Accelerating innovation in Europe : Horizon 2020 SME instrument impact report : 2017 edition.
Date: 2017-09-12
Institutions: Executive Agency for Small and Medium-sized Enterprises
Subjects: EU financial instrument, company growth, economic consequence, innovation, investment, small and medium-sized enterprises

accelerating innovation

in Europe

Horizon 2020 SME Instrument impact report
2017 EDITION

Horizon 2020

3

years of the 
programme

31k

applications

400

coaches deployed

2 457 €882m

SMEs supported

in funding

The SME Instrument supports market-creating innovation 
in  small  and  medium-sized  businesses  (SMEs)  with 
significant  growth  potential  and  global  ambitions.  As 
part of Horizon 2020 – the EU’s €80 billion Research and 
Innovation funding programme – it will invest €3 billion in 
7,500 companies until 2020. 
With more than 31,000 applications received and around 
2,500  small  companies  funded  in  only  three  years,  the 
SME  Instrument  has  proven  its  appeal  for  the  European 
innovation ecosystem. 

In  2016,  the  SME  Instrument  celebrated  its  companies’ 
first  successes:  first  IPOs,  major  contract  signatures, 
important private investments, precious awards and plenty 
of innovative entries on the market. As the business world 
moves fast, results and impacts observed only three years 
after the start of the SME Instrument are just a glimpse of 
the future potential. 
The  SME  Instrument  impact  report  aims  to  provide  first 
insights into the growth trends of the selected SMEs, their 
profile as well as the key features of the programme. The 
report presents cumulative data from 2014 to 2016. 

2

1

a booster for

gr ow t h

Shorter time-to-investment

The SME Instrument funding shortens the average time for companies 
to get the next investment from 32 to 9 months

Higher funding rounds

With the SME Instrument, companies raise higher investment rounds 
(€ 4.3 million on average) than before (€ 2.8 million)  

Stronger leverage effect

Only  3  years  after  the  start  of  SME  Instrument,  each  euro  invested 
generated one euro of private investment. This amount is prompt to be 
higher in the future as the leverage effect will reveal its full potential 
only after several years.

Company
AlphaSense
Name
Jack Kokko
Funding
€ 1.8 million

support 
The  financial 
from the SME Instrument 
allowed  us  to  speed  up 
our  growth,  attract  new 
clients  and  invest  in  our 
has 
technology. 

This 

helped us accelerate our 
product  adoption  and 
grow  into  new  market 
segments.  We  are  very 
thankful for this support.

4

Better innovation capacity

The feasibility study under Phase 
1  and  coaching  offered  by  the 
SME Instrument build up strategic 
and  managerial  capacity  within 

the  SMEs, 
in  particular  with 
regards  to  their  knowledge  of 
the market and understanding of 
clients’ needs.

According to the companies, SME Instrument funding and coaching helped them with:
Data: replies out of 10

9

8 

8 

Understanding 
needs of the client

Company 
reputation

Knowledge of 
competitors

8 

7

7

8 

Marketing 
method

7

8 

Risk 
management

7

Understanding of 
technical issues

Contacting support 
organisations

Internal 
organisation

Strategic 
management

Understanding 
of IPR

5

Fast growth

A year down the line funded Phase 2 companies experience on average:

250%

increase in 
turn-over

122%

increase in  
employment 

9 funded companies among the fastest growing businesses in Technology Fast 500™ EMEA 2016

5 funded companies among the Financial Times 1000 Europe’s Fastest Growing Companies 2016

6

2 IPOs 

Instrument 

funded 
Two  SME 
companies had their Initial Public 
Offerings (IPOs) on Nasdaq’s First:  
Immunovia and Svenska Aerogel. 

result 

is  observed  only 
This 
three years after the start of the 
programme  and  should  increase 
in the years to come.

Company
Svenska Aerogel
Name
Anders Lundström
Funding
€ 1 million

This  prestigious  grant 
gave  us  a  valuable 
recognition  that  played 
a  major  role  in  our  IPO. 
our 
strengthened 
It 
credibility 
front  of 
in 
investors  and  customers 

7

and  helped  us  run  a 
customer-
number  of 
in 
related 
order 
full 
scale  production  –    we 
are  ready  to  meet  the 
increased demand.

projects 
reach 

to 

smart

2 money

Equity-free funding 

Phase  1  offers  a 
lump-sum 
funding  of  €50,000  to  carry 
out  a  concept  and  feasibility 
invests 
assessment.  Phase  2 
between €0.5 and 2.5 million (up 

to  €5  million  in  health-related 
topics)  in  innovation  activities 
such  as  demonstration,  testing, 
prototyping,  pilot  lines,  scale-up 
studies and market replication.

World-class business 
innovation coaching 

Coaching  empowers  SMEs  to 
define  the  best  market  strategy, 
advises  them  on  organisation, 
management, 
and 
resource-development. 

finance 

Companies  get 
three  days 
of  coaching  in  Phase  1  and 
twelve  in  Phase  2.  Coaches  are 
experienced  enterpreneurs  and 
investors  with  various  skill-sets 
and backgrounds. 

Business acceleration services 

Through events and international 
trade  fairs,  SMEs  are  invited  to 
build  partnerships  with  investors 
and  potential 
clients.  SMEs 
join  a  community  of  peers  to 
exchange, learn, connect and find 
partners.

In  October  2016,  the  first  SME 
Innovators  Summit 
Instrument 
gathered  more  than  600  SMEs, 
investors,  coaches  and 
large 
companies. 

9

Adapted to the market

Open call
4 cut-offs per year 
for each Phase

Fast & Easy
10-30 page application. 
Results in around 1 month

Across the board
Small businesses 
from all industries

Market-oriented 
selection
Focused on impact, 
unique ideas, 
team’s capacity

Transparent
independent experts, 
clear selection criteria, 
constructive feedback 

Highly competitive
Acceptance  rate: 
8.4% for Phase 1 
5.5% for Phase 2

High-risk
15% of funded SMEs are 
pre-revenue companies

Learning effect
Coaching in Phase 1 boosts 
market readiness and doubles 
chances for Phase 2

Connecting businesses
1,747 new connections for 
SMEs whose presence was 
facilitated in trade fairs 

10

SME Instrument

in novator s

3The SME Instrument portfolio 

The highest number of companies 
supported by the SME Instrument 
come  from  Spain,  Italy  and  the 
UK.  However,  countries  with  the 
highest  acceptance  rates  to  the 
programme  are  Iceland,  Austria, 
Denmark,  Ireland  and  Sweden. 
Ireland  for  example  uses  the 

SME  Instrument  strategically  as 
leverage  to  foster  the  growth  of 
its  local  companies.  Irish  business 
support  organisations  encourage 
only the best SMEs to apply to the 
SME  Instrument  and  back  them 
throughout  the  selection  process 
to get the best out of their efforts.  

12

Funded SMEs
2,457 SMEs from
36 countries

Top 5 acceptance rates:

Iceland (20%)
Austria (13%)
Denmark (13%)
Ireland (13%)
Sweden (12%)

0

1-9

10-
49

50-
99

> 
100

13

Number of SMEs  funded by country

Startups & established SMEs

50%

of funded companies 
are microenterprises 
(with less than 10 
employees)

50%

of funded companies 
are startups with less 
than 6 years on the 
market

Each year the SME 
Instrument attracts 
more and more 
startups

Age of SMEs by year of application

2014

2015

2016

more than 11 years

6 to 10 years

under 6 years

Company
New Gluten World
Name
Carmen Lamacchia
Funding
€ 1.3 million

45%

46%

54%

We  were  flying  a  small 
airplane,  and  the  SME 
instrument turned it into 
a  space  rocket!  Thanks 
to  the  EU  funding,  New 
Gluten World experienced 
steep  acceleration. 
a 
Our  dream  of  a  fully 
operational 
to 
detoxify  gluten  in  wheat 
kernels became a reality. 
We  could  begin  clinical 

lab 

in  experts 

validation of our scientific 
discovery.  We 
hired 
talented staff, developed 
a  prototype  oven,  and 
brought 
in 
the  legal,  financial,  and 
field. 
communication 
In  short,  we 
jumped 
three years ahead in our 
goal  of  placing  Gluten 
Friendly™ products in the 
global market

14

Industry sectors

common 

The  most 
industry 
sectors  the  funded  companies 
in  are  Medical 
are  active 
(412  SMEs), 
and  Healthcare 
Cleantech 
(271  SMEs)  and 
Energy  (239  SMEs).  This  reflects 
large  budget  available  for  the 
companies  in  the  corresponding 

three topics. The ICT topic (Open 
and disruptive innovation), which 
holds the second highest budget 
in the SME Instrument and is also 
the  most  open  and  transversal, 
is  spread  among  many  of  these 
industries, like analytics, robotics, 
semiconductors, security etc. 

Number of funded SMEs in different industry sectors

400

300

200

100

/

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15

 
 
 
 
Revenue models

The most common revenue model chosen by the funded companies is 
manufacturing (920 SMEs). 196 companies get their revenues through 
subscriptions and 153 through commissions.

Number of funded SMEs with different revenue models (Top 10)

manufacturing
subscription
commission
ecommerce / trading
agency
software license
performance based
freemium
content
marketplace

16

200

400

600

800

investor s’

pick

4High-flying sectors

the  SME 
The  high-fliers  of 
Instrument 
in 
are 
Construction,  Home,  Robotics, 
Analytics,  Marketing,  Developer 
tools,  Directory,  Sports  and 

found 

Publisher  tools.  In  these  industry 
sectors 
Instrument-
funded  companies  attract  more 
investments than average.

SME 

Industry sectors where SME Instrument-funded companies attract more investments than average

6
4
2

m €

construction

home

robotics

analytics marketing

developer 
tools

directory

sports

publisher 
tools

Average investment in SME 
Instrument funded companies

Average investment 
in the industry

18

Leading countries

some 

countries, 

In 
funded 
companies  attract  more  private 
investment than their compatriots.  
This is the case especially in the 
Netherlands,  Estonia,  Finland, 
Belgium,  Austria,  Israel,  Sweden, 

Greece,  Croatia  and  Italy.  This 
means  that  in  these  countries 
Instrument  attracts 
the  SME 
particularly 
well-performing 
companies.

Countries where SME Instrument-funded companies attract more investments than average

8

6

4

2
m €

Netherlands Estonia

Finland

Belgium Austria

Israel

Sweden

Greece

Croatia

Italy

Average investment in SME 
Instrument funded companies

Average investment 
in the country

19

E
A
-
0
1
-
1
7
-
4
4
7
-
E
N
N

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ISBN: 978-92-9202-243-3
doi: 10.2826/806719