Cancelling Funding and Changing Grant Requests (2023 EIC Accelerator Work Programme Part 5)

The EIC Accelerator funding (grant and equity, with blended financing option) awards up to €2.5 million in grant and €15 million in equity financing per project (€17.5 million total). It is a popular funding instrument specializing in DeepTech startups and small mid-caps which aim to finalize their product developments, enter the market and scale globally.

The EIC's 2023 Work programme

While the European Innovation Council (EIC) has remained silent regarding the 2023 Work programme that is yet to be released, ScienceBusiness has published the second draft of the highly anticipated document dated July 2022. This article series is exploring some changes and interesting aspects of the EIC Accelerator that are relevant for startups and Small- and Medium-Sized Enterprises (SME) and for professional writers, freelancers or consultants.

ScienceBusiness has likewise published the entire library of Horizon Europe documents by the European Commission (EC) that are mostly in draft form and can be found here.

All the information and conclusions provided in this article are subject to change and the opinion of the author. The following statement by the EIC is part of the 2023 EIC Work Programme draft that this article is based on:

"This document represents a working draft of the EIC work programme for the purpose of feedback and comments from members of the Horizon Europe Programme Committee for the EIC and European Innovation Ecosystems. This draft has not been adopted or endorsed by the European Commission. Any views expressed are the views of the Commission services and may not in any circumstances be regarded as stating an official position of the Commission. The information transmitted is intended only for the Member State or entity to which it is addressed for discussions and may contain confidential and/or privileged material."

Cancelling Approved EIC Accelerator Funding

Horizon 2020 has been plagued by a variety of high-profile fraud cases such as two companies which were beneficiaries of 56 projects funded under the EU’s FP7 and/or Horizon 2020 research programmes. It is only natural that the EIC has implemented clauses which enable them to cancel issued grants or to decline an investment in case certain inconsistencies are encountered during the due diligence.

“In such a case, the Commission may also request amendments or, in the cases of misrepresentation, submission of false information, non-submission of information, suspicion of fraud or any other ground listed in the EIC Accelerator contract, it may terminate your initial EIC contract covering the grant component. The EIC Accelerator contract may also be terminated if the non-investment is likely to affect the implementation of the action or puts into question the decision awarding the financial support.“

For applicants, this presents a certain risk since it is known that the European Investment bank (EIB) and the EIC are very slow when it comes to the issuance of equity investments (read: Inside the EIC Fund). If a company has requested blended finance and is asked to stay in the due diligence process for 12 months, then they might decline the EIC Fund investment but this could jeopardise their received grant financing according to the EIC.

The EIC should make an official and binding commitment that, if an applicant is well-financed from other sources (different from the EIC), they should be allowed to decline the EIC Fund investment while retaining the grant. This should be a company's right if the due diligence by the EIB is too slow for the speed at which a company has to perform. Slow due diligence can even be detrimental to the company's financial health if other investors could act faster.

Converting Funding Requests

The EIC’s 2023 Work Programme outlines the option for a conversion of funding modalities whereas the Step 3 EIC Jury can decide that the requested amount or funding type, which has passed Step 1 and Step 2 already, is inappropriate and can change it on-the-fly.

This likewise expands towards the EIC Accelerator Open and Strategic Challenges as well as the funding modes, namely grant-first, grant-only, equity-only and blended financing.

For the EIC Accelerator Open and Strategic Challenges, the Step 3 jury and the Step 2 evaluators can make changes to the proposal:

“If in the course of the interview the jury assesses that your proposal falls within the scope of one of the Accelerator Challenges which is open at the cutoff and meets the relevant criteria for the Challenge, then your proposal may be transferred to be funded under the relevant Challenge.”

“If your application at the full application stage is assessed to be outside the scope of the Accelerator Challenges to which is it is submitted, then it will be transferred to the Accelerator Open.”

To the detriment of the applicants, this can also include the substitution of a grant with a repayable loan.

“Should the jury find the level of risk to be lower than initially identified by the applicant, the jury may also recommend another combination of components, including substitution of the grant component by a reimbursable advance.”

The ability to convert funding requests is likely one of the reasons why the grant-first success rates exceeded other modalities since some blended financing (grant and equity) applicants were converted into grant-first applicants without the EIC officially acknowledging it or releasing this information (read: EIC Accelerator 2022 Results).

While the EIC Jury and Step 2 evaluators can make a counter-recommendation in Step 2 and 3, respectively (i.e. convert blended financing to grant-first or change the topic), this can also be done during the due diligence phase. To understand the impact of this approach, the EIC should release the statistical data of all anonymized beneficiaries with timelines and funding amounts which aids in managing the expectations of future applicants.

“Should the outcome of the due diligence conclude that the innovation or your company is not yet mature for equity investment, the EIC Fund may recommend to the Commission that you start with the grant component first, and that the investment component will be subject to reaching defined milestones that will be included in the contract for the grant component via an amendment.”

This article is part of a series whereas the remaining articles can be found here, once published:

• The Eligible Applicants (2023 EIC Accelerator Work Programme Part 1)
• How Grant-First Projects get Equity Investments (2023 EIC Accelerator Work Programme Part 2)
• The Conditions for EIC Equity Investments (2023 EIC Accelerator Work Programme Part 3)
• Technology Readiness Levels, Timelines and Interview Priorities (2023 EIC Accelerator Work Programme Part 4)
• Cancelling Funding and Changing Grant Requests (2023 EIC Accelerator Work Programme Part 5)
• The Grant Proposal Evaluation Criteria (2023 EIC Accelerator Work Programme Part 6)
• The EIC’s 2023 Strategic Challenges and Topics (2023 EIC Accelerator Work Programme Part 7)
• The New EIC Ecosystem, Fast-Track and Pilot Plug-In Schemes (2023 EIC Accelerator Work Programme Part 8)

These tips are not only useful for European startups, professional writers, consultants and Small and Medium-Sized Enterprises (SME) but are generally recommended when writing a business plan or investor documents.

Deadlines: Post-Horizon 2020, the EIC Accelerator accepts Step 1 submissions now while the deadlines for the full applications (Step 2) under Horizon Europe are listed below. The Step 1 applications must be submitted weeks in advance of Step 2. The next EIC Accelerator cut-off for Step 2 (full proposal) can be found here. After Brexit, UK companies can still apply to the EIC Accelerator under Horizon Europe albeit with non-dilutive grant applications only - thereby excluding equity-financing. Switzerland has resumed its participation in Horizon Europe and is now eligible for the EIC Accelerator.

Contact: You can reach out to us via this contact form to work with a professional consultant.

AI Grant Writer: ChatEIC is a fully automated EIC Accelerator grant proposal writer: Get it here.

Eureka Network: The Eureka Network delivers various international collaborative R&D initiatives such as Network Projects, Clusters, Eurostars, Globalstars, and Innowwide, providing funding from €50K to €6.75M per project based on the specific initiative. This network emphasizes market-driven innovation and deep-tech advancement across multiple technology sectors including ICT/Digital, Industrial/Manufacturing, Bio/Medical Technologies, Energy/Environment, Quantum, AI, and Circular Economy. Eligible participants include SMEs, large enterprises, research organizations, universities, and startups, with Eurostars particularly focused on R&D-performing SMEs. Get Started

EIC Transition: EIC Transition delivers up to €2.5 million in funding to overcome the 'valley of death' gap between laboratory research and market deployment, emphasizing technology maturation and validation. The initiative supports single legal entities or small consortia of 2-5 partners including SMEs, start-ups, spin-offs, and research organizations. Key technology domains include Health/Medical Technologies, Green/Environmental Innovation, Digital/Microelectronics, Quantum Technologies, and AI/Robotics. Get Started

EIC STEP Scale-Up: EIC STEP Scale-Up delivers significant equity investments of €10-30 million for established deep-tech companies prepared for hyper-growth and large-scale expansion. The initiative targets SMEs or small mid-caps with up to 499 employees who have obtained pre-commitment from qualified investors. Primary focus areas include Digital & Deep Tech (Semiconductors, AI, Quantum), Clean Technologies for Net-Zero objectives, and Biotechnologies. Get Started

EIC Pre-Accelerator: EIC Pre-Accelerator represents a 2025 pilot initiative delivering €300,000-€500,000 in funding for early-stage deep-tech development and preparation for the EIC Accelerator program. This program is exclusively accessible to single SMEs or small mid-caps from 'Widening countries' to foster regional innovation development. The initiative encompasses deep-tech innovations across physical, biological, and digital domains. Get Started

EIC Pathfinder: EIC Pathfinder delivers up to €3 million for Open calls and up to €4 million for Challenge-based calls to support early-stage research and development with proof-of-principle validation. The initiative requires research consortia with a minimum of 3 partners from 3 different countries, including universities, research organizations, and SMEs. Primary technology focus areas include Health/Medical, Quantum Technologies, AI, Environmental/Energy, and Advanced Materials. Get Started

EIC Accelerator: EIC Accelerator delivers flexible funding options including blended finance (€2.5M grant + €0.5M-€10M equity), grant-only (up to €2.5M), or equity-only arrangements for scale-up and market deployment of breakthrough innovations. The initiative targets SMEs, start-ups, and small mid-caps with up to 499 employees, with MedTech/Healthcare representing 35% of funded projects. Additional technology areas include Biopharma, Energy, AI, Quantum, Aerospace, Advanced Materials, and Semiconductors. Get Started

Innovation Partnership: Innovation Partnership enables collaborative innovation between public and private sectors with typical funding of €1-5 million per project. The initiative supports cross-sectoral strategic technologies through public-private partnerships and consortia. Projects concentrate on addressing societal challenges through collaborative innovation approaches. Get Started

Innovation Fund: The EU Innovation Fund delivers substantial funding of €7.5 million to €300 million for large-scale demonstration of innovative low-carbon technologies. The initiative targets clean energy, carbon capture, renewable energy, and energy storage technologies to accelerate the transition to a low-carbon economy. Eligible participants include large companies, consortia, and public entities capable of implementing large-scale demonstration projects. Get Started

Innovate UK: Innovate UK delivers various programs with funding ranging from £25K to £10M depending on the specific initiative, supporting business-led innovation, collaborative R&D, and knowledge transfer. The organization funds projects across all sectors with particular emphasis on emerging technologies and supports UK-based businesses, research organizations, and universities. Programs are designed to drive economic growth through innovation and technology commercialization. Get Started

Industrial Partnership: Industrial Partnership delivers €2-10 million in funding for industrial research and innovation partnerships focusing on manufacturing, industrial technologies, and digital transformation. The initiative supports industrial consortia and research organizations in developing collaborative solutions for industrial challenges. Projects aim to strengthen European industrial competitiveness through strategic partnerships. Get Started

Eurostars: Eurostars represents a joint EU-Eureka initiative delivering €50K-€500K for international R&D collaboration specifically led by SMEs. The program adopts a bottom-up approach, accepting projects from all technology fields without predefined thematic restrictions. R&D-performing SMEs must lead the consortium and demonstrate significant R&D activities. Get Started

LIFE Programme: The LIFE Programme delivers €1-10 million in funding for environmental protection, climate action, and nature conservation projects across the European Union. The initiative supports environmental technologies, climate adaptation strategies, and biodiversity conservation initiatives. Eligible participants include public authorities, private companies, NGOs, and research institutions working on environmental and climate challenges. Get Started

Neotec: Neotec represents a Spanish initiative delivering €250K-€1M in funding for technology-based business creation and development, supporting the growth of innovative Spanish SMEs and start-ups. The program covers all technology sectors and aims to strengthen Spain's technology ecosystem. Funding is specifically targeted at Spanish technology-based SMEs and start-ups to enhance their competitiveness and market presence. Get Started

Thematic Priorities: EU Thematic Priorities encompass various programs aligned with EU strategic priorities including green transition, digital transformation, health, and security initiatives. Funding amounts vary based on the specific program and call requirements, with projects designed to address key European challenges. Applicant eligibility varies by specific program and call, with different requirements for different thematic areas. Get Started

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