SME / MKB instrument 2014-2020

“The best of the best or the best of the rest?”

“Valley of death”

Joost.Holleman@hudson.comDirector Hudson Netherlands

Edwin.Aelberts@hudson.comManaging consultant

Wilbert.vanderVliet@hudson.comSenior consultant Hudson

Hudson1

Hudson Financial Incentives

Options;

Grants (Domestic & Pan-European)

Tax Incentives

Foreign Direct Incentives

European Investment Bank facilities

Our services

19 years of experience throughout Europe

Local consultants in 18 European countries;

Feasibility studies, application, negotiation & administration

Support to SME’s and Multinationals

Our experience: all European topics: e.g. R&D, Energy, Transport, Training, Life sciences, ICT

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The broader aspect

959 miljard4

Price Index 2011

│ 5

3 categoriesof regions

< 75 % of EU average

GDP/capita*

*index EU27=100

75-90 %> 90 %

Regional GDP figures: 2006-07-08© EuroGeographics Association for the administrative boundaries

EU Structural funds Budget 2014-2020ESF / EFRO / INTERREG

*index EU27=100

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TERRITORIAL COOPERATION

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Interreg VA Vlaanderen-Nederland Interreg VA 2 Zeeën Interreg VB Noord West Europa

Interreg VB Noordzee

Total Budget 959 billion

Convergence regions – €162 bn (RED)

Transition regions – €39 bn (ORANGE)

Competitiveness regions – €53 bn (GREY)

Territorial cooperation – €11bn

Cohesion fund – €68.7 bn

Horizon 2020 - €80 bn

Thematic areas > 10 €80 bn– Energy – €9.1bn

– Transport – €21.7bn

– ICT/Digital – €1bn

– Food Quality & Safety

– ETC.

EUROPE GRANTS & FINANCING

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EU

grants

EU

REGION

EU

NationalDOMESTIC EIB

Routes & Approaches

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HORIZON INTERREGESF

EFRO

RVO

TAX

LUX

National

Project loans for large developments in excess of EUR 25m

Intermediated loans are made via local banks

Structured finance provides additional support to priority projects

Guarantees: helping projects attract new investors

Project bonds: unlocking infrastructure funding

Equity & fund investment to catalyse further activity

Venture capital: helping invest in high-tech and growth SMEs

Microfinance has benefited from our long term commitment

Risk-sharing in research, development & innovation (RSFF)

Sustainable energy: maximising investment (ELENA)

Green-tech demonstration support (NER300)

Infrastructure project advice for new EU members (JASPERS)

Urban development technical assistance (JESSICA)

Transport infrastructure cash-flow guarantees (LGTT)

Public-private partnership optimisation (EPEC)

Flexible SME funding (JEREMIE)

Innovation & Cooperation levels

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•Fundamental research

•Industrial Research

7th Framework

HORIZON 2020

•Industrial researchEureka

•Regional support

•Economic growth

•InnovationEFRD

•Innovation

•Economic growthTransnational / Regional

•Thematic areas

•Pilot demonstration

•InnovationEuropean Specific

•Innovation

•Economic growthNational Grant schemes

Leve

l of

coo

per

atio

n

Level of in

no

vation

Gra

nt

per

cen

tage

s

VC

Bancair

ERRHIGH

IRRHIGH

IRRMEDIUM

IRR Negative

RISK HIGH

RISK MEDIUM

RISK HIGH

RISKLOW / MEDIUM

VC

PURE LOAN

GUARANTEE

EIB facilitiesEIB LOAN

PDA GUARANTEE

GrantsGRANT

TAX Incentive

GUARANTEE Revolving fund

Priv Equity

Economic &Social Benefit

Financial Profitability

Risk level

RISK LOW

11APPROACH TOWARDS PROJECTS

HORIZON

EU Funding opportunities

100 % Funding 70% Funding

EUREKA, EUROSTARS, COSME,

50-80 % Funding 50% Funding

EFRD

25-50 % Funding

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Plaatje hudson

SME Instrument

• Horizon 2020 will support Innovative Small and Medium-sized Enterprises (SMEs) through a new dedicated SME instrument.

• Here SMEs can form collaborations according to their needs, including for subcontracting research and development work to apply for funding and support.

• Horizon 2020 funds high-potential innovation through a dedicated SME instrument, which offers business innovation support.

• Provided with € 2.8 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.

• Moreover € 90 million will be allocated for Information and Communication Technologies (ICT) in 2014 and 2015.

Special instrument to support SMEs

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THREE PHASESPhase 1: Concept and feasibility assessment

Phase 2: R&D, demonstration, market

replication

Input: Idea/Concept: "Business Plan 1”(~ 10 pages) 10% budget

Activities:Feasibility of concept, Risk assessment, IP regime, Partner search, Design Study, Pilot application, etc.

Output: elaborated "Business plan 2“5,200 Phase 1 projects could be funded

Lump sum: 50.000 €

~ 6 months

Input: "Business plan 2" plus description of activities under

Phase 2 (~ 30 pages)90% budget

Activities:Development, prototyping,

testing, piloting, miniaturisation, scaling-up, market replication,

Research

Output: "investor-ready Business plan 3“

1,700 Phase 2 projects with an average size of 1.5 M€ can be funded.

1-2.5 M€ EC funding

~ 12 to 24 months

No direct funding

Phase 3: Commercialisation

Promote instrument as quality label for successful projects

Facilitate access to private finance

Support via networking , training, information, addressing i.a. IP

management, knowledge sharing, dissemination

SME window in the EU financial facilities (debt and equity facility)

GRANTS FINANCING

Phase 1 - Feasibility assessment (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.

Outcome:

• 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.

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Amount of funding: lump sum of €50,000 (covering up to 70% of project costs and per project,

not per participating business)

Duration: typically around 6 monthsOutcome: The outcome of a phase 1 project is a feasibility study (technical and commercial), including a business plan.

Proposal: max. 10 pages

Evaluation leads to go/no decision

Suggestion: Grant decision and decision operational at AOSD level

Success rate 5-10%

Phase 1 - Feasibility assessment (optional)17

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: 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.

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).

Phase 2 - Innovation project18

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 yearsNo negotiations. Only high quality projects will be funded. Phase 1 funding complemented by coaching of beneficiaries should have allowed to prepare a solid proposal for Phase 2.

Based on the experiences with FET Open, the suggestion is to organise two parallel open calls for Phase 1 and 2. A topic-oriented approach will make this more difficult and lead to longer project cycles.

Success rate suggested: 50-70%

Phase 2 - Innovation project19

Cut-off days

OPENING: March 2014

NO DEADLINES

CUT OFF DATES

TFI 2015 TBDApplications for phase 1 or phase 2 van be submitted at any time as of March 2014. The SME Instrument has a permanently open call with – in general – four cut-off dates per year. Applications can be submitted at any point in time and will be evaluated immediately upon submission. Applicants will receive feed-back on the evaluation outcome within a short time after submitting their application. The information whether a project can be funded can only be communicated after the respective cut-off dates.

Phase 1

• 18/06/2014

• 24/09/2014

• 17/12/2014

• 18/03/2015

• 17/06/2015

• 17/09/2015

Phase 2

• 09/10/2014

• 17/12/2014

• 18/03/2015

• 17/06/2015

• 17/09/2015

FTI Instrument

• 4 dates for2015 TBD

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FTI versus SME Instrument

Evaluation22

Main criteria

• Impact (out of 5)

• Scientific & technological excellence (out of 5)

• Implementation (out of 5)

Evaluation process

• Proposals will be evaluated individually when they arrive. They will be ranked after the cut-off dates.

• The criterion Impact will be evaluated first, then Excellence and Implementation. If the proposal fails to achieve the threshold for a criterion, the evaluation of the proposal will be stopped.

• For phase 1 the threshold for individual criteria will be 4. The overall threshold, applying to the sum of the three individual scores, will be 13.

• The final consensus score of a proposal will be the median of the individual scores of the individual evaluators

• Applicants can provide during the electronic proposal submission up to three names of persons that should not act as an evaluator in the evaluation of their proposal for potential competitive reasons

Writing the best proposal23

A significant effort that requires discipline and method

A good H2020 proposal will take between 150 and 250 hours

You need to address all evaluation criteria

You need to make it easy for the reviewers

Only excellent applications get funded (aim for the max score!)

Frequent mistakes

Starting too late (less than 3 months before the deadline)

No clear KPIs and risk management

Neglecting prior art

Calls have become very competitive

There are a lot of experienced coordinator and proposal writers

The skill levels have increased over time

Only the best of the best proposals (ie 13+) get financed