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22, Nov 2018

Finding success with the EC’s SME Instrument

Company News

With an equity-free funding investment of up to €2.5 million, the SME Instrument is a highly competitive funding programme by the European Commission designed to help small to medium companies deliver an innovative product or service to the market.

Our team has several years of experience in writing and winning SME projects, and is combined with the knowledge and expertise of our Inveniam colleagues of other company services –corporate finance, business development, market analysis, tech transfer, investor fundraising and more. We also tailor our services to fit the needs of differing companies, whether it is to write the SME Instrument application to effectively and convincingly present their product, or to support the client in writing their own application.

But is the SME Instrument right for you? With generous funding available, it remains extremely competitive with an average of 3% of the applicants winning funding. So, who are really the best candidates? How can you analyze if your project has a chance of winning? That’s what we are going to talk about in this article.

What is the SME Instrument?

Let’s start with the basics. The programme's "Phase 1" is a Feasibility Assessment for the product. A lump sum of €50,000 is provided to support companies in testing the market potential and technical viability of their innovation. Examples of such activities include analysis on technical feasibility, customer profiling, market quantification, business modelling and IP protection development. Delivering innovation to market requires you to get out there and engage potential customers, and this funding is designed to help enable you to do that.

With a clearer road to market and validated technology maturity, a follow-up Phase 2 provides more ambitious funding to get you over the obstacles that you have identified in the Phase 1 with funding of up to € 2.5 million (70% of your project costs). They can include additional development, prototyping, piloting, customer validation and more. The objective for such a project is to cover everything needed for your commercial roadmap, allowing you to launch the product commercially after the SME Instrument project has been completed.

What kind of companies are good SME Instrument candidates?

The SME Instrument programme is open to all SMEs regardless of business sectors (from Biotech to Telecommunications to Sustainable Energy, to name a few), the age of the company or even if the company has sold any products yet. 

However, there are some common characteristics of successful SME projects:

  • Highly innovative products or services, with significant differentiation from existing products

  • The opportunity to create a new market, rather than just displacing an existing product

  • International in scope, especially solving a pan-European problem

  • Offering significant growth to the applying company, particularly in terms of job creation

  • The right team to deliver it, covering both technical expertise and business experience

  • Close to market… not to be confused with an EC-funded Horizon 2020 R&D project! While additional development to commercialise is fully supported, the SME Instrument comes in only after extensive prototyping, testing and validation. 

More than just an idea

A common mistake is to enter the SME Instrument programme with only a concept. Instead, companies should pursue this mechanism only once they reach a certain level of development maturity. Phase 2, in particular, should be considered once your prototype is demonstrated in a relevant environment (TRL-6), with a strong history of testing behind it.

High risk / high impact

The SME instrument is a public funding programme and should not be considered simply as an easy way to raise capital without diluting ownership. There should be additional social motivations for the European Commission to back the project. You must be able to answer – why should the European Commission fund this project?

Remember the evaluator

Uniquely for European research funding, most SME Instrument evaluators have investment profiles rather than academic profiles. They have only a short amount of time to read the application, so it is vital that you communicate to them as if they were an investor – succinctly, clearly but also providing comprehensive answers to all the questions that the European Commission asks. 

That wraps up our overview from years of experience in the programme. But we’re always keen on analysing a case in better detail. The more detailed the product, sector and context, the more tangible the discussion becomes. If you see this as a good fit for your company, contact us and let’s see how we can best support you!

 

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