding level = 100%

Innovation

Funding level = 70%

Innovation

Funding level = 50-80%

Market Replication

Funding level = 50%

New SME Instrument

€2.5Bn

Page 8: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Agenda

New SME Instrument

€0.35B per year

Page 9: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Instrument Comparison

H2020 Collaborative

Project

H2020 SME

Instrument

H2020 Fast Track

to Innovation

EUREKA Eurostars

Small or large consortium

Industral or academic

research driven

Single applicant (phase 1)

Single applicant or SME

consortium (phase 2)

Small industry-driven

consortium

(max 5 organizations)

Small SME-driven

consortium, industry and

academia permitted, average

3-4 participants

SMEs encouraged

SMEs requested in

specific calls

SMEs required SMEs encouraged Project leader must be an

R&D performing SME

Non prescriptive budget

range indicated in the call

text

50k Euros (phase 1)

0.5-2.5M Euros (phase 2)

(5M Euros for healthcare)

3M Euros max 1.4M Euros average project

costs, max funding specific

to each country

Specific challenge, scope

and expected impact, all

indicated in the call text

Broad scope per topic

(except healthcare: cell

technologies)

Broad scope: any topic

related to LEIT or Societal

Challenges

Broad scope: innovative

products, processes and

services

Single stage or two stage

deadlines

Continuous submission

4 annual cut-offs

Continuous submission

3 annual cut-offs

Continuous submission

2 annual cut-offs

100% for RIAs and CSAs

70% for IAs

Typically 70%

(100% for healthcare)

Typically 70% 50-80%

(depending on each country)

Page 10: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Evaluation Process

Individual

Evaluation

Report

Individual

Evaluation

Report Individual

Evaluation

Report

Median

of the

Scores

ESR

Individual

Evaluation

Report

Individual

Evaluation

Report

Expert Expert Expert ExpertExpertMinimum 4 experts, 1

additional expert may

be called as tie-

breaker

Individual evaluation

(performed remotely,

no face to face

consensus meeting

between experts)

Final score = median

of the expert scores

(SMEinst) or

arithmetic average of

the expert scores (FTI)

Proposal Eligible proposal

Page 11: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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ESR Example

Public Abstract

Total Score (out of 15)

Project

Budget

Page 12: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Evaluation Outcome

Excellent

Good

Threshold Funding

Average

Effort + 100%

Effort + 100%

Page 13: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Statistics (2014-2015)

TopicProposals

Submitted

Funded

ProposalsSuccess Rate

ICT 1,367 49 3.6%

Health 751 31 4.1%

Manufacturing 527 27 5.1%

Business model innovation 192 10 5.2%

Cleantech 418 24 5.7%

Biotech 102 6 5.9%

Blue growth 83 5 6.0%

Energy 529 37 7.0%

Security 142 10 7.0%

Agrofood 236 21 8.9%

Transport 429 46 10.7%

Space 59 12 20.3%

TOTAL 4835 278 5.7%

Very high competition

High competition

Moderate competition

Page 14: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Selecting the right company in your portfolio

Initial product/service prototype

Freedom to operate analysis and IPR strategy

Willingness to pay analysis and pricing model

User/market analysis

Technology innovation vs state of the art

Competitive analysis

2.5-3.5M project budget (2 years)

Team capabilities (technical and commercial)

Alignment with EC societal challenges

Page 15: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Selecting the right phase

Lump sum = €50k Up to €2.5M(€5M for health)

No Direct EC Funding

Page 16: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Selecting the right topic

TOPICS CALL ID 2016 2017

Open Disruptive Innovation Scheme SMEInst-01 €60 m. €66 m.

Accelerating the uptake of nanotechnologies advanced materials or advanced

manufacturing and processing technologies by SMEsSMEInst-02 €31.83 m. €35.32 m.

Dedicated support to biotechnology SMEs closing the gap from lab to market SMEInst-03 €7.5 m. €7.5 m.

Engaging SMEs in space research and development SMEInst-04 €11.37 m. €12.6 m.

Supporting innovative SMEs in the healthcare biotechnology sector SMEInst-05 €35 m. €45 m.

Accelerating market introduction of ICT solutions for Health, Well-Being and

Ageing WellSMEInst-06 €18 m. €12.5 m.

Stimulating the innovation potential of SMEs for sustainable and competitive

agriculture, forestry, agri-food and bio-based sectorsSMEInst-07 €25.46 m. €32.19 m.

Supporting SMEs efforts for the development - deployment and market

replication of innovative solutions for blue growthSMEInst-08 €9.5 m. €10 m.

Stimulating the innovation potential of SMEs for a low carbon and efficient

energy systemSMEInst-09 €46 m. €50 m.

Small business innovation research for Transport and Smart Cities Mobility SMEInst-10 €57.57 m. €61.23 m.

Boosting the potential of small businesses in the areas of climate action,

environment, resource efficiency and raw materialsSMEInst-11 €25 m. €27.5 m.

New business models for inclusive, innovative and reflective societies SMEInst-12 €10.8 m. €11.4 m.

Engaging SMEs in security research and development SMEInst-13 €15.37 m. €14.67 m.

TOTAL €353 m. €385 m.

Page 17: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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• The management time is better spent on operations

• It is very unlikely the management team will have the time and focus to spend on a thorough application preparation

• Seek advice from EEN, NCPs and SMEinst coaches but keep in mind– They are not here to write your proposal

– They don’t evaluate proposals as experts

– They can be wrong too!

• Allocate a specific resource or recruit an external consultant

Outsourcing the application development

Page 18: Horizon 2020 European Grants: Should Your Portfolio Companies Apply?

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Funding Program Project ESR Funding Domain

H2020-SMEinst-2-2014 CITRIMACC 12 (15) €2.4M Transportation

H2020-SMEinst-2-2014 DoReMIR 13.9 (15) €2.1M ICT / software

H2020-SMEinst-2-2014 BioValue 13.5 (15) €2.3M Energy

H2020-SMEinst-2-2014 AirportIQ 12.6 (15) €2M Transport

H2020-SMEinst-2-2014 CyberWiz 13.9 (15) €2.1M Cybersecurity

H2020-SMEinst-2-2015 Nafen 13.7 (15) €2.5M Nanomaterials

H2020-SMEinst-2-2015 Q-bot 13.7 (15) €2.1M Energy

H2020-SMEinst-2-2015 Nanosol 13.9 (15) €1.7M Solar energy

H2020-SMEinst-2-2015 iFoodbag 14.4 (15) €1.7M Food

H2020-SMEinst-2-2016 SKLCarbon 14 (15) €2.5M Energy

H2020-SMEinst-2-2016 SOMA Analytics 13.2 (15) €1.8M ICT / health

Success Stories