🇪🇺 EU direct investments in startups 👍👎
The European Commission has completed its first direct equity investments into startups. 42 lucky (?) companies have already received between €500k and €15M (European Commission), 117 are in the pipeline awaiting trial… I mean, due diligence.
The goal? Bridge the funding gap and boost innovation in the continent.
The outcome? A shitstorm of opinions.
Let’s shovel our way out of it.
European Innovation Council Fund (EIC) is meant for startups developing breakthrough technologies including deeptech, medtech, agritech, foodtech … No, not the average SaaS company (LinkedIn). It aims to help them gain critical mass and commercial viability for the sake of EU’s tech sovereignty.
The Pitch Deck
Forget about it.
Similarly to the process for getting Horizon 2020 grants, approaching EIC requires a written proposal, 50-100 pages essay thoroughly defined (European Commission). If selected, the founders are invited to pitch to an interview board, gathered just for the occasion.
The process is extremely bureaucratic. Especially when it is compared to fundraising 101, where a pitch deck is the first contact point and members of the investment board follow the startup along the entire process.
The Term Sheet
The messiest ever.
It states that investors can put any amount from €500k to €15M in return for a stake in the firm.
Does EIC introduce the startup to additional investors? "Yes", says a spokesperson. "I have been misled", state multiple founders who thought that EIC would have helped in finding private investors covering 50% of the amount (Politico <- plenty of negative statements).
The EU is officially a VC fund (kind of). What now?
- What are the implications of having the EU among the shareholders? Will you be eligible for a follow-on investment (sifted)? Can you nimbly change course and pivot?
- How will a more active role of the EU shape the European VC space? Will it hinder competitors to attain tech sovereignty?
- Is the EU simply offering a lifeline to unprofitable businesses? Or is it going after a solid return on investment?
Have you heard that Cameo racked $100M last year? Maybe it’s worth investing after all!