The European Commission’s fund to accelerate tech growth has hit some snags.

The European Commission startup fund was supposed to accelerate advanced technologies and fill a funding gap — but the firms that need the cash to grow are facing delays that are starting to hurt their business., according to a report in POLITICO.

Officials are struggling with the European Innovation Council (EIC) Accelerator’s role as a sort of venture capital fund that takes an equity stake in innovative companies, the report claims. This is potentially conflicting with the Commission’s position as an administrative authority.

More than 30 companies due to get so-called blended financing of a grant and an equity investment are now facing a second delay in receiving payouts. Some 22 out of 30 companies that only asked for a grant — and no stake — have already gotten their cash. The fund has a budget of €1.16 billion this year.

Startups face consequences due to the delays

Last year, with much fanfare, the EU last year launched a new startup fund as part of its flagship research and development program Horizon Europe. Interest in the EIC Accelerator was immense. More than 800 companies applied by the first deadline in June 2021, seeking €4.85 billion. “We are taking risks nobody is taking,” the EU’s chief investor Jean-David Malo said last year.

But nearly a year later, companies from the first round are still waiting for their money, POLITICO says.

But the startups that are waiting for their money don’t care why their money is late, as they are busy dealing with the consequences.

The companies are eager to get going on the projects that they pitched to the jury. As long as the money is delayed — even if it is just a couple of months — they have to stall projects and the recruits that they planned to hire to deliver them or finance them by other means.

Even more damaging is that the EU’s reputation as a reliable source of funding for tech companies might be damaged before it ever gets started.