Segler Consulting

Frequently Asked Questions

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What are the key sections I should include in an in-house FTO analysis for the EIC Accelerator?

Your FTO should include a company identity section, a statement and disclaimer explaining the analysis's scope, a methodology section detailing your search process, a list of keywords used, a selection and discussion of relevant third-party patents, and an appendix with supporting IP information.

How do I choose the right keywords for my FTO analysis?

Identify the innovative features of your technology and create keyword groups for each. For example, if your innovation is 'Green hydrogen generation from algae,' keywords could include 'Green hydrogen,' 'Hydrogen algae,' and 'Hydrogen biomass.' Use multiple keywords per innovation for a comprehensive search.

What kind of documents should I include in the appendix of my FTO analysis?

Include any IP information relevant to your company, such as a list of IP assets (patents, trademarks, domain names), technical graphics of discussed patents, legal analyses, patent applications, scientific publications, and other relevant IP documents.

Is an FTO analysis always necessary for EIC Accelerator applications, even for software products?

While software patents can be more challenging to obtain in Europe, an FTO analysis is still important. It helps identify potential IP risks and demonstrates due diligence, even if the risk is perceived as lower than for other technologies.

How many third-party patents should I discuss in my FTO analysis?

The number of patents to discuss depends on the complexity of your technology and the depth of your search. However, a comprehensive FTO analysis should discuss at least 15 patents, especially for complex and sophisticated technologies.

What kind of information should I include when discussing third-party patents in my FTO analysis?

For each patent, list relevant metadata like the inventor, assignee, filing status, and territories. Then, explain how the patent differs from your innovation and why it doesn't pose an IP or commercial risk to your company.

What is a Freedom To Operate (FTO) analysis and why is it important for the EIC Accelerator?

An FTO analysis assesses the existing IP landscape to ensure your company can patent its technology and commercialize its product without infringing on third-party patents. It's mandatory for EIC Accelerator grant proposals and demonstrates that you've considered potential IP risks, which is crucial for DeepTech startups.

What happens if I don't have an FTO analysis when applying for the EIC Accelerator?

Since an FTO analysis is mandatory, you'll need to either hire a patent law firm to conduct one or prepare a general analysis in-house. While hiring a firm is the safest option, an in-house analysis is acceptable if you plan to contract a firm later during the project.

How many risks should I include in my EIC Accelerator Step 2 proposal?

Aim for around 8 risks (4 technical, 4 commercial) that are somewhat vague but accompanied by strong mitigation strategies. Avoid focusing on real-world or market risks, as these can lead to negative evaluations. The key is to acknowledge risks without making them seem insurmountable.

Is it always best to ask for the maximum grant amount available through the EIC Accelerator?

Most companies do aim for the maximum grant amount, and the jury typically doesn't change this amount. However, it's important to carefully consider your actual needs and how the grant will be used to achieve your project goals.

What kind of risks should I avoid highlighting in my EIC Accelerator application?

It's best to avoid emphasizing real-world risks or market risks, such as product-market fit issues. These types of risks can be easily criticized by evaluators. Instead, focus on more general risks with clear mitigation plans.

What factors should the EIC Jury consider instead of just 'high risk' for DeepTech companies?

The EIC Jury should focus on circumstances surrounding the risk, such as whether the company has a clear capital need, if there's intense competition, if Europe lacks the necessary ecosystem, or if the value chain is not yet established. These are realistic challenges that the EIC should consider more than just the abstract idea of 'high risk'.

What happens if I'm confused about the equity request amount in my EIC Accelerator application?

Many applicants are confused about equity requests, focusing more on the grant component. If you're unsure, it's best to seek advice and understand the implications of different equity amounts. The EIC Jury should ideally be able to adjust the amount if needed.

Should I be completely transparent about all the risks my DeepTech company faces?

While transparency is generally good, being overly transparent about significant risks, especially for groundbreaking DeepTech ventures, can decrease your chances of reaching the interview stage. Focus on presenting risks in a way that demonstrates you've considered them and have effective mitigation strategies in place.

Why might it be advisable to request less equity funding from the EIC?

The EIC equity funding process is complex, involving a crowd-in factor, tranches, negotiations, and policy goals. Requesting less equity can sometimes be advantageous, and the EIC should be able to adjust the amount to fit their mission and budget.

How can the EIC improve the evaluation process regarding domain expertise?

The EIC could adopt a system similar to Airbnb's review process. Step 2 evaluators, who often possess domain expertise, could submit 1-2 questions for the Jury to ask during interviews. This allows the Jury to assess the applicant's understanding and response to technical inquiries.

Why is domain expertise important in the EIC evaluation process?

Domain expertise helps evaluators to assess the technical feasibility and market potential of a project more accurately. Step 2 evaluators often have this expertise, and incorporating their input through targeted questions can improve the overall evaluation quality.

Why should the EIC Jury have the power to adjust the equity amount requested by applicants?

Allowing the Jury to adjust the equity amount provides flexibility to account for factors like the crowd-in factor, co-investor requirements, EU interests, and the company's fundraising progress. This prevents companies from being rejected solely due to an unfitting equity request.

How can AI be used to engage with applicants during the evaluation process?

AI can be used to automatically send questions to applicants if information is missing or unclear, facilitating a real-time information exchange. The application template could also be replaced with a shorter cheat sheet followed by AI-driven Q&A to streamline the process.

What's the recommended setup for an AI evaluation system for the EIC?

It's recommended to use a European company running an open-source Large Language Model (LLM) locally on EU servers. This ensures data security and avoids sending sensitive Intellectual Property (IP) outside of Europe. A modular setup with separate backend/UI and instructions allows for flexibility and control.

Why should the EIC start integrating AI into its evaluation process now?

It's crucial to start early to allow for experimentation and development. Many applicants and consultancies are already using AI, and proposal writing is likely to become fully automated soon. Being prepared with a well-developed AI evaluation system will be essential as submission rates increase.

What are the key benefits of using AI in EIC proposal evaluations?

AI enables instant and repeated evaluations, allowing for refinement of the filtering process. It also provides a perfect record of evaluation decisions, enabling continuous improvement based on past successes and failures. Ultimately, the goal is to increase the interview success rate and the quality of winning projects.

Could AI be used to assist human evaluators rather than replace them?

Yes, a hybrid approach is possible. AI could generate a dashboard highlighting the pros and cons of each project, acting as the initial evaluators. Human evaluators could then use this information to make the final decision, improving efficiency and consistency.

What are some potential long-term applications of AI in the EIC Accelerator?

Beyond evaluation, AI can be used to connect to patent databases, perform web searches for market and competitor analysis, and even replace the traditional proposal template with a more streamlined AI-driven Q&A format.

How can AI help the EIC find the best companies, not just the ones who know how to apply?

By streamlining the application process and potentially replacing it with AI-driven Q&A, the EIC can remove the learning barrier for applicants. This allows the EIC to select from a broader range of European companies, not just those familiar with the EIC's requirements.

When should AI be fully integrated into the EIC evaluation process?

AI should only be fully integrated when it consistently demonstrates higher quality evaluations than human evaluators. Early testing can involve inviting top AI-selected projects that were initially rejected by human evaluators to see if the jury approves.

How can the EIC retain control over the AI evaluation process?

By saving the core logic and evaluation instructions as plain text, the EIC can easily modify and update the system. This approach allows them to retain control over the evaluation criteria while using external contractors for integration and version control.

What's the most important KPI to improve in the EIC evaluation process?

The interview success rate is the most important KPI. It indicates how well the initial evaluation steps filter out unsuitable projects. A higher interview success rate signifies a more effective evaluation process overall.

Could Grant+ help protect sensitive technologies?

While equity investments are sometimes seen as a way to protect European interests in sensitive technologies, the EU can also set terms and request board seats even with grant funding. There's no inherent requirement for the EIC to become a VC to ensure oversight.

What is the main takeaway regarding the EIC Accelerator's funding approach?

The EIC Accelerator should consider prioritizing pure grants and the Grant+ model over equity investments. This approach could be more effective at crowding in private investors, supporting more DeepTech companies, and achieving the program's core mission of bridging the valley of death.

How does the EIC Accelerator decide on equity investments?

The EIC Fund, managed by the EIB and Alter Domus, handles equity investments. They perform due diligence similar to venture capitalists, basing decisions on the European Commission's funding award and potentially splitting the investment into multiple rounds.

What is 'Grant+' and how does it differ from blended finance?

Grant+ is a proposed alternative to blended finance, focusing on providing larger grant amounts with top-up grants tied to future funding rounds and milestones. Unlike blended finance, which includes equity, Grant+ aims to provide non-dilutive funding to incentivize private investors.

How could Grant+ allow more companies to be funded?

By shifting from large equity investments to smaller top-up grants, the EIC Accelerator could fund a significantly larger number of companies. The remaining budget could be used to provide more initial grants, expanding the reach of the program.

How would Grant+ incentivize private investors?

Grant+ acts as a 'VC dowry,' providing a non-dilutive grant to the startup's next funding round. This effectively offers a discount to outside investors, making the company more attractive without requiring them to share equity with the EIC.

Why does the EIC Accelerator make equity investments?

The EIC views equity investments as a way to de-risk DeepTech companies, making them more attractive to private investors. The goal is to bridge the funding gap and encourage private sector investment, not to control companies or become a central authority.

What are the potential downsides of the EIC's equity investment strategy?

One concern is that the EIC might be seeking control or influence through equity stakes. Another is that budget limitations might be driving the focus on equity. Finally, the long-term vision of self-funding through investment returns could create a zero-sum game if public funding is reduced as a result.

Why is the focus on equity investments potentially problematic?

The increasing focus on equity investments means a larger portion of the EIC Accelerator budget is allocated to fewer companies. This can overshadow the grant incentive, which is arguably more effective at attracting outside investors and supporting a wider range of DeepTech startups.

What is the EIC Accelerator program?

The EIC Accelerator is a European Commission funding program for startups and SMEs, offering up to €2.5 million in grant funding and €15 million in equity financing. It aims to support DeepTech companies in crossing the 'valley of death' and attracting private investment.

What is the EIC Accelerator funding program?

The EIC Accelerator program, offered by the European Commission and European Innovation Council, provides grant and equity funding to startups and SMEs. It offers up to €2.5 million in grant funding and up to €15 million in venture financing per project, aiming to support high-growth potential companies.

What is a 'Zombie Innovator'?

A 'Zombie Innovator' is a company that has been developing a technology for a long time without achieving clear product-market fit or generating significant revenue. They often lack a clear market need and struggle to demonstrate commercial viability, despite extensive patent filings and R&D efforts.

What are the warning signs of a 'Zombie Innovator' in their business plan?

Zombie Innovators often focus heavily on their technology, intellectual property, and related benefits (like sustainability) but rarely mention customer demand or pilot customer negotiations. Their commercial plans tend to rely on inflated market sizes without a practical plan to reach the market or evidence of customer interest.

What should a company do if they have a finished prototype?

If a company has a finished prototype that can be commercialized to some degree, they should aim to generate revenues as quickly as possible. This helps validate the product-market fit and demonstrates that customers are willing to pay for the solution.

What key factor does the EIC consider when evaluating companies?

The EIC places significant emphasis on timing. They look for companies that are addressing a timely market need or opportunity, often driven by factors like regulatory changes, technological breakthroughs, or increasing consumer demand. Good timing suggests a strong potential for product-market fit.

How does past financing affect the EIC's view of a company?

The EIC will assess how a company has utilized past financing. A history of starting and stopping developments based on funding status, without achieving significant progress or market traction, can be a red flag and decrease the chances of receiving EIC funding.

What is 'traction' and why is it important?

Traction refers to the progress a company makes in gaining market acceptance and demonstrating commercial viability. It's crucial because it validates the product-market fit and shows investors that there is real demand for the company's solution, making it a worthwhile investment.

How can a company demonstrate traction if early revenues are not possible?

Even without early revenues, a company can demonstrate traction through customer relationships, early testing with end-users, agreements with value chain stakeholders, and impressive Letters of Intent (LOI). These demonstrate market need and usability, showing potential for future commercial success.

What is the problem with giving away a product for free?

While prototype testing with customers is valuable, giving away a product for free can be misleading. It doesn't validate whether customers would actually purchase the product, which is a critical indicator of market demand and investment potential.

Why is it important to identify 'Zombie Innovators'?

Identifying 'Zombie Innovators' is crucial for consultants, writers, and freelancers, especially when targeting programs like the EIC Accelerator. These companies are unlikely to attract investment or EIC funding due to their lack of traction and commercial viability, making them poor prospects.

How can I improve my chances of success in the EIC Accelerator application?

Pay close attention to the feedback received after Step 2 if you are rejected. Address the evaluator's criticisms directly and logically in your resubmission. Since evaluators may focus on the conversation history, a well-addressed rebuttal can significantly improve your chances.

What can the EIC do to improve the evaluation process?

The EIC should consider reintroducing a ranking system to differentiate between applicants and better manage the number of companies invited to the interview stage. Additionally, they should gather statistics on rejection reasons in Step 3 and use them to filter applicants more effectively in Step 1.