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The EU has invested more than a billion euros in a fund designed to support start-ups. But they run out of money quickly.
Around 2,000 companies have applied for funding from the European Innovation Council Accelerator since the beginning of April, of at least € 4.85 billion, more than four times the 1.1 billion euros earmarked by the fund.
The high demand is encouraging for EU politicians, who are boosting Europe’s digital economy and are less dependent on US or Chinese tech companies. But the struggle to meet it also shows how difficult it is to get 27 countries with varying degrees of technological advancement to prioritize investments at a time when Europe is struggling to keep up with its competitors. And many busy companies are likely to be understaffed.
Companies that have run out of money receive a “Seal of Excellence”, which is intended to signal to private investors that the EU likes the company.
The bloc’s executive branch calls on private investors and EU states to step in for those who cannot finance them themselves. “We hope that the really good ones that we have no money for as we don’t have enough budget to be funded from other sources,” said the EU official.
The EU positioned the Accelerator as the largest startup sponsor in areas that the EU believes are strategically important, particularly those that align with its political priorities, such as tackling climate change and stepping up with the US and China in the digital arena.
“It will lead Europe to the forefront of innovation and new technologies and help us address the health, environmental and societal challenges we face,” said Mariya Gabriel, Commissioner for Innovation, in April when the fund was first opened .
The majority of companies responded to a specific call related to the Green Deal, as the EU climate initiative is called, and advanced health care and digital technologies. Gabriel had previously told POLITICO that Green Tech is an industry that Europe can actually lead.
Part of the EU research program Horizon Europe aims to promote new technologies such as artificial intelligence and blockchain and support the digitization of sectors such as healthcare and energy. After a three-year pilot phase, the project got off to a serious start this year.
Companies can receive a grant of up to 2.5 million
“The high demand clearly shows the community’s interest in this type of support,” said a Commission official.
But there isn’t much support to be given. Officials say no budget increase is planned, although there could be a slight increase if some non-EU countries like the UK make their contributions after EU countries allow them to participate.
But starting the program was problematic from the start. Companies complained that the difference between grants and equity was not clear, which resulted in some actually losing money. The funds were also withheld for political reasons. Horizon Europe’s budget was only approved this month as EU countries were divided over allowing non-EU countries like the UK and Israel to join the program, which holds valuable cash on hand.
The agency may also have deterred applicants from applying when it actually wanted to inform applicants that they had reached the 16. May deadline that it was impossible to submit applications. “That was by no means correct as the application was never finalized,” said a commission official.
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