Innovation in Small Businesses: The SME Instrument
Written by Lisa Parks

The European Commission (EC)-funded SME instrument is a specific Horizon 2020 funding track aimed at helping small and medium sized enterprises (SMEs) to take their ideas from concept to commercialisation. The instrument is mainly designed for close to market concepts developed by innovative EU-based SMEs.

So, what is the EC’s definition of an SME? To meet the EC’s definition of an SME you must have fewer than 250 employees and either turnover of less than €50 million or a balance sheet total less than €43 million. Single SMEs can apply for the instrument, or small groups of SMEs, but all partners must be SMEs in order to be eligible.

And, how does the SME instrument work? The SME instrument consists of three distinct phases. Depending on your idea and how much development has already been performed, you can apply for one of the following:

  • Phase 1 is a feasibility assessment to determine the commercial potential of an innovative idea. €50,000 per application is available to undertake a 6 month project, with a business plan being the outcome.
  • Phase 2 provides funding for ideas with a sound commercialisation plan behind them; this can be obtained via Phase 1 or other routes. Projects can focus on a variety of development goals over a timescale of 1 to 2 years, including scale up, prototyping, testing, demonstration, and more. The funding available is €500,000–€ 2.5 million and above, depending on the topic, with the outcome being a new product, process or service ready for the market. In most cases, 70% of eligible costs are offered, or in exceptional, specific cases up to 100%.
  • Phase 3 provides support for commercialisation, such as linking with private investors and customers or assistance in applying for further EU risk finance.

When can you make a submission to the SME instrument? Calls for proposals are open all year round, but there are four cut off dates per year. The current topics will close at the end of this year, and new topics will be published for 2016-17 this autumn. Draft information is currently available for the upcoming topics.

What topics are available under this program? The SME instrument covers a large variety of topics, such as health, nanotechnology, ICT, and the environment. You can access the calls from the SME instrument call information page.

So, what should you really focus on when applying for the SME instrument? The competition really is strong for this call, with a very high number of proposals per call (for example, 2,990 proposals were submitted for the recent June call deadline); therefore you need to stand out from the crowd.

It has been suggested following the first round of evaluations that focusing on the business opportunity rather than the research idea as you would in a traditional grant proposal is key. Commercial potential of the idea needs to be at the forefront of your application.

If you would like help or guidance applying for the SME instrument Phase 1 or 2, please contact the Euram team at and we would be happy to help!