The SME Instrument is a business innovation support scheme that targets SMEs in the 28 EU Member States and the H2020 associated countries. The aim of the instrument is to support the best companies with the most innovative ideas and biggest growth potential through two main phases – Phase 1 for exploring the feasibility of the business idea and Phase 2 for developing the innovation and preparing for its commercialisation – and various additional acceleration services aimed at securing new partnerships and increasing the visibility of the beneficiary SMEs. The ultimate aim of the instrument is to get companies ready to scale up and go global.

The SME Instrument was launched in 2014 and since then, it has become a very popular and competitive instrument that has firmly established itself on the European SME and startup scene. By now, the instrument has invested in 3,200 ambitious SMEs in the amount of 1.3 billion euros and created a network of 750 business coaches to advise the beneficiaries. Having already offered the instrument to SMEs for four years, the Executive Agency for Small and Medium-Sized Enterprises (EASME) has prepared the 2018 edition of the Horizon 2020 SME Instrument impact report. In this article, some of the highlights of this report that might be interesting to policy-makers are presented.

Location of companies and regional hubs

SMEs from Spain and Italy account for one third of both applicants and funded companies. Combining Spain and Italy with numbers from the UK and Germany, these four countries represent half of all the funded SMEs.

At the same time, the SME Instrument’s geographical distribution matches the main innovation hubs in Europe, including London, Berlin, Dublin, Paris, Vienna, Amsterdam and Stockholm.

Skeleton Technologies (www.skeletontech.com) produces graphene-based ultracapacitors – extremely powerful energy storage devices used in hybrid trucks, cars and buses, wind turbines, power grids, and even satellites. In 2014, the company got SME Instrument Phase 1 funding that allowed it to make a feasibility study for the production technology of ultracapacitors. A subsequent EUR 2.5 million Phase 2 funding enabled the development of the technology at industrial scale. In 2017 Skeleton Technologies received a EUR 15 million quasi-equity loan from the European Investment Bank and opened a new manufacturing facility in Germany.

The effects of the SME Instrument

The conclusions of the report outlines the most important SME Instrument effects that underpin the relevance of the instrument in terms of supporting SME competitiveness. There are four main effects that should be stressed:

  • The SME Instrument helps companies build the appropriate capacity to deploy their innovations in the market;
  • The SME Instrument support proved instrumental in linking technological progress to market opportunities;
  • The increase in capacity and connection to cross-national networks resulted in several forms of commercial success;
  • Such commercial success lead to an increase in economic performance, e.g. in terms of turnover, employment and additional investments.

Implications for policy-makers

The Horizon 2020 SME Instrument impact report provides solid evidence that the SMEs who have received the support grow faster and have an improved innovation capacity. An opportunity for policy-makers related to the SME Instrument that is not touched upon in the report, however, is the awarding of the so-called ‘Seal of Excellence’ certificates. These certificates are awarded to proposals which are considered to be excellent, but do not get funded owing to budget constraints.

The aim is to highlight these high-quality projects and companies so they could have an improved access to alternative funding sources (regional, national, private or public). It is up to each country and region to establish supporting funding schemes for these projects and indeed, many have done so (e.g. the Czech Republic, France, Germany, Sweden, Spain, Poland, Italy and Norway). In other countries, this is an unused opportunity to support promising business ideas that have already been rated very highly by international business experts. Following the example of the mentioned countries could be worth considering. 

Sources and further reading

EIC SME Instrument Data Hub, https://sme.easme-web.eu/

Guide for Applicants (2018). SME Instrument, H2020 Programme, http://ec.europa.eu/research/participants/data/ref/h2020/other/guides_for_applicants/h2020-guide-smeinst-18-20_en.pdf

Horizon 2020 Work Programme 2018-2020. Towards the next Framework Programme for Research and Innovation: European Innovation Council (EIC) pilot, https://ec.europa.eu/easme/sites/easme-site/files/horizon_2020_work_programme_eic_pilot_2018-2020.pdf

Innovation Kitchen – Horizon 2020 SME Instrument impact report (2018). Executive Agency for Small and Medium-sized Enterprises, https://ec.europa.eu/easme/sites/easme-site/files/smei_2018_impact_report_final_may_2018.pdf

Innovation Kitchen – Horizon 2020 SME Instrument impact report (2018). The highlights. Executive Agency for Small and Medium-sized Enterprises, https://ec.europa.eu/easme/sites/easme-site/files/sme-instrument-impact-report-digital.pdf