In the world of startup funding, “non-dilutive” and “equity” are often presented as opposites. But in the EU’s flagship funding scheme for high-risk innovation; the EIC Accelerator”; these two models come together in what’s known as blended finance.
This hybrid model can be confusing at first. Founders often ask: What’s the catch? Do I get equity even if I don’t want it? What does the EU want in return?
In this guide, we’ll demystify blended finance, explain how the EIC Accelerator works, and help you understand how to position your company to benefit from this powerful funding instrument.
At FundMatchMaker.eu, we regularly match deep-tech startups with consultants who specialize in navigating EIC Accelerator proposals and we’ve seen firsthand how understanding the financing model early on can make or break your application.
What Is Blended Finance in the EU Context?
Blended finance in the EIC Accelerator combines two funding mechanisms:
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Grant: Non-dilutive funding up to €2.5 million
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Equity: Investment component (typically up to €15 million) managed by the EIC Fund
Together, this can result in up to €17.5 million in support for scaling breakthrough innovations.
The blended finance model is designed to:
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Support startups working on high-risk, high-impact technologies
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De-risk private investment by co-funding innovation with public support
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Help companies bridge the “Valley of Death” between prototype and market adoption
In short, it’s a powerful tool for startups who need both R&D funding and growth capital without having to choose between grants or equity.
Who Is Blended Finance For?
Blended finance under the EIC Accelerator is best suited for:
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Startups and SMEs (small to medium enterprises) with deep tech or disruptive innovations
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Companies with a Technology Readiness Level (TRL) 5–9
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Teams that need both product development and go-to-market funding
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Ventures addressing global challenges in areas like AI, biotech, clean energy, space tech, quantum, etc.
Use case example: A startup with a functional prototype of a new quantum encryption device applies for a €2M grant to finish development, and an additional €10M equity investment to build a production facility and scale commercial sales.
How the Grant Component Works
The grant portion is non-dilutive. That means:
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You do not give up equity
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You receive up to €2.5 million
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Funding covers eligible costs (typically at 70%)
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It supports activities like prototyping, testing, certification, piloting, and early market deployment
Important: You can apply for the grant-only option if you don’t need the equity, but this is only available in specific scenarios. The EIC favors blended finance applications because they show higher ambition and scalability.
How the Equity Component Works
The equity portion is managed by the EIC Fund, which acts as a strategic investor. This component:
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Typically ranges from €500K to €15M
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Is delivered in exchange for equity (usually minority shares)
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Can be structured flexibly (convertibles, SAFE, etc.)
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Often co-invests with private VCs to crowd in capital
The EU is not looking to own your startup. Their goal is to de-risk innovation and crowd-in private capital. In many cases, the EIC Fund takes a long-term, patient-capital approach that avoids forcing early exits.
What makes it different from VC funding?
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It’s mission-driven
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The EIC Fund doesn’t interfere with your day-to-day decisions
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It can serve as a powerful signal of credibility to other investors
How to Apply for EIC Blended Finance
The application process for the EIC Accelerator is structured in three stages:
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Short Application (video pitch, slide deck, form)
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Full Application (detailed proposal with budget, impact, work plan)
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Interview with Jury (for those shortlisted)
The full proposal must clearly justify:
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Why your project is high risk but potentially high impact
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Why blended finance is necessary (not just a “nice to have”)
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How equity will be used to scale and what the exit pathway looks like
Common pitfalls:
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Applying for the full €17.5M without financial justification
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Treating the equity ask as a backup plan rather than an integrated growth strategy
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Using vague phrases like “we’ll figure out the commercialization later”
What Evaluators Look For
EIC evaluators are looking for projects that:
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Tackle a significant global or European challenge
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Have a clearly defined and compelling innovation
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Demonstrate strong execution capacity (team, advisors, partnerships)
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Are likely to create new markets or disrupt existing ones
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Use blended finance as a smart and necessary growth strategy
In the interview stage, expect to be challenged on your financial model, risk assessment, and go-to-market plan.
Pro tip: You don’t have to have all the answers, but you must show clarity of thinking and a realistic roadmap.
How Consultants Add Value in Blended Finance Applications
Navigating a blended finance application requires:
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Technical knowledge
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Financial modeling
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Impact storytelling
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Familiarity with EU jargon, scoring rubrics, and expectations
The best consultants can:
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Help you decide if blended finance is right for your stage
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Position your equity ask in a way that aligns with investor logic and EU policy
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Support proposal writing, slide decks, and interview prep
At FundMatchMaker.eu, we match startups with consultants who:
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Have successful EIC Accelerator wins on record
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Understand your sector (e.g. cleantech, medtech, robotics)
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Know how to structure both grant and equity components in a credible way
Why This Matters in 2025 and Beyond
The EIC Accelerator is a cornerstone of the EU’s innovation strategy. Blended finance will remain key in areas where:
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Europe wants to build sovereign capacity (AI, chips, green tech)
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Public investment is used to crowd in private capital
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Strategic autonomy and resilience are top policy goals
In other words, if you’re building something the EU cares deeply about, and you need serious capital to scale, blended finance is not just an opportunity — it’s a strategic advantage.
Final Thoughts: From Confusion to Confidence
Blended finance is not just another funding buzzword. It’s a powerful model that combines the best of both worlds: the security of public grants and the scale potential of private equity.
But to access it, you need clarity, confidence, and a compelling proposal.
If you’re not sure how to approach blended finance or if your project is a good fit for EIC Accelerator, don’t guess. Let us help you build a strategy that fits your stage, goals, and growth path.
Ready to explore blended finance with the right consultant?
