It is not only about the money! 8 reasons to apply for the SME Instrument funding
The SME Instrument funding is not easy money, as the success rate is rather low; 8,4% for Phase 1 projects and 5,4% for Phase 2 projects. However, the popularity of the program remains unchangeably huge. Between 2014-2016, the European Commission received around 31 000 applications. Do you wonder why so many companies invest their time and money in preparing the application? You may be surprised but the huge grant amounts are not the only motivation.
The amounts that are offered by the SME Instrument are highly attractive and it is the most obvious thing that makes the funding worth applying for. In Phase 1, the European Commission provides a grant of EUR 50,000 for conducting a feasibility assessment and for business planning. Furthermore, up to MEUR 2.5 is available in Phase 2 for SME’s having disruptive business ideas for demonstrative activities, such as scale-up, piloting, performance verification, and testing. The SME instrument funding covers up to 70% of the eligible project costs. In topic 5 - Supporting innovative SMEs in the healthcare biotechnology sector- the companies can get up to MEUR 5 (and 100% of funding) for their life-science projects.
“It is a unique opportunity that will help you get information (regarding business model, partnerships, distributors, etc.) and contacts that can be essential for the future of your business”
2. Coaching services
As part of Horizon 2020’s SME Instrument, the European Commission is providing business innovation coaching services to its Phase 1 and Phase 2 project beneficiaries (3 days and 12 days respectively). This is an important feature that distinguishes this Instrument from other SME funding schemes. The aim is to create a permanent learning effect that will build the beneficiary’s innovation and business capacities. It is a unique opportunity that will help you get information (regarding business model, partnerships, distributors, etc.) and contacts that can be essential for the future of your business. We have written more about the coaching services within the SME Instrument here.
3. Better understanding of the market
The feasibility study under Phase 1 and coaching services will help you build up strategic, business and managerial capacity within your company. You will improve your knowledge of the market and understanding of the clients’ needs as well as prepare a professional business development plan that will be a blue print for all your strategic decisions in the future. The companies with innovative ideas are often so focused on R&D activities that they neglect the market analysis. The Phase 1 project gives you a perfect opportunity to catch up on the market aspects. It will pay off in the future. According to the SME Instrument Impact Report 2017, 9 out of 10 SME beneficiaries agreed with the sentence that the program helped them to understand the needs of the client, and 8 out of 10 improved their knowledge regarding competitors, market methods and risk management.
“Even if your company doesn’t show revenues yet, it doesn’t mean that you don’t stand a chance at receiving funding from the program.”
A relatively low success rate makes the program very prestigious. Thus, support from the SME Instrument helps companies attract new investors. The Seal of Excellence or a granted project further confirms that the company´s innovation is disruptive and has huge market potential. According to the SME Instrument Impact Report 2017, the SME Instrument funding shortens the average time for companies to get the next investment from 32 to 9 months. 8 out of 10 companies noticed that the SME Instrument improved the company´s reputation and strengthened its position in negotiations with potential investors.
5. Early stage support
Even if your company doesn’t show revenues yet, it doesn’t mean that you don’t stand a chance at receiving funding from the program. 15% of the funded SMEs in the years 2014-2016 were pre-revenue companies.
“The beneficiary companies experienced on average a 250% growth in turnover and a 122% growth in employment.”
6. Business accelerating service
Knowing the right people is often essential in the business world. Thanks to participating in events and international trade fairs, the winning companies are invited to build partnerships with investors and potential clients. They build a community of peers to exchange, learn, connect and find partners. In October 2016, the first SME Instrument Innovators Summit gathered more than 600 SMEs, investors, coaches and large companies.
7. Light procedure
Do you avoid all grant programs because you are afraid of their complicated procedures, their many formalities and the extra hassle? The huge advantage of the SME Instrument is its relatively simple project administration. The grant agreement, status and final reports are signed electronically via the Participant Portal.
8. Your business will grow
According to the SME Instrument Impact Report 2017 a year down the line funded Phase 2, the beneficiary companies experienced on average:
- a 250% growth in turnover
- a 122% growth in employment.
You can find the full SME Instrument Impact Report 2017 here.
Research and Innovation Funding Specialist