EIC Board to ITRE: fix the Fund, restore blended finance and run a proper review before locking in institutional change
- ›The EIC Board told the ITRE Committee that Commission decisions on the EIC Fund have caused major delays and risk undermining the EIC Accelerator.
- ›The Board urged immediate implementation of a transition solution so investments and grants flow again and recommended removing the College level single award requirement.
- ›The EIC pilot showed rapid investment delivery and strong crowding in of private capital; the Board wants those market norms restored.
- ›The Board proposes a temporary transition until the Horizon Europe midterm review in 2024 and a full assessment of institutional options including a Union agency.
- ›Short term fixes recommended by December 2022 include advisory arrangements, tighter fee controls, clearer roles across Commission, EISMEA and the Fund, and performance monitoring using published KPIs.
EIC Board to ITRE: fix the Fund, restore blended finance and run a proper review before locking in institutional change
On 1 September 2022 the European Parliament ITRE Committee discussed the Ehler report on the implementation of the European Innovation Council. Ahead of that meeting the EIC Board issued a statement for ITRE setting out where implementation is working and where urgent corrections are needed. The Board welcomed successes such as the EIC Pathfinder and Transition instruments but warned that changes to how the EIC Fund is managed have introduced long delays and operational frictions that cut against the EIC's original mission to back risky deep tech at speed.
Why the EIC Board intervened
The EIC Board framed its intervention as both practical and political. Practically the Board is concerned about a growing backlog of Accelerator beneficiaries waiting for equity and blended finance. Politically it argued that delays frustrate EU goals on the digital and green transitions and on strategic autonomy for key technologies. The Board therefore offered a set of short term fixes and a call for a measured institutional review rather than rushing to lock in a long term governance model.
What the EIC pilot achieved and what changed
During the pilot under Horizon 2020 the EIC put in place an integrated model combining grants and equity. The EIC Fund was incorporated in June 2020, became operational in September 2020 and by the end of the pilot had made rapid progress. The Fund approved over 140 investments worth more than 600 million Euro and achieved significant co-investment leverage with private investors. The Board highlights that the pilot moved towards market norms in timing and deal structure and that more than half of the pilot investments used convertible loans as short term bridge finance.
Under Horizon Europe the Commission decided to shift to indirect management for the EIC Fund. That move required a transition involving an external fund manager and, in the Commission's approach, introduced a requirement for a Single Award Decision by the College of Commissioners for each selected company. The Board says those changes, together with multi-party arrangements, have slowed decisions, introduced duplication and eroded the coordination between grant, equity and business acceleration services that is essential to blended finance.
Reported operational consequences
The EIC Board documents several concrete harms linked to the new arrangements. They report long delays for companies that have already been selected by the Accelerator and are waiting to receive grant and/or equity. The Board estimates that in some cases the delay since the first competitions is around a year and roughly nine months since companies were told the outcome. Those delays have reputational costs for the EIC and practical costs for startups running limited cash runways.
Beyond speed, the Board warns of a deteriorating fit between policy aims and execution. If grant decisions, business acceleration and delegated equity sit in separate silos without structured coordination then the catalytic aim of blended finance is at risk. The Board is particularly worried that a fragmented multi-party approach increases total fees and multiplies frictional costs.
Context: market conditions and why speed matters
The Board placed the operational problems in the wider investment context. Early stage venture capital is sensitive to market cycles. During downturns VCs typically prioritise follow-on support for existing portfolio companies and reduce first time investments in high risk deep tech. That makes counter-cyclical public funding especially valuable. The Board pointed out that Europe also faces geopolitical moves from competitors such as the United States which are pursuing technology industrial policy through large programmes. For these reasons the Board argues the EIC's role in catalysing investment is more important now, not less.
A reminder of scale and impact during the pilot and Pathfinder
| Item | Metric reported by EIC Board or EIC sources | Notes |
| Pilot EIC Fund investments | Over 140 investment decisions | Approved investments worth over 600 million Euro |
| Leverage | Around 2.7 Euro private capital per 1 Euro EIC | Co-investment rate achieved during pilot |
| Convertible loans | >50% of pilot investment agreements | Used as bridge to next fundraising round |
| EIC Pathfinder 2021 statistics | 2,087 proposals received; 44 projects chosen; 140 million Euro total EU contribution | Average EU grant 3.7 million Euro; projects from 71 countries |
EIC Board recommendations to ITRE and to the Commission
The EIC Board proposed a set of urgent measures the Commission should implement to restore operational credibility and get financing flowing again. The Board recommended that these steps should be completed in the short term and specifically noted December 2022 as a target for the immediate fixes.
Short term actions recommended (target December 2022)
| Recommendation | Purpose and rationale | Expected effect |
| Implement the full transition solution for the EIC Fund immediately | Clear the backlog of companies awaiting financing and build on pilot practices | Re-start timely investment decisions and restore market norms |
| Remove the requirement for College level Single Award Decisions for each investment | Speed up approvals and reduce duplication of political sign-off | Align decision making with indirect management and market timing needs |
| Continue co-investing with private investors where possible | Leverage larger financing rounds and maintain market credibility | Maximise crowding in and follow-on funding prospects |
| Avoid a freeze of the 2023 EIC Accelerator budget conditional on EIC Fund operability | Prevent withholding funds which would hurt startups in a difficult market | Ensure funding continues to flow while operational fixes are implemented |
| Let the transition solution operate until the 2024 midterm review and assess institutional options | Provide time to evaluate performance and options including a Union agency | Prevent premature institutional lock-in |
| Establish an Advisory Committee to the AIFM investment committee with EIC expertise and Commission/EISMEA involvement | Ensure structured coordination across grant, equity and BAS and preserve policy alignment | Improve investment quality and policy coherence |
| Ensure board members or observers appointed to investee companies add venture building and market expertise | Avoid appointing actors whose presence does not add operational value | Improve governance of portfolio companies and value creation |
| Control aggregate fees paid to external bodies to be in line with market norms | Avoid multiplied fees from multi-party approaches and ensure value for money | Protect public resources and reduce frictional costs |
| Monitor performance using published KPIs including speed targets for grants and investments | Use a clear evidence base to judge the new arrangements | Enable corrective action if operational targets are missed |
Governance and accountability concerns
The Board accepts that using an external manager and indirect management can be legitimate choices for risk allocation and operational scalability. Its concern is practical. The Board wants decision authority to be sufficiently market oriented and close to the investment process so that timing and deal structures reflect startup realities. It also asked for contractual safeguards so that if a future midterm review recommends a different institutional form, the chosen arrangements do not pre-empt that outcome or trap the Fund in an inflexible model.
The Board also asked for structured mechanisms to preserve policy orientation. It recommended an Advisory Committee to the Investment Committee of any delegated manager and insisted that Commission and EISMEA representatives be involved so that the grant, equity and business acceleration strands remain aligned with EU policy aims such as widening participation and improving gender balance among founders.
Institutional review and the midterm test
Rather than endorsing a rushed or irreversible transfer of the Fund to another institutional owner, the EIC Board called for a proper assessment to inform the Horizon Europe midterm review in 2024. The options to be assessed include continued Commission ownership, transfer to the European Investment Bank or establishment of a Union agency. The Board asked that any transfer include clauses that allow reversal or adaptation if the midterm review recommends a different path.
The Board argued that the EIC is a policy innovation itself and should be allowed to operate as a testbed. Its experience during the Covid pandemic showed the EIC could deliver novel instruments quickly. That agility is something the Board said should be preserved rather than removed by institutional formalities.
A cautious and practical closing note
The EIC Board took a constructive tone. It said it had engaged with Commission services and established a working group on the Fund. It reiterated its willingness to advise. However the Board was clear that continued delays are unacceptable and that political interventions which withhold accelerator budgets as a disciplinary device are counterproductive in the Board's view. Instead the Board wants the Commission and the implementing actors to restore market oriented decision making, control avoidable fees, and deliver on the EIC's promise to be Europe’s leading early stage deep tech investor.