Focus Area Innovation Support Programme

Details

COUNTRY: Hungary
REGION: CEE Region
PERIOD: 2023 – Ongoing
LINK

Goals, Recipients, Beneficiaries

In June 2023, the Hungarian Parliament adopted the government’s new innovation strategy, the Neumann János Programme. This strategy places strong emphasis on strengthening the link between universities, research institutions, and the economy, with a long-term vision for Hungary to become:

  • One of the top 25 innovators globally by 2030, and
  • Among the top 10 innovators in the Global Innovation Index (GII) by 2040.

The Programme focuses on three priority areas:

  • Digital transformation of the economy
  • Healthy living
  • Green transformation

Approximately 85% of the budget for the Focus Area Call is dedicated to these three domains—HUF 10 billion each, totaling HUF 30 billion. An additional HUF 5 billion (20%) is reserved under a “general excellence” budget to support innovation projects in other fields.

In line with international best practices, public innovation investments will primarily support domestic SMEs, recognizing them as key drivers of innovation. However, large enterprises may also participate under certain conditions:

  • Under Component B (joint consortia), large companies can be involved in cooperation projects with universities or research institutions and may receive up to 35% of total project aid.

The resource framework is divided as follows:

  • Component A – 40% of the total budget (HUF 15 billion):
  • Targeted at Hungarian SMEs, either individually or in groups.
  • Component B – 60% of the total budget (HUF 20 billion):
  • Dedicated to joint R&D developments between companies and universities/research institutes, in line with the Programme’s objective to strengthen cooperation between knowledge producers and economic actors.

Eligible Projects / Expenses

To ensure that public innovation investments generate measurable economic impact, the National Research, Development and Innovation Office (NRDIO) has introduced a standardised set of 19 impact indicators. These indicators are designed to align all RDI (Research, Development and Innovation) funding calls with Hungary’s broader innovation strategy.

Within the Focus Area Call, three key indicators have been made mandatory:

  • Development of a new technology, service, or product: The funded project must result in a new technology, service, or product by the end of the implementation period.
  • Minimum revenue requirement from innovation outcomes: For technology or service development, the beneficiary must generate at least 40% of the grant amount in revenue from sales within the first two years of the maintenance period; For product development, this threshold is increased to 60% of the grant amount.
  • Intellectual property protection: By the end of the maintenance period, the new solution must be protected by a granted international patent, serving as a default requirement to ensure competitiveness in global markets.

If a beneficiary fails to meet at least 75% of the turnover commitment for reasons attributable to them, they will be obliged to repay the grant (or the relevant portion).

To apply under this call, the consortium leader company must meet the following financial and operational requirements:

  • Have an annual turnover of at least HUF 300 million,
  • – or be a startup with at least HUF 150 million in external capital investment.
  • In the last 3 financial years, the total approved dividends must not exceed 50% of the sum of:

Profit after tax over the same period, and
The profit and loss reserve of the financial year preceding these 3 years.

  • Employ a minimum of 15 staff members, acknowledging that the scale of projects supported under this call requires significant professional capacity.

Projects must focus on developing and commercialising innovative technologies, services, or products in line with the Focus Area Call priorities. Eligible expenses typically include:

  • R&D personnel costs
  • Technology development
  • Equipment and infrastructure related to innovation
  • IP protection
  • Market entry and scaling activities

For further details, refer to the official call documentation or visit the NRDIO website.

Support

Under the Focus Area Call, the payment of the awarded grant is strictly tied to the achievement of agreed project milestones. At the start of the implementation period, successful applicants receive a 30% advance—a significant shift from the previous standard of 75%. Upon completion of Milestone 1, typically at the end of the first year, an additional 30% is disbursed.

The remaining amount is settled at the end of the implementation period (usually after two or three years), with the actual cleared costs deducted from the advances paid. However, 15% of the cleared grant is withheld until the end of the maintenance period. This final portion is only released if the applicant meets their key commitments, including revenue generation and international patent protection for the developed solution.

The programme gives preference to companies that already conduct R&D activities independently, without relying solely on public funding. Within the grant structure, up to 20% may be spent on purchasing technical equipment, while external services are capped at 50% of the total grant amount.

To further support implementation, beneficiaries may also access mentorship services through the Hungarian Innovation Agency’s (NIÜ) newly launched mentoring pool.

Procedure

The National Research, Development and Innovation Office (NRDI Office) has significantly enhanced its evaluation process to ensure higher quality and more impactful funding decisions. Drawing from best practices in Israel and the European Union, the evaluator pool has been reduced from nearly 2,000 to 350 experts, focusing on quality over quantity.

In selecting new evaluators, the NRDI Office has placed special emphasis not only on technological and academic expertise, but also on real-world market and business experience. Evaluations are conducted anonymously, ensuring impartiality, and are now complemented by technical monitoring throughout project implementation. Evaluators monitor the progress of funded projects every six months, adopting a supportive role to help ensure successful outcomes. If a project is not progressing according to plan, they may recommend termination of funding, in line with the internationally recognised stage-gate model used for innovation management.

To acknowledge the expanded responsibilities of evaluators, the NRDI Office has introduced a significantly higher remuneration scheme. Meanwhile, successful applicants will benefit from mentoring support through the Hungarian Innovation Agency’s (NIÜ) newly established mentoring pool. Another key innovation in the process is the creation of Focus Area Innovation Panels, which validate the final rankings. These panels follow the triple helix model, comprising representatives from academia (universities and research institutes), industry, and government policy-making bodies.

Given the rapid pace of technological change, the standard implementation period for projects under the Focus Area Call is set at 24 months. However, in well-justified cases—particularly in areas like health innovation aimed at preserving healthy living—the implementation period may be extended to 36 months to support market maturity.

Status and Results

The support scheme was subject to public consultation during the summer of 2023 in Hungary. The resulting innovative funding programme was shaped by the feedback gathered during this period.

Following the closure of the call at the end of September 2023, interest in the Focus Area Innovation Call exceeded expectations—more than three times oversubscribed. Nearly 230 applications were submitted, competing for a total budget of HUF 35 billion

Remarks

To fully understand the structure and ambitions of Hungary’s innovation support framework, it is important to first highlight the European Innovation Council (EIC), which serves as both a key reference and inspiring model for the development of the current Focus Area Call and related schemes.

The EIC programme is structured around three main pillars:

  • EIC Pathfinder – supporting advanced research with high-risk, high-gain potential;
  • EIC Transition – bridging research results to innovation;
  • EIC Accelerator – supporting market-ready innovations through blended finance (a combination of grants and equity), provided through a single evaluation and decision-making process.

The EIC Accelerator stands out by offering one unified financial commitment to cover all stages of innovation—from early development through to pre-commercialisation and market entry.

Hungary’s Focus Area Call mirrors some of the attributes of the EIC Pathfinder, especially regarding impact indicators and long-term innovation objectives. At the same time, the Startup Factory programme can be viewed as a national counterpart to the EIC Accelerator. It has evolved into a sophisticated tool that prepares startups for the stringent standards of both the EIC Accelerator and EIC Transition programmes.

Originally launched in 2013, the Startup Factory programme has undergone continuous improvements. The current version, with a budget of HUF 5 billion, now includes two important additional components:

  • Mentorship support, and
  • Investment facilitation through investor partnerships.

This expanded support has led to the emergence of two new categories of technology incubators:

  • New incubators, established alongside existing ones and now eligible for funding.
  • Specialised incubators, which meet the definition of “new incubator” but focus their professional and business activities on prioritised thematic areas (e.g. green tech, health, deep tech). These specialised incubators are required to allocate at least 80% of their total project budget to these focus areas.

The success of early-stage ventures often depends not just on funding, but also on access to expert mentoring and strong networks. As the needs of entrepreneurs differ significantly across stages—from idea generation (Start-Up/SUP) to market entry—mentorship must be tailored and multidisciplinary.

The Hungarian Innovation Agency (NIÜ) plays a critical role here. Its various expert units bring together a wide range of experience including:

  • Company formation and scaling
  • Running technology incubators
  • Attracting private investment
  • Navigating EU funding opportunities
  • Bootstrapping and lean startup practices

This diverse expertise ensures that the support system can address the full spectrum of startup challenges, providing both strategic guidance and hands-on advice at every step of the innovation journey.

Contacts

ORGANISATION: Hungarian Innovation Agency
CONTACT PERSON: Zoltán PALOTAI
EMAIL: palotai.zoltan@niu.hu
PHONE: +36309428237

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