The EIC route for Australian and Canadian deeptech

Australian and Canadian deeptech can fund European growth through the EIC without becoming a subsidiary of a US parent. What you get and what you give up.

Last verified: 26 July 2026. Corporate structuring described here is general information, not legal or tax advice.

Australian and Canadian deeptech companies run out of domestic growth capital at roughly the same stage. The usual answer is to redomicile to the United States, which means a new US company is created above yours and your company becomes its subsidiary.

There is another route. The EIC Accelerator, run by the European Innovation Council, offers up to EUR 2.5 million in grant plus up to EUR 10 million in equity. It does not require you to put anything above your company. It requires you to put a subsidiary underneath it.

That difference in direction is what decides who owns your technology in ten years. This article covers why the ceiling exists, what each route does to ownership, what the European route actually gets you, and the trap inside it that catches companies who have not planned for it.

Why Australian and Canadian deeptech hits the same funding ceiling

Both countries build excellent research. Both convert it into commercial output at a lower rate than they should.

The World Intellectual Property Organization publishes an annual index that separates innovation inputs from outputs. In 2025, Australia ranked 16th on inputs and 27th on outputs. Canada ranked 13th and 20th.

WIPO states the conclusion in the same words for each country. Australia and Canada both produce less innovation output relative to what they invest.

Neither has a research problem. Australia ranks 8th globally for human capital and research, Canada 10th. On citable document H-index they rank 6th and 4th. Their top universities rank 3rd and 5th in the world.

This is not a bad year, either. WIPO publishes six years of both ranks for each country, and the output rank sits below the input rank every single year. Australia went from 13th in and 31st out in 2020 to 16th and 27th in 2025. Canada went from 9th and 22nd to 13th and 20th.

Meanwhile the capital that funds the conversion is thinning. Venture deal numbers fell 18.3% in Australia and 9.3% in Canada between 2023 and 2024. Both countries show negative annual growth in deal count across 2020 to 2024.

One difference is worth naming. Canada ranks 6th in the world for university-industry R&D collaboration. Australia ranks 16th. Australia has a collaboration deficit that Canada largely does not, so what the two share is the conversion gap and the funding trend, not a single cause.

What a Delaware flip actually costs you

The obvious cost is that there is less money available. That is true, and it is not the expensive part.

The expensive part is that the established route to growth capital reorganises who owns the company.

In a Delaware flip, a new US holding company is incorporated above your existing company. Shareholders swap their shares for equivalent shares in the new parent. Your original company becomes a wholly-owned subsidiary of it.

Founders and early investors keep their proportional ownership. The team, the customers and usually the R&D stay put.

What moves is the top of the structure. Future rounds are raised into the US parent. Future value accrues there. Any eventual exit happens there.

Sometimes this is the right call. If your market is genuinely American and your next investors are US funds, the flip removes real friction.

The problem is that it is a decision about ownership dressed up as a decision about paperwork. It is expensive, it is hard to reverse, and most founders make it without seriously examining the alternative.

Where the IP ends up when ownership points offshore

There is good evidence on what happens to intellectual property when a company's ownership points offshore. It comes from Canada.

The Institute for Research on Public Policy studied Canadian-invented patents granted in the United States. A majority are assigned to firms outside Canada, or to foreign subsidiaries inside Canada, on the day the patent issues. The Canadian inventor did the inventing. The Canadian entity did not end up owning it.

The trend moved one way over two decades. Foreign assignment more than doubled, from 18% to 45%. The share staying with the original inventor fell from 32% to 13%. Canada's net patent ownership position deteriorated more than sevenfold between 1998 and 2017.

One number matters more than the rest. In 2015, foreign subsidiaries operating in Canada received close to 37% of the patents from the country's top 100 R&D companies. Only 15% of those patents were assigned to Canadian firms.

The other 85% went to the foreign parent.

That is the mechanism. A subsidiary generates IP, and the IP assigns in whichever direction the ownership chain runs. Put the subsidiary below a foreign parent and the IP leaves.

The corporate form is neutral. The direction is not.

Two caveats. The data runs to 2017, so treat it as a structural pattern rather than a current measurement. The authors also list limits in their own method, including possible under-counting where a foreign assignee is itself Canadian-controlled. The direction holds; the precision is not the point.

The EIC Accelerator route, and what it requires

The EIC Accelerator funds a single company scaling a breakthrough technology. Up to EUR 2.5 million in non-dilutive grant, plus up to EUR 10 million in equity through the EIC Fund. It funds a business plan, not a research consortium.

Neither country can reach it directly. Canada associated to Horizon Europe's Pillar II in July 2024, and Australia does the same from January 2027. The EIC Accelerator sits in Pillar III, which neither association covers.

Applicants must be established in an EU member state or associated country. For Pillar III purposes, neither country qualifies.

The established route is an EU subsidiary with genuine operations, in place before the Step 2 full proposal. It runs in the opposite direction to a flip:

The home parent stays on top. It keeps its existing IP, operations and R&D base. This is an addition to the group, not a reorganisation of it.
The EU subsidiary sits underneath, with real substance. An address and a nominee director do not satisfy the requirement.
Background IP is licensed down, with enough rights to exploit the technology in Europe. It is not assigned away.
New project IP sits in the subsidiary, which the parent owns, with Europe-first exploitation obligations attached.

This is a structure we have built before, and the mechanics are covered in more detail in the EIC Accelerator gap.

What this actually gets you

Stated plainly, because the structural argument above can obscure the practical one.

Your company stays the parent. It is not demoted to a subsidiary of a foreign holding company. You keep control of the group and you keep the option to do something different later.

Up to EUR 2.5 million of the funding is a grant. You give up no equity for it at all. For a deeptech company two or three years from revenue, non-dilutive money at that scale is rare in either domestic market.

The equity goes into the subsidiary, not into your company. The EIC Fund takes its position in the EU entity. Your existing shareholders are not diluted at parent level, which is the opposite of what happens when you raise a round into a US holding company. How that plays out in your specific cap table depends on the terms and is worth modelling properly before you commit.

Your existing IP stays yours. It is licensed down to the subsidiary with rights to exploit it in Europe. It is not sold, and it is not assigned away.

New IP created in the project sits in an entity you own. Compare that with the Canadian pattern above, where 85% of foreign-subsidiary patents went to the foreign parent. Direction of ownership is the whole difference.

One qualification on that last point, and it matters. The work programme requires the value and the IP to stay in Europe.

You own the entity holding them, which is not the same as being able to bring them home later. The next section sets out what that means.

Your domestic R&D base is untouched. The parent keeps doing its R&D at home, which keeps the domestic R&D tax credit running: the R&D Tax Incentive in Australia, and SR&ED, short for Scientific Research and Experimental Development, in Canada. Grant-funded spending does interact with those claims, so model that with your tax adviser before committing.

You get a real European operating position. Not just funding. An entity, a market presence, and a route into European customers and supply chains that is difficult to build from the other side of the world without one.

The trade is that you have to build and run a genuine European subsidiary, and that is real work with real cost. It is not a mailbox.

The trap in the EIC parent company rules

This part is not in the brochures, and it is why the structure needs designing rather than copying.

The EIC's 2026 work programme lets the EIC Fund take its equity position in a parent or holding company instead of the applicant. The reasoning is practical. The Fund would rather invest where the other investors already are and where the upside will actually land. For most companies that is the top of the group.

There is a condition. The parent must meet all the relevant criteria, including SME status, meaning it counts as a small or medium-sized enterprise under the EU's definition, non-bankability, meaning it cannot readily raise the money from banks, and establishment in an EU member state or associated country.

An Australian or Canadian parent fails that last test.

So the Fund's natural instinct, to invest where the cap table sits, points at an entity it cannot invest in. The easiest way out of that tension is to put a holding company in Europe, above the group.

Which is a Delaware flip in a different jurisdiction, arrived at by accident rather than decision.

Avoiding it is a design problem with three constraints. The EIC needs an entity it can invest in. The parent needs to stay on top. The IP needs to sit where the value reaches the people who built it.

Those three are satisfiable together, but not by default, and not late.

What EIC funding does not do

The limits matter as much as the benefits, and they are easy to get wrong.

EU money does not land in your home company's accounts as grant income. The grant funds the EU beneficiary. Your company is not a funded grant beneficiary, and anyone telling you otherwise has not read the eligibility rules.

The value and the IP stay in Europe. The 2026 work programme states that when implementing investments, the EIC Fund will ensure supported companies keep most of their value, including their IP, in the EU or in associated countries, so that the funding contributes to European growth and jobs. It can also require case-by-case safeguards to protect European interests in strategic areas.

Read that clause carefully, because it is the real boundary on this structure. You own the European entity. You do not get to build it up on EU money and then move the assets to Sydney or Toronto.

The Agency can object to moving results. The grant agreement permits the Agency to object to a transfer of ownership or a licensing of results in defined circumstances, and to object to non-exclusive licensing where the technology has dual-use applications. Decide the licensing direction deliberately and early, not after the grant is signed.

The equity is not guaranteed by selection. Being selected starts a separate due diligence process run by the EIC Fund with the European Investment Bank as investment adviser. That process can conclude you are not yet mature for investment and tie the equity to milestones, or reject it outright. There is also a provision removing you from the investment process if no funding round is foreseen within six months. Treat the EUR 10 million as a ceiling on a second, conditional process, not as money attached to winning.

Some grant-only calls restrict foreign control. The work programme allows specific Accelerator grant-only calls to add an eligibility condition excluding beneficiaries controlled from outside the EU and associated countries. This is not a blanket rule and the carve-outs vary by call. The 2026 critical raw materials Challenge, for instance, explicitly permits control from OECD countries, which covers both Australia and Canada. Check the conditions on your specific call rather than assuming either way.

Subcontracting back to the parent is narrower than it sounds. The grant may fund subcontracting only where justified, and for activities essential to the objectives of the project. Any subcontract also has to demonstrate best value for money and be free of conflicts of interest. Paying your own parent sits squarely in that last category, so it needs documenting properly rather than assuming.

EIC or US funding: a sequence, not a choice

It would be convenient to end by telling you the European route beats the American one. It does not, and framing it that way would not survive contact with anyone who has run both.

On the measures founders usually rank first, the US wins clearly. American growth rounds are larger, they repeat through Series C and D, and they close in weeks.

The EIC caps out around EUR 12.5 million, grant-only support is available once per company for the whole programme, and the work programme indicates roughly five months from deadline to result and eight to grant signature. The US is also the deepest capital market in the world and the largest market for most technology. None of that is in dispute and none of it should be talked around.

So the honest framing is not Europe instead of America. It is what you do before you need the large round.

An EIC-funded European build gives you customers in a second major market, an operating entity, a Commission track record, and EUR 2.5 million you did not pay for in equity.

A company that raises its large round after that is raising from a stronger position, with more evidence, and on a cap table it still controls. A company that redomiciles first has given away the ownership before it had anything to trade on.

The Accelerator now runs six cut-offs a year, and the other 2026 changes are in EIC Accelerator 2026: what changed.

Most founders are shown the American route in detail and this one not at all, then describe the outcome as inevitable. It is not inevitable, and it is not either-or. It is a question of order, and order is far cheaper to decide before the structure exists than after. We work through that sequence with Australian and Canadian companies regularly, usually well before anything is committed.

FAQ

Can Australian or Canadian companies apply to the EIC Accelerator directly? No. The EIC Accelerator sits in Pillar III of Horizon Europe. Canada's association, from July 2024, and Australia's, from January 2027, both cover Pillar II only. Applicants must be established in an EU member state or associated country.

Does the home company have to relocate? No. The EU subsidiary is an addition below the existing parent. The parent keeps its IP, operations and R&D base, and stays at the top of the group.

How is this different from a Delaware flip? Direction. A flip creates a new foreign parent above your company, which becomes a wholly-owned subsidiary. The EIC structure creates a foreign subsidiary below your existing parent, which stays on top.

Can the EIC Fund invest in our Australian or Canadian parent company? No. The work programme permits investment at parent or holding company level, but only where that parent is established in an EU member state or associated country. Neither qualifies for Pillar III purposes.

Does EU grant money go to the home company? No. The grant funds the EU beneficiary. The home company's position is as owner of that entity, and work can be subcontracted to it at market price as an eligible project cost, subject to the conditions in the grant agreement.

What is the actual benefit over redomiciling to the United States? Your company stays the parent instead of becoming a subsidiary, up to EUR 2.5 million of the funding is a grant rather than equity, your existing IP is licensed to the subsidiary rather than assigned away, and your domestic R&D base stays intact. The cost is that you have to build and run a genuine European subsidiary.

Can we move the IP and the value back home later? No. The 2026 work programme states that the EIC Fund will ensure supported companies keep most of their value, including their IP, in the EU or in associated countries, and it can impose case-by-case safeguards. You own the European entity and the assets sit inside it. Ownership is local, the assets are European, and that is the deal.

What most commonly goes wrong? Unresolved IP ownership, usually where a university or an inventor holds rights without a documented exclusive licence to the company. It survives a domestic seed round and does not survive EIC due diligence. Resolve it before building the structure.

Sources

For the full picture on what Horizon Europe association covers and excludes, see our [Horizon Europe association guide](/horizon-europe-australia-guide).