The European Innovation Council: A Catalyst for Breakthrough Technologies and Innovations

The European Innovation Council (EIC) is Europe’s key driver for next-generation technologies, revolutionising industries with a €10.1 billion budget. Backed by Horizon Europe programme, the EIC helps startups, SMEs, and scaleups thrive through grants and equity investments. 

The European Innovation Council (EIC) is Europe’s flagship innovation programme designed to support and accelerate game-changing innovations. Established under the EU’s Horizon Europe programme, the EIC is central to Europe's efforts to drive innovation and technological leadership. With a budget of €10.1 billion, the EIC aims to identify, develop, and scale up breakthrough technologies, spanning from early-stage research to the commercialisation of innovations.

The EIC is a major player in Europe’s innovation landscape, supporting innovative start-ups, SMEs (small and medium-sized enterprises), and mid-caps through a comprehensive range of funding opportunities. By providing both grants and investments, the EIC plays a critical role in nurturing innovations that have the potential to transform industries and address global challenges.

Under the umbrella of Horizon Europe, the EIC supports companies across various stages of innovation, from proof of concept to technology transfer, and from early-stage research to financing and scaling up. The strategic direction of the EIC is guided by an independent board, which includes experts from different sectors, such as entrepreneurs, researchers, investors, and corporates.

Innovation and startup ecosystem in europe

Europe has firmly established itself as a global hub for innovation, a diverse talent pool, and a robust support system for entrepreneurship. With over 150 venture-capital-backed unicorns, including major players like Germany's neobank N26, Lithuania's Vinted, and France's Doctolib, Europe’s innovation ecosystem continues to thrive. 

Government policies and initiatives such as the European Innovation Council (EIC), Horizon Europe, the Digital Single Market, and national innovation strategies provide critical funding, infrastructure, and regulatory support for the development and scaling of new technologies.

The European innovation ecosystem is characterised by a collaborative network of stakeholders, from start-ups and entrepreneurs to research institutions, universities, corporates, and investors, all working towards advancing technological innovations. Notable startup hubs in cities like London, Berlin, Stockholm, Paris, and Barcelona have attracted global talent, fostered investments, and facilitated the emergence of new business models. 

These cities offer a thriving ecosystem, providing access to mentors, accelerators, incubators, and a vibrant community of entrepreneurs. This environment nurtures the growth of both Business-to-Consumer (B2C) and Business-to-Business (B2B) start-ups, with the latter experiencing significant success, evidenced by companies like Personio, UiPath, and Klarna, achieving billion-dollar valuations. 

The continued success of European start-ups is bolstered by the region's technological advantages, early value creation from customer relationships, and strong public and private sector support.

EIC-EIT collaboration

In January 2021, the European Commission signed a Memorandum of Understanding (MoU) between the EIC and the European Institute of Innovation and Technology (EIT) to reinforce their collaboration. The partnership aims to provide comprehensive support to European innovators, helping them deploy and scale up innovations faster and more effectively.

The MoU facilitates cooperation between the two organisations and their respective networks, enabling entrepreneurs, SMEs, research organisations, and higher education institutions to access a broader range of support services. This collaboration aims to streamline the innovation process and enhance the impact of European innovation on the global stage.

Since its launch in 2021, the European Innovation Council has made significant strides in advancing the innovation landscape across Europe. The EIC’s unique funding model, which combines grants and investments, has already yielded substantial results, including the creation of new markets, the commercialisation of breakthrough technologies, and the scaling of innovative startups and SMEs.

Under the pilot phase of the EIC (2018-2020), over 5700 startups and SMEs were supported, with these companies raising more than €5 billion in follow-up investments. The pilot phase also supported over 430 projects on Future and Emerging Technologies, resulting in the publication of over 3000 peer-reviewed scientific articles, more than 600 innovations, and over 100 patents.

The EIC’s funding and business acceleration services have helped companies scale rapidly, with many beneficiaries seeing significant growth in employment and revenue. On average, startups and SMEs that received EIC funding doubled their number of employees within two years.

Funding opportunities under the EIC

The EIC offers a variety of funding opportunities designed to support innovators at different stages of the innovation lifecycle. These funding opportunities include grants, equity investments, and blended finance, which combine both forms of funding. One of the EIC's unique features is its ability to provide direct equity or quasi-equity investments, managed by the EIC Fund.

EIC accelerator

The EIC Accelerator is a funding programme under Horizon Europe designed to help startups and SMEs develop and scale up their innovations. The programme focuses on technologies with the potential to create new markets or disrupt existing ones. It provides both grants and equity investments, with grants of up to €2.5 million available for innovation activities, as well as investments ranging from €0.5 million to €10 million, which are provided on a blended finance basis.

The EIC Accelerator is particularly geared towards high-risk innovations that require patient capital, providing funding at the critical stage where the risk is too high for private investors alone to take on. In addition to financial support, beneficiaries also receive extensive business acceleration services, including mentoring, coaching, and access to global partners. The Accelerator has two key streams:

• EIC Accelerator Open, which accepts proposals in any field of technology, with a budget of €384 million for 2025.
• EIC Accelerator Challenges, which are targeted towards specific technological challenges, with a budget of €250 million for 2025.

EIC pathfinder

The EIC Pathfinder programme provides support to early-stage research teams working on high-risk, high-reward breakthrough technologies. The aim is to support projects at the earliest stages of development (TRL 1-4), funding research that will provide the scientific foundations for technologies that could potentially disrupt markets.

Grants under the Pathfinder programme range from €3 million to €4 million, depending on whether the project aligns with specific thematic areas (Pathfinder Challenges) or is more exploratory in nature (Pathfinder Open). Pathfinder projects also receive coaching and mentoring, along with access to a network of experts and potential collaborators.

EIC transition

The EIC Transition programme is designed to support innovations that have reached the proof-of-concept stage (TRL 3-4) and are ready to move towards commercialisation. This programme provides grants of up to €2.5 million to validate technologies and develop business plans for specific applications. The funding can be used for activities such as market validation, technology demonstration, and the development of business models.

The EIC Transition programme also includes booster grants, which provide additional funding for ongoing projects or activities that are crucial for the commercialisation of the innovation.

EIC STEP scale up

The EIC STEP Scale Up programme is part of the Strategic Technologies for Europe Platform (STEP), which targets high-risk innovations in key strategic sectors such as digital technologies, clean tech, and biotechnology. The STEP Scale Up scheme provides substantial equity investments ranging from €10 million to €30 million to help scale up promising innovations.

The STEP Scale Up programme focuses on supporting technologies that can enhance the EU's competitiveness, particularly in the areas of quantum technologies, semiconductors, and clean energy solutions.

The EIC’s approach and structure

EIC governance and leadership

The governance of the EIC is directed by the EIC Board, which steers the strategy and overall implementation of the programme. The EIC Board is composed of independent members who bring expertise from various fields of innovation. These members include entrepreneurs, investors, researchers, and representatives from corporations and other key innovation ecosystems. This independent nature ensures that the EIC remains at the forefront of cutting-edge innovation across various sectors.

The EIC is supported by the SME Executive Agency (EISMEA), which is responsible for implementing the activities set out in the EIC Work Programme. The agency works closely with the EIC Board and its President to ensure that the programme delivers on its goals and objectives.

Proactive funding management

A unique feature of the EIC is its proactive management of funding. EIC Programme Managers are responsible for identifying areas of innovation with high potential and steering projects towards achieving significant breakthroughs. These managers are experts in their respective fields, recruited for specific time periods (up to four years), and tasked with overseeing the funding allocation in their portfolio areas.

The EIC’s proactive approach ensures that funds are directed to the most promising companies and projects, addressing the challenges and risks that come with high-tech innovation.

Funding mechanisms: Grants and investments

The EIC offers a combination of grants and equity investments to help fund promising innovations. Grants provide non-dilutive funding to support the development of new technologies and innovative business models. In addition to grants, the EIC also offers equity investments in the form of direct equity or quasi-equity investments through the EIC Fund. This blend of funding options enables the EIC to support companies at different stages of their growth, from early-stage research to scaling up and commercialisation.

EIC fund: Bridging the gap for deep tech innovation

The EIC Fund, the venture arm of the European Innovation Council (EIC), plays a critical role in supporting Europe’s deep-tech innovation landscape. The fund provides much-needed patient capital to high-risk, high-reward startups and SMEs, focusing on companies with breakthrough technologies that have the potential to disrupt markets. 

With a budget of over €10 billion, the EIC Fund helps these companies navigate the funding gap, which is often too large for private investors, by offering investments that enable them to scale and grow.

The EIC Fund is specifically designed to provide the investment component of the EIC Accelerator. Its primary focus is on deep-tech companies—those working on disruptive technologies that can create new markets or transform existing ones. The fund supports companies across various sectors, including health, energy, green technologies, digital, and deep-tech, by offering both grants and equity investments.

The EIC Fund targets minority equity stakes, typically around 10%, though this can rise to 25% in some cases. It supports investments in early-stage companies, often in their proof-of-concept phase, and continues to provide support in subsequent rounds of funding. The aim is to nurture the growth of market-creating innovators and help them access the capital they need to scale and reach commercialisation.

Structure and governance of the EIC fund

The EIC Fund operates as an alternative investment fund (AIF), with the European Commission as the current sole investor. However, it is expected that the European Investment Bank (EIB) will take over as the investor of record in the near future under a mandate agreement.

The governance of the EIC Fund is overseen by the EIC Fund Board, which holds the broadest powers and is responsible for defining the investment strategy. The EIB serves as the investment advisor, providing due diligence support and expertise for investment decisions. The fund itself is managed by an external EIC Fund Manager, who handles the day-to-day operations and makes the final decisions on investments and divestments.

Additionally, the EIC Fund Advisory Committee provides input on investment cases, while the European Innovation Council and SMEs Executive Agency (EISMEA) coordinates the grant component and ensures alignment between the grant and equity components.

The EIC Fund’s co-investment platform is open to various types of institutional investors. These include:

• Venture Capital Funds
• Corporate Venture Capital Funds (CVCs)
• Private Equity Funds
• Impact Funds
• Angel Investors
• Family Offices

How to apply for EIC funding

The application process for EIC funding varies depending on the specific programme. Generally, applicants must submit a proposal via the Funding and Tenders Portal, which will be evaluated by EIC expert evaluators. Depending on the programme, applicants may be invited for interviews with the EIC jury, after which they will receive feedback and, if successful, an invitation to negotiate funding.

The application process for the EIC Accelerator includes the following steps:

1. Submit a short proposal: A summary of the project, including a pitch deck and a 3-minute video pitch.
2. Prepare a full proposal: If the short proposal is successful, applicants are invited to submit a detailed business plan and further documentation.
3. Face-to-face interview: Shortlisted applicants will be invited to pitch their innovation to the EIC jury.
4. Funding agreement: If successful, the company enters into a funding agreement, and the grant or investment is disbursed.

EIC fund portfolio

The EIC Fund invests in a select group of European startups across a wide range of industries, from health and energy to green technologies, digital innovations, and deep-tech fields. These startups are chosen for their market-creating potential and their ability to disrupt industries with breakthrough technologies. Each investment is preceded by a thorough evaluation process, including expert reviews and due diligence.

Some examples of companies in the EIC Fund’s portfolio include:

• HySiLabs (France) - Specialising in hydrogen delivery technologies for the energy sector.
• Qblox (The Netherlands) - Developing quantum computing control stacks.
• 3DEUS Dynamics (France) - Innovating in 3D printing with hybrid manufacturing techniques.
• Abbelight (France) - Creating new detection methods for fluorescence microscopy in medical applications.
• Ability Pharmaceuticals (Spain) - Developing first-in-class therapies for oncology.
• Acorai AB (Sweden) - Developing AI-driven medical devices for non-invasive heart failure diagnostics.