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Research Funds Up for Grabs
June 3, 2014   
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A generous 77 billion euros is up for grabs under the European Union’s new Horizon 2020 framework program, which aims to advance research and innovation in the bloc and is the world’s largest initiative of its kind. Scientists and companies can use these funds to put their research results, products and technologies to commercial use.

The Horizon 2020 program is targeted not only at researchers, academic institutions and research-and-industry consortiums, but also individual companies. Small and medium-sized enterprises, thanks to their flexibility, often come up with quality inventions.

“Horizon 2020 will support the entire innovation chain, from the idea to putting the innovation on the market,” says Zygmunt Krasiński, Ph.D., deputy director of Poland’s National Contact Point for EU research programs. “The European Commission will distribute funds among the best process, product, technological and social innovations chosen on a competitive basis.”

The Horizon 2020 program is also an opportunity for making commercial use of ideas developed as part of the EU’s 7th Framework Program. The competition will be tough, but it is worth trying to win funding, Krasiński says. The money will help Polish inventions and prototypes that have won awards at international exhibitions hit the European market in the form of products, services and programs for the economy and society.

Many breakthrough inventions have cost a lot of money and effort to develop, but have not moved beyond the stage of patenting prototypes and touring numerous exhibitions, Krasiński says. The inventors were proud of bringing home gold medals from innovation fairs, but business acumen was needed in order to sell the invention and put it on the market.

Funds available under the Horizon 2020 program are intended for companies operating in sectors such as nanomaterials, nanotechnology, information and communication technology (ICT), food, biomedicine, security, aerospace, energy and transport. Also eligible are interdisciplinary projects bringing together various branches of science and the economy.

Katarzyna Walczyk-Matuszyk, coordinator for innovation at the National Contact Point for EU research programs, says, “Small and medium-sized enterprises, acting alone or in a consortium, can apply in each of the three phases of financing if only they have an innovative solution and plan to implement it.” For starters, they can receive a lump sum of 50,000 euros to check if a concept developed by a company or a research team is suitable for introduction onto the market. The first phase covers a period of up to six months. During this time, the company should prepare a concept of a marketing plan for implementing their product. The money can also be spent on protecting intellectual property rights and risk assessment.

When the business plan is ready, the project partners will be able to apply for second-phase financing, which offers an opportunity to receive up to 2.5 million euros for two years. Financial support is intended for demonstration, piloting innovative processes, products, services, miniaturization, and planning.

In the third phase, instead of direct financing from the European Commission, companies can get a loan on attractive terms, and with less paperwork than in the case of bank loans. Innovations even at this advanced stage of commercialization are high-risk ventures—with no security for financing them, and a high degree of uncertainty. Therefore, companies need simplified access to debt and financial instruments.

“Financial instruments for innovation will play a very important role, alongside the SME Instrument, in the Horizon 2020 program,” says Krasiński. “After the success of the Risk Sharing Finance Facility in the 7th Framework Program, including the pilot Risk Sharing Instrument, both these projects will continue to run on a larger scale. This is something new in relation to the 7th Framework Program. The point is to unblock the innovation cycle and to put result results and modern technologies on the market.”

Loans will be granted to small and medium-sized enterprises, and to large projects carried out not only by businesses but also by public institutions, such as universities and research institutes, acting alone or as part of consortiums. Funds can be allocated, for example, to help complete research or finance industrial tests and full commercialization. The competition for Horizon 2020 grants will be intense, because only a small percentage of the companies and institutions will receive funding for their projects. Financial instruments are an additional opportunity for projects that failed to secure grants. Financial instruments will be granted directly by the European Investment Bank, as well as by financial intermediaries in Poland cooperating with the bank.

Another category of financial instruments is venture capital intended for start-up businesses and companies in early stages of development. Regardless of who seeks the funds, co-financing for research projects is 100 percent, while co-financing for innovative projects is 70 percent of eligible costs. However, universities, as nonprofit organizations, can get up to 100-percent reimbursement in the case of innovative projects. Importantly, there are new rules for value-added tax (VAT) settlements. In the Horizon 2020 program, VAT becomes an eligible cost if the beneficiary proves that the tax cannot be retrieved. This marks a change from the previous arrangement in the 7th FP. When a university bought equipment for research and testing under the 7th FP, it had to pay VAT as its own contribution.

The Horizon 2020 program is managed directly by the European Commission’s Directorate-General for Research and Innovation and the Research Executive Agency. These institutions have launched an official website (http://ec.europa.eu/programmes/horizon2020) as well as a Participant Portal where information is posted about available funding opportunities, program budgets and deadlines for submitting applications. With R&D projects carried out by consortiums, the project coordinator and the consortium partners need to submit an application. Application forms can be found on the website and they can be submitted online. This does not mean that Polish researchers and entrepreneurs will have to deal with the paperwork on their own. The National Contact Point for EU research programs offers organizational and formal assistance as well as support in the search for a partner for a consortium.

Karolina Olszewska
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