EU projects – Technology Scouting – Business Innovation

Who are H2020 SME winners?

According to the European Commission DG Enterprise and Industry, there are more than 23 million SMEs in the EU, representing 99% of businesses. Those SMEs are a key driver for economic growth, innovation, employment and social integration. In Switzerland in 2009 an average of 53.6% of sales revenues were generated by exports by SMEs[1].

Horizon 2020 introduced a new funding instrument specifically designed for innovative SMEs. The dedicated SME instrument’s supports close-to-market activities, with the aim to give a strong boost to breakthrough innovation. Highly innovative SMEs with a clear commercial ambition and a potential for high growth and internationalisation are the prime target.

Almost half of the companies applying to the SME Instrument are micro-sized enterprises and almost a third are younger than 3 years (start-ups). 11% of the companies are backed by accelerators and 12% are spin-offs by academia[2]. On average the profile of the typical SME selected for funding has been on the market for 10.8 years, has an annual turnover of € 4 million and employs 21 people. It’s a good sign if the SME is based in an innovation hub, has received grants or venture capital funding, received innovation-related tax benefits, or won an innovation prize in the last 2 years[3]. Since its launch in 2014, SME Instrument attracts actors never involved in European R&I Programmes: newcomers are more and more successful in getting an SME Instrument grant (87% in 2015 compared to 80% in 2014).

 

Profile of the SMEs winners (2014-2016)[4]

SME Instrument is highly competitive with success rate 8% for Phase 1 and 6% for Phase 2. Spanish SMEs have been particularly successful, followed by firms from Italy, UK and Germany. Compared to other EU countries, Spain has a net of small innovative businesses and is efficient in making use of the offered by EU funding. Most of the Spanish funded companies work in the field of ICT, followed by energy efficiency and sustainable food.

It is worth noting that Italy and Spain account for the highest numbers of evaluated projects. A high number of submissions per country does not automatically correlate with a larger share of selected projects. Whereas some innovation support infrastructures encourage as many companies as possible to apply for the SME Instrument, other national and regional systems put a stronger emphasis on advice, such as determining the stage of product development at which submitting a project proposal could be the most beneficial for an SME. This approach appears to create more results (i.e. in Ireland).

 
 

Manufacturing is the most common activity for the businesses applying to SME Instrument and the ICT sector counts the biggest number of applicants and selected companies. In 2015, most of the projects funded were in the area of low-carbon energy systems. It was closely followed by food production and processing and biomarkers and medical devices. The analysis done at EASME shows that the renewable energy market is important for many sectors like manufacturing, S&T activities, Electricity, Water and waste treatment, Construction.

For the first cut-off of 2017, ICT remained the most popular topic, followed by Healthcare in biotechnology that ranked higher than usual. In fact, January cut-off was the only opportunity in 2017 to submit proposals on clinical research for validation on biomarkers that will be closed for the rest of the year. Other popular topics were Energy, Transport, Eco-innovation & raw materials and Agriculture & forestry.

 

The share of projects above threshold has increased over time. At the beginning of the programme 24% of projects scored above threshold. This share has almost doubled to 40% in November 2015. Applicants have clearly developed an understanding of what is expected of their applications. This has led to an increase of the overall quality of submitted project proposals during these two years.

The SME Instrument allows companies to resubmit their projects for evaluation without treating them differently from a first submission. The large majority (90%) of resubmissions are resubmitted once or twice. A majority of resubmitted projects improve their score. Around 55% of all resubmissions get a better score compared to previous submissions. Resubmissions in Phase 1 double their chance of being selected. The success rate in Phase 1 is 11% for resubmissions, compared to 7% for first time submissions. For Phase 2, the trend is less accentuated but resubmissions are still more likely to be funded (4,4%) compared to first time submissions (4,1%). In conclusion, resubmissions offer the companies an opportunity to improve their applications both in concept and in presentation, thus increasing chances of receiving funding.

For any questions or more information please contact Elena Turco.

[1] Swiss SMEs are small but international by Alexander Kuenzle, (Adapted from German by Julia Slater)

[2] EASME’s report of the first two years of implementation of the SME Instrument 2014-2015

[3] http://ec.europa.eu/easme/en/horizons-2020-sme-instrument

[4] The European SME Instrument, Catalysing European Innovation by Gabriela Mara (EASME) 23rd Nov. 2016

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