European Commission is offering special treatment to SMEs as part of the Horizon 2020 innovation and technology programme

SMEs get special treatment as part of Horizon 2020

The European Horizon 2020 research and innovation programme offers unprecedented conditions to tech and manufacturing SMEs including about €9bn (£7.5bn) of available funding.

Out of the €9bn available,  €3bn is ring-fenced solely for projects put forward by SMEs, forming about 7 per cent of the €47bn Horizon 2020 industry-focused budget covering the next six years.

After the first calls for projects have been opened at the beginning of January, SME’s across Europe will now compete to take their share of the money, each being able to receive between €1 and 3m plus a €50,000 lump sum for an initial market viability assessment.

“For the first time in the history of Europe’s research and innovation programmes, there is really a serious attempt to support SMEs,” said Paul Tranter, the CEO of Pera Technology, a British organisation helping companies develop new products and prepare projects to maximise their chances to reach EU funding.

Contrary to previous years, SMEs can now apply alone, without having to enter larger consortiums and are entitled to receive expert advice and free-of-charge coaching to help them get their projects off the ground.

“The new dedicated SME instrument, part of Horizon 2020, is designed to encourage SMEs and help them to overcome obstacles, such as the lack of financial or technical resources, in order to be able to develop their products and get them into the market,” Tranter explained.

The dedicated SME instrument consists of three phases. At the beginning, companies can receive €50,000 to prove the market viability of their ideas and evaluate the risks. The outcome of this assessment is crucial to enable the companies to move to the second phase when they can receive between €1 and 3m to develop and produce the first batch of their products to demonstrate the technology. The third phase aims at bringing the products to the European market with additional funding possible through other European institutions.

“European funding is crucial for the UK innovation and technology sector, especially for the SMEs” Tranter said. “Despite some anti-European sentiments that we can encounter in the UK, no one can deny there are tremendous opportunities opened up by European funding. For comparison, the SMEs can apply for local UK funding through the Technology Strategy Board, but they only provide about €40m annually – Horizon 2020, during the six years of its existence, will offer at least €3bn.”

Tranter says UK companies have been particularly successful during the last Seventh Framework Programme for Research and Technological Development, the predecessor of Horizon 2020. With 621 SMEs receiving funding, the UK became the second most prolific country in terms of SME bidding success after Spain, beating even Europe’s biggest economies France and Germany. Tranter's Pera Technology, working as a new product development contractor, helped British SMEs to secure more than €87m of the overall funding.

“There are no geographical limitations when it comes to awarding the funding. The projects are assessed solely on their quality and potential,” Tranter explained.

“In my opinion, traditional SMEs have the best chances to succeed. Those already established businesses that have ideas on the shelf but might not have had resources to develop those ideas,” he said.

“When it comes to the product it can be basically any manufacturing goods that prove to have a good market potential. In particular, areas that are addressing existing challenges such as energy efficiency, waste recovery, food security, information technologies or health technologies are of great interest,” Tranter said, explaining the European Commission is looking for projects capable of demonstrating clear market potential.

To streamline the process for the SME's even more, European Commission has also revised the administrative guidelines, reducing the administrative burden placed on the SME’s. Previously, the workload related to performing administrative tasks related to EU funded projects used to consume a large part of the available resources, putting off many smaller bidders.

“The European Commission has rightly identified small and medium sized business as the key engine for economic growth. There are 20 million SME businesses in the EU and 4.8 million in the UK alone; growing each of these businesses by even just one or two employees will have a significant impact on the economy,”Tranter concluded.

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