Finance:Cascade Funding

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Definition

Cascade Funding, also known as Financial Support for Third Parties (FSTP), is a European Commission mechanism to distribute public funding in order to assist beneficiaries, such as start-ups, scale-ups, SME and/or mid-caps, in the uptake or development of digital innovation.[1]

This funding method aims at simplifying the administrative procedures, creating a light, SME-friendly application scheme, by allowing that some EU-funded projects may issue, in turn, open calls for further funding.[2] This scheme is based on the model of Erasmus students[3] and was first introduced by the European Commission in Horizon 2020, the Framework Programme for Research and Innovation (2014-2020).[4]

Some previous experiences under the 7th Framework Programme for Research and Innovation (FP7), such as Future Internet Public Private Partnership (FI-PPP[5][6]) and ICT Innovation for Manufacturing SMEs (I4MS[7]), had already piloted a similar model which is a good example of the structure and principles envisaged to be applied in the implementation scheme.

However, the procedure to provide financial support to third parties under Horizon 2020 is significantly different[8] than in those experiences, in which third parties became beneficiary of the project they were selected by and entered in a contract with the European Commission. Instead, third parties receiving cascade funding under Horizon 2020 have a contract with the consortium of the EU-funded project of which they become a third party.[9] This means that this consortium is liable towards the European Commission for the third parties to which it provide financial support and, hence, no legal and financial validation is necessary for these third parties, which makes quicker/easier for projects to have open calls in their projects.

These open calls[10] from EU-funded projects are usually competitive, have a European dimension and aims at:

  • selecting tech start-ups or scale-ups for acceleration or incubation purposes (usually equity free),
  • supporting pilots, demonstrations and/or experiments on a specific innovative technology or framework (usually with the participation of start-ups or SME), or
  • integrating more participants to the project to extend its scope or to address specific tasks.

Support offered by these open calls, usually consist in funding (typically in the range of €50,000 to €150,000[11]) but it may also be vouchers for support services or free access and support to use testing facilities.

Most of the open calls issued during this Horizon 2020 belong to one (or more) of the following domains: Future Internet and Next Generation Internet, Smartisation, Industry 4.0 (ICT for Industry), Internet of Things (IoT), Robotics, Big Data, Photonics, Innovation throughout value chains, and the nexus between creativity and technology.

Open calls in the field of smartization and industry are linked to the creation of a pan-european network of Digital Innovation Hubs under the European Union initiatives Smart Anything Everywhere (SAE) and ICT Innovation for Manufacturing SMEs (I4MS), which are both part of the Digitising European Industry strategy.[12]

Cascade funding is increasingly used throughout the "Information and Communication Technologies" priority in Horizon 2020 and contributes "to knowledge transfer and exploitation, take-up of technologies, and building and scaling ecosystems in these areas".[13] During the new Horizon Europe Framework Programme for Research and Innovation by the European Commission this mechanism has been extended mainly in Cluster 4 (inheriting ICT from Horizon 2020) but also in other clusters.

A number of companies have specialized in the management and participation as "grant managers" through these schemes. Examples are Sploro, F6S or Funding Box.

Open calls listings

There are different sources listing an updated source of open calls available online

References

  1. ↑ "How To Raise up to 300,000€ in Equity Free Funding For Your SME or Startup With Cascade Funding Grants". 12 May 2022. https://sploro.eu/what-is-cascade-funding-and-how-can-i-raise-funds/. 
  2. ↑ "Open Competitive calls and calls for third parties". http://ec.europa.eu/research/participants/portal/desktop/en/opportunities/other/competitive.html. 
  3. ↑ Sassen, Anne-Marie (16 December 2014). "FoF 9: ICT Innovation for Manufacturing SMEs (I4MS). p.5". http://ec.europa.eu/information_society/newsroom/cf/dae/document.cfm?doc_id=8266. 
  4. ↑ "European Commission Decision C (2015)8621 of 4 December 2015: Part K of the General Annexes of the Work Programme for 2014-2015 for Horizon 2020"". 4 December 2015. http://ec.europa.eu/research/participants/data/ref/h2020/wp/2014_2015/annexes/h2020-wp1415-annex-ga_en.pdf. 
  5. ↑ Future Internet Public-Private Partnership (2015). FI-PPP From Research Programme to Innovation Ecosystem. Final Report of the Second Interim Evaluation.. Luxembourg: Publications Office of the European Union. pp. 20. ISBN 978-92-79-47687-7. http://ec.europa.eu/smart-regulation/evaluation/search/download.do?documentId=16967334. 
  6. ↑ Smedlund, Anssi: “Engagement platforms in software ecosystems – Case Future Internet PPP”. Platform Value Now Conference 2017 in Espoo (Finland) on April, 28th, 2017.
  7. ↑ “Enhancing the digital transformation of the European manufacturing sector: The I4MS initiative ICT Innovation for Manufacturing SMEs” (Brochure). September, 2017. Page 4-7.
  8. ↑ "FAQs on H2020 calls on Customised and Low-power Computing (ICT 4) and ICT in Factories of the Future (FoF 8 and FoF 9). p.8". 19 November 2014. https://ec.europa.eu/digital-single-market/news/faqs-h2020-calls-customised-and-low-power-computing-ict-4-and-ict-factories-future-fof-8-and. 
  9. ↑ Directorate-General for Communications Networks, Content and Technology, European Commission. "Guidance note on financial support to third parties under H2020". p.1
  10. ↑ In this case, open means open to the public: any entity fulfilling each call's rules can apply
  11. ↑ Commission, European. "FAQ - Research Participant Portal" (in en). https://ec.europa.eu/research/participants/portal/desktop/en/support/faqs/faq-8590.html. 
  12. ↑ "Digital Innovation Hubs projects: open calls for SMEs" (in en). Digital Single Market. https://ec.europa.eu/digital-single-market/en/news/digital-innovation-hubs-projects-open-calls-smes. 
  13. ↑ "Cascading Grants in Horizon 2020 - ICT Proposers' Day 2017" (in en). https://ec.europa.eu/digital-single-market/events/cf/ict-proposers-day-2017/item-display.cfm?id=19984. 



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