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TOPIC : Design and development of a tool to support and improve the decision making process of investors for financing high-growth potential innovative SMES

Topic identifier: INNOSUP-09-2018
Publication date: 27 October 2017

Types of action: CSA Coordination and support action
DeadlineModel:
Opening date:
single-stage
07 November 2017
Deadline: 28 February 2018 17:00:00

Time Zone : (Brussels time)
  Horizon 2020 H2020 website
Pillar: Industrial Leadership
Work Programme Year: H2020-2018-2020
Topic Description
Specific Challenge:

The Long Term Investment Working Group set up by DG Research and Innovation of the European Commission during the Greek Presidency of the Council Conference that took place in Athens on 12 and 13 June 2014 has shown that the lack or dispersion of available data on innovation, of existing analysis of their market potential, as well as the expensive costs to access to both of them, are strong obstacles to assess the technological and financial viability of innovative projects and enterprises for investors.

The Horizon 2020 InnovFin Advisory report on "Access-to-finance conditions for KETs companies"[1] published and discussed on 31 March 2016 in Den Haag during the "Innovative Enterprise – Financing Ideas from Europe" conference of the Dutch Presidency of the Council, confirmed this outcome and allowed to understand more in depth the difficulties faced by innovative SME while attempting to access finance. The report shows the difficulty of the decision making for investors when confronted to high growth potential innovative companies, especially those led by disruptive market-creating innovation. Indeed, enhanced technology and market expertise is needed but not always available to assess the technological viability of projects. Complex technology and "asymmetric knowledge" between the companies and lenders/investors worsen the general risk aversion of the latters. Indeed as shown by Nobel Price Akerloff, asymmetries leading to a single price equilibrium mixing different qualities dynamically converge to a market collapse. The transaction cost related to the technological assessment is relatively higher for smaller funding needs. As a consequence Innovative SMEs, and in particular those providing/driving breakthrough/disruptive market-creating innovation, struggle to access to finance.

Scope:

A core solution to improve access to risk finance for innovative enterprises should target these informational asymmetries at their source to help investors decision making by signalling positively technologically rigorous and promising projects, and avoiding a mixed equilibrium between non-viable and viable projects leading to higher interest rate and to the migration of very promising projects outside the EU. Hence, such a solution would lower the risk premium as well as the administrative cost for technological assessment that are ultimately paid by innovative project managers, and therefore should reduce the cost of financing for innovative project managers. Such tool could help improving EU Access to Finance conditions for innovators by better selecting projects, making a better allocation of resources, and a better use of EU private existing fundings by channelling them to companies in position to succeed in their projects, therefore participating to the creation of growth and jobs. Such tool could also help improving the reputation of investing in EU and AC innovative companies by increasing the success probability of such investments which could ultimately lead to attract new investors in the field.

The action will therefore consist of:

  • The design and development of (a) methodolog(y)(ies) and relating tool(s) providing (a) technological assessment(s) / rating(s) of technologies (being) developed / carried out by EU and AC [2] innovative SMEs seeking for investments for their growth, the methodology should account of the diversity of the strengthes and weaknesses of EU and AC SMEs (supply chain, collaterals, IP, sectorial positioning...);
  • The testing of the above-mentioned technological assessment / rating methodolog(y)(ies) and relating tools with different group of investors (e.g. business angels, VC, banks (including promotional banks); …). The testing must also target different type of EU and AC innovative SMEs;
  • The development of a deployment plan of the above-mentioned methodolog(y)(ies) / tool(s).

The action, of an expected length of 3 years, could involve, if relevant, participants from third countries.

The Commission considers that proposals requesting a contribution from the EU of up to EUR 3 million would allow this specific challenge to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.

Expected Impact:
  • Reduction of the financial risks perception and higher confidence/trust for investors supporting EU and AC innovative SMEs;
  • Easier access to finance for EU and AC innovative SMEs, in particular those providing / driving breakthrough/disruptive market-creating innovation;
  • Increased investments in EU and AC innovative SMEs, in particular those providing / driving breakthrough/disruptive market-creating innovation;
  • Increased uptake of innovative solutions, including breakthrough/disruptive market-creating innovation, by EU and AC SMEs;
  • Development of a recognised EU technological assessment / rating tool(s) for the benefit of EU and AC innovative SMEs.
Delegation Exception Footnote:

This activity directly aimed at supporting the development and implementation of evidence base for R&I policies and supporting various groups of stakeholders is excluded from the delegation to EASME and will be implemented by the Commission services.

Cross-cutting Priorities:

Open Innovation

[1]http://www.eib.org/infocentre/publications/all/access-to-finance-conditions-for-kets-companies.htm

[2]EU Member States and Horizon 2020 Associated Countries.

Topic conditions and documents

1. Eligible countries: described in Annex A of the Work Programme.
A number of non-EU/non-Associated Countries that are not automatically eligible for funding have made specific provisions for making funding available for their participants in Horizon 2020 projects. See the information in the Online Manual.

 

2. Eligibility and admissibility conditions: described in Annex B and Annex C of the Work Programme. 

Eligible proposals can take one of the following forms:

- Either a single legal entity established in a Member state or a Horizon 2020 Associated Country;

- Or a consortium composed of at least 2 independent legal entities established in 2 different Member States or Horizon 2020 Associated Countries. Legal entities from Third Countries can participate in addition to the minimum composition.

Proposal page limits and layout: please refer to Part B of the proposal template in the submission system below.

 

3. Evaluation:

  • Evaluation criteria, scoring and thresholds are described in Annex H of the Work Programme.  
  • Submission and evaluation processes are described in the Online Manual.

The following aspects will be taken into account additionally and in particular:

Excellence: Ambition and innovation potential of the proposed methodology(y)/(ies), eventually leading to radical innovations in the sector

Impact: Quality of the proposed measures to exploit and disseminate the methodology(y)(ies) and related expected improvement for the decision making process of investors

Quality and efficiency of implementation: Coherence and effectiveness of the proposed deployment plan.

4. Indicative time for evaluation and grant agreements:

Information on the outcome of evaluation (single-stage call): maximum 5 months from the deadline for submission.
Signature of grant agreements: maximum 8 months from the deadline for submission.

 

5. Proposal templates, evaluation forms and model grant agreements (MGA):

Coordination and Support Action:

Specific provisions and funding rates
Standard proposal template
Standard evaluation form
General MGA - Multi-Beneficiary
Annotated Grant Agreement

6. Additional provisions:

Horizon 2020 budget flexibility
Classified information

Members of consortium are required to conclude a consortium agreement, in principle prior to the signature of the grant agreement.

7. Open access must be granted to all scientific publications resulting from Horizon 2020 actions.

Where relevant, proposals should also provide information on how the participants will manage the research data generated and/or collected during the project, such as details on what types of data the project will generate, whether and how this data will be exploited or made accessible for verification and re-use, and how it will be curated and preserved.

Open access to research data
The Open Research Data Pilot has been extended to cover all Horizon 2020 topics for which the submission is opened on 26 July 2016 or later. Projects funded under this topic will therefore by default provide open access to the research data they generate, except if they decide to opt-out under the conditions described in Annex L of the Work Programme. Projects can opt-out at any stage, that is both before and after the grant signature.

Note that the evaluation phase proposals will not be evaluated more favourably because they plan to open or share their data, and will not be penalised for opting out.

Open research data sharing applies to the data needed to validate the results presented in scientific publications. Additionally, projects can choose to make other data available open access and need to describe their approach in a Data Management Plan.

Projects need to create a Data Management Plan (DMP), except if they opt-out of making their research data open access. A first version of the DMP must be provided as an early deliverable within six months of the project and should be updated during the project as appropriate. The Commission already provides guidance documents, including a template for DMPs. See the Online Manual.

Eligibility of costs: costs related to data management and data sharing are eligible for reimbursement during the project duration.

The legal requirements for projects participating in this pilot are in the article 29.3 of the Model Grant Agreement.

 

8. Additional documents:

1. Introduction WP 2018-20
2. Future and Emerging Technologies (FETs) WP 2018-20
3. Marie Sklodowska-Curie actions (MSCA) WP 2018-20
4. Research infrastructures (including e-Infrastructures) WP 2018-20
5. Introduction to Leadership in enabling and industrial technologies (LEITs) WP 2018-20
5i. Information and communication technologies (ICT) WP 2018-20
5ii. Nanotechnologies, advanced materials, advanced manufacturing and processing, biotechnology WP 2018-20
5iii. Space WP 2018-20
6. Access to risk finance WP 2018-20
7. Innovation in SMEs WP 2018-20
8. Health, demographic change and well-being WP 2018-20
9. Food security, sustainable agriculture and forestry, marine and maritime and inland water research and the bioeconomy WP 2018-20
10. Secure, clean and efficient energy WP 2018-20
11. Smart, green and integrated transport WP 2018-20
12. Climate action, environment, resource efficiency and raw materials WP 2018-20
13. Europe in a changing world - inclusive, innovative and reflective societies WP 2018-20
14. Secure societies – protecting freedom and security of Europe and its citizens WP 2018-20
15. Spreading excellence and widening participation WP 2018-20
16. Science with and for society WP 2018-20
17. European Innovation Council (EIC) WP 2018-20
18. Dissemination, Exploitation and Evaluation WP 2018-20

General annexes to the Work Programme 2018-2020

Legal basis: Horizon 2020 Regulation of Establishment
Legal basis: Horizon 2020 Rules for Participation
Legal basis: Horizon 2020 Specific Programme

Euratom Work Programme 2018-20
Legal basis: Euratom Horizon 2020 Regulation of Establishment

Legal basis: EIT Regulation of Establishment
Legal basis: EIT Strategic Innovation Agenda

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