A group funded by the EU’s European Institute of Innovation and Technology (EIT) has suspended payments to business partners, following an investigation into its management of funds.
Since launching in 2019, EIT Manufacturing (EITM) has been tasked with enhancing European competitiveness by innovating and upscaling manufacturing capacity in the region, supporting dozens of homegrown businesses through investment and various development schemes.
However, EITM recently 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.
According to a source familiar with the matter, an investigation was launched in January 2022, after concerns were raised over the body’s handling of funds. In a statement shared with Sifted, the EIT confirmed it had “detected irregularities” at EITM and reported its findings to OLAF for further investigation.
OLAF’s investigation found “serious irregularities and breaches of obligations,” the EIT said. Since December 2024, the EIT has withheld funds from EITM, meaning it, in turn, had to suspend payments to partner companies and projects.
A spokesperson for EITM tells Sifted the group was “surprised” by the investigation as it “continues to be committed to adhering to all applicable rules and regulations,” adding it didn’t know what had prompted the investigation.
A source familiar with the matter tells Sifted the EITM has been asked to return part of the funds it received from EIT from 2020 to 2022.
Companies await funds
The pause in payments to EITM has had major repercussions for some of the companies it has been working with.
According to two of the startup founders affected, 150 projects are awaiting funds. EIT Manufacturing said it was working to resolve the situation, but declined to comment on the number of companies affected.
Projects typically receive around €500k, according to Sifted sources, with 85% of a given project’s funding supplied by EITM, with the remaining 15% contributed by partnering startups.
One founder, who spoke to Sifted on the condition of anonymity, said the delay in payments resulted in their company losing its biggest customer as it didn’t have the funds to complete a project.
“We cannot move forward. We don't have the money to continue anymore. We had to have more capital to continue,” the founder said.
A decision of what is to come next will be taken at an EIT governance board meeting on June 17, according to one source familiar with the matter.
“We are working with the EU to find a solution to this that will help all of the startups,” another founder tells Sifted.
“None of us were involved in the issues that are being investigated at EIT and therefore we feel that being harmed by that decision is unwarranted.”
Correction: On 5th June 2025, this article was updated to reflect that EIT Manufacturing is not a subdivision of the EIT, but is funded by it.
