Horizon 2020 SME Instrument

The Horizon 2020 SME Instrument provides grant funding support for innovation projects that allow SMEs to grow and expand their activities into other countries – in Europe and beyond.

Funding is available for:

• Phase 1 – Concept and production of a technical and commercial feasibility assessment, including a business plan, for a breakthrough innovation. Funding is provided as a lump sum of €50,000, covering 70% of eligible costs. Projects should last up to 6 months.
• Phase 2 – Activities aimed at bringing innovation projects to investment readiness and maturity for market take-up. Innovation projects must be underpinned by a sound and strategic business plan, and should last between 12 and 24 months. The amount of funding ranges from €500,000 to €2.5 million, covering up to 70% of eligible costs.

A single for-profit SME, or a consortium of for-profits SMEs, established in the EU member states or countries associated with Horizon 2020 can apply for funding. An SME company must have a group headcount of less than 250 staff and meet at least one of the following: a turnover of below €50 million or an annual balance sheet of no more than €43 million. These ceilings apply only to individual firms; however, if your company is part of a larger group, you need to include the employee, turnover, and balance sheet numbers from the entire group.

Target companies are high-growth, highly innovative firms with global ambitions that want to disrupt the established markets. You should be able to demonstrate your knowledge and experience in your chosen market and have a clear commercial ambition.

To demonstrate financial stability, applicants are expected to be established with at least three years of trading accounts. Startup companies may apply but will have to demonstrate that they have a viable, long-term business plan with or without funding support from the SME Instrument.

Companies that have received grants or venture capital funding, received innovation-related tax benefits, won an innovation prize, or are based in an innovation hub are encouraged to apply.

The SME Instrument is targeted at close-to-market activities for breakthrough innovative ideas. The underlying technology activities should be at, or very near, Technology Readiness Level 6 – you should be able to demonstrate the innovation in a relevant operational or production environment.

You will also need to align your innovation with one of the SME Instrument’s programme topics.

Horizon 2020 SME Instrument project topic areas include:

• Open disruptive innovation;
• Nanotechnology;
• Biotechnology;
• Space research and development;
• ICT solutions for health, well-being, and ageing;
• Sustainable and competitive agriculture, forestry, agri-food, and bio-based sectors;
• Blue growth (marine-based) development, deployment, and market replication;
• Low carbon and efficient energy;
• Transport and smart cities mobility;
• Climate action, environment, resource efficiency, and raw materials;
• New business models for inclusive, innovative, and reflective societies; and,
• Security research and development.

Preparation of a phase 1 proposal takes around 150 hours of work; phase 2 takes around 300 hours of work.

You will need the right combination of people to cover the proposal’s key aspects: the technology, market knowledge, commercialisation plan, and financial details.

Horizon 2020 SME Instrument evaluation is done remotely, with each proposal typically evaluated by four evaluators. The evaluators are mainly entrepreneurs rather than scientists.

If your proposal is eligible and in scope, each evaluator scores the proposal according to three main criteria (‘impact’, ‘excellence’, and ‘quality of the implementation’). The final score of a proposal is the median of the individual scores from the individual evaluators.

A phase 1 application has to achieve a threshold score of at least 4 out of 5 for each criterion, and an overall score of 13 out of 15, to be considered for funding. Evaluation results are sent to applications within 2 months.

To February 2016, 54% of phase 1 proposals which met the quality threshold were funded. (15% of all phase 1 proposals met the quality threshold.)

For phase 2, the evaluators first assess whether the applicants have the operational capacity to carry out the proposed work. A phase 2 application has to achieve an overall threshold score of 4 for the ‘impact’ criterion, and an overall score of 12 out of 15, to be considered for funding. Evaluation results are sent to applicants within 4 months.

To February 2016, 17% of phase 2 proposals which met the quality threshold were funded. (35% of all phase 2 proposals met the quality threshold.)

The SME Instrument is highly competitive: to the end of February 2016, there have been over 16,000 proposals for phase 1, with 1,340 proposals funded – an 8% success rate.

There have been over 5,000 proposals for phase 2, with 325 proposals funded – a 6% success rate.

For phase 2, the success rate is higher for proposals that were previously funded for phase 1, as this ensures that a comprehensive feasibility assessment and business case has been completed. However, submitted proposals for phase 2 will be assessed on their own merits, without taking into account whether or not they have successfully applied for phase 1.

Your Horizon 2020 SME Instrument proposal is more likely to succeed if it:

• Shows how the project results in a real innovation and doesn’t replicate products currently on the market
• Provides a convincing company description which explains why you are more likely to succeed than a competitor
• Includes a clear and thorough description of the business opportunity, not just a description of the project.
• Demonstrates a clear understanding of the target market, including commercialisation and competitor information

A Horizon 2020 SME Instrument application is examined by at least three independent experts in the area of innovation identified in the application. In many cases, the application is examined by five or more experts.

For the Horizon 2020 SME Instrument, the grant body aims to inform you within 4 weeks after submission whether or not your application meets the necessary thresholds in order to be considered fundable. You will be told if your proposal will be funded after the relevant cut-off date, which occurs every three months.

On average, it takes 1 month from the cut-off date to the publication of results.

For phase 1, there is an advance payment of €17,500 (40% of the lump sum of €50,000, minus 5% retained by a guarantee fund). The remaining €32,500 is paid at the end of the project, after approval of the feasibility study.

If the technological or commercial viability of the innovation cannot be demonstrated, it’s an acceptable outcome for the project to stop after phase 1 is completed. The lump sum will be paid for the completed feasibility study if the reporting obligations are fulfilled and tasks have been completed as described in the grant agreement. If not all the tasks have been completed, the lump sum will not be paid.

For phase 2, there is an advance payment of 40% of the grant, minus 5% retained by a guarantee fund. The balance is paid at the end of the project, after approval of the reports.

Myriad Associates have an enviable track record with R&D grant applications. Using our grant application services can give you a significant competitive advantage over other grant applicants.

Project Assessment – Our specialist consultants discuss all the relevant technical, commercial and financial details of your R&D project with you and assess your chances of success.

Workshop Session – We will take you through a workshop session so that we fully understand your project in terms of the technical problems and solution, commercial opportunities, market dynamics, project team and financial projections.

Grant Writing – We research, prepare, and write an award-winning R&D grant application for your review and approval.

Submission and Feedback – We complete the online registration process and submit the web-based grant application on your behalf. Grant assessors provide feedback on both successful and unsuccessful grant applications, and we review this feedback with you to give you on-going advice and guidance.

Compliance and Monitoring – When your grant application is approved, we help you comply with all requests from the grant body’s monitoring officers.

For more information on Horizon 2020 SME Instrument grants, download our fact sheet here.