Library FAQ
How does the Compartment typically structure investments for Bucket 1 cases?
The External AIFM may use quasi-equity, a combination of quasi-equity and equity, or equity in a future round; it may offer investment in at least two tranches or a single convertible instrument, seek board representation, provide external mentoring, or propos...
How is valuation and conversion handled if the Bucket 1 convertible loan reaches maturity without a qualified round?
If no qualified round occurs by maturity, valuation will generally use the post-money valuation from the last round or a lower amount if conditions materially changed; the External AIFM may set a conversion cap and will engage founders and other investors to a...
What are the conditions for the Bucket 1 second tranche equity investment?
The second tranche would in principle invest the remaining estimated amount in an equity round, typically subject to private investors co-investing an amount fully matching the Compartment investment (including the convertible loan); the Compartment may requir...
What are the typical terms of the Bucket 1 first-tranche convertible loan?
The first tranche is up to the greater of 50% of the estimated Compartment investment or the company’s unfunded cash needs for generally up to 18 months, structured as a convertible loan with generally 18-month maturity, 8% fixed interest accruing and capitali...
What aspects does financial and commercial due diligence focus on?
Due diligence focuses on governance and management quality, capital structure and financial planning, business strategy, competition, market assessment, value creation and legal form and jurisdictions.
What co-investment and syndication does the Compartment seek for direct equity investments?
The Compartment will systematically seek co-investment and syndication on at least a 1:1 matching basis and aims for a 1:3 leverage effect across the investment horizon; it should only invest where market support (including InvestEU) cannot be secured.
What compliance checks are performed before investments and tranches?
The External AIFM performs compliance and KYC checks for AML, anti-terrorism financing, tax-avoidance, non-compliant/non-cooperative jurisdictions, Sanctions, and identification of shareholders/UBOs in non-eligible countries; these are done prior to initial in...
What defines Bucket 0 and what are examples of negative issues?
Bucket 0 covers cases where due diligence reveals substantial negative issues preventing any investment, such as fraud, money laundering, tax avoidance, sanctions/non-compliance, misrepresentation, refusal to provide information, manifest errors, material adve...
What equity-type financial instruments may the Compartment use?
Priority instruments are equity or quasi-equity, including common shares, preferred shares, convertible instruments (convertible loans/bonds/notes, participation rights, SAFEs) and other equity-type instruments appropriate to achieve the EIC Accelerator object...
What happens if Bucket 0 issues are found and no remedies exist?
The External AIFM will decide not to proceed with the investment; the EU Commission may reconvene a jury, condition or terminate grant support, or cancel the EIC Accelerator contract depending on the case.
What is Bucket 1 and why are companies placed there?
Bucket 1 includes companies that remain very high risk and are not investor-ready despite EIC Accelerator support—due to early-stage technology, long time-to-market, small market size, weak readiness to absorb equity, or award conditions like required blocking...
What is Bucket 2 and how does the Compartment behave in such cases?
Bucket 2 covers cases where potential investors (including Qualified Investors) show immediate co-investment interest; the Compartment seeks that equity is at least matched by these investors (covering at least 50% of the round) with an objective of 1:3 levera...
What is Bucket 3 and what options exist when third parties offer full funding?
Bucket 3 includes cases where investors offer to provide the full investment; the External AIFM may nevertheless co-invest (e.g., to secure a blocking minority), reserve initial authorised investment as a top-up, and negotiate terms to ensure founder incentive...
What remedies or consequences arise from non-compliance or ineligibility discovered during due diligence?
Non-compliance or ineligibility (including fraud, misrepresentation, sanctions issues) can lead to termination or cancellation of EIC Accelerator support, termination of investment contracts and Compartment exit, reimbursement/cash settlement obligations, and...
When is additional technology due diligence required?
Additional technology due diligence may be required case-by-case by the Investment Committee to supplement the initial assessment with a more in-depth, investor-angle review or to investigate concerns raised about misrepresentation or manifest error; relevant...
Which types of investors may participate depending on the operation's stage?
Investors may include Business Angels, Venture Capital funds, Impact investment funds, Family offices, Venture debt funds, National Promotional Banks and Institutions (NPBIs) and corporate venture arms.
Who are "Qualified Investors" and why are they important?
Qualified Investors (e.g., business angels, VCs, impact funds, family offices, venture debt funds, NPBIs, corporate venture arms) not only provide funding but add knowledge, expertise, teams and networks to help companies strengthen management, business strate...
Who conducts due diligence and KYC checks?
Due diligence and KYC compliance checks are led by the External AIFM and the Adviser, with the External AIFM performing compliance checks prior to initial investment and subsequent tranches.
Are beneficiaries encouraged to seek co-investors themselves?
Yes. Beneficiaries are entitled and encouraged to seek co-investors in parallel with the EIC Fund's efforts.
Can a material breach of the grant contract affect the investment component?
Yes. A material breach of the EIC Accelerator contract related to the grant component prevents the EIC Fund from further investing and may lead to early exit, and vice-versa.
Does the EIC Fund seek co-investment when providing direct equity?
Yes. It will systematically seek co-investment and syndication on at least a matching 1:1 basis and seeks an overall leverage effect of 1:3 throughout the investment horizon.
How are milestones defined under the EIC Accelerator?
Milestones are meaningful achievements in the company's innovative project that reflect maturity stages and TRLs achieved, including leveraged co-investment; support continues as long as relevant milestones are met, unless EU market deployment cannot realistic...
How are tranche timings and milestone conditions managed?
They are negotiated with the company, agreed and managed by the EIC Fund under the operational coordination of EISMEA while the grant component is in force; tranche disbursements are linked to predefined milestones.
How does the EIC Fund handle investments made in tranches?
The Fund will take a position on the entire amount considered for funding (which may differ from the EC award), decide the overall package, and may recommend the EC revise or reject the initially awarded investment. Timing and tranche conditions are negotiated...