The EU’s European Institute of Innovation and Technology (EIT), a key backer of startups across the bloc, has handed out around €1bn to organisations within its network — including EIT Manufacturing, which was recently the subject of a fraud investigation.
The allocation comes at a fraught time for the institute, which is not expected to receive any new funds under the EU’s proposed budget.
EIT works by funding sub-organisations each focused on a separate sector, which then fund research and startups. EIT Urban Mobility, EIT Health, EIT Raw Materials, EIT Food, EIT Urban Mobility, EIT Culture & Creativity and EIT Manufacturing together received a combined €978m in the new allocation.
EIT, which is headquartered in Budapest, has become one of Europe’s leading startup funders: it recently topped Sifted’s ranking of the most successful investors, based on the revenue growth of its portfolio. Companies backed by EIT include unicorns Swiss climate tech Climeworks, French health tech Owkin and French battery startup Verkor.
In a statement, EIT said the new funds will help the bloc to “to address Europe’s most pressing challenges – from sustainable food systems and resilient healthcare to advanced manufacturing, critical raw materials, creative industries, and the future of urban mobility.”
An uncertain future
The new funding comes amid an uncertain time for EIT. Its current budget gave the institute €2.96bn to invest into suborganisations – the €978m being the last tranche.
But in the EU’s new proposed budget, which covers 2028 to 2034, there is no mention of any funds at all for EIT. The budget still needs to be approved by the EU Parliament.
A spokesperson for EIT told Sifted that “as budget discussions advance, the EIT will continue to offer its expertise and network to the collective effort of strengthening Europe’s innovation landscape.” They directed Sifted’s enquiry about funds to the Commission, which did not respond to a request to comment.
EIT Manufacturing
EIT Manufacturing (EITM) will receive €163m under the new allocation. In June, Sifted reported that EITM had paused all planned payments to partner companies and projects, following an investigation conducted by the European Anti-Fraud Office (OLAF) that uncovered issues with past grants awarded by the organisation.
A source familiar with the matter told Sifted the EITM has been asked to return part of the funds it received from EIT from 2020 to 2022.
A spokesperson for EIT told Sifted that the personnel concerned had been removed from EITM and that it had "reinforced its internal procedures."
Before it receives the new funding, EITM needs to "meet a number of requirements designed to ensure sound financial management, operational capacity, and effective controls," the spokesperson for EIT said.
This article was updated on 3rd October to include EIT's comments on the re-funding of EITM.
