EU tries to recover EIC programme after contract dispute – updated

Technology News | June 14, 2023

By Nick Flaherty

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The European Commission is trying to recover its troubled EIC deeptech innovation fund in the face of delays in funding startups and a major contract dispute.

The company involved, The Innovation Loop in Lille, France, has responded to eeNews Europe with detailed comments below (14th June).

The Commission is aiming to create 100 unicorns from members of the programme to boost innovation across the region. However the EIC has been beset by delays in funding. It has now moved to a new platform, citing a contract dispute, with just a few days for applicants to move across.

”Last year, the European Commission adopted a set of 25 specific actions with the objective to boost innovation and competitiveness in Europe. The New European Innovation Agenda, as we named it, is a comprehensive strategy to stimulate innovation across all sectors of the economy,” said Margrethe Vestager, commissioner for competition at the Conference on deep tech entrepreneurship for an innovative, resilient and competitive internal market in Sweden.

This included taking an equity stake in some deeptech startups in the EIC programme.

However the current platform has been a major problem. Feedback received from applicant companies, EIC jury members and expert evaluators, investors and others indicated that the Platform remains too complex, requiring extensive amounts of time and effort for companies to understand and complete their applications, said the commission.

Innovation programme

The EIC Board says it has examined this issue and published a statement on 21 March 2023 which called for major and rapid improvements to the EIC AI Platform, in particular to shorten the length of the application form, follow more closely the business cases used for other investment purposes, and improve the user experience.

These changes will hit early stage applicants harder, as the new platform is not yet up and running.

The EIC is key to the New European Innovation Agenda. “This is the result of an extensive consultation process. It has five priorities to support our innovation ecosystem, develop new technologies, and bring them onto the market,” said Vestager.

The plan is to improve access to finance for European startups and scale-ups by accessing untapped sources of private capital, and simplify listing rules, as well as improving the regulatory conditions for innovators to experiment with new ideas through sandboxes.

One hundred Regional Innovation Valleys will help to attract and retain talent in Europe, for example by increasing support to women innovators and well as improving the policy framework, including through clearer terminology, indicators, and datasets. However this has already had problems with the terminology of cleantech.

The Regional Innovation Valleys includes calls for funding until the 17th of October, with the first results will be announced next spring.

She points to the European Institute for Innovation and Technology launched the Deep Tech Talent Initiative, targeting one million deep tech talents across Europe until 2025 with the Innovation Talent Platform to help European businesses, including startups, attract talent from outside the European Union, offering new opportunities to the labour market.

The Commission has also recently set up a working group on employee’s stock options under the EIC Forum to explore ways to bring down the barriers that limit the uptake of employees’ stock options.

The European Innovation Council has a budget of over €10bn, and sees 12 unicorn companies worth over €1bn 112 ‘centaur’ companies worth €100m.

“Supporting scale-ups is not only our best chance to produce home-grown tech giants: it is a critical choice for digital and energy resilience. EIC Scale Up 100 will prove that Europe is the most attractive location for future global unicorns and their investors,” she said.

EIC platform change

The EIC is migrating to the Electronic Submission System hosted on the Funding and tender opportunities portal. The Portal is available with immediate effect for future and on-going applications to the EIC Accelerator.

The current EIC Artificial Intelligence (AI) Platform for applying to the EIC Accelerator is not accessible anymore as of today[5th June], due to a contractual dispute, said the commission. Consequently, as an emergency measure the EIC has restructured EIC Accelerator application forms on the Funding and tenders opportunities portal and will continue to improve them.

Since its launch under Horizon Europe, the EIC has been using the EIC AI Platform (also called EIC Accelerator submission Platform) for submission of applications for EIC Accelerator calls. This Platform was developed in a very short period of time to accommodate new features which were not possible at the time on the Funding and tenders opportunities portal. In particular, it provided diagnostics, AI tools and a methodology to allow applicants to develop business plans in a carefully structured way.

Companies that have already worked on their application for full (Step 2) proposals for the EIC Accelerator cut-off on 7 June 2023 will be informed and receive their draft application documents by e-mail. They will be able to continue their application on the Funding and tenders opportunities portal with immediate effect, using the Portal’s application forms. To guarantee equal treatment in the evaluation, companies already having submitted a full (Step 2) application on the EIC AI Platform will also need to re-submit their proposal. These companies will also receive their application as submitted on the EIC AI Platform by e-mail.

To accommodate the change for applicants, the deadline for submissions for the 7 June 2023 cut-off has been delayed with two weeks until 21 June 2023 at 17.00

During a short period of time companies will not be able to submit short (Step 1) applications. Short (Step 1) applications will not be submitted on the Funding and tenders opportunities portal, but on a separate IT platform that is to be put in place.

A separate IT Platform for Step 1 proposals is needed due to its specific requirements (a short form, slide deck and video pitch). Companies who are preparing short (Step 1) applications will therefore need to wait until the new IT Platform is operational. This is expected to be ready in early July 2023.

Companies which already submitted their short (Step 1) applications but have not yet received the (positive) results of the evaluation, there will not be sufficient time to prepare full (Step 2) applications in time for the (delayed) cut-off on 21 June. These companies will be notified about the results of their evaluation in due course and may apply for the following cut-off (4 October 2023) or for cut-offs in early the 2024.

Comments by The Innovation Loop

All this could have been avoided by the European Innovation Council and SMEs Executive Agency (EISMEA) says the developer of the platform, The Innovation Loop (TIL), in France.

“We discovered, along with the EIC Accelerator applicants, on 2 June 2023 that EISMEA had decided to revoke all access to the EIC AI Platform without notice,” said TIL in a statement to eeNews Europe.

“Since then, EISMEA published a new submission date and new templates. Applicants have, consequently, to redesign and rewrite their proposals in less than three weeks. Such a situation could have been avoided, as it is technically possible to restructure the data from proposals prepared on the EIC AI Platform into any new template validated by EISMEA,” said TIL.

“The EIC AI platform fully reflects EISMEA’s choices and ambition, aligned with the EIC work programme objectives. It was developed in record time and has addressed a massive productivity load with over 33,000 users to date. Like any other product, the EIC AI platform must evolve. Our repeated requests to EISMEA to undertake a review of the platform, with transparency and in co-creation with users, remained unanswered for over a year and a half,” said the company.

“Explanations provided by EISMEA hold significant implications and are factually false. After a tender launched by EISMEA, TIL signed a 2-year contract (Innospace contract) in December 2022 to respond to the EIC ambition to create a “Virtual European Silicon Valley”. This contract included the development of the first ever European innovation social network and marketplace supported with artificial intelligence, as well as the continuation and review of the EIC AI Platform.”

“The Innospace project has been rapidly put on hold by EISMEA for reasons never precisely formulated, and which in any case never mentioned the complexity of the platform. Facing this blocking situation, The Innovation Loop has ultimately been forced to initiate the termination procedure of the Innospace contract due to EISMEA’s failure to comply with its obligations, on 24 March 2023. Consequently, it is with surprise that we have learnt that the European Commission on 2 June 2023 justifies its decision to interrupt the EIC AI Platform by a contractual dispute, and implicitly by criticisms of the initial platform expressed by the applicants and in the EIC Board statement of 21 March 2023 on the complexity of the EIC AI Platform.”

External report

This followed an external report on the EIC process. “We replied to this report on 25 March 2023, highlighting its many methodological flaws,” said TIL. “Our response and proposals following this report were never communicated by EISMEA to the EIC Board, nor to the EIC Program Committee. We however also indicated that we were of course waiting and ready to implement changes that would be requested by EISMEA, as foreseen by the Innospace contract. As of today 13 June 2023, we can identify no other understandable reason for EISMEA’s decision than internal conflicts within the European Commission, which is beyond us as a private company.”

TIL points out that the EIC board itself stressed that it was “the existing Commission IT tools [ therefore not the EIC AI Platform ] were not suitable. While the EIC AI platform has achieved its primary objectives to date, it is now time for a major improvement of the platform,” said the EIC board.

www.theinnovationloop.eu/; ec.europa.eu;