Discover the secrets of Cascade Funding and enhance your innovation journey. Explore how Cascade Funding works, all its benefits and how to stay informed about funding opportunities. Dive into a world of interconnected innovation with these essential elements.

Funding plays a crucial role in the success of any project or venture, be it a business startup, a nonprofit initiative, or a research endeavor. It’s the fuel that empowers dreamers, visionaries, and pioneers to transform their ideas into reality. While traditional funding methods like grants, loans, and investments are well-known, there’s a relatively new approach gaining momentum in various sectors: Cascade Funding.

In this blog post, we’ll delve into the concept of cascade funding. Our goal is to provide you with a deep understanding of cascade funding by breaking it down into three fundamental elements, offering valuable insights into its profound significance and untapped potential.

1st Element. The Concept: What Is Cascade Funding?

According to the European Commission official information, Cascade funding, also known as Financial Support for Third Parties (FSTP), is a Commission mechanism to distribute public funding in order to assist beneficiaries, such as start-ups, scale-ups, SME and/or mid-caps, in the uptake or development of digital innovation.

This innovative funding approach seeks to streamline administrative processes, fostering a simplified and SME-friendly application structure. It empowers select EU-funded projects to initiate open calls for additional funding, drawing inspiration from the successful model employed in the Erasmus student program.

The European Commission first introduced this pioneering scheme within **Horizon 2020, the Framework Programme for Research and Innovation (2014-2020).** At its core, cascade funding involves a domino effect where funding flows from one EC funded project to another, creating a continuous, interconnected flow of support. This dynamic chain reaction doesn’t just move financial resources; it propels knowledge, expertise, and resources from one project to another, nurturing an ecosystem where collaboration thrives and innovation flourishes.

Thus, Cascade funding is a novel funding model designed to support innovation and research activities across Europe.

2nd Element: How does it work?

Cascade Funding Mechanism

With a clear understanding of what cascade funding entails, it’s time to explore the mechanics that make this funding model tick. Delving into ‘How does it work?’ provides the practical insights you need to know the operational framework of cascade funding, unraveling the stages and mechanisms that drive its success:

1. 1. Call for Proposals: The European Commission issues a call for project proposals, that includes the management of Financial Support to Third Parties in a specific field or area of interest. These proposals are evaluated based on their quality and alignment with the program’s objectives.
   2. EU Project Implementation: After the evaluation process, a set of projects are selected for funding. This is where cascade funding differs from traditional models as part of the funding must be re-distributed following a Cascade Funding approach.
   3. Resource Redistribution: As the selected projects move into the execution phase, the consortiums responsible for these projects are tasked with launching open calls for proposals. These calls invite third parties to participate, offering them access to a portion of the allocated budget. These third parties, responding to the conditions laid out in the call, are responsible for developing and implementing their own projects.
   4. Third parties project execution: The third parties, who have secured funding through the open calls, proceed to implement their respective projects. Their performance is critically evaluated, with a keen focus on deliverables and the successful achievement of Key Performance Indicators (KPIs). Beyond financial support, the third parties also have the opportunity to access additional assistance, such as mentoring, coaching, or various support services, to further enhance the chances of their project’s success.

In essence, cascade funding encourages a ripple effect of innovation, where collaboration and the efficient use of resources play pivotal roles in propelling multiple projects toward success. This method of financing fosters an ecosystem and network where progress is not confined to the individual but thrives through collective efforts, transforming ideas into impactful outcomes.

3rd Element: Benefits of Cascade Funding

Cascade funding offers several advantages that make it an attractive option for funding innovative projects:

## Streamlined Processes

Cascade financing streamlines the often-convoluted application, evaluation, and justification procedures. It cuts through bureaucratic red tape, ensuring a more efficient and accessible pathway for innovators.

## Higher Success Rates:

One of its key merits lies in significantly higher success rates. As these calls are often less saturated and "popular," innovators stand a better chance of securing funding to materialize their vision

## Flexible Funding Spectrum

The financial support under cascade funding is versatile, spanning from €10,000 to €300,000. Among these, projects typically falling within the €50,000 to €150,000 range are the most prevalent, catering to a diverse array of innovative endeavors.

## Equity-Free Support

Importantly, cascade funding typically entails equity-free financial support. This means that innovators can access vital resources and capital without relinquishing any equity or share capital to external entities.