SMEs - What can we learn from the first cut-off results?

SMEs - What can we learn from the first cut-off results?

In an effort to support innovative small and medium-sized enterprises (SMEs), Horizon 2020 introduced a new dedicated SME instrument, managed by the Executive agency for Small and Medium-sized Enterprises (EASME).
With more than € 2.8 billion allocated for the SME instrument from 2014 to 2020, this funding scheme aims to be a simpler and more easily accessible funding scheme for SMEs. It comes in addition to the support provided through the participation of SMEs in collaborative projects continued within Horizon 2020.

The aim of the SME Instrument is to fill the gaps in funding for the early stages, Research and Innovation and accelerating the exploitation of innovation. Projects will be selected through a bottom-up approach within a given societal challenge or enabling technology of H2020. They must be of clear interest and benefit to SMEs and have a clear European dimension. The SME Instrument is divided into 3 phases covering different stages of the innovation cycle.

Phase 1 aims to cover the assessment of technical feasibility and market potential of new ideas, it provides an investment of € 50,000 (lump sum) and the project should be no longer than 6 months.

Phase 2 aims to cover R&I activities with a particular focus on demonstration activities and market replication encouraging the involvement of end users or potential clients. Project funding should amount to no more than 2,5 million euros with a duration ranging from 12 to 24 months (more funding and longer durations are possible if duly justified).

Phase 3 concerns support measures aimed at helping SMEs move towards commercialising their innovative products and services through measures like networking, training, coaching and mentoring, facilitating access to private capital or better interaction with key stakeholders. SMEs will not be funded directly under phase 3.

SMEs are recommended to apply for funding starting with phase 1, however they are allowed to apply directly to phase 2 or even phase 3, depending on the stage of their project. Successful completion of one phase will allow an SME to move on directly to the next one.

SMEs can apply for funds under phase 1 and phase 2 whenever they need. The calls under these phases will be open on a continuous basis until 2020.

The first cut-off results are a great example of the intense competition level for funding among European programmes: 2.662 proposals were received and 2.602 were eligible and evaluated. Among these only 317 were evaluated above the minimum threshold needed for obtaining funding. The budget available would allow to fund 169 companies, but only 155 were selected.

After accessing these first results, the European Commission published a set of conclusions.

Unsuccessful proposals were:

- too much project focussed, not enough business opportunity oriented
- Description of company not convincing (why would this company succeed and not the competitor)
- No information on competing solutions
- Innovation content too low; product exists already on the market (just incremental improvement)
- Just ideas, no proof of existing commercialisation concept (Technology Readiness Level far too low)
- Just trying ones luck

A careful analysis of these conclusions allows us to propose a set of recommendations, most valuable to all who wish to present their proposals for this funding scheme:

- This is not a typical innovation and research project, a business oriented approach is key for a successful proposal.
- Keep in mind the end-user and market creation and impact;
- Adopt a streamlined approach focused on innovation and commercialisation results.

Finally, bear in mind that, although this is one of the most interesting funding proposals for SMEs at EU level, specially at a time where funding is increasingly harder to obtain, the competition levels are intense and demand a careful and serious approach in order to be successful.

Joana Dias
Magellan, association for the representation of Portuguese interests abroad

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