Library FAQ
Under what conditions can the Compartment make follow-on investments?
Follow-on investments are possible only subject to an ex ante amending award decision by the EU Commission and only in exceptional cases, notably where a follow-on is necessary to secure a blocking minority or majority to protect European interests as identifi...
What acknowledgment regarding publication of information must EIC Fund Final Recipients include in their EIC Fund Agreement?
Each EIC Fund Agreement must acknowledge that the EIC Fund and/or the Adviser may communicate information regarding the EIC Fund Final Recipient (irrespective of the amount of support), and that the EIC Fund may provide or publish information including, but no...
What activities are excluded from EIC Fund investments?
Excluded activities include: production or activities involving harmful or exploitative forced labour or harmful child labour; production or trade illegal under host country laws or international conventions; pornography or prostitution; production/trade in wi...
What additional requirements must follow-on investments satisfy?
Follow-on investments must not crowd out smaller investments and must fulfil Horizon Europe requirements for EIC blended finance support (i.e., beneficiaries are SMEs or, exceptionally, small mid-caps; continued EIC support is necessary; InvestEU support not y...
What exit routes does the Compartment consider?
Exit routes are set case by case in cooperation with co-investors and may include initial public offerings (IPOs), management buy-outs, secondary sales, or liquidations.
What happens to additional investments awarded to Horizon 2020 EIC Pilot operations?
Where the EU Commission awards an additional investment to a Horizon 2020 EIC Pilot operation following an EIC Call for proposals, that additional investment is transferred under the Compartment.
What is the required written acknowledgment text for EIC Fund Final Recipients?
“[EIC Fund Final Recipient] hereby acknowledges that [this] investment [is]/[has been] provided by the EIC Fund set up under the European Innovation Council. The purpose of the European Innovation Council is to identify, develop and deploy breakthrough technol...
What is the typical investment duration and perspective of the Compartment?
The Compartment invests patient capital with a long perspective on return—typically seven (7) to ten (10) years on average, with a maximum of fifteen (15) years in general. The main objective is impact investment while planning for a positive return.
What limitations arise from the equity and quasi-equity nature of the Compartment’s investments?
Because investments are equity or quasi-equity, the EIC Fund will typically have no or limited remedies or exit/repayment possibilities if a Final Recipient fails to meet eligibility/exclusion criteria or breaches terms of the EIC Fund Agreement.
What measures are used to align investor and management interests and prepare for exit?
Alignment and exit preparation include implementing incentive programs (e.g., employee stock ownership plans), defining sector-relevant key metrics and plans to optimize them for exit, and identifying and engaging a pool of potential acquirers leading up to an...
When should the Compartment consider divesting?
The Compartment should divest when companies can be financed from market sources including InvestEU because EIC support is no longer needed. Less favourable exit scenarios (including exiting below the initial investment) should be considered if customary strat...
Who composes the Advisory Committee and what is its role?
The Advisory Committee is created by the External AIFM and is composed of External AIFM staff, external experts, two EU Commission representatives as observers (to interpret the Investment Guidelines and provide policy steer especially on EU economic security)...
Who manages monitoring and follow-up for individual EIC Fund investments?
The External AIFM manages individual investments, including monitoring and acting on milestone funding, financing events (conversions, follow-on, etc.), write-downs and restructurings, exits, and related matters.
Will the EIC Fund connect Final Recipients with mentors?
Yes. With the recipient’s consent, the EIC Fund will put the Final Recipient in contact with its network of mentors (which could include potential investors) to provide advice and recommendations for business development and potential corporate actions. In som...
Are operations with entities in certain jurisdictions prohibited?
Yes. The EIC Fund prohibits entering into new or renewed operations with entities incorporated or established in jurisdictions listed under the Union policy on non-cooperative jurisdictions for tax purposes, identified as high-risk third countries for AML/CTF,...
Can companies receive follow-on investments or investments after a grant-first?
The Commission may award follow-on investments on an ad hoc basis to companies that were awarded an investment component to catalyse additional investors on a matching basis, and may award an investment to companies that were awarded ‘grant first’ support subj...
How are investments managed after signing?
The EIC Fund manages individual investments by monitoring and acting on milestone funding, financing events (conversions, top-ups), write-downs, restructurings, exits, and may appoint qualified EIC Fund representatives or independent experts as board represent...
How does the EIC Fund approach valuation for equity investments?
The EIC Fund will, in general, align its valuation to the valuation set by the market (i.e. by private qualified investors co-investing alongside them) and may use common investor valuation methods such as multiples of earnings (times revenue), fair market val...
How does the EIC Fund handle blocking minority protections in co-investments?
Where awarded support is conditioned on the EIC Fund acquiring a blocking minority, the EIC Fund may opt to substitute a direct blocking minority with a shareholder agreement providing similar guarantees regarding EU interests, and will agree with other shareh...
Is additional technology due diligence required?
Yes. Additional technology due diligence may be required on a case-by-case basis in addition to the systematic technology assessment performed during initial evaluation, potentially to include a more in-depth investor-angle review and involvement of EIC Progra...
What are considered strategic technologies for the EIC Fund?
Strategic technologies include those related to the EIC Accelerator Challenges in the EIC Work Programme, defined as critical technologies and technology roadmaps in the action plan on synergies between civil, defence and space industries (COM(2021)70 final) a...
What are the consequences of non-compliance or breaches identified by the EIC Fund?
Non-compliance issues may lead the EIC Fund to recommend termination or cancellation of support; the breach of obligations at any stage may lead to interruption, cessation or cancellation of EIC Accelerator support and recovery of amounts paid where fraud is d...
What are the main steps in investment implementation by the EIC Fund?
Investment implementation includes identifying the most appropriate financing structure, negotiating investment terms, assessing availability of third-party financing, closing final legal documents (including the investment agreement), providing information to...
What compliance and due diligence checks does the EIC Fund perform?
The EIC Fund performs compliance and due diligence checks related to KYC, anti-money laundering (AML), anti-terrorism financing, tax avoidance, non-compliant/non-cooperative jurisdictions, sanctions, and other standard compliance rules; checks extend to shareh...