Andra Larin's presentation on how to raise public money as a startup at Startupcamp Berlin 2017 curated by B10, a Berlin-based early-stage VC.

1. Page 1
MONEY FOR NOTHING?
PUBLIC FUNDING EXPLAINED IN FIVE EASY STEPS
Berlin, 8 April 2017
Andra Larin
EY Start-up-Initiative

2. The better the question. The better the answer.
The better the world works.
What is the one basic
topic funded by public
instruments?

3. INNOVATION

4. The better the question. The better the answer.
The better the world works.
Where does European
innovation come from?

5. According to EC statistics,
some 65% of private sector
research and development (R&D)
investment comes from
manufacturing
https://ec.europa.eu/growth/industry/innovation_en

6. a fact:

7. Innovation that happens inside
the big companies is live and
well in Europe

8. but

9. „21st century innovation is about
something that is more radical
than any big company can
handle”
Natan Myhrvold,
Intellectual Ventures, Ex CTO of Microsoft

10. European problem?

11. Our culture – risk averse
Lack of funding
Innovation ecosystems

12. SMEs are a particular target for
European innovation policy
The smaller the company is, the more it faces constraints
to innovation or to the commercialisation of its
innovations

13. Some 71% of companies with
between 1 and 9 employees
encounter difficulties commercialising
their innovations due to a lack of
financial resources, compared to 48%
of companies with 500 employees or
more

14. 5 steps to
public funding

15. know the
public
funding
landscape

16. Page 16Page 16
Incentive
mapping cube
 Idea development and pre-feasibility
 Research and pre-competitive
 Investment
 Commercialisation
PHASE OF START-UP / CONCEPT
TOPIC / INDUSTRY
/ SECTOR

17. Page 17Page 17
Phase vs
funding
source
Establishment,
Investment Commercialisation
Idea,
pre-feasibility
Research,
pre-competitive
Demonstration,
testing prototyping
GERMAN
EU

18. Page 18Page 18
Topics
ITC
nanotechnologies
biotechnologies
space
healthcare
life sciencesagriculture, food, forestry
oceanology and blue growth
smart citiestransport and mobilityclimate action & environment
material science
inclusive , innovative, and reflective societies
musicdesign and crafts
security

19. Page 19Page 19
Public support
pyramid
LOANS
CONSUL-
TATION
GRANTS
EQUITY
PUBLIC SME SUPPORT

20. Page 20
H2020 SME
INSTRUMENT
Direct support
(Phases I-II)
Grants
Indirect support &
Services
(Phase III)
Coaching &
Mentoring
(EEN)
Access to
Finance
ACCESS TO
FINANCE
eg InnovFin, COSME
Programmes
SME
Guarantee
SME Venture
Capital
H2020 Fast Track
to Innovation
Grants for close-to-
market innovation
activities in any area of
technology or application
Annual and multi-
annual programmes
Grants
28 EU MSs
EU level – Innovation in SME-s NATIONAL level
- SME measures
SME Instrument:
Phase I: Proof-of-concept
Phase II: Development & demonstration
Phase III: Go-to-market / consultation
Financing:
• Grants
• Loans
• Equity instruments
Financing:
• EU: Horizon 2020
• Own co-financing (can be covered with
Access to Finance measures - COSME,
EIB, EaSi Guarantee Financial
Instrument)
Accredited local financial
institutions (banks, VCs, AIs)
National Project
Coordinators
Online application,
National Contact Points
National
Managing Authorities
SME SUPPORT IN EU: INNOVATION

21. Page 21
H2020
SME
Instrument
EY supports
in Phase 1
and Phase 2
By 2020
investment of
€ 3 billion in
7500 projects
EU SUPPORT

22. SME Instrument Statistical Overview
(as of 24 January 2017)
Source: https://ec.europa.eu/easme/en/news/sme-instrument-1189-phase-2-proposals-submitted-under-june-2016-cut
2.445
proposals
submitted
35%
from
Spain and
Italy
85%
single
SMEs
17%
for ICT
36
countries
► 2.445 proposals submitted (Phase 1, 2)
► Phase 2: 66 projects out of 1534 proposals funded
► incl. 5 projects out of 59 from Germany
► incl. 10 projects under transportation call
15%
for
Transport
13%
for
Energy

23. SME Instrument 2016-17: 13 calls
Open Disruptive
Innovation Scheme
Disruptive ICT
concepts, products and
services applying new
sets of rules, values and
models which ultimately
create new markets or
disrupt existing market
Supporting SMEs
efforts for the
development -
deployment and
market replication
of innovative
solutions for blue
growth
Stimulating the
innovation potential
of SMEs for a low
carbon and
efficient energy
system
Small business
innovation research
for Transport and
Smart Cities
Mobility
Engaging SMEs in
security research
and development
Engaging SMEs in
space research
and development
Stimulating the
innovation potential
of SMEs for
sustainable and
competitive
agriculture,
forestry, agri-food
and bio-based
sectors
New business
models for
inclusive,
innovative and
reflective
societies
Accelerating
market
introduction of ICT
solutions for
Health, Well-
Being and
Ageing Well
Supporting
innovative SMEs in
the healthcare
biotechnology
sector
Accelerating the
uptake of
nanotechnolo-gies,
advanced materials or
advanced
manufacturing and
processing
technologies by SMEs
Dedicated support to
biotechnology
SMEs closing the gap
from lab to market
Industrial
biotechnology and
ideas/concepts
involving the use of
systems and/or
synthetic biology
Boosting the
potential of small
businesses in the
areas of climate
action,
environment,
resource
efficiency and
raw materials

24. Statistical Overview
(as of 24 January 2017)
Most funds allocated
2014-2016:
► ICT: 147 MEUR
► Transport: 132 MEUR
► Energy: 113,5 MEUR
► Biomarkers and
diagnostic medical
devices: 110 MEUR
► Nanotechnologies: 80
MEUR

25. Page 25Page 25
Some of the
German
Funding
Authorities
KfW
Bankengruppe
Bundesanstalt
für
Landwirtschaft
und Ernährung
(BLE)
Federal Office for
Agriculture and Food
Bundesminister
ium für
Ernährung und
Landwirtschaft
(BMEL)
Federal Ministry of
Food and Agriculture
Initiative Musik
Federal government’s
funding agency for
music industry SMEs
Mittel-
ständische
Beteiligungsges
ellschaft
Niedersachsen
(MBG) mbH
For SMEs in Lower
Saxony
Bundes-
ministerium für
Wirtschaft und
Energie (BMWi)
Federal Ministry for
Economic Affairs and
Energy
Bundes-
ministeriums
für Bildung und
Forschung
(BMBF)
Federal Ministry of
Education and
Research
Investitions-
bank Berlin
(IBB)

26. Page 26Page 26
Examples of
German
grants
Common task
programme
IBB
►Investment in
Berlin
►Grant: 10-30%
Pro FIT
IBB
►Tech-oriented,
R&D companies –
earli-phase &
project
►Grant or low-
interest loans
KMU-innovativ: ICT
BMBF
►ICT companies,
R&D and pre-
competitive
►Grant >50% of
expenses
KMU-innovativ:
production
BMBF
►Manufacturing,
R&D and pre-
competitive
► 50% of expenses
+ SME bonus
Agricultural grants
BLE
►R&D, agricultural
production,
processing,
marketing
►25%-100%
Music infrastructure
Initiative Musik
►Eg platforms,
promotion
activities…
►>40% of cost, max
€100K year
Central Innovation
Programme
BMWi
►R&D, market-
penetration. All
topics
►R&D max €380K
market <€50K
BioEconomy 2030
BMBF
►Ideation and
feasibility in
bioeconomy
►€25K- €250K

27. make
sure you
‘qualify’

28. Qualification Requirements
SME DEFINITION
TECHNICAL
READINESS
IMPLEMENTATION
CAPACITY
BUSINESS CASE
SIZE
of the company
 EMPLOYEES
 TURNOVER
 BALANCE SHEET
 OWNERSHIP
 PARTNERSHIP
 LINKAGES
RESOURCES
available
Company
from an
eligible
country
SME DEFINITION

29. Defining the
size
of the company
(incl. any
participations
over 25%)
People
<250Med-
ium
Enterprise
category
<50M
EUR
Revenue
BS
Value
<43M
EUR
<50
<10
Micro
Small
<2M
EUR
>10M
EUR
<10M
EUR
<2M
EUR

30. SME DEFINITION
TECHNICAL
READINESS
IMPLEMENTATION
CAPACITY
BUSINESS CASE
TECHNICAL
READINESS

31. SME DEFINITION
TECHNICAL
READINESS
IMPLEMENTATION
CAPACITY
BUSINESS CASE
IMPLEMENTATION
CAPACITY
2 - TEAM
covering all aspects of
the project
1 – OWN COFINANCING = access to
investors / loans
Assessment of
the overall
ability to
finance own co-
financing and
carry out non-
funded
activities 70%
30%
EU H2020 SME
Instrument: (own
funding around 1MEUR)
National
schemes:
Own financing
75-0%

32. SME DEFINITION
TECHNICAL
READINESS
IMPLEMENTATION
CAPACITY
BUSINESS CASEBUSINESS CASE
Assessment of the business idea’s probability to
obtain funding
unique
has (inter-
national)
market /
growth
potential
solves
public
problem
technical
& functional
innovation
activities
you need
funding for
are ‘eligible’

33. get
prepared

34. Understanding the requirements
Example based on H2020 SME Instrument
PROPOSAL
STRUCTURE
TECHNOLOGY
RESEARCH
MARKET STUDY
►Objectives
►Relation to
Work
programme
►Concept
►Methodology
►Ambition
►Users
►Market
►Competitors
►Company
►Commercial.
strategy
►IP, regulation
►Communication
►Work plan
►Decision-
making
►Innovation
management
►Risks
►Committed
resources
►Legal entity
►CVs
►Project
partners
involved in
project
►Sub-
contractors
►Approach to
meeting
ethical and
legal
requirements
►Security
EXCELLENCE IMPACT IMPLEMENTATION MEMBERS OF
CONSORTIUM
ETHICS &
SECURITY
5 CHAPTERS
30 PAGES
REGISTERING ECAS
ACCOUNT

35. align your
business
case

36. Preparing your Business Case
Mapping and aligning with grant call objectives
GROWTH
OBJECTIVES
SW(OT) ANALYSISCONTEXT SCAN BUSINESS MODEL
Strengths, Problems –
on what are we
building and what
shall be improved
Strategic
objectives of the
company
Value proposition,
customers, channels,
activities, resources,
partners, costs and
revenue model
Competitors,
trends, political /
economic climate,
technology factors,
uncertainties….
GROWTH
OBJECTIVES
CONTEXT SCAN SW(OT) ANALYSIS BUSINESS MODEL

37. AS-IS BUSINESS
MODEL
PROJECT TO BE
FUNDED
TO-BE BUSINESS
MODEL
Idea /
scope,
technical
(work)
plan
‘Cut out’ your project

38. Concept note drafting
Designing a project from your business case
Concept note:
- Company, team
- Strategic and project
objectives
- Technology, Novelty
- Project activities
- Market - users,
competitors, trends

39. write &
design your
application

40. Grant application
INPUT
Standard
templates
and
require-
ments
PREPARATION
Inputs
from steps
2-4 +
writing
funding
applica
tion

41. PROJECT’s
business model
work
packages /
plan over x
years
COSTS REVENUE
financial
plan
TECHNICAL PLAN
Project budget

42. Further matters to consider
Cut-off
dates
Partner
involvement
and LOIs
Sub-
contracting
Time to
grant
contract /
first
payment
Consultation
fees

43. Timeline
How long does it take from contract to grant?
Typical timeline of an application under H2020 SME Instrument
Planning,
studies,
partnering…
Iterative
drafting of
application,
coordination of
inputs, design
Design of
business case,
commericialisation
and project
work plan
Support with
project
administration
and finanances
Business case
design
Preparation Project implementation
0.5 month
According to
grant agreement
Evaluation
>4month
Application
writing
> 2 months

44. Page 44
Writing a
winning
proposal
1 Excellence
Objectives
Relation to Call/Work
programme
Concept
Methodology
Ambition
3 Implementation
Work Plan
Decision-making, risks
Innovation management
Financials and budget
Funding Application Structure
4 Members of Consortium
Legal entity
CVs
Project partners
Subcontractors
2 Impact
Users, Market
Competitors
Company
Commercialization strategy
IP, regulation
Communication
Commitment Partnership
Template Vision
Timing
Scope
Governance Budget

45. Page 45
Short URL:
EY SME IRA:
incentives
readiness
assessment
tool
Your online
15-minute
grant
readiness test
Quick online self
assessment for
incentive readiness
with no costs involved
Free EY initial assessment on
ability to raise capital through
public cash
incentives in the form of a
feedback upon questionnaire
fulfilment
Questionnaire challenges
finding innovative
business cases with
high growth potential
suited for global markets
Questionnaire submission
opens the door to EY
Global Network and the
new business
opportunities
Doing
smart business
Access to networks
Addressing future
needs
Raising
capital
Benefits
fromself-assessment
Benefits
fromEYsupport
1
2
3
4
https://eysurveytool.ey.com/wix/p1164074.aspxWWW
EY is supporting
young
companies with
access to public
funding
goo.gl/wNJzVT

46. The better the question. The better the answer.
The better the world works.
Which comes first –
funding or a business
idea? for questions and requests on public startup
and SME funding in EU and Germany, please
contact
andra.larin-van.der.pijl@ey.de.com
www.linkedin.com/in/andralarin
EY Start-up-Initiative
start-up-initiative.ey.com/