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Horizon 2020 SME Instrument: financing your innovative business with EU funds

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Horizon 2020 SME Instrument overview, tips, hints, proposal writing

Horizon 2020 SME Instrument: financing your innovative business with EU funds

  1. 1. FINANCING YOUR INNOVATIVE BUSINESS WITH EU FUNDS Horizon 2020 success story Sviatoslav Sviatnenko Director of Business Development, Borsch Ventures
  2. 2. DISCLAIMER • based on first hand experience, facts and evidence as of March, 2017 [changes may occur as program develops] • This is “Workshop", so lots of slides [sorry] • lots of text [that may be hard to read] as presentation will be put online shotrly and used as a reference material • I speak on behalf of myself, not representing official position of EU or any EU-funded project
  3. 3. BIO: SVIATOSLAV SVIATNENKO ssv@borschventures.com s.sviatnenko@gmail.com • MA European Studies (Maastricht University, the Netherlands) • Director of Business Development, Borsch Ventures • SME Instrument phase 2 grant (1.2M Euro), 2 Seals of Excellence • Coordinator PVCloud H2020 SME project • Top 30 under 30 according to Kyiv Post
  4. 4. PLAN • Horizon 2020 Overview • Horizon 2020 SME Instrument Overview • H2020 SME Instrument proposal • Tips, Hints, and Mistakes
  5. 5. HORIZON 2020: ABOUT nearly €80 billion of funding available Horizon 2020 is the financial instrument implementing the Innovation Union, a Europe 2020 flagship initiative aimed at securing Europe's global competitiveness. 7 years till 2020 The overall success rate of eligible full proposals under the first 100 calls is around 14%, under SME Instrument is about 5- 6% The 20% budget target for SMEs has been achieved the biggest EU Research and Innovation programme ever
  6. 6. TYPE OF BENEFICIARIES
  7. 7. HORIZON 2020: FOR WHOM? • Academia, R&D centers, Universities • Public institutions (e.g. City Hall, PPPs) • Corporates (small, mid, large Caps including public companies, international companies) • SMEs • Start-ups • NGOs, non-profits • FIs (Banks, VC/PE Funds, business angels etc) • Business Support organizations, clusters, centers, incubators etc • Consultancies/legal firms • …
  8. 8. H2020 WORK PROGRAM • Priorities • Budget • conditions& requirements • Current WP ends in 2017, new one to be published in Q3
  9. 9. 61+ proposals/projects 95% not coordinators Ratification in mid- 2015 Total – around 12M Euro Average grant – 200,000 EUR «Українські науковці з університетів і науково- дослідних інституцій матимуть доступ до великих ресурсів, їх заявки конкуруватимуть з усіма грантовими заявками європейських країн», — наголосив міністр освіти і науки Сергій Квіт. Ukrainian teams will receive the highest subsidies for applications submitted to Marie Sklodowska Curie - RISE (4.16 M€), coordination and support actions (CSA - 2.06 M€) and research projects (RIA -1.91 M€). But… Ukraine’s contribution to the programme (with 95% discount) is… 35,5M EURO!
  10. 10. CASE 1: AGRI CALL SFS-02 RIA: Teaming up for good: Exploiting the benefits of species diversity in cropping system Expected Impact: Activities will support the adoption of productive and resilient agricultural systems which capitalise on the benefits of high plant species diversity. Goal to be achieved via: • scientifically supported and field tested evidence on the mechanisms underpinning beneficial crop associations and their effects on crop performance and product quality; • increasing farmers' and breeders' knowledge of potential benefits of 'plant teams' (e.g. with regard to resource facilitation, pest and disease restriction/control); • promoting diversity-rich crop management practices 01 02 03 04 Reimbursement rate: 100% Up to 5M Euro per project, total budget 10M 4 submitted proposals 2 proposals above threshold requesting 9,999,363 Eur
  11. 11. CASE 1: FISHERY SFS-20-2017: Towards a science-based regionalisation of the Common Fisheries Policy The new Common Fisheries Policy (CFP) envisages a regionalised ecosystem-based approach relying on detailed measures proposed jointly by Member States under the umbrella of common principles and benchmarks set up in EU legislation. This will require choosing appropriate management units (fisheries, fishing gears, sea basins, fish stocks, stock assemblages, target fleets, geographical units, etc.) and combining in an innovative manner management instruments and new governance mechanisms adapted to specific regional needs. 01 02 03 04 Reimbursement rate: 100% Up to 6M Euro 1 submitted proposal 100% of projects funded
  12. 12. CASE 3: INTERNATIONAL NETWORK OF BIZ SUPPORT ORGS • INNOSUP-01-2016-2017: Cluster facilitated projects for new industrial value chains • Budget was up to 5M for credible international consortiums (new calls in 2018) • Goal was to: • 1) validate ideas for structured innovation projects driven by SMEs from different sectors and countries in collaboration with other innovation actors and facilitate the coordination towards new industrial value chains through this collaboration space. • 2) support innovation activities and/or channel a mix of different targeted entrepreneurial and innovation support measures (such as mentoring, coaching, innovation and technical assistance vouchers, etc.) directly to the innovation actors of the validated innovation projects to further support their development, integration and large-scale demonstration in a strategic manner. • At least 75% of the total proposed budget shall be allocated to support innovation in SMEs directly, whereby the SMEs benefit by either participating in the consortium or by being supported as third party enterprises.
  13. 13. CASE 4: EIB/EIF PROGRAMMES UNDER H2020 (UNDER RISK FINANCE) • The European Commission and European Investment Bank Group are joining forces to encourage banks and other financial intermediaries to lend or provide equity to innovation-driven companies through InnovFin – EU Finance for Innovators under H2020 Risk Finance • E.g. InnovFin Equity - managed by EIF - is, in addition to the InnovFin SME Guarantee Facility, part of “InnovFin – EU Finance for Innovators”, an initiative launched by the European Commission and the EIB Group in the framework of Horizon 2020. • Via InnovFin Equity, EIF provides equity investments and co- investments to or alongside funds focusing on companies in their pre- seed, seed, and start-up phases operating in innovative sectors covered by Horizon 2020, including life sciences, clean energy and high-tech. • Under InnovFin Equity, EIF targets investments in around 45 funds, mobilising a total amount of EUR 4-5 bn to be invested in enterprises located or active in the EU and Horizon 2020 Associated Countries (Participating Countries).
  14. 14. INNOVFIN PRODUCT PORTFOLIO
  15. 15. CASE 5: SME INSTRUMENT • Through the SME Instrument, the European Union wants to finance the most innovative small companies with a high growth potential. • SME Instrument looks for internationally-oriented SMEs to support them in implementing high risk, high potential projects and ideas. • The Instrument is worth around €3 billion over seven years and offers fast and simple grants for business innovation feasibility studies (Phase 1) and demonstration projects (Phase 2). • Investment-mature concepts can in addition benefit from business development advice and other support services (Phase 3). • The application process is easy but only the very best projects
  16. 16. PHASE 2 OVERVIEW Project duration: 12-24 months Proposal – 30 pages+ Financing: 0,5-2,5M Eur and 70% of total project cost (as a general rule) For health-related – 100% grant, up to 5M and duration may be expanded Success rate: 6% 12 days of business coaching: • Bus dev (marketing, sales, fundraising). • Organizational devt (optimization * efficiency) • International collaboration & value chains devt. Targeted SMEs: • High growth potential + innovation • Internationally-oriented • Value to Europe and the world Financing is for: • Demonstration • Market Replication • Research • Development • Minuaturization • Testing • Pilot • Prototyping • Scaling up • Bus dev • Communication • Commercialization • IPR
  17. 17. SME DEFINITION • A micro, small or medium-sized enterprise within the meaning of Recommendation 2003/361/EC. Necessary (but not sufficient) conditions for being an SME are a number of employees smaller than 250 and an annual turnover not exceeding €50 million, and/or an annual balance sheet total not exceeding €43 million. • These ceilings apply to the figures for individual firms only. A firm which is part of larger grouping may need to include employee/turnover/balance sheet data from that grouping too. • More details are explained at: http://bit.ly/SMEdefinition
  18. 18. SME INSTRUMENT For whom? Start-ups Micro biz Small biz Medium biz Academi a spin- offs Product/ service business Family business With high growth potential and value to/positive impact on the EU/the world
  19. 19. CALLS FOR PROPOSALS TOPICS • Open Disruptive Innovation Scheme (ICT) • Accelerating the uptake of nanotechnologies advanced materials or advanced manufacturing and processing technologies by SMEs • Dedicated support to biotechnology SMEs closing the gap from lab to market • Engaging SMEs in space research and development • Supporting innovative SMEs in the healthcare biotechnology sector • Accelerating market introduction of ICT solutions for Health, Well-Being and Ageing Well • Stimulating the innovation potential of SMEs for sustainable and competitive agriculture, forestry, agri-food and bio-based sectors • Supporting SMEs efforts for the development - deployment and market replication of innovative solutions for blue growth • Stimulating the innovation potential of SMEs for a low carbon and efficient energy system • Small business innovation research for Transport and Smart Cities Mobility • Boosting the potential of small businesses in the areas of climate action, environment, resource efficiency and raw materials • New business models for inclusive, innovative and reflective societies • Engaging SMEs in security research and development Cut off dates Phase 1: • May 3 • Sept 6 • Nov 8 Phase 2 • April 6 • June 1 • Oct 18
  20. 20. FEW FACTS Almost a third of the selected companies are start-ups, meaning that they are younger than 3 years. Success rate is 6% Harvard Univ 6% Mohylianka 5% Startupbootcamp 3-5% Y Combinator 3-5% Techstars 1-1,5%. Job at Google 0.5% Winners raised € 692 million in private equity (as of early 2016) The average amount of grants in Phase 2 in 2014- 2015 was € 1,7 million 11% Accelerators & 12 Academia 15% 50-249 employees 40% resubmissions 22% upscale stage 28% in seed stage 35% in the project-to-project stage Company stage
  21. 21. BY COUNTRY Key reasons: • Role of government (hands on help, NCPs) • Industry of BSO, consultants, lawyers, innovation clusters etc • Widespread knowledge about H2020
  22. 22. ANGUILLA - UKRAINE 1:1
  23. 23. Mid 2015 H2020 – EU- Ukraine deal, ratified by Rada First application to SME Instrument from Ukraine Late 2015 Seal of Excellence, early 2016, First and only above threshold proposal from Ukraine as of late 2016 4th attempt, recommended for funding, first and only in Ukraine under Phase 2 so far 2016 Dec – agreement signed 1 Jan 2017, project started 4AM – email from EC OUR EXPERIENCE Timeline • 4 submissions, 70+ iterations of the proposal, 10 months of work, months of bureaucracy with EU (no pain, no gain..) • We competed with 259 companies from Europe under our call, only 10 got funded (3,8%) • Average success rate for our cut off date was 5.8% (and 6.2% for applicants who went through Phase 1)
  24. 24. SEAL OF EXCELLENCE: “ДЕНЕГ НЕТ, НО ВЫ ДЕРЖИТЕСЬ”
  25. 25. Product Model Market Partnerships POLYTEDA CLOUD PROJECT New cloud-based business model “pay per use” Winning foundry partners Entering European Market first European focus InnovationProduct customization • POLYTEDA CLOUD is receiving €1,220,888 financing for 2-year project “Innovative Cloud-Based PV Workflow for Semiconductor Foundries” that will contribute to restoring the competitiveness of European microelectronics industry. • http://polyteda-cloud.com/images/stories/docs/Press_release_Polyteda_ENG-rev1.pdf
  26. 26. MYTHS Misuderst andings/ Myths Legal documents Consortium Co-funding SME type Legal documents required prior to application (financial statements, balance sheet, registration extract, VAT form, etc) Consortium/academic institution required as a partner no and financial audit if 2+ partners 30% co-funding requirement to show/prove prior to the application convincing justification where to get 30% is enough Only for start-ups/only for small business/only for middle business/only for 3+ years companies/only for companies with multimillion EBITDA etc winners are diverse F T F T F T F T no document checks till the moment you win
  27. 27. 04 No page limit Company 05 No page limit Ethics & Security 03threshold 3 out of 5 Implementation 02(1.5x), threshold 4 out of 5 Impact 01threshold 3 out of 5 Excellence SME INSTRUMENT PROPOSAL SECTIONS
  28. 28. IMPACT 1.5X Market & Customers competitors Business strategy IP management Strategic communication well- analyzed, as detailed as possible yes, you do have competitor s clear and logical (and H2020 is a logical next step of a broader strategy), shall be at least 3 to 10 years & and calculated biz/fin model and projections how you plan to protect results of this project? involving relevant stakeholders, ongoing process evidence/fact based (e.g. reports, customer surveys, business cases, quotes etc)
  29. 29. EXCELLENCE 1 2 3 4 Clear, justified, logical objectives that align with project activities and within budget European and global social, economic, industrial challenges your project will help to overcome Describe your innovation novelty and differentiation [in general, keep your secrets] Clear realistic outcomes of the project (revenues, jobs, market share etc) with timeline Describe technology readiness level and what have led to it, as well as the project concept (at minimum TRL6 at start, and TRL8-9 at the end of the project to allow commercialization) Prove innovation potential and novelty
  30. 30. IMPLEMENTATION Organizational structure and management procedures should match the project scale (e.g. different functions and decision making procedures) Work packages, tasks, milestones and deliverables are well- described, linked/logical [be ware of confidential/public info] Realistic & measurable & verifiable project plan; enough person months and within the budget If subcontract - best value for money and no opportunity to change the subcontractor (only exceptionally, e.g. bankruptcy of subcontractor)
  31. 31. 4.COMPANY INFO PITCH AND “SELL ” YOUR COMPANY RELEVANT EVIDENCE Pitch and “sell” you company and your [existing] team (HR recruitment is not covered) by showing references, clients, experience etc. Describe your project experience that is relevant List all kinds of supporting info (articles, letter of intents, certificates etc) that will back your story No page limit
  32. 32. ETHICS & SECURITY • Do not underestimate this section - dual use, human-related research, data protection, potential abuse/misuse etc • Likely, all companies from Ukraine will face “non-EU country with potential terrorist abuse of research results” after the win (unless got lucky with Ethics experts..)
  33. 33. if you decide to apply - long process 6months+ polish the language & Brussels English Find data/market studies allocate enough time prior to deadline prior for submission don't give tasks to your assistant Халяви немає MISTAKE#1: DO NOT UNDERESTIMATE THE WORKLOAD
  34. 34. Study the programme conditions/ideology Read the call info and study legal requirements Check whether the industry focus aligns Revenues+jobs TRL level “disruptive” innovations MISTAKE#2: DEFINE WHETHER THE COMPANY/PROJECT REALLY FITS THE CALL/PROGRAMME IN THE FIRST PLACE
  35. 35. know the regulations know the costs type think of subcontractors if any Know your taxes potential payment schedule Budget is key MISTAKE#3: DO WORK ON YOUR BUDGET There is some flexibly (e.g. you can transfer between budget categories), but in general you will work under budget you submitted (even if project starts 4-6months after)
  36. 36. MISTAKE#4: DO ANSWER EVERYTHING answer all the questions/address each and every point of the proposal template: • Gender • IP • Ethics • Commercialization • Communication
  37. 37. I EU A I EU Strategies , reports, agendas, other documents INTERVIEWS Learn from the best in EU ARTICLES on official websites To identify best practices INSIGHTS & International Network To build on knowledge HINT#1: KNOW EU STRATEGIES/POLICY/PRIORITIES Horizon 2020 is not a charity and funds potentially global businesses that generate revenues ,create jobs, and have European/international dimension
  38. 38. SOLID Business Plan STRATEGIC Commercialization strategy INNOVATIVE Product or service IN-DEPTH Knowledge of market, customers, competitors H2020 is not just about the best product/technology but convincing commercialization strategy HINT#2: NOT ONLY GOOD/BEST TECHNOLOGY BUT BUSINESS
  39. 39. HINT#3: START ASAP (=NOW) • start ASAP = now. Success rate is falling down, competition increases, more and more good proposals • There will never be more time than now to prepare a project
  40. 40. HINT#4: KEEP TRYING • try-fail-repeat - Keep trying, it is real. Get feedback from an expert, resubmitted proposals are more successful, seek external advice, speak to those who won (info is public), learn it is REAL
  41. 41. LIST OF USEFUL INFO: • Templates http://ec.europa.eu/research/participants/da ta/ref/h2020/call_ptef/pt/2016-2017/h2020- call-pt-sme-2-2016-17_en.pdf • Easme https://ec.europa.eu/easme/ • Participant portal and calls https://ec.europa.eu/research/participants/p ortal/desktop/en/home.html • CORDIS and existing projects http://cordis.europa.eu/
  42. 42. • https://ec.europa.eu/programmes/horizon2020/si tes/horizon2020/files/horizon_2020_first_results.p df • https://ri- links2ua.eu/object/document/234/attach/Statistic s___Analyses_of_Ukrainian_Participation_in_HORIZ ON_2020__updated_after_274_calls_.pdf • https://ec.europa.eu/easme/sites/easme- site/files/catalysing_european_innovation_- _easmes_report_of_the_first_two_years_of_implem entation_of_the_sme_instrument_2014-2015.pdf • https://ec.europa.eu/easme/sites/easme- site/files/15_facts_web.pdf • Self evaluation - http://ec.europa.eu/research/participants/data/re f/h2020/call_ptef/ef/2016-2017/h2020-call-ef- sme-2016-17_en.pdf

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