In a recent move, the European Commission has announced the first round of direct equity investment through the new European Innovation Council (EIC) Fund.
The EIC Fund amounts to about €178M, and it will go to 42 startups and SMEs, to develop and scale-up breakthrough innovations in health, circular economy, advanced manufacturing, and other areas.
Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth says, “This new form of financing – combining grants and equity – is unique to the European Innovation Council. It will bridge the funding gap for highly innovative companies, unlock additional private investments and enable them to scale up in Europe.”
According to the press release from the European Commission, the equity investment ranges from €500,000 to €15M, which complements grant financing provided through the EIC Accelerator Pilot.
Notably, this is the first time the European Commission has made direct equity or quasi-equity investments, with ownership stakes expected to range from 10 per cent to 25 per cent.
Innovative heart pumps
Corwave, a French medtech company is the first to receive an EIC investment. Based out of Paris, CorWave is a medical device company developing innovative heart pumps – Left Ventricular Assist Devices (LVADs).
The €15M EIC Fund investment has played a critical role by mobilising additional investors to unite behind the French SME, which led to €35M of investments in the fourth stage of startup financing for CorWave.
CorWave says that the “Left Ventricular Assist Device” (LVAD) will improve the lives of those with advanced heart failure by reducing by half severe complications, while at the same time improving their quality of life.
Funded €563M to date
Back in December 2019, the EIC Accelerator announced the first deployment of grant funding. So far, it has funded 293 companies with over €563M in grants. Among those, 159 companies have been selected to additionally receive the new equity investments from the EIC Fund.
The 42 companies announced today are the first of this group to successfully pass the evaluation and due diligence process claims the European Commission. Rest, 117 companies are still in the pipeline.
Why the EIC fund?
With the fund, EIC aims to fill the financial gap faced by innovative companies when bringing their technologies from high technology readiness levels to the commercialisation stage.
Moreover, the fund is focused on supporting equality and gender balance and highly contributes to sustainability with a particular focus on health, resilience, and green and digital transitions.
Companies in the pipeline
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 (Netherlands) – An international satellite and communication company.
- XSUN (France) – A solar aircraft company that designs energy-independent drones to be fully autonomous.
- GEOWOX LIMITED (Ireland) – A technological company that provides automated property valuations.
- EPI-ENDO PHARMACEUTICALS EHF (Iceland): A pharmaceutical company focused on developing a proprietary portfolio of drugs to address chronic respiratory diseases.