EIT Manufacturing (EITM), an EU-backed body tinquireed with digitising the bloc’s industrial base, filed for liquidation earlier this month – leaving more than 200 applicants without promised funds, half of them SMEs and startups.
The organisation was launched in 2019 to back manufacturing startups across the region as one of nine groups funded by the EU’s European Institute of Innovation and Technology (EIT).
EITM wrote cheques of around €500k to startups.
The organisation saw its funding frozen in 2024, after the European Anti-Fraud Office (OLAF) launched an investigation into its activities between 2020 and 2022.
Anti-Fraud investigations
The EIT notified Sifted that OLAF’s investigation found “serious irregularities and breaches of obligations”. EITM stated the investigation revolved around mismanagement of investment documentation, rather than any mishandling of funds.
In October last year, after EITM had implemented new governance structures, the EIT stated it would allocate €163m in funding to the organisation.
However, EITM was notified in February that another instance of alleged mismanagement was going to be investigated. A spokesperson for the EIT stated the new instance established that “irregularities went well beyond those identified initially.”
EITM’s CEO Caroline Viarouge, however, informs Sifted the instance also relates to the 2020 to 2022 period, which had been previously investigated.
“EIT manufacturing is obviously very different from what it was from 2020 to 2022. We have a new leadership, a new supervisory board and a lot of new management,” Viarouge states.
The organisation has not received any funds from the EIT since June 2024. After realising the €163m was not going to arrive, it filed for liquidation on March 19.
“We’ve been cutting costs. We’ve been in crisis management for more than a year,” Viarouge states, adding that EITM had flagged its precarious situation at a political level within the EU.
Companies await funds
More than 200 companies are waiting for grants promised to them by EITM, Viarouge states. “EIT, as the grant authority, are the ones that required to step in and pay for these companies.”
The EIT had previously notified Sifted that it had requested EITM to provide information on how many startups are affected.
“The EIT will aim to cooperate with the appointed liquidator as regards the reimbursement of the ‘beneficiaries’ eligible costs,” a spokesperson for EIT stated.
“We remain fully committed to supporting innovation and skills in the manufacturing sector and are actively exploring alternative ways to support the ecosystem in a compliant and impactful manner.”
‘We’re put in an unnecessarily fragile position’
As liquidation loomed, EITM states it applied for a bank loan to tide it over. The loan was contingent on a letter from EIT, which the organisation did not provide, Viarouge states.
A spokesperson for the EIT stated EITM had not met requirements for new funding, including “putting in place a robust control environment, increasing the efficiency of its internal procedures, and demonstrating progress in resolving ongoing legal procedures in line with the principle of sound financial management.”
Therefore, the person stated, the EIT could not provide a letter for it to apply to secure a bank loan.
For Viarouge, the situation highlights failings in the set up of EIT and its ‘Knowledge and Innovation Communities’ (KICs) — of which EITM is one. There are eight more, including EIT Digital and EIT Health.
In October last year, the EIT was handed €1bn to fund the organisations in its network. But its future is uncertain: in a proposed EU budreceive, which covers 2028 to 2034, there was no mention of any funds at all for EIT. The budreceive still requireds to be approved by the EU Parliament.
The proposed budreceive allocated €38bn to the European Innovation Council (EIC) and “innovation ecosystems” — which many have interpreted as EIT’s KICs, despite not mentioning the parent organisation.
“The KICs are put in a really unnecessarily fragile position in the current setup of the EIT framework,” Viarouge states.
“We really required to believe of setting up a stable, transparent and simplified framework for them, with clear governance from the coordinating body at the commission. We truly required strong leadership in the coordinating body.”
The EIT spokesperson stated the current framework provides “a robust basis for KIC operations, as reflected in the continued performance and compliance of the other KICs.”
“It is important to underline that this is a specific case concerning only one of the 10 Knowledge and Innovation Communities and does not affect the operations or financial stability of the other KICs,” the person stated.
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