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SME Instruments: What are the differences between Phase 1 and Phase 2?

June 20 2017

Within the Horizon 2020 program are several funding schemes devised to promote growth in small and medium enterprises across Europe. Included within this category are the SME Phase 1 and SME Phase 2 instruments, two separate single partner grant schemes that support innovation activities that have the potential to create profitability for SMEs. What are the differences between the Phase 1 and Phase 2 schemes and for which one should your SME apply?

About the SME Instrument funding

As defined by the EC, ‘The dedicated SME instruments support close-to-market activities, with the aim to give a strong boost to breakthrough innovation. Highly innovative SMEs with a clear commercial ambition and a potential for high growth and internationalisation are the prime target.’

The SME Phase 1 and Phase 2 instruments are specifically designed to promote innovation activities, and as their names suggest, are intended to support different phases of innovation development. Simply put, the Phase 1 scheme allows for SMEs to conduct feasibility assessments for a novel concept, and Phase 2 schemes are devised to support the implementation of a innovation-driven business plan and thus to move from proof of concept/clinical studies to successful commercialisation.

When to apply for an SME Instrument Phase 1 vs an SME Instrument Phase 2?

SME Instrument Phase 1

If you are working on an innovative idea, one that you think will help your SME become more profitable but one for which you still need to figure out a few details, an SME Phase 1 could benefit you. This type of grant intends to support the execution of a feasibility assessment, a process during which the technological, practical or economic viability of your idea can be analysed. However, it should be noted that projects for which preliminary data has already been generated, of which points to an idea’s viability, are more competitive during the review process. As such, specific tasks for SME Phase 1 projects can include market study, strategy development, risk assessment, user involvement, IP management and partner search. SME Phase 1 instruments support projects by providing a lump sum of €50,000 (70% of the total costs requested) for a duration of up to 6 months. The outcome of a Phase 1 project is therefore a clearer understanding of the landscape surrounding your concept, knowledge with which you can deliver an elaborate business plan that details the strategy for developing your innovation and prepares you to apply for an SME Instrument Phase 2.

SME Instrument Phase 2

On the other hand, if your innovation has already been developed far past the feasibility stage, and is at a point where marketability is viable within a few years, then the SME Phase 2 scheme would be more suitable for you. SME Phase 2 projects should focus on bringing innovations (in the form of a product, a process or a service) that are at a Technology Readiness Level (TRL) 6 or above, to industrial readiness and maturity for market introduction on a European or international level. TRL is a scale between 1 and 9 used to estimate an innovation’s technological maturity, in which TRL 6 generally refers to technologies for which prototypes have been demonstrated in a relevant environment. For example, a novel drug at TRL 6 would have already been proven effective in relevant animal or organoid models. Activities comprising an SME Phase 2 proposal can therefore include actions such as testing, piloting, prototyping, demonstration, scaling-up, miniaturisation, design, market replication but can also involve some research (such as clinical work). SME Phase 2 projects are supported with funds of up to €2.5 million at a funding rate of 70%, and are intended to be carried out over a duration of 2 years. Exceptions for such benefits are made for proposals that align with the specific pre-defined topic, ‘SMEInst-05-2016-2017: Supporting innovative SMEs in the healthcare biotechnology sector’ (see table below).

Summary of SME Phase 1 and SME Phase 2 instruments

SME phase 1 vs phase 2

Request assistance

In what is remaining of 2017, there are two more cut-off deadlines for Phase 1 applications and one more for Phase 2 submissions.  At ttopstart we have handled over 50 cases of SME instrument projects and therefore have profound understanding of what is required to deliver a competitive proposal. Whether your SME is considering the feasibility of an innovative concept, or if your company is ready for a Phase 2 proposal, our consultants are available to assist you. Please do not hesitate to contact us to discuss your ideas and your chances for a successful project.

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