EIC 2025: bigger budget, new STEP Scale Up and an expanded invest­ment toolbox

On 29 October 2024 the Commission adopted the European Innovation Council (EIC) Work Programme for 2025. The headline figure is €1.4 billion in funding and investment capacity dedicated to Europe’s deep tech sector, an increase of almost €200 million over 2024. The extra money comes with structural changes meant to improve access to later-stage equity through the EIC Fund and the newly introduced Strategic Technologies for Europe Platform (STEP) Scale Up scheme. The package mixes non‑dilutive grants, larger equity investments and a programme of business support services. The stated intent is to reduce strategic dependencies, accelerate the green and digital transitions, and scale up EU deep tech companies.

What changed in 2025 and why it matters

The most visible change is the STEP Scale Up scheme. STEP was created by Regulation (EU) 2024/795 earlier in 2024 to coordinate Union funding for strategic technologies and to create a 'Sovereignty Seal' to flag projects of strategic interest. The EIC's 2025 programme uses that legal basis to make larger equity investments available through the EIC Fund to address a perceived 'market gap' in deep tech scale‑up finance in Europe.

Beyond STEP, the 2025 work programme includes a refreshed set of challenge calls to target specific technologies such as generative AI, new space, agri tech and future mobility as well as demand‑driven Advanced Innovation Challenges for risky, systems‑level solutions. There is also a continued focus on widening participation, with more Business Acceleration Services (BAS) access for companies from lower‑performing innovation regions.

How the STEP Scale Up scheme is meant to work

STEP Scale Up is an equity‑only stream run through the EIC Fund. In 2025 the EIC commits €300 million for STEP Scale Up investments at the per-company range of €10–€30 million. The stated objective is to leverage private co‑investment so that each supported round reaches at least €50–€150 million in total financing. The scheme targets SMEs, start‑ups, spin‑offs and small mid‑caps in digital deep tech, net‑zero clean tech and biotechnologies.

To be admissible for STEP Scale Up, applications must include a pre‑commitment from a qualified private investor representing at least 20% of the targeted total funding round. The target total round should be between €50 and €150 million, and the EIC investment should be between €10 and €30 million. Successful companies that meet evaluation thresholds can receive a STEP Seal to facilitate access to other funding sources, including cohesion funds and national programmes.

Application flow and support services

The EIC continues to deploy the well‑established multi‑step process used across its schemes: short application, invitation to submit a full proposal, evaluation, and interview with an EIC Jury. Winners then enter grant agreement and, where relevant, investment negotiation and due diligence phases. Alongside financing the EIC provides Business Acceleration Services that include coaching, investor readiness programmes, trade fair support and corporate matchmaking.

Policy and legal context: how STEP changed the rules

STEP is not just a funding stream. The STEP regulation adapted existing EU programmes and cohesion rules to make combined financing easier, introduced a Sovereignty Seal to identify strategic projects, and asked the Commission to set up a Sovereignty Portal to aggregate funding opportunities. STEP also encourages Member States to consider Seal‑awarded projects when drafting recovery and resilience plan updates and allocating national support.

These adjustments stretch across a broad legal patchwork from Horizon Europe to InvestEU, the Innovation Fund, ERDF/ESF+, the Just Transition Fund and even the European Defence Fund. That cross‑instrument approach is meant to be more flexible but increases the complexity of governance and the need for careful coordination across programmes and levels of government.

What the EIC claims and where scepticism is warranted

The EIC and Commission argue STEP Scale Up fills a market gap for larger deep tech rounds and that public equity will crowd in private capital. Those are plausible objectives. Still, there are legitimate doubts and practical hurdles worth flagging for policymakers, companies and investors.

Defence and dual‑use: a new frontier for the EIC

In 2026 the EIC broadened STEP to include a dedicated STEP Scale Up Defence call. This reflects a policy shift to back defence and dual‑use tech scaling inside the EIC architecture. The move aligns with the EU’s strategic autonomy agenda but raises additional governance, security and export control questions. The Defence call includes exclusion rules on third‑country control and requires additional safeguards and national approvals for companies with non‑EU ties.

What this means for different stakeholders

Start‑ups and scale‑ups: STEP offers a rare route to larger, patient public equity in Europe. Successful applicants can obtain substantial capital and BAS support. However, teams should prepare for stringent due diligence, investor pre‑commitments and possible conditions about IP and European value retention.

Private investors: the Trusted Investor Network and co‑investment model create opportunities to lead rounds and access deal flow. Investors must weigh the benefits of EIC validation against any governance constraints and co‑investment mechanics set by the EIC Fund and its managers.

Policymakers: STEP is a test of whether coordinated EU instruments can influence industrial outcomes. Success depends on governance, evaluation, coordination with national programmes and careful monitoring of market effects.

Practical checklist for applicants to STEP Scale Up

Monitoring, evaluation and indicators to watch

The STEP regulation requires annual reporting on spending per programme, Seal‑awarded projects and cross‑border participation. Observers should monitor: actual leverage ratios achieved, follow‑on private investment raised by EIC‑backed companies, geographical distribution of projects, patent and IP retention in the EU, exit outcomes and whether the public equity led to durable industrial capacity rather than short‑term market shifts.

Key performance indicators to track

Examples include private co‑investment mobilised per euro of EIC equity, number of follow‑on rounds and their sizes, jobs created in manufacturing or critical value‑chain activities within the EU, number of STEP Seal projects that secured national or cohesion fund co‑financing, and the rate of successful commercialisation of Pathfinder/Transition projects backed via EIC channels.

Bottom line and near‑term watchlist

The 2025 EIC work programme is a clear attempt to evolve the EU’s approach to deep tech financing and to close the later‑stage funding gap with larger, more structured equity support. It signals political will to build European scale‑ups in strategic tech areas. The plan combines sensible elements — grants, equity, BAS and policy levers — but success is not guaranteed. The biggest risks are executional: converting public validation into sustained private capital, ensuring geographic inclusiveness without diluting returns, and containing market distortions while pursuing industrial policy goals.

For stakeholders the near term priorities are straightforward. Companies should sharpen investor engagement, IP and governance documentation. Investors should scrutinise deal terms and alignment with their return targets. Policymakers and EIC managers must publish clear evaluation metrics and enhance transparency on fund governance so that public money achieves measurable industrial outcomes and not just headline transactions.