EIC Accelerator returns to implementation while demand stays high

In June 2022 the European Innovation Council and the European Commission took a sequence of steps intended to normalise delivery under the EIC Accelerator after a period of delay. The Commission approved payment of 20 grants to companies selected for blended finance from the 2021 selection rounds and expected a further seven payments before the end of the month. Separately the EIC Fund announced its first direct equity investment, a €15 million participation in French chip developer SiPearl combined with a €2.5 million grant from the Accelerator. Together these moves mark progress in reactivating both the grant and investment arms of the instrument that were disrupted by an internal restructuring of the EIC Fund required under Horizon Europe rules.

At the same time the EIC continues to attract strong application volumes. The June 15 2022 cut-off for the Accelerator drew 986 full proposals from start-ups and small and medium sized enterprises. Most applicants sought blended finance, demonstrating continued demand for the programme model that mixes grant support with direct equity or quasi equity investments.

Why the delays happened and what changed

The core cause of the implementation slowdown was the restructuring of the EIC Fund to align with Horizon Europe legislation. That process required setting up new governance, contractual arrangements and the appointment of an external fund manager for the EIC Fund. Those changes are administrative but consequential. Equity investments require a separate legal and operational pathway from grants and are dependent on an operational fund vehicle and investment infrastructure.

Officials signalled that once the external fund manager is appointed and the new arrangements embed, signatures on delayed investment agreements will resume. The Commission said that all delayed grant decisions for companies that requested blended finance from 2021 cut-offs were expected to be taken by the end of the summer. The stated objective is to progressively reduce the time from selection to financing so the EIC can match the time pressures faced by deep tech start ups.

SiPearl: first fully fledged EIC Fund equity investment and what it means

On 14 June 2022 the EIC Fund completed its first direct equity investment under the restructured arrangements. The recipient is SiPearl, a French start up spun out from the European Processor Initiative. The package combines a €2.5 million Accelerator grant with a €15 million equity stake. The investment is part of a larger Series A round that the company said will catalyse more than €100 million in financing from strategic and public investors.

SiPearl is developing high performance, low power microprocessors aimed at exascale supercomputing. Exascale processors perform extremely large scale calculations relevant to climate modelling, medical research and artificial intelligence. The investment is intended to further Europe’s strategic autonomy in high performance computing and to demonstrate the EIC Fund can de - risk early stage deep tech for co investors.

June 2022 cut-off snapshot and application dynamics

Applications were being evaluated by external experts at the time of the announcement. Successful companies would be invited to pitch to an investor and business expert jury in September with selection decisions expected in October. The continuing high share of blended finance requests underlines the market expectation that early stage deep tech needs both non dilutive grant capital and patient equity to scale.

EIC Board response: new strategic goals and measurable KPIs

Responding to the implementation issues and to lessons from the EIC pilot, the EIC Board revised and enlarged its strategic goals for 2021 to 2027 and published key performance indicators to measure progress. The updated position emphasises both strategic outcomes such as creating more scale ups and attracting large follow on capital and operational metrics aimed at shortening delivery times.

The operational targets are explicit and demanding. They seek to restore the EIC’s claim to operate on market relevant time frames. The Board set a headline ambition to crowd in between €30 billion and €50 billion of private capital into European deep tech, framing the EIC Fund as a lever to mobilise institutional and venture finance.

Implementation status by selection round and practical effects

The Commission provided a detailed account of the state of implementation for companies selected in several cut-offs. The substance is that grant contracts have generally been prepared and some grant pre-financing paid but the equity investment agreements for many blended finance cases were delayed pending the EIC Fund restructuring and the appointment of an external fund manager. The timeline provided aimed for many of the outstanding grant signatures and equity agreement signatures to occur between summer and the end of the year, with grant payments often described as delivered quickly once contracts were signed.

June 2021 cut-off

64 companies selected. 29 requested grant-only or grant-first support. All contracts had been signed except one that was still considering. 27 pre-financings had been paid. Companies generally receive their first payment within 10 days after grant signature. 31 companies requested blended finance. First 17 grants among these had been signed. For the equity investment component and four equity only selections, signatures were expected to start in summer and continue until the end of the year.

October 2021 cut-off

99 companies selected. 34 requested grant-only or grant-first. Nine contracts had been signed and most remaining ones were planned to be signed in July. One of the 61 companies selected for blended finance had signed both the grant and the investment agreement. Signatures of remaining grants were planned in July and signatures for investment agreements would start in summer and continue through the end of the year. Four equity-only projects faced the same timelines for the investment component.

March 2022 cut-off

74 companies were selected and had received invitations to start negotiations. 36 requested grant only or grant first. 38 requested blended finance or equity only. In most cases the Commission forecast grants would be delivered within five to eight months and finalisation of equity investments was expected in the autumn.

Concepts explained

Analysis and implications

What the Commission described as a return to normal is progress for companies that waited for contracts and capital. Payment approvals and the SiPearl equity deal are tangible markers that the EIC Fund pathway can function. The scale of interest in the June cut-off shows the Accelerator retains strong market recognition.

However the episode exposes two recurring challenges. First, the institutional complexity of mixing grant instruments with a dedicated investment vehicle produces legal and operational frictions. Appointing an external fund manager and establishing operational routines will reduce those frictions but it depends on timely procurement and robust handover. Second, the speed of execution matters to deep tech companies whose technical timelines and cash needs are constrained. The Board’s operational KPIs are a realistic response but achieving them will require both internal capacity and external market cooperation.

There is also a credibility test on the crowding in of private capital. The EIC Board set ambitious leverage targets of three to five times EIC funding at portfolio level and follow on investing of similar multiples within three years. Those multipliers are feasible for high performing portfolios but are not automatic. They depend on successful deal selection, deal structuring that attracts co investors, and sustained private sector interest in high risk deep tech at early stages. The SiPearl round, which the EIC says catalysed a larger Series A, will be watched as an early indicator of whether the Fund can mobilise strategic public and private co investors.

What to watch next

Key near term items to monitor are the appointment and mobilisation of the external fund manager for the EIC Fund, the pace of signatures for the remaining investment agreements from 2021 and 2022 selections, and whether the operational KPIs on grant payment and term sheet timing become observable reality. Observers should also track whether the Fund can consistently attract co investors at the leverage rates the Board set as ambitions and if the Accelerator can increase participation from widening countries and women founders.

For start ups the message is cautiously positive. The EIC is reactivating funding pathways and the Accelerator remains a high profile route to grant and equity support in Europe. For policymakers and ecosystem actors the episode is a reminder that designing hybrid public finance instruments requires sustained implementation capacity and clear governance to match market rhythms.