Revised EIC Fund Investment Guidelines: what changed and why it matters

On 3 March 2022 the European Innovation Council published an updated set of Investment Guidelines for companies selected under the EIC Accelerator in 2021 and 2022. The document is intended to clarify how the EIC Fund will make investment and divestment decisions during a management transition and to give more transparency to applicants, selected companies and potential co-investors. The updated guidelines are explicit about the Fund's objectives of accelerating scaleup of high potential deep tech startups and of attracting private co-investment.

Why the update now

The revised guidelines reflect two simultaneous realities. First, the EIC Fund is moving from a pilot phase into an interim management arrangement. Second, the Commission wants to provide clarity and business continuity for companies selected in the 2021 and 2022 Accelerator cut-offs while it finalises a long term management model. The guidelines therefore cover the transition period expected to last until the end of 2022 and explain the approach the Commission will take until a permanent structure is in place.

Governance and management: transitional AIFM and the EIB adviser role

During the transition the Commission will appoint an external alternative investment fund manager to run the EIC Fund. The European Investment Bank will continue as investment adviser. The EIB will perform due diligence, prepare investment decisions and monitor the portfolio under a renewed advisory agreement. The Commission says a long term management approach will be finalised in advance of the 2023 Accelerator calls and will remain in place for the Horizon Europe period up to 2027.

What the guidelines set out

The new guidance explains the investment process, the strategy and conditions under which the EIC Fund will invest and divest, provides an updated definition of what counts as a qualified investor and describes possible investment scenarios. It is designed to increase predictability for companies and to help attract co-investors by aligning processes with market practices while preserving EU policy objectives.

How much capital and what instruments

The EIC Accelerator combines grants with equity or quasi-equity investments. Grants can reach up to €2.5 million. Investments through the EIC Fund typically range from €0.5 million up to €15 million, and in some cases more when rounds justify larger tickets. Investment instruments have included direct equity and equity-like instruments such as convertible loans and redeemable bonds.

Performance claims and caution

The EIC highlights a private co-investment multiplier of around 2.6 to 2.8 achieved during the pilot. That means that private investors committed roughly 2.6 to 2.8 euros for each euro of EIC public investment in the pilot deals. The Commission also projects the EIC Fund could become the largest deep tech venture investor in Europe by 2027, potentially co-investing in around 600 companies. Those are significant claims and they merit scrutiny. Multipliers depend on deal selection, market conditions and follow-on funding dynamics. Publicly funded vehicles can catalyse rounds but they can also alter pricing and investor behaviour in ways that change later private participation.

Examples from the pilot that illustrate the approach

The EIC has published case examples where the Fund invested alongside larger private rounds. Notable names from the pilot include Aledia and IQM. Aledia received a €15 million EIC Fund investment as part of a €120 million round for its µLED technology. IQM, a Finnish quantum computing company, had a pre-authorised €15 million EIC investment that was conditioned on matching a lead investor in a private round. These examples show the Fund's role as a co-investor in large financing rounds for strategic deep tech.

What this means for applicants and co-investors

For startups and SMEs that pass EIC selection, the guidelines are intended to make the investment path more predictable. The document outlines scenarios companies can expect during due diligence and investment negotiation. For potential co-investors the guidelines aim to provide transparency on conditions under which the EIC Fund will invest and divest which can facilitate alignment of deal terms and timing.

However applicants should be aware that transitional arrangements can introduce uncertainty over process sequencing and timing. The Commission has said the guidelines apply to companies selected in 2021 and 2022 and that a more permanent management structure will be communicated in advance of the 2023 Accelerator calls.

Risks and governance considerations

A move towards an external AIFM and market-like governance will likely improve fund management at scale. At the same time there are open governance questions. These include the balance between public policy objectives and return-seeking behaviour, conflict of interest rules for co-investors, and the degree to which public investments should accept riskier terms to support strategic technologies. Transparency on selection criteria and on whether the Fund will lead rounds or only follow private leads will matter to both companies and commercial investors.

Next steps and timeline

The Commission is analysing lessons learned from the EIC pilot and the EIC Board will advise on the long term fund model. The expectation set out in the guidelines is that a sustainable management approach will be finalised in time for the 2023 Accelerator calls and will run through the Horizon Europe period up to 2027. Until then the transitional AIFM will manage investments and the EIB will continue in its advisory role.

Practical advice for innovators and investors

Startups planning to apply to the Accelerator should note the blended nature of support and prepare documentation for both grant and equity due diligence. Companies should clarify expectations with the EIC on timing of investment decisions during the transitional period. Private investors considering co-investments should seek clarity on whether the EIC Fund will lead or follow in a round and on exit policies so that governance and return horizons are aligned.

Where to find the guidelines and additional information

The EIC published the updated Investment Guidelines and background material on its website with links to related EIC Fund information. The Commission also signposted that the EIC Work Programme 2022 contains detailed timing for Accelerator cut-offs, Info Days and submission deadlines. For companies selected in pilot cut-offs the EIC has been progressing grant decision making and due diligence in parallel with investment negotiations.

Taken together the revised guidelines are a necessary step to reduce uncertainty during a governance transition. They also mark a broader shift by the EU towards running public innovation support with market-based fund management layers. That approach can increase scale and bring in private capital but it raises valid questions about oversight, alignment of public policy objectives with investor incentives and the measurement of real impact beyond headline multipliers.