SME Instrument increases a company's innovation capacity

The European Commission (EC) published the ‘Accelerating innovation in Europe: Horizon 2020 SME Instrument Impact’ report.

According to the report, participating in the Horizon 2020 SME Instrument leads to a growth of the innovation capacity of companies and attracts investment. Regarding attracting private investment, companies that benefited from the SME Instrument manage to obtain their next investment 18 months faster than non-SME Instrument beneficiaries do. The SME Instrument support already resulted in two stock market launches and several prizes. Unfortunately, due to the Swiss former partial association in Horizon 2020, the report does not make mention of Swiss companies participating in and benefiting from the SME Instrument.

The SME Instrument funded 2'457 companies and attracts small companies of all sizes, ages, profiles and sectors. It attracts both young, market challenging start-ups aiming for fast scale-up as well as family businesses existing since many years, where the new generation of owners bet on innovation to remain competitive. In addition, university spin-offs use the SME Instrument, especially Phase 1, to test the market feasibility of their technologies. SMEs from Spain and Italy account for one third of both applicants and funded companies. Together with the UK, these three countries represent almost half (47%) of all funded SMEs. However, the highest success rates are achieved in Iceland (20%), Austria (13%), Denmark (13%), Ireland (13%) and Sweden (12%). Moreover, there is a strong correlation between geographical distribution and innovation hubs across Europe: The SME Instrument's geographical distribution matches the main innovation hubs in Europe, including London, Berlin, Dublin, Paris, Amsterdam and Munich. These hubs bring together innovative companies, like accelerators, incubators and co-working spaces, investors and highly skilled individuals, but also friendly tax regimes and requirements for setting up a business.

In the first three years, more than 31'000 applications were handed in and approximately 2'500 companies received funding. Until 2020, the EC will invest three billion Euros in companies. The SME Instrument itself will be revamped in the Horizon 2020 work programme 2018-2020, making it fully bottom-up, focusing on breakthrough innovations, thus attempting to attract more young, market challenging start-ups aiming for fast scale-up.

Sources: Swisscore, EC