SME Instrument under Horizon 2020

The Analysis

Outcome of impact assessments

• Less than 50% of industrial partners use the publicly funded applied research projects strategically

• Only about 22% of SMEs participating in EU research programs are strategic innovators

• Most academics engage with industry to further their research rather than to commercialise their knowledge

• Results are not exploited because projects were not designed for exploitation

• There is a strong relationship between internationalisation and innovation, but SMEs are not aware of internationalisation support programmes.

• The information environment of (European) R&D programmes is unattractive and repelling to SMEs

Concept and

Design

The SME Instrument is special • It is aimed at reducing the risk and bridging the funding gap = ”valley of

death” between research grants and private investments, in order to strengthen European competiveness

H2020 SME instrument ”bridge”

”Death Valley” =

High RISK

the ”Password” to cross the bridge:

Question: Does this solution have a potential to become a big business and does it solve a real problem for many

potential customers ?

Password: Yes !:

Why participate?

Horizon 2020

• To compete among the best European companies

"Champions league" with only very few winners,

quality label based on a rigorous assessment

• Visibility at European level

• Possibility to receive business/management coaching

• Networking possibility with investors and customer

networks

• Preferential treatment for subsequent financing (EU

Financial Instruments: loan and equity facilities)

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Phase 1: Concept and feasibility assessment

Phase 2: R&D, demonstration,

market replication

Input: Idea/Concept: "Business Plan 1"

(~ 10 pages) 10% budget

Activities:

Feasibility of concept Risk assessment

IP regime Partner search Design study

Pilot application etc.

Output: elaborated "Business plan 2"

Input: "Business plan 2" plus description of activities under Phase

2 (~ 30 pages) 88% budget

Activities: Development,

prototyping, testing, piloting,

miniaturisation, scaling-up, market

replication, research

Output: "investor-ready Business plan 3"

Lump sum: 50.000 €

70%

~ 6 months

No direct funding

Phase 3: Commercialisation

0.5-2.5 M€ EC funding al 70%

~ 12 to 24 months

Promote instrument as quality label for

successful projects

Facilitate access to private finance

Support via networking , training, information,

addressing i.a. IP management,

knowledge sharing, dissemination

SME window in the EU financial facilities (debt

facility and equity facility)

Possible connection to PPC (and PPI?)

10% success 30-50% success

Phase 3 = 2% budget

• Targeted at all types of innovative SMEs showing a strong ambition to develop, grow and internationalise

• Only SMEs will be allowed to apply for funding and support

• Single company support possible

• No obligation for applicants to sequentially cover all three phases; each phase open to all SMEs

• 70% funding (exceptions possible)

Main features

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Article 18(2) Regulation

•[…] a dedicated SME instrument that is targeted at all types of SMEs with an innovation potential, in a broad sense, shall be created under a single centralised management system and shall be implemented primarily in a bottom-up manner via a continuously open call […]

• Implemented centrally by one agency (EASME)

• Bottom-up approach within the frame of the societal challenges and enabling technologies each SC & LEIT defines a broad topic

• Continuously open call with around 4 cut-off dates per year: First cut-off for Phase 1 June 2014; first cut-off for Phase 2 in October 2014.

Implementation

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Next calls

• In 2014 and 2015 the SME Instrument will sponsor SMEs operating within 13 themes:

Themes

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Coaching in practice

• Objectives: Enhance the commercial potential and impact of SME participation in the dedicated H2020 instrument Achieve tangible organizational change Leave a legacy, H2020 to become the stepping stone to sustainable high growth

• Delivered by high calibre individuals with substantial experience in working in or with high growth businesses at a senior level (Coaches are independent of EEN)

• Accessible through the regional EEN which will support the coach by linking the SME to EEN and regional/ national support services

EEN Enterprise European Network

Coaching in practice

• Voluntary coaching offered in Phase 1 and Phase 2:

Phase 1 – 5 coaching days

Phase 2 – 10 coaching days

• Coaches will drive the performance of the organization by working with the senior management team

• Coach suggestion provided by the EEN, but final selection by the SME

• Coach and SME to decide a coaching plan in Phase 1. A summary of coaching foreseen for Phase 2 will form part of application to Phase 2

• Coaching paid in addition to Phase 1 and Phase 2 contribution

Suggestions

Phase 1 proposal status 18/06/2014 2.666 proposals received (our estimation was 2.500) theoretical success rate: 6.2% 2507 single company applications 119 consortia with 2 SMEs 34 with 3 SMEs 6 with 4 SMEs

Topic

Proposals Max. project

fundable

Max.

success

rate

ICT 37: Open Disruptive Innovation Scheme

885

30

3.4%

NMP 25: Accelerating the uptake of nanotechnologies, advanced materials or

advanced manufacturing and processing technologies by SMEs

305 14 4.6%

BIOTECH 5: SME boosting biotechnology-based industrial processes driving

competitiveness and sustainability

73 2 2.7%

LEIT Space-SME

128

5

3.9%

PHC12 :Clinical research for the validation of biomarkers and/or diagnostic

medical devices

213 44 20.7%

SFS8: Resource-efficient eco-innovative food production and processing

BG12: Supporting SMEs efforts for the development - deployment and market

replication of innovative solutions for blue growth

129

49

6

2

4.6%

4.1%

SIE 1: Stimulating the innovation potential of SMEs for a low carbon and

efficient energy system

372

22 5.9%

IT.1: Small business innovation research for Transport 229

24 10.5%

SC-5-20: Boosting the potential of small businesses for eco-innovation and a

sustainable supply of raw materials

241 11 4.6%

DRS17-Protection of urban soft targets and urban critical infrastructures 42 4 9.5%

Number of received proposals per topic, maximum number of fundable projects under this cut-off and

theoretical maximum success rate per topic

only countries with submissions are shown

Phase 1: first and second calls Check list of beneficiaries at the end of the presentation

Phase 2: first call Check list of beneficiaries at the end of the presentation

Info on proposals

• Do proposals describe the disruptive / breakthrough potential in sufficient detail?

• Can you sufficiently assess the level of market disruption?

• Did you see a predominant market/sector addressed by the proposers?

What is innovation?

• New solutions to existing problems

• New technology or re-use in an innovative way of existing technologies as a solution to unmet needs (e.g. Tetrapack, laser for bio-medial applications)

• New disruptive markets (e.g. iPad, Skype)

The common denominator

There has to be a market

Solve a relevant problem &

easy to use for the customer

and easy to produce for the firm

Business model – technical solution possible and better than alternatives

There has to be a market

Solve a relevant problem &

easy to use for the customer

and easy to produce for the firm

Business model – technical solution possible and better than alternatives

...and the customers shall

be willing to pay

...therefore competitor

knowledge is essential

Customers shall know about the product – and it should be easy

to deliver

Only competent

management can deliver

The common denominator

Common mistakes

• Users identified / match users’ needs / demand

• Give data/evidence

• Market: good understanding of market and competitors

• Size, growth, competitve analysis (why users should prefer the new solution?)

• Ambition (“my company will hire 10 new emplyoees”)

• Business model clear (who pays what)

• Inconsistency with description and TRL

• IPR / freedom to operate / protection of market

• Risk analysis

• Prove capacity of the SME to transform the idea into success (resources, network, skills, commercialization network … not just CVs)

• Not instrument for “validating an idea”, not instrument to seed a start-up

Useful links

• EASME SME Instrument

• http://ec.europa.eu/easme/en/horizons-2020-sme-instrument

• FAQ

• http://ec.europa.eu/easme/sites/easme-site/files/documents/FAQ_SME_Instrument_Expert_Evaluators_0.pdf

• PHASE 1. LIST OF BENEFICIARIES

• http://ec.europa.eu/research/participants/portal/doc/call/h2020/h2020-smeinst-1-2014/1637612-sme-instrument-phase1-beneficiaries_en.pdf

• PHASE 2. LIST OF BENEFICIARIES

• http://ec.europa.eu/research/participants/portal/doc/call/h2020/h2020-smeinst-2-2014/1637611-sme-instrument-phase2-beneficiaries_en.pdf

Technology readiness levels (TRL)

• TRL 1 – basic principles observed

• TRL 2 – technology concept formulated

• TRL 3 – experimental proof of concept

• TRL 4 – technology validated in lab

• TRL 5 – technology validated in relevant environment (industrially relevant

• environment in the case of key enabling technologies)

• TRL 6 – technology demonstrated in relevant environment (industrially relevant environment in the case of key enabling technologies)

• TRL 7 – system prototype demonstration in operational environment

• TRL 8 – system complete and qualified

• TRL 9 – actual system proven in operational environment (competitive

• manufacturing in the case of key enabling technologies; or in space)