The European Commission (EC) announced this Wednesday the first round of direct investments in equity through the new fund of the European Innovation Council (ERC). In all, 42 start-up companies, normally known as startups, and small and medium-sized companies (SMEs) will be supported, with a total budget of around 178 million euros.
CorWave, a French SME, was the first to receive direct investment in equity, worth 15 million euros. As a mission, the company plans to provide a new standard of healthcare to patients with potentially deadly heart failure.
In a statement, the EC explains that the investment of the ERC fund mobilized other investors. The result? EUR 35 million in the fourth phase of CorWave’s start-up financing.
This value will allow CorWave to launch on the market and expand its medical solution “left ventricular assist device”. The goal is for this equipment to halve serious complications and the need for a patient to return to the hospital.
In addition to the French company, other organizations are already known that will soon have the European aid from the fund, with the agreements practically closed. Hiber, from the Netherlands, XSUN from France, Geowox Limited in Ireland and EPI-ENDO Pharmaceuticals EHF from Iceland are the names disclosed.
The importance of this fund for startups and SMEs
According to the Commission, the first investments are preceded by a “thorough” evaluation by external experts and by a due diligence process supervised by professionals and external investors on the Investment Committee of the CIS Fund. Finally, it is up to the Board of Directors of the CIS Fund to make a final decision.
As Commissioner Mariya Gabriel explains, this fund aims to “close the financing gap for highly innovative companies, unlock additional private investments and allow them to expand across Europe”.
Created in June 2020, the CIS Fund is an initiative that the Commission defines as “radical”, and which aims to make direct investments in equity and quasi-capital, between 500,000 and 15 million euros from start-up companies and SMEs.
This is the first time that the Commission has made direct investments in equity or quasi-equity, that is, investments in equity of start-up companies, combined with a grant, with equity participation expected to vary between 10% and 25%. At the end of 2020, the European Innovation Council helped 38 startups and “promising” companies by 176 million euros. This was the last round of funding for the CEI pilot project, the EIC Accelerator, and received more than 4,200 applications, the highest number ever.