1. The Horizon2020 SME instrument A new understanding of SME innovation needs a new way to draft convincing proposals Bucharest, October 2015

2. Introduction Positioning Facts & Figures First analysis Tips to assess companies with a real potential for the SME instrument Recommendations

3. SME Instrument – Positioning What are we looking for?

4. An accountant's look on innovation projects Time to profit Management objectives for innovation: 1.Abandon early – filtering ideas (P1-Feasibility assessment) 2.Minimize accumulating costs to launch (well-defined P2 project) 3.Minimize time to market (early inclusion of clients) 4.Minimize time to profit 5.Maximise revenue (P3 – support) 1 2 3 4 5 Poorly managed innovation projects just drain resources and reduce competitiveness! But it doesn't cost you anything – the Commission or the government subsidises it! So, poorly managed innovation projects waste our AND public resources! That's why the EC wants to have services 'Enhancing innovation management' in the EEN…. Idea 'Project' 'Commercialisation' generation

5. What is wrong – or 'not appropriate in our context' ? Funding Gap (range: 1-3 M€) A popular view: From research to innovation/commercial use How important is research for innovation ? Start-up – not existing company

6. Options to innovate – and build 'competitiveness' OpenIn-houseclients Collaboration options universityProduct Business model and value chain innovation are 'disruptive' and have larger growth potential for the economy Business model Process Innovation opportunities Has been supporte d so far suppliers' Value chain

7. Key EU support for SME innovation SME Instrument Industrial leadership (LEITs) 6 key technologies Eurosta rs II Positioning EU Structural and Investment Funds (national / regional implementation) Horizon 2020 (2014-20) Societal challenges Structural funds Overall budget – 325 bn € 2014-2020 Innovation priorities and budget specific to each region Flagship R&DI programme of the Innovation Union Overall budget - 77bn € Collaborative projects 3 ways for SMEs within Horizon 2020 & Eurostars Thematic pillars Collabo ration among SMEs and with R&D provide rs EUREKA EUREKA / Eurostars – intergovernmental cooperation (incl.CH, KOR, CAN) with EU participation / contribution Total €0.9-1.3bn to 2020 Special rules for 'coordinated funding' between ESIF & H2020

8. 3 opportunities in H2020 – How to direct companies? Horizon 2020 – collaborative projects EUREKA Eurostars SME instrument R&D by topics - 6 Key technologies / Societal challenges Applied R&DI – product development Business innovation - breakthrough Objective R&D Market opportunity - SMEs with core business in R&D, as partner in large projects - SMEs which can provide an 'application environment' for R&D projects Research intensive SMEs (>10% turnover) Innovative SMES with an ambition to develop, grow and have an international impact Established SMEs with high growth potential SMEs targeted 77 overall incl. up to 5,8 for SMEs (excl. Sme instrument) 0,3 (0,9 -1,3 overall incl. Bugets by Member States) 2,8 (linked to Horizon 2020 umbrella) EU Budget 2014-2020 (bn €)

9. Horizon 2020 – collaborative projects EUREKA Eurostars SME instrument Large consortia Small transnational groups Single company (but SME partners & sub-contracting possible) Participants in the call R&DMarket opportunity Issues to be addressed are defined Transnational R&D Existing market gaps to attract investors to radical innovation Call focus Scientific excellence Technical excellence – market prospects Innovation excellence – create or shape new markets Key success factor typically a single deadline Several deadlines per year to start evaluations Continuous stream of evaluation (cut-off dates for award) Application deadline & Evaluation 3 opportunities in H2020 – How to direct companies?

10. 'Champions league' for the most innovative European SMES Phase 1 Idea / Concept Feasibility assessment Phase 2 Innovation project Development / Product testing Phase 3 Access to markets and finance 50 000 € 0,5 -2,5Mio € - ca 6 monthsCa 12-24 months- Business Plan 1 (10 pages) Business Plan 2 + description of activities for project (30 pages) - 10%88%2% % Budget 2014/2015 EC funding per project Project duration What to do - application 3 days12 days Support and networking to facilitate access to risk finance Voluntary Coaching – (coach suggested by EEN, selected by SME) Recognition among the best European SMEs Visibility at European and global level Other benefits SME InstrumentPackage

11. Phase 3 Access to… Equity investors Loans Geographic markets Large enterprises Procure- ment An important role for the EEN to play !

12. SME instrument looks for Enterprises Companies with high growth ambition and potential Companies already on the market  More convincing if they have a record of successful innovation AND Start-ups !  Specific issue to finance phase 2 without steady revenues Ideas Ideas that relate to a published topic Ideas that 'shape new markets' Business ideas that develop into an ambitious business plan NOT: 'ideas for technology projects to enhance an existing product to be sold to the same customers'

13. Facts & Figures

14. Evaluation On every evaluation, 4 evaluators - 2 experts for the 'societal challenge'/'technology area - 2 experts in enterprise / business development / financing businesses Evaluation focussed on market & growth opportunity

15. Phase 1- proposals 1 556/ 2 029 2015 1./2. evaluation rounds received 1 539/ 2 017 eligible 251/ 342 'above threshold' 13/15 points 149/ 128 financed 25-40% resubmitted proposals! <1% formal errors ~84% no convincing business idea 46% (37%/59%) financed

16. Phase2 - proposals 614 / 962 2015 1./2. evaluation rounds received 597/ 946 eligible 230/ 357 'above threshold' 12/15 points 37/ 44 June2015 >50% re-submissions Successful direct applications (without phase 1) 5/332 financed 2% formal errors ~60% no convincing business idea 14% financed

17. Accessing phase 2 directly?  Is possible  But success rate is extremely low (in June 2015 below 2%)  Seal of excellence

18. -Channel the companies which have a good potential for this scheme -Direct the other companies to other programmes which are more relevant to them Way forward

19. only countries with submissions are shown Data Phase 1 March 2015 – cut-off

20. Romanian participation 2015 Proposals / above quality mark / 'partners' above quality mark' Phase 1 March 2015: 18 / 0 / 0 Phase 1 June 2015: 23 / 1 / 1 Phase 2 March 2015: 7 / 0 / 2 Phase 2 June 2015: 5 / 0 / 0 Mobilisation ok – but the wrong companies

21. Country success rates 2014-Phase 1 Top 5 Ireland20 % Austria15 % United Kingdom 11 % Israel10 % Spain 9 % Key success factors -Business driven approach to innovation (Ireland, UK, Israël) -Good communication between people on the ground and national representatives, around existing national programmes

22. Phase 2 – 1st cut-off Both PL companies in 1project led by an Italian SME

23. EEN support Target innovative SMEs Assess potential of interested companies Direct to most appropriate funding EU - SME Instrument EU - Eurostars R&DI funding EU - Horizon 2020 Collaborative projects EU Structural funds in national programmes National/regional programmes Access to finance EU - COSME Financial instruments Bank loans Business Plan competitions POD profiles Organise sessions to innovative SMEs and entrepreneurs Mini-questionnaire IMP³rove methodology Benchmarking tools Speakers – experts, successful proposal leaders, evaluators Position SME Instrument with other instruments Crowdfunding Equity Funds EU - Horizon 2020 Financial instruments

24. Position it to academia, consultants Academia - clearly explain the objectives of the programme Phase 1 - they should not have any illusions about funding their R&D priorities and should be redirected to other sections of Horizon 2020 Phase 2 – Potential collaboration with SMEs as a service provider Consultants - they should be well informed and instructed This programme is targeted at innovation excellence – it is addressed at very good companies and entrepreneurs - it is not an easy source of revenue! Coaching opportunity – they need to be registered and meet requirements, it requires genuine work for payment to be done, preparing the application is not sufficient

25. Remember Explain the most important requirements for participation Business idea Visionary Manager Technology geek Innovation Positioning in the market Business plan

27. Just before lunch …. the evaluation game. Rank these 4 abstracts and identify weaknesses

28. Applications P1 – 4 examples

29. Tips to assess companies with a real potential for the SME Instrument

30. Applications –lessons What worked - Application responding to call requirement – innovation excellence - Market driven - Radical / step innovation – the product aims at creating a new market - Convincing company description – why would this company succeed rather than the competitor? Providing information on competing solutions - Proof of existing marketing concept - Proof of EU added value What didn't work - Project or research driven and not market driven - Incremental innovation – the product already exists in the market and doesn't aim at creating a new market ; it isn't a breakthrough - Company description doesn't provide information or not enough on competing solutions - The market is defined but not the share the company aims at - what is the ROI - at least approximately? - A good idea but without marketing strategy behind it - Proof of EU added value - only rationale presented, European consortium - Description of the company contains nice CVs of techies but nobody with a marketing expertise - <8 or <10 points – either presented case inadequately or not in the excellence league - Response by chance a bit like a lottery ticket?

31. Evaluation – 3 key questions Solution is feasible and better than existing ones Market opportunity Company's potential to achieve proposed results Market potential and economic impact Excellence in innovation Company's growth potential Additional requirement for EU funding: EU added value to be demonstrated by the applicant Additional requirement for EU funding: EU added value to be demonstrated by the applicant The company and the idea have to be here!

32. Phase 1 - 10 pages to convince the jury As the competition is high, a good presentation is essential and can make potentially the difference between good and excellent application The successful described in 10 pages not only what their business opportunity was all about, their solution versus their competitors' solutions, their ability to achieve it The questions to be addressed by the feasibility assessment should be clearly outlined It has to be logical, coherent and easy to read by people who are not technical experts in the sector Assessment question- How clear is it? Does the content come out clearly as an evidence?

33. Feedback – a known flaw Decimal marks (4.2) can be given by the evaluators The 'word' mark 'excellent' is given to every numerical mark from 4.01 - 5 A project can be below threshold even if almost all sub-criteria are 'excellent'. Will be corrected in one of the next cut-off dates. (likely excellent only >4.5)

34. Market opportunity The market opportunity should be described from a marketing viewpoint and not only from a technological/technical point of view Assessment Question - Can these questions be responded– "How big is the market? Where is it geographically? In which value chains ? Is the company already present in these markets? How good is the estimate of market size?" Often competitors and solutions already existing in the market are not mentioned Assessment Question - "Why would customers prefer this solution above the existing ones and even pay for?"

35. Excellence in Innovation Innovation in this programme is about breakthrough (radical) innovation, to shape new markets in priority areas of Horizon2020 Assessment Question – How radical is this innovation? Is it changing radically an existing market? Or creating a brand new market? If the company aims at incremental innovation (a gradually better product with limited growth potential) => Direct this company to alternative funding programmes that may encourage cooperation with a 'R&D provider' to enhance the technical features. Essential for Phase 2 – Demonstrate 'Freedom to operate' regarding Intellectual Property Rights (IPR) : I.e SME has the rights needed and is not blocked by thrisparty's rights Assessment Question – Is another IPR blocking the proposed development? By the end of Phase 2, will they have developed or acquired all IP to put the product/ service on the market?

36. Company's growth potential Growth potential and ambition have to be described in a clear and understandable way Assessment Question – Can the enterprise demonstrate: its ability to carry- out the project? its management and financial ability to address the proposed market opportunity and create jobs and growth? In case of a start-up – Assessment question – How ambitious are they? Are they able to co-finance the Phase 2 project (for example with the help of early stage investors)? If they are already on the market – Assessment question – How ambitious are they? What track record have they got to drive successfully innovation projects? How aware are they of their own weaknesses and how ready are they to address them through coaching & consulting services provided in phase 2? NB: The funded companies were in general larger and older than the overall population of applying companies

37. Phase 2 The outcome of phase 1: a better substantiated business plan no obligation for a phase 1 – but useful An assessment of strategic weaknesses & a coaching plan

38. Phase 2 Evaluation Solution is feasible and better than existing ones Market opportunity Detailed work programme for the P2 project Market potential and economic impact Excellence in innovation Company's growth potential Additional requirement for EU funding EU added value to be demonstrated by the applicant The company and the idea have to be here! Company's potential to achieve proposed results Same approach as Phase 1 - More detailed, better substantiated and with a detailed work programme for the development project The feasibility done in Phase 1 should have helped ! Coaching plan & consulting

39. The Health topic…. Is interpreted in a rather 'free' manner. Funded projects P2: (strict) CLINICAL VALIDATION OF A GENOMIC BIOMARKER FOR THE TREATMENT OF PANCREATIC CANCER Validation of a point-of-care H-FABP test for a rapid exclusion of Acute Myocardial Infarction in patients with cardiac complaints. Prototyping 'intime' - a NINAAT-based self testing platform to detect infectious diseases High pressure from Member States to formulate a more open topic in teh next work programme.