Financial Maturity – the ‘Achilles Heal’ of Innovation Fund Applications
Financial maturity is a critical success factor for EU Innovation Fund applications
Yet, it was by far, the most common ‘fatal flaw’ for 2024 submissions. It should problably not be a surprise that the reason for the most failed applications happens to be the hardest condition to satisfy for a first-of-a-kind (FOAK) project. Afterall, the main issue lenders and investors have with a FOAK project is exactly what makes the project a ‘FOAK’ – it is a first.
This challenge is revealed within two stages of the IF application review, and the financial weaknesses can lead to rejection at two key stages of the Innovation Fund assessment process: the initial Admissibility & Eligibility stage (i.e., the screening test before applications are accepted for evaluation) and the subsequent application evaluation.
So, what does financial maturity actually mean, how is it assessed, and how can applicants avoid common pitfalls? Below, we explore the main reasons for rejection and the key requirements for building a financially credible and competitive application.
Financial Maturity: A Critical Success Factor for EU Innovation Fund Applications
At the Admissibility & Eligibility Stage, 68 (19%) of the 359 submitted application failed to meet the eligibility criteria and therefore, were excluced from further evaluation.
A closer look reveals that 54% of the 68 were screened out because of insufficiencies within the financial documents (e.g., incorrect CAPEX, excessive budget), which means 36 (10% of the 359) applications did not pass the A&E stage due to deficiencies within the financial and business plans.
Of the 291 applications that passed the Application Evaluation Stage stage, 92 – or 32% of the evaluated applications - failed to meet the IF’s evaluation criteria for financial maturity. As shown below, the lack of financial maturity was, by far, the most common reason for failed applications.
This means that, of the 359 submitted applications, 128 – or 36% - were excluded or failed due to insufficiencies within the financial section of their submissions. While this indicates the most common challenge for FOAK projects, it also identifies the area of opportunity, where applicants can most significantly strengthen their application’s chance of success. 
Demonstrating financial maturity goes far beyond providing Letters of Intent (LOIs) as evidence of project financing or simply identifying potential financial partners.
As illustrated in the 6 Golden Rules of Financial Maturity overview below, achieving financial maturity requires attention to both the bigger picture and the finer details. At a strategic level, this means developing solid, credible business and financing plans, identifying andaddressing risks, and securing commitments from key project sponsors and offtakers. At a more detailed level, it requires ensuring consistency across all application documents and applying the correct calculation methodologies within the financial model.
The importance of credibility is also reflected in CINEA's findings. According to CINEA, the most common weakness in insufficient Business Plans was a lack of credibility. Financing Plans faced similar challenges, often lacking a plausible financing strategy or relying on unrealistic debt assumptions.
Financial Maturity in Practice
Norwegian Hydrogen’s RjukanLH2 project aims to establish Europe’s first complete green liquid hydrogen (LH2) value chain dedicated to maritime freight transport, integrating hydrogen production, liquefaction and bunkering to support zero-emission shipping.
Working closely with Nordic Innovators and Nordic Innovators Corporate Finance (NICF), Norwegian Hydrogen successfully secured €31.5 million from the 2024 Innovation Fund, with a strong focus on demonstrating the project's financial maturity.
Demonstrating Financial Maturity
As a first-of-a-kind (FOAK) project introducing liquid hydrogen to a maritime market still in its infancy, RjukanLH2 faced several financing challenges:
• Securing offtakers: Identifying shipping partners willing to commit to liquid hydrogen purchases, a key prerequisite for project financing.
• Attracting lenders: Finding financial institutions willing to accept early-stage technology and market risks.
• Aligning stakeholder interests: Structuring offtake agreements that satisfied the project, offtakers and financiers.
• Building financial credibility: Developing robust business and financing plans supported by credible commitments and consistent financial assumptions.
Keys to Innovation Fund Application Success
We worked closely with Norwegian Hydrogen to develop a financially credible and competitive application. This included building a robust business plan with realistic revenue projections, supported by Letters of Support (LoS) from potential offtakers, and a convincing financing plan demonstrating access to debt financing through Letters of Intent (LoI). Key business and financial risks were also identified and addressed through credible mitigation strategies.
NICF strengthened the project's bankability by providing supporting financial evidence and demonstrating its feasibility. Crucially, the financial analysis compared the project's economics with and without Innovation Fund support, establishing the need for public funding in a market not yet sufficiently de-risked to attract private capital.
The close integration of Nordic Innovators' proposal and Corporate Finance teams ensured a consistent financial narrative throughout the application. As a result, RjukanLH2 achieved a high score for financial maturity, contributing to its successful Innovation Fund application.
Financial Maturity Goes Beyond Grant Writing
While the Innovation Fund does not expect FOAK projects to have reached Final Investment Decision (FID) at the application stage, it requires a credible, well-supported and de-risked plan to get there.
Financial maturity is therefore much more than an application requirement. It brings together the commercial, financial and strategic elements needed to demonstrate a project's viability to lenders and investors – making it a critical factor in both Innovation Fund success and the project's long-term realisation.
