EIC infuses first equity investments of €178m in striking innovations

CorWave’s “Left Ventricular Assist Device” will significantly improve the lives of those with advanced heart failure

Photo: EU Mariya Gabriel.

Forty-two highly innovative start-ups and SMEs will together receive equity financing of around €178m to develop and scale up breakthrough innovations in health, circular economy and advanced manufacturing, among other areas. This is the first round of direct equity investment through the new European Innovation Council (EIC) Fund, announced by the Commission on Wednesday. 

The French CorWave is the first EU company in which the EIC Fund is investing. The €15m investment by the fund has played a critical role by mobilising additional investors to unite behind the French SME, which led to a €35m of investments in the fourth stage of start-up financing for CorWave.

This sizeable venture will enable CorWave to successfully bring to the market and scale up its innovative medical solution “Left Ventricular Assist Device”. It will significantly improve the lives of those with advanced heart failure, reducing by half severe complications and the need for rehospitalisation, while at the same time improving significantly their quality of life.

The investment agreements with the other target companies are now being finalised, and will be announced shortly.

Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth commented that Europe has many innovative, talented start-ups, but too often these companies remain small or relocate elsewhere.

This new form of financing – combining grants and equity – is unique to the European Innovation Council, Commissioner Gabriel said explaining that it will bridge the funding gap for highly innovative companies, unlock additional private investments and enable them scale up in Europe.

The equity investments, ranging from €500.000 to €15m per beneficiary, complement the grant financing, which has already been provided through the EIC Accelerator Pilot to enable companies to scale up faster. This is the first time the Commission has made direct equity or quasi-equity investments, specifically equity investment blended with a grant, in start-up companies, with ownership stakes expected to range from 10% to 25%.

Under the EIC Accelerator a total of 293 companies have already been selected for funding worth over €563m in grants since December 2019. Among those, 159 companies have been selected to additionally receive the new equity investments from the EIC Fund. The 42 companies announced on 6 January are the first of this group to successfully pass the evaluation and due diligence process.

The other 117 companies are in the pipeline to receive investments pending the outcome of the relevant process.

The EIC Fund was established in June last year and is a breakthrough initiative of the Commission to make direct equity and quasi-equity investments in the capital of start-ups and SMEs. It is first of its kind in terms of EU intervention in direct equity-type investments. In its current stage, it makes such investments, in combination with grants, as part of blended finance under the EIC Accelerator Pilot. The allocated maximum grants and equity can reach €17.5m.

 

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