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Small and Medium sized Enterprises (SMEs) have often been regarded as Europe’s cornerstone for competitiveness and job creation. For the duration of the Cell Factory (Quality of Life Programme, FP5), specific activities for SMEs consisted of 34 exploratory awards and 8 co-operative research contracts being granted for a total budget of €6.3 million.

As a direct consequence of the adoption in 1996 by the Commission of a recommendation on the definition of an SME to be used in all Commission programmes, an SME in FP5 is an enterprise which fulfils the following 3 criteria:

  • has fewer than 250 employees,
  • has either,
    - an annual turnover not exceeding €40 million, or
    - an annual balance-sheet total not exceeding €27 million,
  • is independent, i.e. is not owned by 25% or more by one or more organisations which are not an SME (except public investment corporations, venture capital companies, funds and institutional investors).

In order to participate in the SME Specific Measures, an SME:

  • must be registered and operating in one of the Member States or in a State associated to FP5.
  • can not be a research centre, research institute, contract research organisation or consultancy.

The participation in FP5 has helped SMEs develop new technologies, either in-house or by gaining access to them and expand their market potential and business opportunities.

One of the objectives of FP5 was to spend at least 10% of the budget on SMEs. This has been reached, largely due to SME specific measures that the EU has set up and which consist of:

  • Exploratory awards, which provide SMEs with a financial support from the EC of up to €22,500 for the preparation of project proposals (this includes partner search, market and innovation surveys and feasibility studies)
  • Co-operative research projects (CRAFT) with EC contribution of up to €2 million, where groups of low and medium-tech SMEs facing similar problems, but with little or no research capacity of their own can outsource the required RTD work to a third party (universities or research organizations).

The approach developed by the Cell Factory to attract proposals from SMEs has consisted in an open call for proposals divided into 9 cut-off dates covering the whole duration of FP5, a single entry point at the Commission exclusively dedicated to SME project proposals, a single information package and harmonized evaluation procedures.

The Key Action received a total of 74 Exploratory Awards and 31 CRAFT applications, of these, respectively 42 and 12 were successful in the evaluation and proposed for funding, representing an overall success rate close to the 39% of the programme(11).

Figure 1: SME Specific Measures in FP5

The following tables list the individual CRAFT and Preparatory Awards projects.

Characteristics of CRAFT contracts

SMEs lead the project:

  • SME project co-ordinator
  • Co-ordination costs eligible for funding
  • Research performers in subcontract to the SMEs
  • IPR owned by the SMEs

Conditions for participation:

  • 3 SMEs from 2 countries (minimum)
  • RTD performers account for at least 40% of the project costs
  • Duration of the contract: 12 to 24 months
  • Budget ranges from 0.3 to €2 million
  • bottom-up approach, in line with objectives of at least one Thematic Programme

In this way, SMEs have acquired unique technologies that are adapted to their specific needs, increased their capabilities of using new tools and increased their networking activities. This has contributed greatly to the participation of SMEs in further research projects as leading or major partners.
(See figure 1 on page xiii.)

The sectors of activity to which the funded consortia of SMEs and RTD performers have contributed through the exploratory awards and CRAFT projects are presented in the following two tables (abstracts and contact details can be viewed from the following website:

With the exception of the CRAFT and exploratory awards contracts, SME participation in the overall RTD activities of the Cell Factory represents 9% of the total number of teams. The CRAFT scheme accounts for 4% of the overall SME participation in the Cell Factory. Since the CRAFT budget for the Cell Factory represents 9.6% of the total but the average over the QoL programme is 7.8%, we can conclude that there are promising perspectives for a further increase of SMEs participation in this sector.

11 As for the CRAFT proposals, since contract negotiations had to be terminated as a consequence of bankruptcy in one case and an incapacity of the consortia to reach an agreement on Intellectual Property Rights in three other cases, a total number of 8 projects were finally supported. Similarly, but for other reasons, only 34 of the positively evaluated exploratory awards resulted in contracts.

Beatrice Lucaroni
Biotechnology and Applied Genomics
EC Directorate General for Research

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