Finance

Horizon 2020-The champions league for small, innovative European companies

Untitled-1Horizon 2020, a specific instrument for small and medium sized enterprises, aims to identity small companies with high innovation and strong growth potential.

Europe is a vibrant continent for technological innovation and knowledge creation but  commercialisation of knowledge here is lower than in other parts of the world. Although Europe has a high number of start-ups and small companies, a fully-functioning risk capital market is still lacking and these firms have difficulties finding necessary funds to engage in new markets or to disrupt existing ones. Therefore these companies cannot grow and prosper to their full potential.

It was with this background that Horizon 2020, a specific instrument for small and medium sized enterprises within the European Research and innovation Framework Programme, was created in 2014.

The Instrument has a budget of around €3 billion in grants until the year 2020. It aims to identity small companies with high innovation and strong growth potential. Funding is provided after the initial start-up or seed phase, often referred to as the “Series A” round.

Inspired by the US Small Business Innovation and Research Programme (SBIR), the instrument consists of three phases. The first phase provides the company with a small grant of €50,000 to identify detailed market conditions and risks, to study customer trends or ensure the availability of the necessary intellectual property in order to pursue market opportunity.

The subsequent second phase provides a grant of €1 to 4 million to roll out growth and market strategy. Providing fresh funds to companies is important for them to overcome the so-called “death valley.” However, recent studies of successful innovation environments have shown that the provision of soft services, in addition to finance, helps considerably in realising the companies’ growth strategies. This is what Phase 3 is all about.

sssThe supported companies receive business coaching helping them strategically develop and position the company. The instrument also aims to attract private investments, to foster links between funded companies and corporates or public procurement entities and supports attending trade fairs and oversea trade missions. One of the supported enterprises is Watly.co with facilities located in Spain and Italy.

The company is pioneering ways to provide solutions to fundamental and global human needs – access to clean water and sanitation, free-energy and connectivity. It creates technological solutions powered by clean and renewable energies that respect the Earth’s ecosystem. Through innovative design and an unconventional engineering approach, it builds upon advanced and beautifully designed solar water purifiers and micro-power stations in the world.

After a successful Phase 1, the Phase 2 grant has helped the company gain credibility and exposure. It is about to launch a massive crowdfunding campaign on the Indiegogo.com platform and is negotiating with potential VC investors to raise €10 million. It is looking to launch a unique line of product for the UAE and Qatar markets. Watly.co is one of over 200 European small companies supported by the instrument since April 2014.

A very competitive scheme, it ensures that less than 1 in 10 companies applying have a chance of support after a thorough technological and commercial scrutiny. We have good reason to believe that the supported companies will grow and progress and become true European champions.

About the author

Bernd Reichert

​Bernd Reichert became Head of Administration of the directorate "Industrial Technologies" in 2003. From 2007 until the end of 2013 he was heading the unit "Small and Medium-Sized Enterprises" in the Commission's Research and Innovation Directorate General. Since 1st January 2014 he is responsible for setting-up of activities "Horizon 2020: Small and Medium-Sized Companies", in particular the implementation of the SME Instrument under the EU Research and Innovation Framework Programme Horizon 2020, within the Executive Agency for Small and Medium-Sized Companies (EASME).​

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