Date

14 Sep 2023

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Widening countries in Horizon Europe

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It's evident that within the European Union, some member states demonstrate more success in innovation than others. When observing the sheer volume of projects that receive innovation funding or the financial support garnered, disparities become clear. Specifically, a group of 15 nations known as 'widening countries'—Bulgaria, Croatia, Cyprus, Czechia, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, and Slovenia—make up 30% of the EU's population. However, in 2022, they received a mere 7.1% of the investment awarded to start-ups in the EIC Accelerator, part of the Horizon Europe initiative focusing on deeptech start-ups and small to medium-sized enterprises. Furthermore, out of these, seven countries (Croatia, Cyprus, Hungary, Latvia, Lithuania, Malta, and Slovakia) did not receive any funds from this programme in 2022.

It's important to recognise that while the pursuit of excellence is the main driver for selecting Europe's leading innovators under the EIC, the development stage of each country's innovation ecosystem is quite varied across the EU. The Widening Countries Working Group of the EIC Board conducted an analysis identifying key reasons for the lower participation rates of 'widening countries' in the EIC Accelerator. The study sheds light on specific challenges that prevent innovators from these countries from gaining successful entry into the program and possible actions that ecosystem partners can take to support them.

Key takeaways from the report

Issue #1: Heterogeneous level of knowledge and support

The levels of knowledge and engagement with the EIC programmes vary significantly across European countries. Not all NCPs (National Contact Points) and local entrepreneurship support organisations can properly communicate EIC programmes to entrepreneurs and effectively support their applications. ~ EIC Board

At Zaz Ventures, we understand that the key to succeeding in EIC programs lies in a rigorous selection process. National Contact Points and other innovation ecosystem stakeholders count on us to advise startups on highly selective funding programmes such as the EIC Accelerator, Transition and Pathfinder. Our first priority is to validate the technology and commercial maturity of prospective applicants, which entails an extensive due diligence process where we review key aspects such as their team, intellectual property portfolio, product roadmap, financial plans and go-to-market strategy, based on our extensive experience in backing winning funding applications - over €1Bn of funding obtained for deeptech startups since 2014.

Issue #2: Lack of local consultant support

According to the EIC Board, “the EIC Pilot Evaluation survey (2018-2020) shows that 52% of companies use consultants to apply to EIC instruments. However, there are very few experienced consultants in widening countries effectively supporting innovators to apply for EIC funding.”

Here, we beg to differ with the EIC Board’s opinion. We have gathered data suggesting that several European consultancies serve clients in widening countries, even when they do not have physical offices there. A recent survey conducted by the European Association of Innovation Consultants showed that EAIC members supported 36% of the Accelerator companies funded in the widening countries, although in most cases, the consultancy did not have an office in the country. At Zaz Ventures, for example, we supported three of the five Bulgarian startups awarded EIC Accelerator funding in 2021-2023 and the only Latvian startup without any local office in those countries.

Issue #3: Too much time and money for an unpredictable outcome

According to the EIC Board, “a significant number of entrepreneurs from widening countries report feeling discouraged to invest money and time in the application process as they believe only participants from certain non-widening countries are selected.“

EIC funding instruments such as EIC Accelerator, EIC Transition and EIC Pathfinder are time-consuming and selective instruments: while applications can consume up to 400 hours of work for the startup founders, success rates average below 5% in some cut-offs. Naturally, winning such funding might look unattainable and time better spent elsewhere, especially when you know you are competing against the best of the best. Startups turn to experienced consultants with a demonstrated track record to save time and improve their odds, but does that require them to invest significant money? Not always! At Zaz Ventures, we have pioneered a no-win-no-pay model for highly selective funding instruments, where startups do not need to invest upfront money to submit their funding application, even when average success rates are below 5%. Our model relies on a strict selection and a structured application led by top-tier consultants, allowing us to support all start-ups, regardless of their financial resources, and to achieve success rates 5 times above average. We have helped over 350 companies raise funding since 2014 (see our Success Stories for specific examples in your industry).

Issue #4: Unconscious evaluation bias

According to the EIC Board, “unconscious bias based on the country of origin of an applicant was identified in a recent study led by the experts from the London School of Economics and Political Science. Since the EIC selection process is very competitive, even a small decrease in score affects final results.”

Evaluation biases are typical and unavoidable, as all cases are - still - reviewed by human evaluators. The EIC has taken steps to ensure a proper representation of remote evaluators and jury members stemming from widening countries to manage potential biases and ensure that excellence remains the key selection criterion. At Zaz Ventures, we believe that high-quality applications will succeed, regardless of their country of origin, and we are more than willing to take the risk to support applicants from widening countries. We have already supported successful EIC applicants in Bulgaria, Estonia, Poland, Latvia and Portugal, such as Daye, Dronamics, Transmetics, Skeleton Technologies, ANF Technologies, Elcogen, DAC, Naco Tech and iLof.

Want to be next? Are you an innovator based in widening countries with a groundbreaking deeptech idea? Contact us and find out how we can support you on your journey.

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