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EU funding programme aims to help SMEs step up to next level

SME strand of Horizon 2020 has funded 81 Irish firms over past four years

Irish firms are performing exceptionally well in securing funding from the small and medium-sized enterprises (SME) instrument of the European Union Horizon 2020 programme. “Out of 34,000 applications submitted by SMEs for funding over the past four years just 5.5 per cent were successful,” says Seán Burke of Enterprise Ireland, who is national delegate and contact point for Horizon 2020 in Ireland. “Ireland’s success rate is 13 per cent and that ties us with Denmark and Austria in the top three.”

Overall, Ireland has won €475 million from the programme while the 81 Irish participants in the SME instrument have secured €55 million over the past four years, €16 million in 2017 alone.

“Horizon 2020 is an €80 billion research and innovation programme,” Burke says. “It is the largest programme of its kind in the world. It started in 2014 and finishes at the end of 2020. As part of it a new programme was introduced which wasn’t in previous programmes. This is the SME instrument. Its function is to accelerate the internationalisation of innovation into the marketplace. It’s about the commercialisation of research and it offers grants of between €1 million and €3 million to SMEs with suitable projects.”

Disruptive innovation

According to Burke, the instrument is suitable for companies established for up to six years that are bringing a disruptive innovation to market. “It is specifically designed to help SMEs who want to scale up and internationalise. Very importantly, it is a grant that supports close-to-market activities, so the company does not have to give up any equity in return for it. The size of the grants is also of a greater scale than is available through national funding.”

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The fact that it is a grant also means that the company does not have to achieve a rapid return on investment. Furthermore, it is a much quicker funding source for SMEs than venture capital.

Of equal importance from an SME’s perspective is the fact that the instrument is for single entities and doesn’t require collaborative efforts from consortiums in the same way as other EU funding programmes. “This suits SMEs that are familiar with applying for national and regional funding programmes,” Burke adds.

It is not a programme which suits absolutely every company, however. “A company has to have an innovation going into it. This could have come from research by the company or have been licensed in, but it needs to be at a stage where it has been proven to work. The programme has been created for scaling up innovations which are at this stage.”

Companies also need to have some funding of their own in place as the programme meets 70 per cent of the project cost. A company may already have some seed capital or Series A round funding in place or may be in the process of raising money. The company has to have capacity to do engage with the market and to exploit its innovation internationally.”

Application process

The application process is quite straightforward as well. There are two separate phases to the instrument. The first is for companies with projects still at the feasibility study stage and this offers funding of up to €50,000. The second offers up to €3 million to companies with more advanced projects which are close to market. The applications for the two are about 10 pages and 30 pages long respectively. Phase-two projects also go through a Dragons' Den-style pitch to assess their commercial potential before they are approved.

One Irish company to raise funds under the programme is interactive video technology specialist Axonista. The company’s Ediflo application transforms standard television and video content into an interactive experience when viewed on devices like smartphones or tablets. Viewers of a shopping channel such as QVC can find out more about products by tapping on the screen and they can buy with a tap as well without the need to make a telephone call.

The company’s technology is increasingly being used by television companies and other content owners to enhance viewer experiences, thereby building loyalty and revenues. Funding under the SME instrument has allowed Axonista to develop Ediflo Plus which enables customers to develop video apps within hours. It will also support a new product sales model which enable the global scale-up of Axonista’s business.

"Horizon 2020 funding has been really transformative for us," says chief operating officer Dee Coakley. "We have been revenue funded to date with some investment from Enterprise Ireland and strategic business angels.

“The SME instrument gave us the funding to develop Ediflo Plus and look at new market verticals in the US such as the retail, travel and other sectors. There really is no end to the segments where we can go with the technology.”

The first thing companies interested in applying for SME instrument funding need to do is get in touch with the Horizon 2020 national contact point, which is run by Burke and his colleague Jill Leonard.

“We will guide and assist firms through the process. We will also guide them to the support mechanisms to them from relevant State bodies,” Burke says. “We will pre-evaluate proposals before submission and advise if they are suitable for phase one or two. There is no prerequisite to go through phase one before seeking phase-two funding.”

Barry McCall

Barry McCall is a contributor to The Irish Times