With the introduction of the new Horizon 2020 Work Programme 2018-2020, the SME Instrument funding scheme has undergone several important changes. In this article you will learn what is new.
Since its launch in 2014, the SME Instrument has raised tremendous interest among innovative small and medium sized enterprises across Europe and beyond. During the years 2014-2016, more than 31 000 applications were submitted and approx. 2 500 companies from 36 countries received € 882 million in funding altogether. The 2017 SME Instrument impact report found that owing to SME Instrument funding, the average time for companies to get their next investment shortened from 32 to 9 months, companies were able to raise higher investment rounds (€ 4.3 million on average) than before (€ 2.8 million), and only and year down the line, they experienced a 250% increase in turnover and a 122% increase in employment on average. The Horizon 2020 SME Instrument has without a doubt proven to be both extremely popular among SMEs and a great success and with the introduction of the new Work Programme 2018-2020, highly innovative SMEs in Europe with a clear commercial ambition are to benefit better yet.
As of October 2017, the SME Instrument has become a part of the European Innovation Council together with three other innovation funding instruments i.e., Fast Track to Innovation (FTI), Future and Emerging Technologies (FET)-Open and Horizon Prizes.
Bottom up approach
First of all, topics are no longer pre-defined! The SME Instrument is now fully bottom-up giving a chance to innovative companies that didn’t fit into the 13 topics foreseen in the previous Work Programme. Disruptive projects that cut across sectors, markets and technologies now stand a higher chance at receiving funding. Yes, this probably means that more applications will be submitted in general, making the SME Instrument even more competitive but on the other hand, an increased overall budget (see below) and no set budget limits per topic (as was before), will increase the likelihood for funding above quality threshold project proposals that were recommended for funding but did not receive it due to the budget limits, particularly those submitted to the most popular topics such as ICT or Energy.
Keywords for applicants and expert-evaluators
Since there are no set topics, how will proposals be assigned to the expert-evaluators you ask? Well, now you will be requested to select a maximum of 3 main keywords and 3 sub-keywords from a pre-defined list. Based on your selection, your proposal will be matched with expert-evaluators who too are required to pick the keywords.
Larger pool of evaluators
The pool of expert-evaluators has been extended to reinforce the presence of: entrepreneurs, who have started and scaled up innovative enterprises at a European or global level, investors (including those affiliated with banks, venture capitalists, business angels, crowd-funders etc.) as well as experts involved in the innovation ecosystem (business schools, universities, innovation hubs, accelerators, etc.).
Evaluation criteria - a stronger emphasis on IMPACT
In the previous Work Programme, the three award criteria: Excellence, Impact and Quality and efficiency of implementation were of equal importance. Now, the Impact criterion has been given a weight of 50% of the total score. The remaining two criteria have been given 25% each. This shift in focus clearly shows the EU is searching for highly demanded innovations that have the potential to create new or disrupt existing markets as well as scale-up the applicant company.
Two-step evaluation for Phase 2 proposals
The evaluation process for Phase 2 proposals will consist of two steps. Apart from the remote evaluation conducted by expert-evaluators, face-to-face interviews will be held with project applicants from now on. After step 1, proposals will be ranked according to the obtained scores in the Evaluation Summary Report. Applicants that pass a certain threshold will be invited to participate in a face-to-face interview. The actual threshold to pass to step 2 will be dynamic and depend on the volume of proposals that will pass all quality thresholds in a given cut-off deadline. The interviews will be held in Brussels and on very short notice, usually one week after receiving an invitation letter. Keep this in mind when applying and make sure you are available and able to travel during the interview dates planned for each cut off:
- interview week for 1st cut-off date: February 12-16;
- interview week for 2nd cut-off date: April 16-20;
- interview week for 3rd cut-off date: June 25-29;
- interview week for 4th cut-off date: November 12-16.
The interview will be conducted in English and last approx. 30 min, i.e., a 10 min (max) pitch presentation (a template will be attached to the invitation letter you receive) will be followed by a 20 min Q&A session focused on the commercialisation strategy, technological feasibility and the team/company. Only legally employed staff are allowed to take part in the interview, preferably the CEO or other senior staff members (a max of 3 company representatives). Please note that the expenses related to your participation in the interview will not be reimbursed. As a result of step 2, proposals will receive an additional score: an “A” mark if the proposal is proposed for funding or a “B” mark if the proposal is rejected due to insufficient funding.
Financing and duration
Successful Phase 1 projects will continue to receive funding in the form of a lump sum of € 50,000 and project duration will also remain unchanged (a max of 6 months). All Phase 2 proposals accepted for funding will receive from € 500 000 to € 2.5 million (covering up to 70% of eligible costs) and project duration should range from 12 to 24 months.
In general, the financing and duration of SME projects remains unchanged, however, with the new Work Programme, there will be no more exceptions for healthcare and biotechnology projects (previously topic no. 5), although higher grants and longer durations will be possible if duly justified. Additionally, applicants are now requested to clearly indicate and explain how they intend to finance the 30% co-financing rate (funding rounds, owner contribution etc.).
Over the period 2018-2020, the SME Instrument will provide € 1.63 billion in funding. Compared to 2017, the budget for Phase 1 and Phase 2 projects will increase by 9.65% in 2018. The budget available for each year will be split evenly among the four cut-off dates.
Has the SME Instrument caught your attention?
If so, let GAEU’s team of experienced writers help you make your innovation come to life!
Małgorzata Wójcik, GAEU Horizon Centre of Excellence
Research and Innovation Funding Specialist