Developer of European Innovation Council’s submissions portal says Commission was not correct about ‘contractual dispute’

The Innovation Loop, the developer of the European Innovation Council’s AI platform, wants the European Commission to explain why it shut down the platform on 2 June with no prior notice.

The company says the suspension of the platform came as a surprise to them and “explanations provided by EISMEA hold significant implications and are factually false,” in a statement published on Wednesday.

A possible legal battle over the suspended contract has led the Commission to say it cannot explain what the “contractual dispute” that caused the sudden suspension of the custom-made platform is.

“Due to the contractual dispute, the project is being terminated. Any payment for the services rendered will be made pursuant to the contractual provisions of the contract. The Agency will not elaborate further as this is an ongoing process,” a spokeswoman told Science|Business.

The Innovation Loop is not sitting still. Last week, the company sent a letter to Commission vice-president now responsible for R&I Margrethe Vestager, the EIC Programme Committee, the EIC Board President Michiel Scheffer, and the European Parliament’s Christian Ehler to inform them about what’s going.

What’s going on?

Exactly how all this happened isn’t yet clear, and nobody directly involved in the dispute is willing to discuss it publicly. But according to a range of sources Science|Business has consulted in recent weeks, it all started in 2020, when a group in the Commission working on the EIC realised its €7 billion Accelerator programme for start-ups required a very different application process from other EU research programmes.

The Accelerator formally launched in 2021 to give the EU’s start-ups a boost with funding from the €95.5 billion Horizon Europe research programme. It offers companies a mix of grant and equity funding to help them develop innovative products and grow.

But applying for equity funding is very different from Horizon Europe’s usual large-scale multi-partner research projects. Eventually, the Commission launched a tender to develop a custom-made platform, receiving seven applications. The Innovation Loop, run by Marc Loher, a former bureaucrat at the Commission’s research directorate and innovation consultant, won the contract.

There was little time left before the launch of the EIC under Horizon Europe, but within a few months, the Innovation Loop developed the platform. It wasn’t perfect, and many traditional grant writers complained, partly about having to learn a new system. The Commission and the company kept improving the platform. It was still far from perfect but start-ups got used to it.

The next step was expanding the platform to include all the EIC tools and go beyond, allowing national funders to plug in and connect innovators to other players – it was to be called ‘the Innospace.’ The Commission launched a tender in May 2022, and InnoLoop was the only company to apply.

That contract was signed in December, and this is where it started to get complicated. People inside the agency started to question the €8 million (potentially to be upped to €16 million) contract, and why a solution could not be developed in house.

Internal politics and, some suggest, the Commission’s wish to have a tighter grip on the EIC, led to the project stalling. Sources in the Commission say it didn’t get much further before February, when a suspension of the contract was allegedly requested by the Commission.

It’s unclear what happened between the Commission, EISMEA and the company at the time, but the Innovation Loop says in frustration, it decided to terminate the contract on 24 March.

All this came to light on 2 June when the platform was suddenly shut down with no prior warning. Commission sources say they tried to avoid a sudden halt until the last minute.

Now, the Innovation Loop says the allegations are affecting its business because the Commission’s press release implicitly suggests the platform was faulty. It says changes could have been made.

Messy transition

After shutting down the platform EISMEA and the Commission had to find a quick way to allow applicants to submit their applications - the next deadline for submissions was just days away.

The process was moved to the Commission’s Funding and Tenders Portal platform used for other Horizon Europe programmes with a new template. To give companies more time to adjust, the deadline was extended by two weeks.

Grant proposal writers say they’ve been struggling to fit hundreds of pages of content they had prepared into the new template that was originally meant for large-scale consortia-led research projects.

Lots of small hiccups mounted. For example, the template asked for information on the coordinator and the partners on the project despite the fact that EIC Accelerator funding is meant for sole companies, so-called mono-beneficiaries. “They’re creating fear, uncertainty and doubt. Not on purpose, but by sheer incompetence,” one grant proposal writer told Science|Business.

Some Commission staffers say it’s going to take a long time to get back to normal. The application process is likely to be messy for a while, with temporary solutions still being set up. A new system is not expected to be developed before next year.

But at EISMEA, many are reportedly happy to see the contract ended. It’s been riddled with issues, which the European Parliament drew attention to in a draft motion for resolution last year. The report said the Parliament was “deeply concerned about the functioning of the AI Platform” and pointed to lack of user-friendliness and flexibility, needless use of jargon and a burdensome 100+ pages-long form.