Horizon 2020
The EU Framework Programme for Research and Innovation

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The SME Instrument

SME Instrument Phases
Small and Medium-sized Enterprises that are EU-based or established in a country associated to Horizon 2020 can now get EU funding and support for innovation projects that will help them grow and expand their activities into other countries – in Europe and beyond.

Horizon 2020 funds high-potential innovation through a dedicated SME instrument, which offers seamless business innovation support under the section Societal Challenges and the specific part Leadership in Enabling and Industrial Technologies (LEITs).

Provided with about € 3 billion in funding over the period 2014-2020, the SME Instrument helps high-potential SMEs to develop groundbreaking innovative ideas for products, services or processes that are ready to face global market competition. Available to SMEs only, which can however organise a project in the way that best fits their business needs – meaning that subcontracting is not excluded – the new scheme has opened a new highway to innovation through phased, progressive and complimentary support.

What support is available?

The dedicated SME instrument's supports close-to-market activities, with the aim to give a strong boost to breakthrough innovation. Highly innovative SMEs with a clear commercial ambition and a potential for high growth and internationalisation are the prime target.

The SME Instrument offers small and medium-sized businesses the following:

  • Business innovation grants for feasibility assessment purposes (optional phase I): EUR 50,000 (lump sum) per project (70% of total cost of the project);
  • Business innovation grants for innovation development & demonstration purposes (possible phase II): an amount in the indicative range of EUR 500,000 and 2,5 million (70% of total cost of the project as a general rule);
  • Free-of-charge business coaching (optional in phases I and II), in order to support and enhance the firm’s innovation capacity and help align the project to strategic business needs;
  • Access to a wide range of innovation support services and facilitated access to risk finance (mostly in optional phase III), to facilitate the commercial exploitation of the innovation.

Phased Support

Feasibility assessment (phase 1) - optional

Funding is available for: exploring and assessing the technical feasibility and commercial potential of a breakthrough innovation that a company wants to exploit and commercialize.

Activities funded could be: risk assessment, design or market studies, intellectual property exploration; the ultimate goal is to put a new product, service or process in the market, possibly through an innovative application of existing technologies, methodologies, or business processes.

The project should be aligned to the business strategy, helping internal growth or targeting a transnational business opportunity.

Amount of funding: lump sum of €50,000 (per project, not per participating business).

Duration: typically around 6 months

Outcome: The outcome of a phase 1 project is a feasibility study (technical and commercial), including a business plan.

Should the conclusion of the study be that the innovative concept has the potential to be developed to the level of investment readiness/market maturity, but requires additional funding in view of commercialisation, the SME can apply for Phase 2 support.

Innovation project (phase 2)

Funding is available for: innovation projects underpinned by a sound and strategic business plan (potentially elaborated and partially funded through phase 1 of the SME Instrument).

Activities funded in phase 2 can be of several types: prototyping, miniaturisation, scaling-up, design, performance verification, testing, demonstration, development of pilot lines, validation for market replication, including other activities aimed at bringing innovation to investment readiness and maturity for market take-up.

Amount of funding: in the indicative range of €500,000 – € 2.5 million or more (covering up to 70% of eligible costs, or in exceptional, specific cases up to 100%).

Duration: typically around 1 to 2 years

Outcomes:

  • a new product, process or service that is ready to face market competition;
  • a business innovation plan incorporating a detailed commercialisation strategy and a financing plan in view of market launch (e.g. on how to attract private investors, if applicable).

Commercialisation (phase 3)

With the view of facilitating the commercial exploitation of the innovation activities resulting from phase 1 or phase 2, specific activities will be proposed. These can include support for further developing investment readiness, linking with private investors and customers through brokerage activities, assistance in applying for further EU risk finance, and a range of other innovation support activities and services offered via the Enterprise Europe Network (EEN).

Coaching

Innovation and Business development coaching is proposed in parallel throughout phases 1 and 2 to help SMEs:

  • enhance the company's innovation capacity
  • align the project to the identified business development strategy
  • develop the commercial/economic impact and long term sustainability.

Coaching will be provided by experienced business coaches, selected through the Entreprise Europe Network (EEN).

@H2020SME