The Commission has taken a major step in the restructuring of the European Innovation Council (EIC) Fund with the appointment of an external fund manager to take investment decisions in the 139 start-ups and SMEs selected so far for EIC investments. This step means that the EIC is now fully operational in providing a unique combination of grants, investments and business acceleration services to Europe’s most promising start-ups.
The external Fund Manager, AlterDomus Management Company S.A., will be responsible for taking investment decisions on the high risk – high impact companies following the rigorous selection process for the EIC Accelerator and due diligence by the European Investment Bank. The Fund Manager will have to follow the EIC Fund’s Investment Guidelines and will also benefit from an expert advisory committee. The first investment decisions are expected to be taken during October with other investment decisions completed in the coming months.
In the meantime, significant progress has been made to ensure that selected companies receive the grant component of their support quickly. As of today, 150 grant agreements have been signed – up from 100 grant signatures just a few weeks ago. In a further step to simplify decision making, the Commission will from tomorrow onwards, as a general rule, remove the need to approve EIC Accelerator funding through College-level decisions, which will shorten the time from when a company applies to when it receives its first grant payment towards the 5 month target set by the EIC Board.
How will the EIC Fund work?
- The EIC Fund has been restructured as an alternative investment fund (AIF) with investment decisions taken and managed by an external (alternative investment) fund manager (AIFM), fully compliant with the AIFM Directive.
- The Fund Manager will take investment decisions on all start-ups and SMEs selected through the EIC Accelerator evaluation process to receive blended (grant and equity) or equity-only financing. The selection of companies is based on criteria such as the breakthrough nature of the innovation (in particular in “deep tech”), the potential to scale up, and with risk levels that are too high for private investors alone. The investment decisions follow a due diligence performed by the European Investment Bank (EIB) and must be in line with the EIC Fund’s Investment Guidelines.
- The EIC and SME Executive Agency (EISMEA) will continue to manage the application and evaluation process for the EIC Accelerator, to provide the grant support and business acceleration services to the selected companies, and to ensure a coordinated approach with the EIC Fund investments to maximise the companies’ chances of success. The EIC Board provides independent high-level advice on the strategy and implementation of the EIC.
The EIC Fund implements the equity part of the EIC Accelerator, with its unique offer of grants, blended finance and equity investments and which has proven to be of high interest for start-ups and SMEs since its launch in March 2021. The EIC Fund is the most active public European deep-tech investor in 2022 and aims to catalyze investments into high-risk, deep-tech companies trying to reach the market. Since its launch, the EIC has assessed over 7000 short applications submitted on a continuous basis and evaluated within 4 weeks, evaluated almost 4000 full applications submitted to regular cut-offs (June and October 2021 and March and June 2022 cut-offs), conducted over 800 interviews with shortlisted companies, and selected 236 for funding as well as awarded over 300 Seals of Excellence to facilitate funding from other programmes.
With the EIC external fund manager in place, and after a first equity investment announced on 14 June 2022, the expectations are that the backlog of investments can be addressed in the coming months, with the most urgent cases being treated in the short term. As a next step and to ensure the EIC Fund can operate on a sustainable basis and in line with the legal base, the Commission plans to move the EIC Fund from direct to indirect management. This is not expected to affect the objectives and the risk-taking approach of the EIC or lead to further delays.
The next cut-off for EIC Accelerator full applications is on 5 October 2022 and the results of the June 2022 cut-off will be announced shortly.