Library FAQ
What conditions apply to the EIC Fund's second tranche of investment?
The EIC Fund will in principle invest the remaining estimated amount in an equity round subject to private investors co-investing an amount fully matching the total EIC Fund investment (including the convertible loan). The Board may require co-investors be qua...
What could non-compliance lead to?
Non-compliance, including political or integrity issues creating high reputational risk, may lead the EIC Fund Board to recommend to the Commission to terminate or cancel support. Breach of obligations at any stage may lead to interruption, cessation or cancel...
What is Bucket 2 (co-investment opportunities)?
Bucket 2 includes cases where potential investors show immediate interest in co-investing into EIC-selected companies. The EIC Fund seeks that its investment is at least matched by other investors (covering at least 50% of the round), generally relying on due...
What is Bucket 3 (alternate investment opportunities)?
Bucket 3 includes cases where potential investors show immediate interest in providing the full investment into EIC candidate companies. The EIC Fund Board may still decide to co-invest to secure a blocking minority where EU interests cannot otherwise be prote...
What is the typical investment duration and exit strategy for the EIC Fund?
The EIC Fund invests patient capital with a long average perspective (7–10 years) and a general maximum of 15 years. The main objective is impact investment; exit routes are set case-by-case and may include IPOs, management buy-outs, secondary sales or liquida...
What protections and remedies exist in case of fraud or material breach?
Investment agreements contain protection clauses for material breach, fraud or non-compliance, potentially requiring full reimbursement or cash settlement of EIC support. For equity, remedial measures may include disposal of EIC's interest via secondary sale....
What types of investment instruments does the EIC Fund use?
Priority instruments are equity or quasi-equity, including common shares, preferred shares, convertible instruments (e.g., convertible loans), and other equity-type instruments, with terms standardized where possible and adjusted as needed for specifics.
When are compliance and KYC checks performed?
Compliance and KYC checks are performed prior to the initial investment and prior to possible follow-on investments, and are extended to shareholders and their ultimate beneficial owners. Checks relate to KYC, AML, anti-terrorism financing, tax-avoidance, non-...
Will the EIC Fund take a board seat in investee companies?
Yes. When operating as a major investor the EIC Fund will ensure a Board Member seat in target companies and seek external mentoring.
Are there special provisions for Israeli entities?
Yes. Agreements with Israeli EIC Fund Final Recipients must include a clause committing compliance with the EU Guidelines on eligibility of Israeli entities (Commission Notice 2013/C 205/05), reflecting restrictions related to territories occupied since June 1...
Can the Compartment make secondary share purchases or exercise rights to buy exiting shareholders' shares?
Yes. The EIC Fund can make secondary share purchases on a case-by-case basis and will strive to have a right of first refusal to purchase exiting shareholders' shares on a pro-rata basis, including to prevent transfers to non-eligible countries for economic se...
How are companies selected for potential investment by the Compartment?
Companies apply to the EIC Accelerator via public calls; EISMEA collects and evaluates proposals; the EU Commission selects actions and may indicate an indicative EIC blended finance amount and maximum investment amount in its award decision.
How are investments structured and monitored when made in tranches?
The External AIFM takes a position on the entire contemplated funding amount; timing and conditions for tranche investments (linked to predefined milestones reflecting TRLs and maturity) are negotiated with the recipient, agreed by the External AIFM, and manag...
How does the Compartment approach co-investment?
The External AIFM will connect investees to the EIC investor ecosystem to leverage co-investment. Beneficiaries are encouraged to seek co-investors. If agreed, due diligence and negotiations may be performed jointly but remain under control of the External AIF...
To which compartment do these Investment Guidelines apply?
They apply to the EIC Fund Horizon Europe compartment (the Compartment).
What are the typical investment size and equity stake targets?
Investment per company generally ranges between EUR 500,000 and EUR 15,000,000. Targeted ownership stakes are usually minority positions aiming between 10% and 20%, though blocking or majority stakes may be acquired when needed to protect European interests.
What exclusions apply to investments by the Compartment?
The Compartment shall not invest in economic sectors incompatible with the ethical and social basis of Horizon Europe, and must comply with exclusion criteria in the EIC Fund Memorandum, EU Financial Regulation (including Article 136), restrictive measures und...
What is the geographical eligibility for companies?
Companies must be established and operating in EU Member States or Countries Associated to Horizon Europe Pillar III. The External AIFM may invest in a holding or parent established in those territories if justified and meeting eligibility criteria.
What is the Investment Objective of the Compartment?
To invest in EIC Fund Final Recipients that develop or deploy breakthrough technologies and disruptive, market-creating innovations, and to fill a financing gap in European technology transfer by supporting commercialisation and scale-up.
What is the purpose of the EIC Fund Investment Guidelines 2023?
They provide information to potential beneficiaries and co-investors on the strategy and conditions under which the EIC Fund will make investment and divestment decisions and update definitions and clauses (e.g. qualified investor, follow-on investments, exits...
What is the typical investment process once a proposal is selected?
Selected proposals are channelled to the External AIFM for initial assessment, categorised into scenarios (Buckets), undergo financial due diligence and KYC, receive structuring proposals and term discussions by the Adviser, are approved or rejected by the Ext...
What measures can the Compartment take to protect European interests in strategic areas?
It can take investment-related measures such as secondary share purchases, acquiring a blocking stake (including blocking minority), investing even if other investors show immediate interest, disposing interests via secondary sale, making Follow-on investments...
What roles do the Adviser and EISMEA play in the investment process?
The Adviser undertakes financial due diligence (unless done by co-investors), discusses financing terms, guides legal work, and assumes an observer function in portfolio companies; EISMEA evaluates Accelerator proposals, negotiates and signs the grant contract...
What target company stages does the Compartment focus on?
Pre-seed, seed, early-stage SMEs, and small mid-caps, typically highly innovative for-profit entities with strong IP components.