Public Funding for Startups in the EU

I think the European funding landscape is actually very diverse. And it’s also very open minded to good ideas. And I think that’s something to keep in mind. The European funding landscape is different than funding landscapes in other parts of the world. Funding landscape is really open to the good ideas and the case that an individual status presents. It’s less rigid in terms of what it wants to see. Sometimes it’s maybe less experimental in terms of solution that it wants to invest in. There needs to be particularly, I notice that in Germany, there’s tendency to like a good business, good solid business case with some evidence backing up why these solutions are likely to be successful. And I think that comes from just the general approach, not just from the entrepreneurship world, but how European investment, and how European industries have been functioning in general. It’s quite evidence-based. So I think that characterized European funding. But I think also that often the message is there is actually a lot of money that is ready to be invested in startups in Europe. Doesn’t have to be European startups, but European startups based in Europe. There’s a big need for the good solutions. So the money is there, but it’s not always being matched up. At least that’s the sentiment in European Investment by the DBA excellent interesting innovative ideas. So that’s also what I hear from the startups. Actually, they sense that the money’s there for how to exit and how to present yourself with a persuasive and convincing case. There’s also a very strong ecosystem across European funding and European investment probably generally stems from the tendency to connect across ecosystems. I see that in the Nordics, I’ve been operating here in the Nordics for awhile. If you look at the Nordic investment scene, it’s quite interrelated, it’s also smaller. People know each other and they want to support each other. So the investment scene know of each other, and they also tend to know about the accelerators. It’s a support network, the individual startups, the university hubs, and how they can access some great startups as well. So I would characterize this as quite interconnected, and over the course and there’s funding opportunities within the European organizations themselves. Sometimes startups find that that’s a little bit, I don’t know, bureaucratic to access, but there is a strong wish. And that’s also, I saw when I was working for an EU funded organization, that’s strong wish and drive in the European commission to really fund startups, both on an individual level, but also fund the networks and the hubs that support these startups and to, if not directly with grants, but then with helping them build that business case, help them access smart, intelligent people to include in their teams, help them to understand the market. So really the network and the ecosystem that is necessary, basically for startups to thrive. There’s a strong will in Europe to build that up. Europe and European institutions tend to like to look at, okay, what is needed for Europe to grow and create growth and innovation. What is the big societal challenge? It’s like climate, digitalization, health, food, food innovation. European institutions like to think in these big sort of headlines. So startups who are accessing EU funding need to be looking at their solution as you know, feeding into the need that European institution has to come up with solution to grand challenges and not all startups have that. But they have maybe sometimes a very individual focus on their own solution, which is good because that means you’re focused on that, but that’s not how you should frame your solution when you’re applying for EU money. You really need to put it in a wider perspective so that they can see that this individual company can contribute to the wider goal of addressing sort of food innovation, health, tech solutions. I think that’s one thing that startups just need to be a bit more strategic in how they frame their work.

There are both individual grants for startups and they come at different levels from the earliest stage to the latest stage. There’s also, as I said, there are grants for startups for hubs. So startups can also really sometimes look for big organizations like the KIC, the knowledge innovation communities that has different programs for startups to say okay, I may not get an individual plan for myself, but I can apply for these organizations or these sort of ecosystems or hubs that are receiving money from the EU and then and look for funding that’s targeted at the individual startups, and they do exist, and they exist across the various DGs. So depending on whether your startup is an agriculture startup, it’s a maritime startup, it’s an industry startup, look for what is being offered by that individual DG that relates to your topic. But also look at the hubs in the environments that the EU like to fund and look at how you can apply to become a startup in that program.

The European investment bank is not really a place for individual smaller startups. The European investment bank invests in larger infrastructure projects, just like the Nordic investment bank, which is also a set up of nordic public banks. So it doesn’t really pay off as an individual company to be focused on what does the European investment bank looks at because they don’t look at individual startups. They look at portfolios of solutions, and then they invest in much larger things like large infrastructure projects, sort of sets of solutions needed and large sets of innovation. So that’s not where a young company should look for funding, because they probably won’t be getting any. It’s much better to look at what’s offered on individual grants levels for individual companies. I think the European investment bank is interesting. And that’s coming back to this issue of startups also, I think, making clever choices if they decide to be part of larger networks and hubs and ecosystems, because those sometimes are being presented as investment options for the European investment bank. So an individual company is not an investment option for the European investment bank, but a portfolio as sort of set of solutions within let’s say time friendly agriculture. So if an individual startup can position themselves to be part of such a portfolio, then they will get some European investment bank money.

The difference between subsidies and grants: grants tend to be sort of equity and strength free. A grant is something you get to build up your company and you don’t have to pay it back. There are some grants that come with certain requirements and there are some grants that come with requests for, let’s say equity. Some of it is very dormant equity and not very strict compared to private investment money. Subsidies is a different matter. It’s paid in different way and it’s not, something that could just be used. It’s usually something that you would have to pay it back at a later point, depending on what is the business model of the company. I think on the sort of face of it, depending on where you are at the grants are most attractive for individual startups.

When the EU institutions and the various sort of agencies publish their grants and their calls where you can apply for fund, they are always extremely clear on saying, this is what an eligible application looks like. So they will be very specific. And I mean, the requirements change, so it’s hard to set up that these are the requirements to be eligible, but there are always requirements but they are always very, very open about them and you can read them, they list them on the website, they list them on the material that they publish alongside a call. So a company can always find out by reading the material, whether they are eligible or not for this particular grant or whether they should apply for this particular call. So that’s my recommendation to always read the material in advance to find out, is this something that’s relevant to you because it’s not, then there’s absolutely no point in applying because your application won’t even be considered. I mean, there’s basic requirements and eligibility requirements. And on top of that, of course, there are usually very specific themes that applies for this particular call. It’s really time well spent to read through the call material, the grant material that sets out very clearly who can apply and who will not be funded.

The eternal question: “how to get money out of the European institutions?” And it’s not just something that applies to startups, it’s applied for all the kinds of funding and the big programs that the IE is funding. And basically there is no easy solution. If you’re a startup looking for grants or some investment and seed money from the European Union, what you have to do, I think is to, as I said, focus your energy in the top of your work on, if you’re working in the energy space, look at the EU institutions that are working in the energy space and see what is upcoming there and follow them on their website. Very often also, they tweet. So you can sign up for Twitter accounts, from, they have news accounts that you can sign up for. So either you have a very semantic focus and say, I will look for grants and calls within the energy space. You can also say, okay, I’m a startup and we are mainly female founders because there’s all sudden cross cutting themes that the commission is very keen to sponsor like female founders. So sometimes there’ll be specific calls aimed at female founders. So look at if you have something that also is not just team specific, but it’s very specific to your company. You could also be a company based in Eastern Europe, looking to get into another part of Europe because the commission tends to also have a very strong focus on trying to scale up solutions and trying to build up ecosystems in the Eastern part of Europe. So if you’re a company based in Bulgaria or Hungary or the Baltics, it’s worse to look out for cause that support companies building up capacities in those parts of Europe as well. You need to stratify your own company a little bit to say, okay, there are different things that the commission tends to be very interested in. That’s supporting diversity, that’s supporting kind of, geographical innovation and of course supporting that individual space that you’re working in like agriculture or food or fintech. So you need to see your company a little bit like that as a product that the EU would like to invest in from a number of perspectives. And once you do that, you realize that you can apply in different calls because you can for instance, apply in a call that is aimed at female founders, and that will be across the teams. So there you need to look at, either you Google it or you follow that detail has focused on, I think, on equity and diversity, and I think as a DG education or one of the other sort DGs that focuses on that. But usually it’s a topic that goes across what the individual agency will be looking at. Then there are the JRCs. So I think you need to have a little bit of understanding of what’s the institution, what’s the structure of the EU and where is the money usually coming from? There’s no point in applying to funds from the European parliament because the parliament will usually have very few funding available.