France and Israel get largest share of EIC’s first equity investments

The European Innovation Council (EIC) announced its first round of ‘blended’ grant and equity investments, saying it will back 39 small tech companies, with the largest numbers in France and Israel.

Another 36 companies won grants alone, which the EIC has been providing since last year. The total value of the awards is €278 million, of which more than half is equity investment – spread across 20 countries, five of them outside the EU.

The awards are a milestone in the roll-out of the EIC, the new technology commercialisation body funded through the EU’s Horizon Europe research programme that has the European Commission acting as an equity investor for the first time. The EIC is still in pilot mode and will launch fully in 2021 with Horizon Europe, Horizon 2020’s successor. But the Commission hopes to have the EIC Fund, which will buy the equity, up and running by early next year.

France and Israel had the largest numbers – six each – of recipients of so-called ‘blended finance’, which is a mix of grants and equity investment. Israel, which participates in Horizon 2020 through an association agreement, was also home to the largest number of applicants for this round of support, which closed in October.

Switzerland, another associated country, accounted for the largest share of grant-only recipients, with nine Swiss companies getting grant funding.

The commission said the prevalence of countries associated to Horizon 2020 “demonstrates the attractiveness” of the EIC and of working with the EU.

The blended finance recipients include S-Biomedic, a Belgian firm producing anti-acne cosmetics; Mybiotics Pharma, an Israeli business developing a system for delivery of personalised probiotics to prevent gut problems; and Orthox, a UK firm that uses silk to create medical implants for repairing cartilage damaged by osteoarthritis.

The equity investments range from €500,000 to €15 million each, and €3.67 million on average. The exact size of each share purchase will be made public once the equity agreements have been signed.

The EIC will seek stakes of between 10 and 25 per cent of the voting rights in each of the 39 companies, and private investors will also have the option to put in their own money alongside the EIC’s. The EIC will not get involved in determining the value of the companies receiving blended finance.