In 2014-2015, the European Commission awarded 500M Euros of non-dilutive, non-reimbursable funding to innovative SMEs via its dedicated SME instrument, aiming to fill gaps in funding for innovative companies that are 1-2 years away from commercialising a new product/service or an improved version of an existing product/service. In 2016-2017, the European Commission will award 740M Euros of grants to innovative SMEs with up to 2.5M Euros for a single applicant. Can your portfolio companies benefit? Do they have what it takes to succeed in this programme? There are 3 phases and 13 topics under the SME instrument, making it difficult for an organization to navigate this "jungle". This presentation will allow you to: Learn more about the SME instrument requirements and benefits Select the right phase and topic to maximize your odds of success Get the latest statistics including success rates and cut-off scores per topic Understand key success factors from 40+ funding applications and 15 successful proposals Learn how to select in your investment portfolio the companies best suited for this programme.

1. Should your Porfolio Companies
Apply for EC Funds?

2. euproject@zazventures.com
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

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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

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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

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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

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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).

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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

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Agenda
New SME Instrument
€0.35B per year

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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)

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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 ExpertExpert
Minimum 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

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ESR Example
Public
Abstract
Total Score
(out of 15)
Project
Budget

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Evaluation Outcome
Excellent
Good
Threshold Funding
Average
Effort
+ 100%
Effort
+ 100%

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Statistics (2014-2015)
Topic
Proposals
Submitted
Funded
Proposals
Success 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

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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

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Selecting the right phase
Lump sum = €50k Up to €2.5M
(€5M for health)
No Direct EC
Funding

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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 SMEs
SMEInst-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 Well
SMEInst-06 €18 m. €12.5 m.
Stimulating the innovation potential of SMEs for sustainable and competitive
agriculture, forestry, agri-food and bio-based sectors
SMEInst-07 €25.46 m. €32.19 m.
Supporting SMEs efforts for the development - deployment and market
replication of innovative solutions for blue growth
SMEInst-08 €9.5 m. €10 m.
Stimulating the innovation potential of SMEs for a low carbon and efficient
energy system
SMEInst-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 materials
SMEInst-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.

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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

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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

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