Horizon Europe

Horizon Europe is the European Union's flagship research and innovation framework programme for 2021-2027, operating as a public funding body rather than a traditional venture capital firm. With an impressive budget of approximately €95.5 billion, this ambitious program aims to foster scientific excellence, address global challenges, and boost European industrial competitiveness. It serves as a critical public funding instrument designed to drive innovation across the continent, supporting a wide range of activities from fundamental research to market-creating innovation.

While Horizon Europe encompasses a broad spectrum of funding instruments, the most relevant component for a venture capital analyst is the European Innovation Council (EIC). The EIC operates under the 'Innovative Europe' pillar and is specifically designed to identify, develop, and scale up breakthrough technologies and disruptive innovations. It targets high-risk, high-impact projects, particularly those from small and medium-sized enterprises (SMEs) and startups, that have the potential to create new markets or disrupt existing ones.

The EIC Accelerator is the flagship program within the EIC, providing 'blended finance' to individual companies. This unique funding model combines grant funding with direct equity investments. Companies can receive grants of up to €2.5 million to cover innovation activities, such as R&D and demonstration, and the EIC Fund can make direct equity investments of up to €15 million per company. These investments aim to bridge the funding gap for deep tech startups that may struggle to attract sufficient private capital due to their high-risk nature or long development cycles.

In conclusion, Horizon Europe, primarily through the EIC Accelerator, acts as a significant public catalyst for innovation, complementing rather than directly competing with private venture capital. Its funding provides crucial early-stage and growth capital to European deep tech ventures, helping them de-risk technologies and scale up, thereby preparing them for subsequent private investment rounds and strengthening Europe's position in global innovation.