On the 6 January, the Commission has announced the first round of direct equity investment through the new European Innovation Council (EIC) Fund. The Fund will help to fill this financing gap at the start-up stage where the EU venture capital market still underperforms compared to the global venture capital market. Its main purpose is not to maximise the return on the investments, but to have a high impact by accompanying companies with breakthrough and disruptive technologies in their growth.
42 highly innovative start-ups and small and medium-sized businesses (SMEs) will together receive equity financing of around €178 million to develop and scale up breakthrough innovations in health, circular economy, advanced manufacturing and other areas. Among them, the French company CorWave, which develops innovative implantable blood pumps based on a breakthrough membrane technology, is the first EU company in which the EIC Fund is investing.
The equity investments, ranging from €500.000 to €15 million per beneficiary, complement the grant financing, which has already been provided through the EIC Accelerator Pilot to enable companies to scale up faster. This is the first time the Commission has made direct equity or quasi-equity investments, namely equity investment blended with a grant, in start-up companies, with ownership stakes expected to range from 10% to 25%.
Under the EIC Accelerator a total of 293 companies have already been selected for funding worth over €563 million in grants since December 2019. Among those, 159 companies have been selected to additionally receive the new equity investments from the EIC Fund. The 42 companies are the first of this group to successfully pass the evaluation and due diligence process.
The investment agreements with the other target companies are now being finalised, and will be announced shortly. A few examples of this first round of investments:
- Hiber (The Netherlands): an international satellite and communication company that provides global and affordable Internet of Things connectivity;
- XSUN (France): a solar aircraft company that designs energy-independent drones to be fully autonomous so they can operate without any human intervention;
- GEOWOX LIMITED (Ireland): a technological company that provides automated property valuations, leveraging high-quality open data and machine learning models;
- EPI-ENDO PHARMACEUTICALS EHF (Iceland): a pharmaceutical company focused on developing a proprietary portfolio of drugs to address the huge global burden of chronic respiratory diseases.