Please refer to the EU definition of an SME. If doubt remains, please check the EU extensive user guide. As of March 2014, an online SME-self declaration tool will be available should you wish to register on the participant portal. After registration, SMEs can start applying for funding.
2. Is there a limitation to participation of beneficiaries to a maximum number of applications/projects at any time regarding the SME instrument?
The rule is: no concurrent submission or implementation with another phase 1 or phase 2 project, be it as lead (even single) applicant or partner in an SME consortium.
- In case the applicant or any of the members of the consortium applies for SME instrument Phase 1 or Phase 2, it would not be possible to submit another proposal until the applicant knows that the submitted proposal will not be funded. Moreover, if the same proposal has been accepted for funding and for the duration of the project, any other proposal will be ineligible.
- It is impossible to submit a proposal for phase 1, when the applicant is partner in a phase 2 project supported by the SME Instrument. However, an SME can submit a proposal to the SME instrument and at the same time to another (not SME instrument-related) topic of the work programme.
3. We have a new, innovative and high risk concept in our area. But at this stage, it is difficult for us to quantify if it leads to “ultimate disruptiveness”. Would it still be admitted as a potentially disruptive solution?
The quality and disruptive level of an idea or concept will be assessed by the evaluators based on the elements provided in the proposals.
The topic descriptions for the SME instrument on the participant portal describes in detail the topics. Moreover, by determining where the centre of gravity of your proposal lies, you will be able to match it with a topic. Your Enterprise Europe Network representative or your National Contact Point will facilitation and/or guidance.
General business practices apply to the content of the business plan. For phase 1 submissions, proposers need to provide a business plan or outline. At the end of phase 2 the project will produce an elaborated business plan, meaning that the business plan will need to include all necessary details to address the way forward in terms of: additional work to be done, resources to be committed and budget needed, pre-requisites and framework conditions, outline of an underlying business model, dissemination, exploitation and sustainability plans.
9. Are there guidelines describing the readiness of the prototype, in order to help me to situate my proposal?
There is a Technology Readiness Level (TRL) sequencer in the General Annex G of the Work Programme, which allows you to situate your proposed solution. The SME instrument asks applicants to present innovation projects that have reached TRL 6 as a minimum (or similar for non-technological innovations). As a rule of thumb this means that the proposed activities have to take place in the operational or production environment.
The core of the work to be supported by this scheme concerns innovation activities and envisaging a Technology Readiness Level of 6 and higher (or similar for non-technological innovations). However, some parts of the activities conducted may include some research and development.
11. How developed should my business model be at submission stage? Do you have examples I can refer to?
It depends on the Phase you are applying to:
- A Phase 1 proposal must include an initial business plan describing, among other things, the underlying business model.
- A Phase 2 proposal should be based on a feasibility assessment and contain an elaborated business plan, either developed through SME instrument phase 1 support or other means.
12. When preparing a proposal for phase 2, in the submission template what does the term “market replication” mean?
Market up-take is the transfer of the solution into a commercial product intended for market penetration. Market replication means the deployment of the solution on a wider scale, and cross border and or cross-sector, so as to reach critical mass and sustainability in the medium/long term.
Can I submit a pre-proposal for a check?
13. If there is more than one SME participating in Phase 1, will the lump sum (EUR 50,000) then be multiplied by the number of participants?
No. Only one grant in the form of a lump sum of EUR 50,000 will be awarded per selected proposal, which means that it has to be shared amongst consortium partners.
How does the lump sum funding relate to the 70% co-financing rule?
The lump sum for phase 1 has been established by the Commission on the basis of objective statistical means. The total eligible cost for a phase 1 project has been fixed at EUR 71,249. Applying the co-financing rate of 70%, the amount of the grant is established at EUR 50,000.
Yes. For Phase 1, there will be an advance payment of 40% of the lump sum of EUR 50,000. The guarantee fund will however retain 5% of the total amount of the grant.
No detailed cost declarations by applicants are necessary. There is a standard budget table provided in the specific template for the technical annex for Phase 1 proposals, which must be used. Proposers need to provide clear indications of the resources and budget needed to carry out the intended work.
16. To what extent is sub-contracting allowed for the completion of aspects of the feasibility study?
Sub-contracting is possible, but needs to be justified. Work can be subcontracted to operators in line with the “best-value-for-money” principle, and provided that conflicts of interest are avoided (see subcontracting clauses in annotated grant agreement models).
No. The Commission considers that proposals requesting an EU contribution of between EUR 500,000 and EUR 2.5 million would allow phase 2 to be addressed appropriately. This does not preclude submission and selection of proposals requesting other amounts.
Yes. For Phase 2, advance payments are foreseen on the basis of the standard rules for Horizon 2020, as specified in the grant manual.
The same funding model will apply for phase 2 of the SME instrument, whatever the tasks and partners are. It covers generally 70% of the direct eligible costs. In exceptional cases, defined in the work Programme, the funding rate can be up to 100%.
The general Horizon 2020 financial rules are applicable.
Eligible direct costs as those related to the implementation of the project, such as personnel costs, travel, equipment, infrastructure, goods and services. Please refer to article 6 of the (mono-beneficiary or multi-beneficiary) model grant agreement for full details.
In general, costs are eligible if they correspond to the tasks agreed upon in the grant agreement, otherwise ineligible, also costs in Phase 2 follow the general H2020 reimbursing rules.
Activities or products purely intended to support commercial purposes do not qualify as eligible direct costs.
However, costs necessary for the implementation of the project can include communication and interaction activities with potential investors or customers, or dissemination of milestone achievements during the project (under a Work Package “communication and dissemination activities”). If these activities are subcontracted, the "best-value-for-money" principle applies, while conflicts of interest should be avoided at all times.
23. Can SMEs participating in phase 2 propose “in-kind” payments as a complement to the 70% of funding (if relevant) offered via the EU grant?
Yes, they can. Equipment, infrastructure or other assets contributed in-kind against payment can be labelled eligible costs if:
- they are not higher than the depreciation costs of similar (purchased) equipment, infrastructure or assets,
- do not include financing fees,
- they are necessary to implement the action.
in full compliance with article 11 of the model grant agreement; for more details, see the annotated grant agreement.
Work can be subcontracted to operators in line with the “best-value-for-money”-principle, and provided that conflicts of interest are avoided (see subcontracting clauses in annotated specific SME Instrument grant agreement model). For very high subcontracting levels in a Phase 2 project however, the motivation or the capacity of the participant to carry out the action could be subject to doubt and would have to be very well justified, given the intervention logic of the SME Instrument.
Proposals can be permanently submitted and will be evaluated upon submission. Applicants should receive informal feedback on the outcome of the evaluation within a very short time. The information whether a project can be funded can only be communicated after the respective cut-off dates outlined in the Work Programme.
26. What will be the benefits of entering phase1? I see the risk that our competitors will hear about our concept in the frame of action meetings or dissemination measures, and we may lose some time advantage.
Phase 1 supports SMEs to assess all aspects, including the commercial potential, of an innovation project that shall become crucial for the business' strategy to enhance competitiveness and to grow. Phase 1 is not mandatory, but recommended so as to be able to present a well substantiated proposal for phase 2.
Phase 1 projects are short, i.e. around six months or even less, and leaner and meaner in project administration than phase 2 projects. Time-to-grant for phase 1 projects is 3 months.
27. Our concept would be of great interest to our market competitors. What are the measures to ensure confidentiality in both the evaluation phase and in phase 1, the development of a business plan?
Expert evaluators and the European Commission officials are bound by a confidentiality agreement and could incur serious sanctions in case of violations. Before a proposal is allocated to experts for evaluation, Commission services will verify if no conflicts of interest could occur. Furthermore applicants are entitled to name three experts and their affiliation that will not be allowed to consult, let alone evaluate, the submitted proposal.
Project outputs will be classified under various confidentiality levels up to publishable results, according to the business plan requirements, meaning that the final business plan will determine the level of disclosure for each output and project results.
Proposals from successful phase 1 participants will be scrutinised and evaluated as any other proposal applying to phase 2, there is no preferential treatment.
However, successful completion of phase 1 will have allowed you to make the feasibility assessment and elaborate the business plan required for phase 2. Support in phase 1, including coaching, should have helped the project to grow to a stage where a proposal for funding in phase 2 can be well substantiated.
Successful completion of phase 2 will endow the innovative output of participating SMEs with a kind of quality label, which will open possibilities to get support from the access to risk finance facilities under Horizon 2020 and COSME. The latter should further facilitate access to private finance.
Furthermore, complementary services will be offered to support the commercialisation step. Some of these services, for example those offered by the Enterprise Europe Network, can already be accessed during phase 2.
We are talking about business/management coaching, for up to 3 days in Phase 1, and for up to 12 days in Phase 2. The role of the coach is to support the SME (specifically its management team) in the project commercialisation efforts. This service is offered exclusively to SME Instrument participants.
In phase 3, the SME instrument does not provide grant support to SMEs.
However, participants successfully rounding off phase 2 of an SME Instrument project will be offered to benefit from a range of additional services, including investment readiness support and facilitated access to risk finance, and the full range of EEN services, in order to help successful commercialisation of the project.
EEN stands for Enterprise Europe Network. The network wants to help SMEs to make the most of their business opportunities in the EU, including through innovation, research or technology transfer. EEN members provide information on EU programmes and actions, including Horizon 2020 and the SME Instrument. Find and contact your local EEN representative.
Yes, provided the evaluation tasks are not carried out in the framework of your own submitted proposal.
If you want to evaluate projects supported by the SME instrument under Horizon 2020, you should register as an expert. Currently, there is no deadline for registration.
Information on expected profiles and opening of expression of interest can be found on the Executive Agency for Small and Medium-sized Enterprises (EASME) portal.
Coaches and experts will be remunerated using the same criteria. Please refer to the appropriate section of the Participants Portal for more information.
Disruptive innovation encompasses any innovative concept, product and service that create new markets by applying new sets of rules, values and models which ultimately disrupt and/or overtake existing markets by displacing earlier technologies and alliances. The Blue Ocean Strategy by Clayton M. Christensen suggests that 'an organization should create new demand in an uncontested market space, or a Blue Ocean, rather than compete head-to-head with other suppliers in an existing industry'.
As historical examples: the pocket calculator, digital photography, the mobile phone, skype, the iPad, the micro-finance model, etc.
39. Is disruption limited to markets or also to models (supply chain, alliances/PPC, production, distribution, etc.)?
Disruption encompasses alternative ways to deliver services and doing business, through innovative alliances and business models.
40. How will I know if my idea/solution is disruptive enough? Is there any example, reference guide, quantitative measure to assess disruptiveness, self-assessment tool I can refer to?
There is no specific/systematic way to assess the extent of disruptiveness of a solution. The assessment needs to be built on the innovative and competitive positioning of concept itself with respect to the existing solutions, market dynamics and receptivity. Refer to the ODI - SME Instrument general presentation for more information.
41. Will there be 'open' calls targeting innovative SMEs, or only calls using the SME instrument covering broad themes within LEIT and Societal Challenges?
There will be open calls across the broader themes of the Work Programme to be implemented through the SME instrument (see the list of SME instrument related calls for 2014 and 2015). ODI is one of those broad themes, and within it there is no prescription in terms of areas to be covered.
42. Do I understand correctly that ODI will use the same rules and means as the SME instrument – so that in fact ODI can be regarded as a particular case of the SME instrument with a specific focus?
This is indeed the case. The specific focus is on 'ICT related disruptive innovation'.
The expected impact on the targeted market will play a fundamental role in the assessing the disruptive potential.
43. We have a new, innovative and high risk concept in our area. But at this stage, it is difficult for us to quantify if it leads to 'ultimate disruptiveness'. Would it still be admitted as potentially disruptive solution?
This will be assessed by the evaluators based on the elements provided in the proposals.
Only a single for-profit SME entity or a consortium of for-profit SMEs can apply for funding under the SME instrument. Other partners like research providers or larger companies can be involved as third parties, in general in a subcontracting relationship.
Only applications from a single SME or a consortium of SMEs, that are all established in EU Member States or countries associated to Horizon 2020 are eligible for funding. In principle, SMEs established in third countries could be involved as third parties, for example in a subcontracting relationship.
Start-ups without balance sheets are not excluded but the SME instrument is not meant as a company creation vehicle/instrument but rather supports the growth of the companies with interesting, innovative ideas bearing European or global potential.