This is the post number three of a series that explains the revised EIC Investment Guidelines. We focus on Buckets (investment scenarios).

The Investment Guidelines have been updated to provide more clarity to applicants and to reflect recent changes in the management of the EIC Fund and will remain in place until the end of 2022.

Updated: 1st March 2022

Soon, we will introduce other main points discussed in the document that might be of interest for any project that needs investors.


Insight on on the so-called:


There are several financing methods that the European Commission refers to. Among those, there are the so-called “buckets”. Basically, buckets are investment scenarios or a way to determine how to finance a project.

As reported in the document,

If the company and the EIC Fund consent to the proposed co-investment opportunity, financial and commercial due diligence and negotiations may then be performed jointly and in agreement with the potential co-investor(s). However, under control of the Fund to ensure sufficient due diligence and implementation of required conditions to be included in the investment documentation.

Following an initial assessment implying some level of due diligence, including KYC compliance checks (led by the EIC Fund), and market consultation (led by the Investment Advisor), a transactions’ categorisation will be done into the “buckets”.

This classification will not be static. In fact, cases may be moved from one bucket to the other as the due diligence process evolves, based on its findings, or on the initiation of co-investment interest – resulting interalia from the de-risking operated by the EIC Accelerator support, or at later stage as the project evolves and milestones are reached.

There are 3 main “buckets” (investment scenarios):

Bucket 0: No Go  It includes projects that cannot meet the mandatory requirements. Their issues in the assessment or due diligence, at any stage, prevents any investment.

Bucket 1: Companies are non-investment ready yet

It includes projects that are not investor ready for regular investors yet. They thus remain very high risk despite the awarded EIC Accelerator support.

Bucket 2: Co-investment opportunities identified 

It includes projects with immediate interest by the investors in co-investing into EIC selected companies.

Bucket 0: No Go

Bucket 0 includes cases for which initial assessment or due diligence, at any stage, reports substantial negative issues preventing investments.

The EIC Fund’s due diligence is a more specific as well as accurate examination of an operation.

If one or more of the conditions below exist, the EIC Fund will recommend to the EC to reject the investment. Consequently , this decision may lead the EC to gather a jury of external independent experts to re-evaluate the proposal. However, in other cases, this can also terminate or even cancel the already concluded EIC Accelerator contract.

It all depends on the case (as the official document reports):

  • The innovation does not show the expected solid, long-lasting competitive advantage and impact on the basis of which the operation was selected.
  • The team has changed since the evaluation and does not anymore gather the strong skills, capabilities and motivation needed to get the company off the ground and scale-up.
  • Other examples of MAC (Material Adverse Changes) have occurred since the initial assessment of the company undertaken by EISMEA. They include major changes in management, changes in control, use of bad leaver provisions, serious litigation situations, including among shareholders, or loss of major suppliers or clients or partners on which the company is heavily dependent.
  • The cap table evidences strong misalignment of existing shareholder’s interest vis-a-vis the company, lack of sufficient incentive for founders as well as key team, etc.
  • The beneficiary refuses or is unable to provide information on an existing investor/shareholder and their ultimate beneficial owner(s), in relation to a possible reputational risk for the EU.
  • An existing shareholder and/or its ultimate beneficial owner (UBO) falls under the cases of exclusion from Union support in accordance with the EU Financial regulation.
  • Financial data as well as documentation submitted at a proposal stage contradicts company’s books.
  • The company does not directly own or does not have access to alleged IP Alleged IP or it is the subject of litigation.

Bucket 1: when companies are non-investment ready yet

Bucket 1 includes cases that are not ready for regular investors yet. This may be due to remaining very high risk despite the awarded EIC Accelerator support.

It is recognized that the project has a distinct potential. However, it’s not fully developed yet and still needs improvements on some level – or several.

The lack of immediate interest may result from various shortcomings. Among them: very early stage of the underlying technology, a too long planned time to market, a too small market compared to the investment needed, etc.

These three types of cases are envisaged (as the official document reports):

  1. The EC okayed support as it gets a minority veto, since the sector affects the EU critically. The EIC Fund may optionally invest in stages or convertible shares to remain flexible per situation.
  2. The innovation has the potential to have a high impact by addressing a societal need or an EU priority. This is particularly in the case of strategic technologies. They are those related to the EIC Accelerator Challenges in the EIC Work Programme, defined as critical technologies and technology roadmaps in the action plan on synergies between civil, defense and space industries as well as in accordance with the update of the 2020 New Industrial Strategy.
    In such cases, operating as a major investor, the EIC Fund will ensure a board member seat in the target companies. External mentoring will be sought.
  3. The EIC Fund may invest in ways to almost match equity, mixing tools as it sets out. It can suggest switching to “grant first” covering up to 70% of pre-TRL9 costs to the EC, laying out goals that bring co-investors to replace initial EC backing.

Bucket 2: Co-investment opportunities identified

Bucket 2 includes cases where potential investors show immediate interest in co-investing into EIC selected companies.

The EIC Fund will seek that the equity investment* is at least matched by these other potential qualified investors. That means, it will cover at least 50% of the round, having an objective of 1:3 leverage for the full EIC investment cycle.

(*A minority investment in a company made by investors alongside a private equity fund manager or venture capital (VC) firm. Equity co-investment enables other investors to participate in potentially highly profitable investments without paying the usual high fees charged by a private equity fund.)

Lastly, to safeguard EU interest as an alternative to take a blocking minority on their own, the EIC Fund will discuss an agreement with other shareholders. On behalf of the EIC Fund, the Investment Advisor will negotiate the terms with potential co-investors, including possible mentoring tasks.

To learn more about the EIC Revised Guidelines, check out our previous articles on:

– Types of innovation; and

– Characteristic of investment.

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