REPORT on the implementation of the European Innovation Council

4.11.2022 - (2022/2063(INI))

Committee on Industry, Research and Energy
Rapporteur: Christian Ehler

Procedure : 2022/2063(INI)
Document stages in plenary
Document selected :  


The European Innovation Council is one of the major novelties of the Horizon Europe Programme. It was set up to support deeptech innovation in Europe from early research, to market deployment and scaling-up. To achieve this three programme parts were designed:

 The EIC Pathfinder to provide grant-based funding for early research

 The EIC Transition Activities to prepare research results for application in products, services or processes

 The EIC Accelerator which would provide tailor-made financing to deeptech startups to boost their growth and development

This new approach, particularly under the Accelerator, is a European solution for a European problem. The European problem is that Europe does not have a well-functioning risk-investment market. Our Venture Capital funds run balanced portfolios that cancel out ambitious investments with less risky ones. This is an issue by itself, but if we consider that Europe is very well positioned to lead the world in deeptech innovation, the situation becomes even more challenging. Deeptech investment is extremely risky because of the high cost as well as development risk of technological innovation based on deep understanding of science and engineering. This innovation needs patient but ambitious funding. It needs funding quick and in large sums without having any substantial revenue stream to back up the claims of success. This kind of investment is too rare in Europe and the EIC was set up to change that.

However, at the start of the Programme the European Commission turned on itself and nearly destroyed the EIC. The Commission’s infighting has put an effect stop on providing funding to close to 100 startups selected in 2021 after submitting a proposal for an EIC project. This is costing European hundreds of millions of Euros and a lost of human capital beyond the expression of numbers.

At the heart of the Commission’s problem is the management of the EIC Fund. While originally having signed off on the plans for the EIC Fund, DG BUDG raised concerns about reputational risk for the Commission as well as the staff needed to manage the EIC Fund’s investment portfolio. These concerns were raised a year after the EIC Fund being incorporated, months after the Horizon legislation was put in place and after the Commission had published the 2021 Work Programme for the EIC. After letting all of that go ahead, DG BUDG decided to pull the emergency brake on the EIC Fund in full swing.

DG BUDG essentially wants to create more distance between the Commission and the investment decisions of the EIC Fund out of fear that the investment decisions would be a reputational risk for the Commission. The process that DG BUDG put in motion so far has resulted in two things. Firstly, the EIC Fund has lost much of its hard earned credibility and reputation due to the unimaginable delays. Secondly, the Legal Service of the Commission got involved and determined that actually all the grant and equity decisions of the EIC Fund will now have to be approved by the College of Commissioners. DG BUDG has achieved the opposite of its intentions: it created reputational damage to the Commission and it brought decisions as deep into the Commission as they could possibly go.

The pretext of the intervention by DG BUDG is a single reference to the possibility for implementing EIC Blended Finance through indirect management. In the Rapporteur’s view this interpretation is not in line with either the full legal text on Horizon or the expressed intention of the legislators for the EIC Fund. The interpretation of that single sentence is wrong both when examining the individual sentence and examining the rest of the text. The full sentence is as follows: “For the purpose of managing EIC blended finance, the Commission shall make use of indirect management. If that is not possible, the Commission may establish a special purpose vehicle (the ‘EIC Fund’), to be managed in accordance with the applicable accountability rules.” The first inconsistency in the interpretation of the Commission is that the text clearly juxtaposes the EIC Fund with indirect management. Only if indirect management is not possible, the EIC Fund should be set up. However, the Commission now argues that this sentence means that the EIC Fund should be managed indirectly. Both cannot be true. The second inconsistency is that the sentence expressly refers to ‘EIC blended finance’ which includes both grants and equity. However, the Commission now propose to move only the equity part to indirect management, which is inconsistent with the legal text. This becomes even more clear when looking at the full legal text as context for the single sentence. The following excepts need to be considered:

 Horizon Europe Regulation - Article 9(1): “The Commission shall establish the EIC as a centrally managed one-stop shop for implementing actions under Pillar III ‘Innovative Europe’ which relate to the EIC.”

 Annex to Horizon Europe Specific Programme - Pillar III - Point 1.1: “With the idea to offer a single one-stop-shop and a single process of support for high-risk innovations carried out by start-ups, SMEs and, in exceptional cases, small mid-caps, the Accelerator will award two types of support in particular: mainly blended finance (combining grants with equity investments) as well as grants, optionally followed by equity support.”

 Annex to Horizon Europe Specific Programme - Pillar III - Point 1.1.2: “Blended financial support will be awarded through a single process and with a single decision, providing the supported innovator with a single global commitment to financial resources covering the various stages of innovation.”

 Annex to Horizon Europe Specific Programme - Pillar III - Point 1.2.3: “The Commission will manage all operational elements of Accelerator projects, including the grant or other non- repayable forms of support. For the purpose of managing EIC blended finance, the Commission shall establish a special purpose vehicle.”

These excerpts highlight the legislators’ intention to have a singular implementation of the EIC Accelerator and that the Commission should be directly involved in the implementation. These texts and their meaning are not challenged or changed by the single sentence referencing to the possibility of indirect management. In fact, if indirect management would take place, it would need to happen in a manner consistent with these indications. Outsourcing the management of the EIC Fund undermines both the singular implementation of the EIC Accelerator and the direct involvement of the Commission in its implementation.

The draft report was developed against this background. The Commission is overstepping its role as executive in interpreting the legislation. As co-legislator, the Parliament has to stand up for its achievements on these issues and demand from the Commission to simply implement the legislation rather than putting its own spin on it. The Parliament as legislator has to decide its view on the future of the EIC, and in particular the EIC Fund.

However, the scope of this report covers all aspects of the implementation of the EIC. Therefore, the above-mentioned issue is not the only challenge for the EIC.

Another key question regarding the nature of the EIC Fund is whether it can be the sole investor in a company if the market does not want to take the risk. The Horizon Europe legislation explicitly allows for that. However, internal forces have been steering the EIC Accelerator to a place where the equity investments are conditional on the beneficiary finding matching financing and a lead investor on the market.

These two problems are fundamental issues and will be addressed as such in the draft report. As a new programme, the EIC of course also has implementation challenges that we have not faced before in the Framework Programme. As is to be expected, not all of these are solved in the most productive way. While these issues make the EIC less effective and less attractive, they do not pose a fundamental challenge to the Programme. Therefore these issues are identified as implementation flaws.

A prominent example of such flaws is the AI system used to filter the applications before they are being evaluated by evaluators. Firstly, the AI system seem easy to manipulate in how it assesses proposals. Simply changing some words will alter the assessment provided by the system. Secondly, the AI system makes applications hard to handle for both applicants and evaluators. For applicants the system limits their options on how to present their proposal. For example, no pictures can be added and the text that is provided is only plain text without any layout options. For the evaluators, instead of making it easier to evaluate the proposals, the AI system produces ‘business plans’ of 120 up to 200 pages. The evaluators are expected to evaluate this in 36 minutes.

This clearly undermines the effectiveness of the Programme and needs to change as soon as possible.

The EIC needs to be rescued from the Commission and needs a positive agenda moving forward. This what the Rapporteur addresses under the heading ‘Recommendations’.

From all of the recommendations included, the ones on how to restructure the EIC Fund are the most fundamental questions. This forces the Parliament to think about the objectives of the EIC and how they can be best achieved. In the Rapporteurs view the EIC has to be the EU’s flagship innovation programme to identify, develop and scale up breakthrough, and in particular deeptech, innovations. It was set up to foster Europe’s technological strategic autonomy as well as improve the functioning of the European venture capital market. In order to deliver this, it needs to be a one-stop shop for European innovators looking for support. This can only be achieved if the EIC is implemented as a fully integrated programme by a single entity. That entity needs to be both agile, to keep up with the market realities, and able of delivering policy steer when the EIC Fund investments would go against the market based on political objectives. That is why the Rapporteur believes that as soon as possible an independent Union body under TFEU Article 189 should be set up to implement the EIC.



on the implementation of the European Innovation Council


The European Parliament,

 having regard to the Treaty on the Functioning of the European Union (TFEU), in particular Title XIX thereof,

 having regard to Regulation (EU) 2021/695 of the European Parliament and of the Council of 28 April 2021 establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination[1],

 having regard to Council Decision (EU) 2021/764 establishing the Specific Programme implementing Horizon Europe – the Framework Programme for Research and Innovation[2],

 having regard to Regulation (EU, Euroatom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union[3],

 having regard to the European Innovation Council (EIC) work programmes for 2021 and 2022,

 having regard to the EIC impact report 2021,

 having regards to the Commission communication of 11 January 2018 entitled ‘Horizon 2020 interim evaluation: maximising the impact of EU research and innovation’ (COM(2018)0002),

 having regard to the impact assessment of 7 June 2018 accompanying the Commission’s proposal for Horizon Europe (SWD(2018)0307),

 having regard to the statement from the EIC Board of 16 August 2022 for the discussion in Parliament’s Committee on Industry, Research and Energy on EIC implementation[4],

 having regard to the statement by the EIC Board of 9 February 2022 on the EIC work programme for 2022 and future of the EIC Fund[5],

 having regard to the Commission press release of 5 August 2022 entitled ‘EIC Accelerator implementation update’[6],

 having regard to Rule 54 of its Rules of Procedure, as well as Article 1(1)(e) of, and Annex 3 to, the decision of the Conference of Presidents of 12 December 2002 on the procedure for granting authorisation to draw up own-initiative reports,

 having regard to the report of the Committee on Industry, Research and Energy (A9-0268/2022),

General objectives and structure of the EIC under Horizon Europe

A. whereas the EIC is the EU’s flagship innovation programme to identify, develop and scale up breakthrough, and in particular deep-tech, innovations; whereas the EIC will facilitate and enhance networking and cooperation and create synergies between different innovation communities in the EU and with the EIT in particular, ensuring broad geographical coverage; whereas it was set up to foster Europe’s technological strategic autonomy as well as to improve the functioning of the European venture capital market;

B. whereas Regulation (EU) 2021/695 identifies the EIC as ‘a centrally managed one-stop shop’ which ‘shall focus mainly on breakthrough and disruptive innovation, targeting especially market-creating innovation, while also supporting all types of innovation, including incremental’;

C. whereas Regulation (EU) 2021/695 stipulates that the EIC must operate in accordance with clear Union added value, autonomy, ability to take risk, efficiency, effectiveness, transparency and accountability;

D. whereas Council Decision (EU) 2021/764 stipulates that the EIC has two objectives: firstly, to identify, develop and deploy high-risk innovations of all kinds, including incremental; and secondly, to support the rapid scale-up of innovative companies at Union and international levels along the pathway from ideas to market;

E. whereas the EIC is implemented through three main pillars: the EIC Pathfinder; the EIC Transition; and the EIC Accelerator;

F. whereas the Pathfinder provides grants to high-risk cutting-edge projects that explore new and deep-tech areas with the aim of developing potentially radical innovative technologies of the future and new market opportunities;

G. whereas the Accelerator mainly supports small and medium-sized enterprises (SMEs) with the ambition of developing breakthrough, deep-tech innovations which are key to Europe’s future growth and open strategic autonomy;

H. whereas the Accelerator is implemented mainly by using EIC blended finance awarded through a single, clear and transparent process and with a single decision, providing the supported innovator with a single global commitment to financial resources covering the various stages of innovation until market deployment, including pre-mass commercialisation;

I. whereas the Horizon Europe legislation allows for the Union to bear the initial risk of the selected innovation alone;

J. whereas Council Decision (EU) 2021/764 requires the Commission to establish a special purpose vehicle for the implementation of EIC blended finance and to manage all operational elements of Accelerator projects;

Results of Pilot

K. whereas the EIC Pilot and EIC Enhanced Pilot successfully demonstrated the feasibility of the EIC as a fully-fledged programme as outlined in the general conclusions of the 2022 evaluation study published by the Commission[7], despite some initial issues including unclear communication with beneficiaries about the investment conditions for companies;

L. whereas the effectiveness of the EIC Pilot was under pressure due to low success rates;

M. whereas between 2018 and 2020, the EIC Pilot funded 330 Pathfinder projects under calls with high numbers of submissions;

N. whereas the geographical spread of participation and, in particular, coordination of the Pathfinder Pilot was concentrated in the EU-15 and Associated Countries; whereas a country’s position in the European innovation scoreboard seemed to be reflected in the number of applications as well as in the success of its innovators in the Pathfinder Pilot: the innovation leaders had the highest success rates and emerging innovators had the lowest success rates;

 O. whereas the EIC Fund under its original structure, as put in place in 2020 under the EIC Pilot and which was accepted by the Commission at the time, was functioning appropriately; whereas 140 equity investment decisions were taken, despite the recurrent delays and issues in signing the blended finance instrument; whereas these decisions had a leverage ratio of 2.7, showing that the EIC Fund in its original structure was capable of establishing significant co-investment;

P. whereas the evaluation study concludes that ‘the EIC Fund is underpinned by well-justified public policy goals and market needs’ and that ‘a contentious point on the Fund structure pivots around the interpretation of two eligibility rules: non-bankability and co-investment’;

Q. whereas the due diligence procedure as established under the EIC Pilot has been particularly successful because it has delivered high quality due diligence assessments as confirmed by the fact that several of these assessments were used to attract external investors, indicating that investors base their investment decisions on due diligence of sufficient quality;

R. whereas the structured professional investment advice delivered by the Investment Committee and the European Investment Bank (EIB) team embedded in the EIC and SMEs Executive Agency (EISMEA) was able to deliver the high quality due diligence thanks to the unique cooperation between EISMEA and the EIB in combination with investment expertise brought in by external experts, including serial investors and venture capitalists, on the Investment Committee;

State of implementation of the EIC under Horizon Europe

S. whereas the annotated model grant agreement for Horizon Europe was published extremely late, which created significant uncertainty among applicants, including potential applicants under the EIC;

T. whereas the introduction of programme managers has the potential to increase the effectiveness of the EIC; whereas a further nine programme managers have been appointed;

U. whereas the work of the programme managers still lacks visibility and is seen as lacking transparency by stakeholders;

V. whereas the EIC is a new type of programme which carries more financial risk than traditional Union spending and which requires a dedicated auditing strategy;

W. whereas under the 2021 and 2022 work programmes, EUR 1.55 billion and EUR 1.71 billion respectively was made available for the EIC; whereas in both of those years, roughly EUR 430 million stemmed from the NextGenerationEU budget, all of which was made available for grant components of the EIC; whereas about 52 % of the available budget was allocated to open, bottom-up calls under the open calls; whereas 65 % of the available funding was allocated to the grant components of the EIC, while 35 % was allocated to the investment components; whereas nearly 70 % of the available funding was allocated to the Accelerator calls, with 20 % going to the Pathfinder calls;

X. whereas the Pathfinder Open call had a success rate of 6.45 % and 7 % in 2021 and 2022 respectively; whereas under the Pathfinder Challenges call of 2021, 403 proposals were submitted and 39 proposals were awarded, which is a success rate of 9.7 %;

Y. whereas for the Accelerator call there were two cut-off dates in 2021 and 2022 respectively;

Z. whereas, until September 2022, the only funding transferred to Accelerator beneficiaries was grant pre-payments for which the time-to-grant was 12 months, no funds were transferred as part of (quasi-) equity support and only one investment decision was taken, leading to a time-to-investment of well over a year; whereas the Commission only started signing term sheets in the summer of 2022 for beneficiaries selected in 2021 and most of them will be signed after the summer[8];

Fundamental implementation issues

EIC Fund management and considerations on restructuring the Fund

 1. Is deeply concerned about the announcement in early 2022 of changes to the structure of the Fund compared to the situation under the EIC Pilot, when companies from the first two cut-offs in 2021 had already been selected for funding;

2. Recalls that the EIC Fund is set up to support startups and SMEs developing deep-tech innovations; highlights the fact that cash flows are crucial for startups and SMEs, and that long delays in receiving expected funding can bankrupt these kinds of companies; emphasises, therefore, the importance of the EIC Fund in being able to invest within market-compatible timeframes; deplores the cases where the EIC Fund failed to achieve this objective and where the original investment decision of the EIC Fund was rendered irrelevant, due to the long time lag and the company’s development during that time;

3. Is concerned by the delays in the implementation of the blended finance actions under the Accelerator; emphasises that the delays were exclusively the result of divergent perspectives on the implementation of the EIC stemming from conflicting interpretations of the relevant legal texts by different departments of the Commission about the management of the EIC Fund; notes that conflicts only concerned the equity part of the project and should therefore not have affected the grant agreements; deplores the fact that these internal Commission conflicts put at risk 96 European deep-tech companies; is deeply concerned that, except for one exceptional investment decision, no decisions for actual investments have been taken by the EIC Fund;

4. Recalls that EIC blended finance should be awarded through a single process and through a single decision covering both the grant and the financial instrument components; points out that the Commission should manage all of the operational elements of Accelerator projects;

 5. Recognises that the Commission expressed concerns about the management of the EIC Fund in terms of staffing implications as well as the Commission’s potential reputational liability for the investments;

6. Acknowledges the staffing concerns raised by the Commission regarding the management of the EIC Fund investment portfolio; appreciates that staffing at the EIC Fund needs to be appropriate and that this means that a significant number of staff with significant experience are required; considers, however, that directly employing these persons is not the only solution; points out that the original Investment Committee together with the EIB had developed an alternative plan to resolve the staffing issue; concludes, therefore, that the staffing challenge is not a reason for restructuring the Fund;

7. Takes note of the Commission’s reasoning that Article 11(3) of Council Decision (EU) 2021/764 requires the Commission to explore indirect management and that this prompts changes to the structure of the EIC Fund;

8. Recalls that the text of Article 11(3) was included in the Commission proposal for Horizon Europe and was never challenged during the legislative procedure; highlights the fact that this means that the Commission should have been fully aware of this text when it set up the EIC Fund in 2020; stresses that the Commission decision to set up the EIC Fund, which included the original structure, was adopted by the College of Commissioners and had the support of the entire Commission; emphasises that the same is true for the 2021 EIC work programme, which made no mention of the need to restructure the EIC Fund; concludes that the issue of compliance with Article 11(3) was raised internally in the Commission in the summer of 2021 after the programme had already started; considers that raising such a fundamental issue during a programme in operation after having missed several opportunities to raise the issue in the three years preceding the start of the programme is at the very least a case of mismanagement and a sign of reluctance to accept a new way of working as envisaged by the co-legislators;

9. Highlights that Article 11(3) is only a single sentence that needs to be read in the context of the full Council Decision; stresses in this regard also that the Annex to the above-mentioned Council Decision mandates that the Commission ‘establish a special purpose vehicle’, without laying down any other conditions; stresses, furthermore, that EIC blended finance as referred to in Article 11(3) and defined in point 1.1.2 of Annex I to the Council Decision includes both grants and support for investment in the form of equity or other repayable forms; concludes, therefore, that the requirement of indirect management cannot be read as applying only to the investment part of blended finance and that this article cannot be interpreted in such a way that the two components are separated in implementation;

10. Notes the importance of the professional preparation of an investment decision; highlights, therefore, the role of the EIC Fund Investment Committee appointed by the Commission as well as the valuable support for due diligence provided by the EIB embedded in EISMEA; regrets, however, that further decisions of the EIC Fund, such as joining an investment round after the initial investment decision or establishing a rationale for an investment, seem to take too long, in part due to the time it takes the EIB to provide its input;

11. Notes that both the EIC Investment Committee and the EIC Fund Board, under the original set-up of the EIC Fund, included representatives of the Commission as well as external experts, ensuring a proper balance between policy coherence and professional investment decisions;

12. Notes that by October 2022 the Commission had adopted and implemented a ‘transition arrangement’ under which the EIC Fund remains in the ownership of the Commission while an external fund manager will take the Fund’s investment decisions; highlights that the external fund manager will also recruit staff to the Investment Committee and that this means that no more independent experts providing invaluable expertise will be on the Committee and no Commission representatives will be ensuring policy coherence; takes note of the description of this arrangement in the 2022 EIC work programme;

13. Notes with concern that until the transitional arrangement for the investments announced in the EIC 2022 work programme was in place, all single award decisions and all substantial investment decisions needed to be approved by the College of Commissioners and were therefore accompanied by another level of scrutiny; regards this as an unacceptable situation because it makes the decision-making process even longer, more complex and with more uncertainty for the applicants;

14. Notes with deep concern that just setting up the transitional arrangement for the EIC Fund took over a year due to continuous internal discussions between the different Commission departments; notes that in June 2022 the Commission started processing the grant components of the Accelerator projects selected in June 2021, indicating that sufficient progress had been made in setting up the transitional arrangement to be able to start implementing blended finance projects; notes that most of the grant agreements for grantees selected under the June 2021 cut-off were signed in the summer of 2022, resulting in it taking more than a year to receive the grant; notes that in May 2022 the Commission communicated that the grant components for the EIC blended finance grantees from the October 2021 cut-off date would be finalised by the end of May or early June[9]; notes that the Commission had to inform these grantees over the summer of 2022 that the grants would not be ready by July and that they would probably have to wait until October 2022; concludes that for this cut-off date the time-to-grant will also be at least one year;

15.  Highlights that Article 216(1) of the Financial Regulation expressly empowers the Commission to directly manage investments (Article 216(1b)) or to implement them through ‘a dedicated investment vehicle’ (Article 216(1a)); stresses that this form of implementation allows for more flexibility and more strategic consideration in the investment decisions and portfolio management than indirect management; rejects the notion that transferring the management of the Fund to the EIB and an external fund manager will allow for the flexibility and strategic consideration required to make the EIC a success; expresses the concern that the EIC Fund will simply become another EIB-backed venture capital fund;

16. Underscores that the EIC Board’s strategic advice needs to be more thoroughly implemented in the work of the EIC, including its recommendations to increase diversity and the inclusion of participants from a broad range of countries to realise the potential of innovators across Europe and to foster practical collaborations with the European Institute of Innovation and Technology (EIT);

EIC Fund as sole investor

17. Is deeply concerned about the apparent policy for the EIC Fund never to be the lead investor in an equity round, in particular in combination with the requirement for companies to bring in matching co-investment from external investors; believes this goes against the strategic objectives of and main logic behind the EIC; highlights the fact that this was not the policy at the beginning of the EIC Pilot and that this policy change was applied with retroactive effect to applications submitted before the policy change; is deeply concerned about the fact that this created cash-flow problems for many applicants and that only a third of the committed equity investments have actually been turned into payments to companies; emphasises that co-investment should not be an upfront requirement for projects but rather an objective of the EIC Fund during the lifetime of the grant project;

18. Recalls that the EIC can be the sole investor, taking on all the risk of an investment, in line with Regulation (EU) 2021/695; notes that this role seems to be implemented only by providing convertible loans alongside the requirement of matching co-investment for any equity investments; notes that more than 50 % of all investments under the equity component have so far been in the form of convertible loans; highlights that one of the reasons for establishing the EIC was that Europe lacks risk capital investors and, in particular, risk capital investors with expertise in deep-tech markets; notes in that regard that a dysfunctional market cannot be fully relied on as an effective mechanism to steer EIC investment and exit decisions; warns, in this regard, that requiring qualified co-investment could exacerbate the market failure which the EIC was set up to address;

19. Notes that the practice of requiring co-investment makes the EIC a follower investor, which puts it at risk of either:

 (a) offering free and partly exclusive access for private investors to excellent investment opportunities, creating a risk of distorting the European venture capital market while at the same time reinforcing the relatively risk-averse nature of the European market;

 (b) or becoming redundant because the lead investor sets the pace and standard for investment rounds, which raises the question of whether startups would need the EIC at all;

20. Is alarmed by the practice of converting convertible loans to equity for companies that did not manage to attract additional investment, based on a valuation established at the time of granting the loan rather than on a valuation at the time of converting the loan; points out, in this regard, that the EIC was set up to facilitate the development and scaling-up of startups exactly in the phase where valuations can increase quickly because the risks surrounding a technology fall rapidly and market entry is closer; concludes, therefore, that relying on an old valuation goes against the objectives of the EIC; points out, furthermore, that the EIC Fund is supposed to take risks, but by using convertible loans, most of the risk is essentially passed on to the applicant;

21. Recognises that an external lead investor brings added value because this lead investor may have highly specialised knowledge of the market segment relevant for a specific investment, and that the EIC Fund, owing to its size and general nature, may not be able to match this specialised knowledge; notes, therefore, that the specialised lead investor may be of more added value to the company’s development than the EIC Fund; recognises, furthermore, that having an external lead investor would guarantee that the valuation and other terms of investment are set by the market;

22. Firmly rejects the notion that the EIC Fund cannot be the sole investor or the lead investor; emphasises that the ability to invest even when the market is not ready to do so is one of the key justifications for the existence of the EIC; concludes that the investment policy of the EIC Fund should explicitly allow for:

 (a) the EIC Fund to be the sole investor through convertible loans or, in specific cases, through equity investments;

 (b) the EIC Fund to be able to lead an investment round;

 (c) the EIC Fund to be the biggest investor while not being the lead investor;

23. Notes that point 1.2.3 of Annex I to Council Decision (EU) 2021/764 requires the EIC Fund to define and implement an exit strategy for its investments; observes that no such strategy seems to be in place;

Implementation flaws

Application procedure

24.  Emphasises the importance of an accessible and effective application procedure for a programme that aims to attract the most ambitious innovators; notes that the procedure can still be improved along the following lines:

 (a) both single- and multi-beneficiary proposals should be facilitated in the application procedure, requiring a dedicated proposal template for both types of application;

 (b) all information required for a successful application should be made available in a coherent manner; currently, the information is spread across several documents which makes preparing the application unnecessarily cumbersome;

25. Notes with concern that evaluators are giving mixed signals to stakeholders regarding the appropriate risk and bankability of EIC Accelerator proposals, especially affecting the participation of under-represented regions and female-led companies; recalls that one of the core principles of the EIC is the ability to take risks; recalls further that point 1.1.2 of Annex I to Council Decision (EU) 2021/764 identifies providing funding to non-bankable projects as a core objective of the EIC Accelerator; is deeply convinced that the EIC Accelerator can only be successful if there is a clear policy and communication on the appropriate risk for and bankability of EIC Accelerator projects;

26. Is concerned about the apparent lack of transparency in the management of the programme as reported by stakeholders; highlights the two main concerns of stakeholders:

(a) the lack of transparency in how the topics for Pathfinder Challenges are selected;

(b) and the lack of transparency in how the programme managers manage the portfolios, in particular in the proposal selection phase;

27.  Stresses the importance of a reliable time-to-grant promise; highlights, in this regard, that the evaluation of the 2021 Pathfinder Open call took more than five months, while Article 31 of Regulation (EU) 2021/695 requires that applicants are informed within five months about the outcome of the evaluation process;

28. Expresses concern regarding the EIC Accelerator submission process, which has become longer and more complex through its several steps and  own EIC platform, outside the official funding and tender opportunities portal; believes that the submission and evaluation process for an innovator-centric EIC Accelerator should be easy to understand for entrepreneurs as well as scientists, minimal in terms of the time investment needed, fair and transparent, and in line with industry standards;

29. Is deeply concerned about the way in which the AI Platform functions; notes in this regard that both applicants and evaluators have voiced concerns about the Platform;

30. Highlights that the online form is time-consuming, has no flexibility in terms of presenting information (no formatting or images possible) and uses jargon needlessly; notes that the resulting ‘Business Plan’ does not seem to meet industry standards and is not in a format which is user friendly for evaluators or project managers;

31. Draws particular attention to the increased number of pages (120-200 pages) compared to the EIC Pilot (50 pages), while pointing out that evaluators have 36 minutes to evaluate a full (second stage) proposal; notes that this is one of the reasons why stakeholders are dissatisfied with the quality of evaluation;

32. Notes with concern that a single ‘No-Go’ opinion in the second stage of the evaluation process is sufficient for an application to fail; believes this is disproportionate considering that there are three evaluators assessing the proposal and that they all give a ‘Go’/‘No-Go’ opinion on three separate evaluation criteria;

33. Appreciates, together with most stakeholders, the introduction of the rebuttal procedure. as it potentially contributes to improving the evaluation procedure; notes, however, that improvements are needed as many stakeholders report that it is unclear what happens with rebuttal remarks provided by applicants and that applicants have very little time to prepare their rebuttal; stresses that the introduction of the rebuttal procedure has been reported as one of the reasons for the longer period of time before receiving a grant; calls on the Commission to improve the rebuttal procedure and make it more meaningful by allowing it to be completed in a shorter timeframe in order to meet the deadline for providing the grant while allowing sufficient time to prepare the rebuttal;

34. Is concerned about the increasing need for applicants to hire consultants to manage the application procedure owing to its complexity;

35. Recognises that in order to facilitate the quick pace of EIC decision-making and deep-tech startup development, individuals employed by research organisations should be able to use the results of research projects to create startups; welcomes in this regard the introduction of the concept of ‘EIC Inventor’ in the model grant agreement and 2022 work programme; regrets that this introduction is accompanied by uncertainty about the legal consequences of this concept for research organisations;

Other individual issues raised

36. Emphasises that the concept of ‘EIC Inventors’ should lead to the effective use of research results to develop economic activities; concludes therefore that it should not undermine the use of the results by other experts within the research organisation or by the research organisation itself to develop economic activities; believes that broad access rights for EIC Inventors, without any time limitation, are justified only in cases where the research organisations do not provide the support needed for individual researchers to use the results to develop economic activity; believes, therefore, that these access rights should be granted to EIC Inventors on a case-by-case basis when it is evident that the Inventor lacks the support needed within the research organisation;

37. Regrets that the low success rates of the programme (6-10 %) leads to too many high-quality proposals not being funded; highlights that low success rates constitute a loss in terms of potentially deeply transformative innovations not being developed further as well as in lost time and money invested in the preparation of proposals; calls for the use, in this regard, where appropriate, of two-step applications in order to limit losses in time and money invested in preparing proposals;

38. Emphasises that Europe’s innovative capacity, economic growth and resilience are undermined because of the low participation of women on the startup and venture capital scene; welcomes, in this regard, the efforts made by the EIC to promote female leadership and participation in startups and venture capital; regrets that this has not yet resulted in sufficient change; points, in this regard, to the fact that only 1.8 % of investments in European startups in 2021 were raised by startups founded exclusively by women and a mere 9.3 % were raised by mixed-gender founding teams[10];

39. Points to the importance of the EIC Board as the principle advisor to the Commission regarding the implementation of the EIC as well as the development of broader innovation policy, particular as regards improving the innovation ecosystem in Europe and identifying strategically relevant technologies; stresses that the EIC Board should be fully informed in a timely manner, both by the EISMEA and other Commission departments involved, on all developments in the implementation of the EIC, and be provided with all information which it requests regarding the EIC;

40. Notes that the EIC Transition is formally part of the EIC Pathfinder, although it is implemented as a separate programme part; considers that the Transition calls represent less than 10 % of the EIC budgets under the 2021 and 2022 work programmes; points out that the Transition calls are the only calls to which the fast track to research and innovation procedure is applied; endorses the use of this procedure for the Transition call; calls on the Commission to widen the application of this procedure to more Pathfinder calls;

41. Highlights that the 2022 work programme refers to the ‘do no significant harm’ (DNSH) principle both as an evaluation criterion for the EIC Accelerator and as an eligibility criterion for the EIC in general; is alarmed by this requirement to comply with the DNSH principle as enshrined in Regulation (EU) 2020/852, known as the Taxonomy Regulation, since it is applied to all calls regardless of content or maturity; recognises the usefulness of the principle to guide the selection of projects under calls whose content directly relates to the environmental objectives of the Union and which are close to market deployment; emphasises that there is no legal basis for a blanket application of this additional eligibility criterion to all calls;

42. Welcomes the efforts within the EIC to develop a suitable framework for the evaluation of the EIC’s performance; highlights that the unique nature of the EIC requires a tailor-made approach to monitoring performance and using the outcome of that monitoring to ensure that the EIC is a top performer in the market;


43. Calls on the Commission to re-assess its implementation of the EIC Fund in the frame of the Horizon Europe programme and to find a new fit-for-purpose management mode that reflects the ambitious and transformative nature of the EIC as the investor of reference for breakthrough innovation in Europe; urges the Commission to include in this new approach the following principles:

(a) ensuring that the implementation of both the equity and grant components are under the full control of the Commission, which should also ensure that there is a direct coordinating line between the implementation of the two components, and safeguarding the ability of the Commission to intervene at any stage of the investment cycle to ensure that investments of strategic importance are made;

(b) ensuring a role for the EIC Fund Board and independent expert evaluation by the Investment Committee in order to closely monitor the fulfilment of the EIC Fund investment guidelines, while relying on the EIB team and the external fund managers for the day-to-day management of operations;

(c) making full use of the added value of co-investment by external investors, while maintaining the possibility for the EIC Fund to:

 (i) be the sole investor, including through taking equity without co-investment from external investors being required;

 (ii) be the major investor without leading the investment round;

 (iii) lead an investment round;

(d) developing an investment strategy for equity investments based on milestones reflecting the merits of the innovation as well as the strategic objectives of the Union rather than solely the willingness of other investors to join the investment round, which would encourage the EIC Fund to take risks as the sole investor, in particular to boost the successful participation of under-represented regions and female-led companies, which face even more difficulties in financing their startups;

(e) establishing an exit strategy for equity investments of the EIC Fund which takes into consideration the strategic objectives of the Union;

(f) maintaining the construction that allows the EIB team to be embedded in the EISMEA European Innovation Council and SMEs Executive Agency to deliver high-quality due diligence; requests the Commission to build on this successful collaboration and agree on an arrangement with the EIB to have the embedded EIB team representing the EIC Fund in investees’ board meetings;

(g) ensuring efficient collaboration with national contact points as well as regional authorities if applicable;

44. Urges the Commission to enter into an open dialogue with Parliament, the relevant programme committee and the EIC Board in order to develop an alternative long-term solution for the structure of the EIC Fund which fully respects the relevant Union legislation and the above-mentioned principles; recommends that a thorough assessment be made of ways to improve the EIC’s implementation, considering as an option the establishment of an independent Union body under Article 187 TFEU as the main entity responsible for implementing the EIC; underlines the need to ensure that applicants are always treated equally, and that implementation safeguards transparency, accountability and prevention of conflicts of interest; recommends that if the thorough assessment finds that such a body would be the best institutional setting to implement the Accelerator along the lines set out above, it should be set up as soon as possible;

45. Calls on the Commission to pay special attention to the promotion of women across the innovation sector while striving for gender parity in all relevant positions, as well as geographical balance of EIC beneficiaries across the Union’s regions; requests, in particular, that the Commission include in the EIC work programmes specific measures to address both issues within the EIC;

46. Recommends that an InvestEU compartment be explored outside of the EIC Fund for companies which simply need to match funding to complete their upscaling rounds;

47. Calls on the Commission to clarify the rules and procedures regarding the interpretation of non-bankability and co-investment criteria, enhancing communication and better involving National Contact Points;

48. Calls on the Commission to apply the DNSH principle for calls whose content directly relates to the environmental objectives of the Union and which are close to market deployment, and refrain from using the DNSH principle as an additional horizontal eligibility criterion for all EIC projects;

49. Calls on the Commission to adapt the Model Grant Agreement to include a clear definition of ‘EIC Inventor’ and to stipulate a clear policy on access rights for EIC Inventors providing them broad access rights only when a research organisation does not have an active policy and structure in place to support the use of research results for economic activities;

50. Calls on the Commission to introduce a system of continuous and quick evaluation of the performance of the EIC and, in particular, of the Accelerator;

51. Calls on the Commission to include a rigorous and continuous assessment of the evaluation procedure, taking seriously into account complaints raised by applicants indicating clear inconsistencies in the evaluation of their proposals; invites the Commission to inform Parliament on how it handles individual complaints demonstrating a clear failure by the evaluators;

52. Calls on the relevant Union bodies, including the European Court of Auditors and the EIC Board, to develop a dedicated auditing strategy for the EIC which reflects the particular nature of the EIC;

53. Calls on the Commission to include measures to improve the participation of SMEs and to make the EIC Accelerator accessible and attractive for innovative SMEs, by simplifying the application process in order to remove barriers for SMEs;

54. Calls on the Commission to ensure that the instrument supports a wide range of projects in terms of their scale, so that small companies developing and scaling up high-impact innovations can have equal access to it;

55. Calls on the Commission to revise the EIC Accelerator’s current submission process and its time-to-grant period, aligning the EIC platform with the evaluation criteria of the EIC Accelerator; believes that such a revision should aim for a fast and simple instrument fit for the needs of European deep-tech startups, reaching a targeted time-to-grant of four to five months;

56. Calls on the Commission to improve synergies and collaboration with the EIT; calls on the EIT and EIC to set up reciprocal and systematic exchanges of information, as well as to have a common member in each of their governing boards, with the aim of avoiding silos and the duplication of efforts and strategies;

57. Instructs its President to forward this resolution to the Council and the Commission.





The following list is drawn up on a purely voluntary basis under the exclusive responsibility of the rapporteur. The rapporteur has received input from the following entities or persons in the preparation of the report, until the adoption thereof in committee:

Entity and/or person

The Guild of European Research-Intensive Universities


European Consortium of Innovative Universities

European Association of Research and Technology Organisations

European Regions Research and Innovation Network

League of European Research-Intensive Universities

Netherlands House for Education and Research

Spanish Office for Science and Technology

ETH Board

Helmholtz Association

European Quantum Industry Consortium

European Association of Innovation Consultants


Leibniz Association

Czech National Agency for International Education and Research

APRE – Agency for the Promotion of European Research

University of Stuttgart





Euro Funding


Carlos Cerqueira

Kamila Oglecka

Cristina Gouveia





Date adopted





Result of final vote







Members present for the final vote

Matteo Adinolfi, Nicola Beer, François-Xavier Bellamy, Hildegard Bentele, Tom Berendsen, Vasile Blaga, Michael Bloss, Marc Botenga, Cristian-Silviu Buşoi, Jerzy Buzek, Josianne Cutajar, Nicola Danti, Marie Dauchy, Pilar del Castillo Vera, Christian Ehler, Valter Flego, Niels Fuglsang, Lina Gálvez Muñoz, Jens Geier, Nicolás González Casares, Christophe Grudler, Robert Hajšel, Ivo Hristov, Romana Jerković, Eva Kaili, Seán Kelly, Łukasz Kohut, Zdzisław Krasnodębski, Miapetra Kumpula-Natri, Thierry Mariani, Marisa Matias, Georg Mayer, Marina Mesure, Dan Nica, Niklas Nienaß, Johan Nissinen, Mauri Pekkarinen, Pina Picierno, Clara Ponsatí Obiols, Manuela Ripa, Robert Roos, Sara Skyttedal, Beata Szydło, Patrizia Toia, Isabella Tovaglieri, Henna Virkkunen, Pernille Weiss

Substitutes present for the final vote

Andrus Ansip, Franc Bogovič, Klemen Grošelj, Ladislav Ilčić, Elena Lizzi, Luděk Niedermayer, Jutta Paulus, Bronis Ropė, Jordi Solé

Substitutes under Rule 209(7) present for the final vote

Andrey Kovatchev, Aušra Maldeikienė







Ladislav Ilčić, Zdzisław Krasnodębski, Robert Roos, Beata Szydło


Matteo Adinolfi, Marie Dauchy, Elena Lizzi, Thierry Mariani, Isabella Tovaglieri


Clara Ponsatí Obiols


François-Xavier Bellamy, Hildegard Bentele, Tom Berendsen, Vasile Blaga, Franc Bogovič, Cristian-Silviu Buşoi, Jerzy Buzek, Pilar del Castillo Vera, Christian Ehler, Seán Kelly, Andrey Kovatchev, Aušra Maldeikienė, Luděk Niedermayer, Sara Skyttedal, Henna Virkkunen, Pernille Weiss


Andrus Ansip, Nicola Beer, Nicola Danti, Valter Flego, Klemen Grošelj, Christophe Grudler, Mauri Pekkarinen


Josianne Cutajar, Niels Fuglsang, Lina Gálvez Muñoz, Jens Geier, Nicolás González Casares, Robert Hajšel, Ivo Hristov, Romana Jerković, Eva Kaili, Łukasz Kohut, Miapetra Kumpula-Natri, Dan Nica, Pina Picierno, Patrizia Toia


Marc Botenga, Marisa Matias, Marina Mesure


Michael Bloss, Niklas Nienaß, Jutta Paulus, Manuela Ripa, Bronis Ropė, Jordi Solé










Johan Nissinen


Georg Mayer


Key to symbols:

+ : in favour

- : against

0 : abstention



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