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The objective of the European Innovation Council is to support innovators in their high-risk ventures that have a strong potential to create new markets and stimulate job creation, growth and prosperity in Europe. The European Commission has put in place this new instrument in order to help Europe regain its prime position in the highly competitive field of innovation.

“We know that global competition is intensifying and that Europe must strengthen its innovation capacity and willingness to take risks in order to be competitive,” said Yuriko Backes, head of the European Commission’s representation office in Luxembourg, in front of some 50 participants at the opening of the event.

“Europe has an excellent performance in the scientific field, but we need to do much better in terms of innovations that create new markets. One third of all high-quality scientific publications come from Europe, but at the end of 2017, the EU was only home to 27 ‘unicorn’ start-ups, while the US housed 106 and China 59.”

A one-stop shop for innovation

This is why the European Commission has set up a new public funding scheme designed to develop highly innovative ideas and make them commercially successful. This direct support to innovation players is provided through two main funding instruments: the Pathfinder, which enables the development of radical innovations all the way from the laboratory to the market through an ambitious programme of interdisciplinary research; and the Accelerator, which supports the development of innovative companies with very high potential through funding and advice. The initiative includes a funding package of €2 billion for the 2019-2020 period covering the entire innovation chain, before being widely implemented in the Horizon Europe framework programme for innovation and research (2021-2027).

“The European Innovation Council will be a one-stop shop for breakthrough or disrupting innovation,” said Stéphane Ouaki, Head of Unit Financial Instruments at the European Commission’s DG Research and Innovation in charge of the EIC Task force.

“We are changing the logics of the funding provided by the EIC as we want to be more agile and flexible than in previous funding programmes in order to develop instruments that correspond to entrepreneurs’ needs.”

Blended finance: combining subsidies with equity

EU funding for research and innovation is generally provided in the form of grants. However, the Accelerator is based on a brand new approach: blended finance. Companies can apply for subsidies of up to €2.5 million as well as for equity up to a total amount of €15 million. Equity investments will be managed through a Special Purpose Vehicle, located in Luxembourg and operated in collaboration with the European Investment Bank Group.

Interested companies can already apply for funding, as the current Accelerator call for proposal is already open and will close on 9 October 2019. Luxembourg companies that want to participate in the call can request financial support to cover their costs of preparing the proposal. In order to be eligible, they need to notify Luxinnovation about their intention to respond to the call before 9 July.

Complementarity with existing programmes

Luxinnovation is the national contact point for European funding programme in Luxembourg. In this role, the agency advises and supports national companies – in particular SMEs – in the design of innovation project and orients them towards the most suitable funding instruments such as Horizon 2020 or, from 2021 onwards, Horizon Europe. “In recent years, we have witnessed a considerable increase in Horizon 2020 projects by both public and private Luxembourg players,” explained Sasha Baillie, the CEO of Luxinnovation. The total amount of Horizon 2020 funding obtained by Luxembourg entities in 2018 was 65% higher than the year before and the success rate of proposals increased from 14 to 24%, which is the highest success rate in the EU. “This indicates that the alignment between national and European strategies is improving and that Luxembourg organisations are becoming more competitive.”

Ms Baillie underlined the complementarity between the new European instruments and existing national programmes that are managed by the Ministry of the Economy and the National Research Fund. “The EIC pilot fits in well as a continuation of the national funding tools, and we always look beyond the project concerned to see how it fits into the company’s overall strategy and development,” explained Ms Baillie.

“For companies with high growth potential aiming at creating new markets – for example successful graduates from the Fit 4 Start programme that have continued to develop their activity and are ready for scaling up – the EIC Accelerator tool could be a very interesting next step.”

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