Next Generation EU: how to obtain European funding for entrepreneurial ideas

Following the Covid-19 crisis, the Next Generation EU European recovery plan is one of the possible lights at the end of the tunnel that entrepreneurs have been longing for. However, the complex process of applying for and processing these grants may make them difficult to access. Specialised platforms or the support of a consultancy may simplify and streamline things for those startups that want to apply.

Brussels is making history by allocating an €806.9 billion injection of funds to build a modern Europe that aligns with the 2030 Agenda. This time, it’s not a case of Spain missing out on the Marshall Plan, rather it will take almost 20% of the total: €140 billion, over half of which will be non-repayable grants that should be implemented within six years, while the remaining €67.3 billion will be activated through loans.

The majority of these subsidies and grants will go to the private sector, which has been hard hit by the pandemic. For companies to be able to receive this injection of funds, they need to review their strategy and quickly adapt their business model, in order to spearhead the projects that stimulate a more sustainable, cohesive and digital economic model.

The crisis as an opportunity

In the aftermath of a recession, businesses are a key player in rebuilding economic activity and boosting employment. “Historically, the brightest ideas often appear after times of crisis, because people and companies have to reinvent themselves,” says Antonio Salido, CEO of Nuvix, a consultant specialising in digital transformation.

The executive points out that startups and their innovative spirit are “a major seedbed of ideas for business models of the present and the future”. He therefore emphasises that, thanks to the combination of this disruptive potential with the large amount of capital coming out of Brussels to finance new business models, “we wouldn’t be surprised to see that many companies that didn’t exist a few years ago, now have a large market capitalisation”.

Nevertheless, for an idea to come to fruition those behind it need to continue with the innovation process and receive the right advice, have a good enough team and a concrete business model, warns Salido. Nuvix therefore makes a comprehensive, overarching diagnosis of each client’s situation, recommending the best options in terms of deductions, assistance and incentives, and advises that all startups follow such a process.

Moving towards a structural transformation

The financial elements of the Next Generation EU recovery plan will be distributed through two main tools:

• The Recovery and Resilience Facility, which accounts for 90% of the budget, will be allocated to long-term strategic investments in human capital (education, health, social protection), fixed capital (infrastructure projects, R&D&i) and natural capital (renewable energies, adapting to climate change).
• The Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU) is more focused on the short term, providing support to companies affected by Covid-19-related restrictions and, above all, to those SMEs in need of a liquidity boost.

At the same time, the Horizon Europe programme stands out. Its purpose is to encourage innovation and research in the Member States, and it has received funds under the Next Generation banner. Also, thanks to the financial help, the Spanish Government has launched the ‘Next Tech’ fund, which will mobilise up to €4 billion, and which seeks to promote digital entrepreneurship and investment in high-impact technological projects, focusing primarily on artificial intelligence, blockchain and cybersecurity – technologies that are already having an impact on industries such as fintech.

How to submit your project to receive financial assistance

So, what is the best strategy for a startup or SME to be competitive in applying for these European funds? According to Antonio Salido, the company should have a well-defined target and a relevant research component or technological challenge. Consequently, the project must clearly present the following points:

• History, activity and evolution of the company.
• Innovation, processes and key tasks.
• Target market – defined customer segments and countries
• Products and services to develop, and why they are differential.
• Team: at the innovation stage and in the launch phase and its scalability.
• Key financial data.
• Socio-economic and environmental impact.

The CEO also notes that, with regard to R&D&i, the projects that often succeed in these applications are those related to cybersecurity, artificial intelligence, robotics, machine learning and deep learning, and that also have at least €175,000 of investment. However, he insists that entrepreneurs who have a good idea should not focus their business model on obtaining funds: “Grants and loans are a good financial add-on, but a solid business model should deliver results on its own.”

Advice to help streamline and win

The Spanish Chamber of Commerce has indicated that 60% of companies are unaware of the existence of these Next Generation EU funds, while 73% do not know how to apply for subsidies. In the sea of public funding, initiatives like Yotramito can help entrepreneurs make sense of things. “Many SMEs and entrepreneurs who may deserve help don’t apply for it because of excessive bureaucracy. We democratise and facilitate access to European funds and other grants by analysing the official texts,” explains Alejandro Pérez de Cárdenas, the CEO of the platform.

In the world of entrepreneurship, every case is unique an must be studied thoroughly. This is why Pérez de Cárdenas believes that expert advice is essential when it comes to getting new help or making another attempt to apply for funds that were not granted on a previous occasion. “There’s no magic wand, only good advice”, he declares. His contribution to this is to say that companies should choose wisely when it comes to which funds to apply for, and, above all, “to speak the lingo”.

In this sense, each pool of funding has an objective (to promote entrepreneurship, encourage R&D&i, and so on), so that when putting forward a proposal you have to know how to communicate it in a manner adapted to each of them. “It’s important not simply to have an innovative project, but to know how to explain it”, he claims.

Bridges with Latin America

In the context of working towards the Sustainable Development Goals (SDGs), the European Union is also committed to development and reducing poverty. For this reason, they have introduced several changes to R&D&i programmes, including triangular cooperation with Latin America, in particular with those countries that have made more progress in the fields of science and innovation. This represents a unique opportunity in entrepreneurship for countries like Argentina and Mexico, according to an article by analyst Nicolás Salerno.

For his part, the CEO of Nuvix, Antonio Salido, points out that “the close relationship that many Spanish companies have with these markets can represent an extra opportunity for closer ties and business growth”. Alejandro Pérez from Yotramito states that many Latin American SMEs that wish to enter the European market use Spain as an entry point. “If what they want is to have greater access to European funds, the smartest thing to do is to look for Spanish partners who can introduce their technologies”, he notes.

The changes that the post-Covid-19 era will require go far beyond the momentum of renewables or the promotion of sustainable mobility. To deal with the current socio-economic and environmental crisis, a structural transformation must be initiated, so ideas from SMEs and startups with high technological impact are essential – as well as representing most of the productive fabric, they have the ability to innovate quickly and create services with real impact. European funds and other subsidies of this calibre are an opportunity to activate partnerships and finance these projects.