Library FAQ
What financial and commercial aspects does the due diligence process focus on?
Financial and commercial due diligence focuses on governance and quality of management, capital structure and financial planning, business strategy, competition, market assessment, value creation, and legal form and jurisdictions.
What is Bucket 2 (Co-investment opportunities identified)?
Bucket 2 includes cases where potential investors show immediate interest in co-investing into EIC selected companies, with the EIC Fund seeking that its equity is at least matched by other qualified investors covering at least 50% of the round and an objectiv...
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 may still co-invest to secure a blocking minority, particularly for strategic technologies, and may reserve pa...
What is the ceiling for ‘grant first’ support for pre-TRL 9 activities?
Where initially requested by the beneficiary, ‘grant first’ support for pre-TRL 9 activities cannot exceed EUR 2.5 million, except that in the case of a full blended finance request the grant component may exceed that ceiling where duly justified.
What is the typical duration and exit strategy for EIC Fund investments?
The EIC Fund invests patient capital with a long average perspective on return (7–10 years) and a maximum generally of 15 years; the Fund’s main objective is impact investment while seeking a positive return, and exit routes may include IPOs, management buy-ou...
What may a compliance KYC self-certification be used for?
A compliance KYC self-certification may be collected together with the full accelerator proposal, but it will not be considered during the evaluation and will only be reviewed by the EIC Fund where the proposal is retained by the Commission.
What types of financial instruments does the EIC Fund prioritize?
The EIC Fund will, in priority, use equity or quasi-equity investments, including common shares, preferred shares, convertible instruments (convertible loans/bonds/notes, participation rights, SAFEs) and other equity-type instruments appropriate to achieve the...
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.
Who negotiates terms with potential co-investors on behalf of the EIC Fund?
On behalf of the EIC Fund, the Investment Advisor will negotiate the terms with potential co-investors, including possible mentoring tasks.
Will the EIC connect companies with mentors?
Yes. With the company’s consent, the EIC will connect the company to its network of mentors, which could include potential investors, to provide advice and recommendations for business development and potential corporate actions; in some cases, such as Bucket...
Can the Compartment substitute a blocking minority with other protections in Bucket 2?
Yes—where the award conditioned acquisition of a blocking minority, the EIC Fund may opt to substitute a direct blocking minority with a shareholder agreement providing similar guarantees regarding European interests.
How are transactions categorised and can the category change?
The Adviser classifies transactions into buckets (0–3) after initial assessment; this classification is not static and can change as due diligence evolves or co-investment interest emerges.
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...