The enthusiasm for applying is so common that the European Commission, commenting on the evolution of the proposals, felt forced to emphasize that “the SME Instrument is not a lottery!” This can be understood as follows: before you decide to apply, please take your time and check what kind of projects we are expecting. Becoming familiar with the EC’s expectations is crucial to preparing your company and your innovation for applying and thus increasing your chances for success. Are you considering applying for funding within the SME instrument? The questions below can help you decide if it is a good idea and whether it is the right time.
Is your innovation really disruptive?
The innovations supported by the program should have the potential to change the dynamic of the market, press the competitors and thus change their behavior. Your solution should be able to create its own market or at least a market niche. Be aware of the fact that some solutions can be innovative without being disruptive. Which is it in your case?
Does your project have an international dimension?
The project needs to have a European or international dimension. If it targets a national market only, it won’t be supported by the European Commission.
Do you know the market you are addressing?
It's quite logical: to know that your solution is unique, you need to have knowledge about the competitors and their solutions. Additionally, you should be prepared to address the questions about the solution's growth potential and your go-to-market strategy. Yes, it is true that you can carry out a detailed feasibility study during the phase 1 project. However, it doesn’t mean that it is realistic to apply for the funding within the SME Instrument with success without any prior knowledge about the market conditions or the competition.
Has your innovation reached the right TRL?
Within the SME-instrument, your innovation should be at a Technology Readiness Level (TRL) of six. The sixth level means that you have a prototype of the solution and that it has been tested “in a relevant environment”. Take into account that, in the application, you need to present all the key milestones that have been reached on the way to the present level, supported by statistics, figures and/or pictures.
Why will people pay for your innovation?
One of the key aspects is to present the market potential of the solution in a convincing way. To come up with an innovative product it is not enough: you need to convince the evaluators that people will be willing to invest their money in your product. Who are the targeted users? What are their needs? How much are they willing to pay?
How will you earn money on your innovation?
Your solution needs to generate revenue, create new jobs and must have a positive impact on the EU’s economy. Before you decide to apply, you should know how you will generate revenue from your innovation.
Do you have the resources to co-finance the project?
You can apply for 70% of the total cost of the project (topic no. 5 is an exception where you can get 100% funding). This means that 30% usually needs to be financed by you. Furthermore, it is always good to show that you have a clear plan for how you will finance the final step – the market launch. However, to be qualified to apply to the SME-instrument, your company doesn’t need to show revenue. Is the innovation your first product? As long as you have access to working capital or an investor’s money, it is not a problem.
Is your team good enough to become market leaders?
The ideal team should combine technical and market competence, both hard and soft skills. It is important to consider that your team involves all the skills needed to take the innovation to the market. The European Commission is looking to award money to projects being led by teams that are best equipped to becoming market leaders upon success.
Hopefully, the list above is not overwhelming and has not deterred you from applying. Rather, see this as a guideline that will help you save time and money. Have you answered NO to any of the questions? Now you know what to do: perform market research, finish the prototype of your innovation and conduct small-scale testing, look for an investor or recruit a Marketing Manager.
As you can see, the European Commission was right. Fortunately, the SME instrument is not a lottery and you are not forced to only count on your own luck. So let's start doing the things that will improve your chances of winning the money!
Researcher, GAEU Consulting