GNSS funding opportunities for SMEs15 February 2008With the EU’s ambitious GALILEO satellite navigation system now well on track, and with EGNOS, the European Geostationary Navigation Overlay Service, already operational, developers of downstream services are now being urged to start planning for a lucrative future. The EU is providing a number of funding opportunities to help SMEs develop and then capitalise on new satellite navigation products and services.  In bygone days, our seas and oceans were the final frontier, representing adventure and opportunities for enterprising individuals. Today, space is providing those new opportunities, with ground-based activities related to it forming a rapidly expanding global market for today’s bold adventurers. At the end of 2007, EU transport ministers agreed to finance the remaining €3.4 billion needed to ensure that GALILEO is fully operational by 2013. Funds will also go towards EGNOS, which augments the US and Russian satellite navigation systems. EGNOS makes GPS and GLONASS signals suitable for applications where accuracy, safety and reliability are crucial, such as flying aircraft or navigating ships through narrow channels. To help ensure that GALILEO and EGNOS create new economic spaces, boosting Europe’s competitiveness, creating jobs and achieving key social and environmental goals, a number of EU funding instruments are providing support to private innovation, with a particular focus on SMEs. The EU Seventh Framework Programme The €50-billion Seventh Framework Programme for Research and Technological Development (FP7) is the EU's main instrument for funding collaborative research from 2007 and 2013. It is managed by the European Commission’s Research Directorate-General. SMEs are actively encouraged to participate in all research actions. FP7 provides numerous opportunities for research and applications related to Global Navigation Satellite Systems (GNSS). Under the funds dedicated to transport and aeronautics, a total of €25 million in 2007 alone was allocated for this purpose. GNSS applications can also be financed under other FP7 areas, such as transport, health and information and communication technologies. FP7’s Capacities programme offers opportunities to develop clusters and supports the development of SMEs. Funding is in the form of grants that can cover 50-100% of eligible costs depending on the type of activity and the type of applicant. To be eligible for these grants, you need to form a consortium with at least three companies or institutions from three different countries. When should you consider applying for FP7 funding?
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Competitiveness and Innovation Programme (CIP) Coordinated by the Commission’s Enterprise and Industry DG, the Competitiveness and Innovation Programme (CIP) seeks to promote the competitiveness of European enterprises. With SMEs as its main target, the programme supports innovation activities, provides better access to funding and delivers business support services at the regional level. It encourages better take-up and use of information and communications technologies (ICT) and helps to develop the information society. It will also promote the increased use of renewable energies and energy efficiency. CIP has two main financial instruments for SMEs: the SME Guarantee (SMEG) and the High Growth and Innovative SME (GIF) facilities. Under SMEG, the European Investment Fund (EIF) provides loan guarantees to financial intermediaries who then grant (or guarantee) loans to SMEs. The EIF manages SMEG on behalf of the European Commission. The objective is to improve access to finance for the start-up and growth of SMEs, and investment in innovation activities, including eco-innovation. The instrument primarily supports the provision of loans to all types of SMEs and start-ups, including those in hi-tech and fast-growing industries. However, those with very high growth potential are more likely to require substantial equity financing as well (see GIF section below). Enterprises should not apply directly to the EIF but to the participating financial intermediaries that provide the loans. The first applications from financial intermediaries are currently being processed. This means that it will take some time before the instrument is accessible to SMEs in all participating countries. Under GIF, the EIF invests in specialised funds, which provide venture capital to SMEs. The objective is to improve access to financing for the start-up and growth of smaller enterprises, and investment in innovation activities. The EIF manages the GIF on behalf of the European Commission. Again, enterprises should not apply directly to the EIF but to participating venture capital funds. Venture capital funds have a track record of backing successful innovative companies. Their contribution usually goes beyond funding and includes support on the strategic issues that start-ups face. Conversely, it is important to realise that these firms are very selective and only accept start-ups with a solid business plan, a strong growth story, an able management team and a unique, sustainable competitive advantage. This means that GIF funding is primarily for SMEs with (very) high growth potential. As this instrument is now being put in place, it is not yet fully accessible to SMEs. However, enterprises can already get in touch with venture capital funds that participated in other EIF programmes. Further information on how to locate venture capital opportunities can be found at: http://www.gate2growth.com Risk Sharing Finance Facility (RSFF) The European Commission and the European Investment Bank (EIB) have joined forces to set up the Risk Sharing Finance Facility (RSFF). RSFF is an innovative scheme to improve access to debt financing for private companies or public institutions investing in the fields of research, technological development, demonstration, and innovation. RSFF is closely connected to FP7. In a way, it complements the research programme by bridging the gap between FP7 grants which are intended mainly for pre-commercial research and traditional bank loans which are mostly used by mature companies for lower-risk projects. RSFF is built on the principle of credit risk sharing between the European Commission and the EIB and extends the ability of the EIB to provide loans or guarantees with a low and sub-investment grade risk profile which involve financial risks above those normally accepted by investors. Despite its ability to accept some level of risk, projects that apply needs to be bankable, i.e. technically sound and financially viable. SMEs can benefit from this instrument. In practice, SMEs do not apply directly to the EIB but will contact their ‘house bank’ or one of the EIB’s partner banks. Alternatively, SMEs can join larger ‘Common legal entities’ when applying for a large loan. Up to 50% of eligible costs can be funded. The ideal candidates for this type of loan are relatively large companies or consortia of SMEs with ambitious R&D plans, as they can apply directly to EIB. Individual SMEs have to apply through EIB’s partner banks. In both cases, beneficiaries need to implement an eligible RDI project and demonstrate their ability to service their financial obligations. EASYEASY, the PRO INNO Europe Business Angels Network, helps knowledge-based companies to access early stage finance. The programme is targeted at companies looking for ‘seed’ funding and interested in meeting business angels, seed funds and early stage venture capital funds. European Space Agency (ESA) initiativesThe ESA operates a number of funding instruments that are of interest to SMEs: the European Special Application Fund (ESAF), its Technology Transfer Programme (TTP), and its Investment Forum. ESA is raising a venture capital fund that will specialise in space applications. Recently, E-Synergy Ltd (based in England and Switzerland) was selected by the ESA as the business entity in charge of the establishment and the subsequent management of the ESAF (formerly known as the ESINET Fund). The main mission of the TTP is to facilitate the use of space technology and space systems for non-space applications and to demonstrate further the benefits of the European Space Programme to European citizens. The Technology Transfer Programme Office is responsible for defining the overall approach and strategy for the transfer of space technologies and systems, including the incubation of start-up companies and their funding. In collaboration with the EU-funded projects INVESaT, FINANCE Space and the ESAF, the ESA hosts the ESA Investment Forum. This forum brings together promising start-up companies using space technology with the finance and investment communities.  As the EU provides such a wide array of tools, it is easy to get lost. Several networks supported by the Europe INNOVA initiative help space-related SMEs navigate the various funding tools. Europe INNOVA is an Enterprise and Industry DG initiative for innovation professionals. FINANCE Space (Finance Innovation Network Addressing New Commercial Enterprise using Space) is one of these networks. It seeks to increase investment activity in innovative downstream companies and projects across Europe with the overarching objective of commercialising space technologies through non-space applications and services. This would in turn stimulate more investment in space innovations. INVESaT (Bridging the gap between INnovative enterprises and financial InVEstors in the emerging ICT markets of SaTellite applications) is a network which aims to consolidate and disseminate, in a coordinated way, the knowledge components required to stimulate and support more efficient investment in innovative services exploiting satellite capabilities in earth observation, navigation, timing, geo-positioning and telecommunications. KIS4SAT was recently launched to address the specific needs of SMEs developing satellite applications. It aims to create support packages for high-growth start-ups and facilitate networking in the satellite downstream application sector. GSA is constantly looking for new opportunities to stimulate downstream GNSS market development. A list of Venture Capital and Business Incubators and GNSS related business networks can be found on the GSA website. This list will be updated on a regular basis.
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