Grants for Innovation Related to Technologies for the Metaverse and Web3 in the Audiovisual Sector

Author
Elzaburu
Date
July 27, 2022

The Secretariat of State for Telecommunications and Digital Infrastructure, as part of the Plan to Promote the Audiovisual Sector (Spain Audiovisual Hub), has announced a call for grant applications for experimental development and process innovation projects using technologies related to the Metaverse and Web 3, for a total amount of 3.8 million euros.

 

The call for applications, along with the regulations governing the grants (hereinafter“BBRR”), has been published in the Order ETD/653/2022, dated July 6, which establishes the regulatory guidelines for the granting of grants by the Secretariat of State for Telecommunications and Digital Infrastructure and announces the call for proposals for grants for experimental development and process innovation projects using technologies associated with the Metaverse and Web 3.

 

This aid is financed by the Ministry itself, out of the General State Budget, and not with European funds, and is subject to the regulatory provisions contained, regarding aid for research and development projects, in Regulation (EU) No.651/2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty ( better known as the General Block Exemption Regulation—GBER).

This call for proposals falls within the scope of R&D&I, which is essential for contextualizing the grants, in the sense that they are intended to foster innovation and technological advancement, rather than merely improving the competitiveness of individual companies. That is why the creation of prototypes—and not the commercial launch of a product or service—is the objective of this funding, without prejudice to the possibility that, in the future and in conjunction with other resources, the products or services resulting from the subsidized projects may have commercial potential. As established in the BBRR, “prototypes resulting from the projects receiving the grants may not be used commercially, unless they necessarily constitute the final commercial product and their manufacture is too costly for their exclusive use for demonstration and validation purposes.”

 Furthermore, projects must include activities aimed at development and functional improvement; projects that merely integrate third-party technologies will not be considered.

In this document, ELZABURU outlines the conditions, requirements, and most relevant considerations to help you decide whether to apply for the grants described herein.

I. PURPOSE

 The grants aim to (i) promote the digitalization and competitiveness of Spanish companies in the sector and (ii) integrate women into the audiovisual industry by encouraging the use of technologies related to audiovisual media, video games, and digital and interactive content, and by supporting the digitalization of small and medium-sized enterprises (SMEs). Projects that incorporate, within these fields, Augmented Reality (AR), Virtual Reality (VR), and hybrid technologies, as well as applications of Artificial Intelligence (AI) and blockchain in the immersive environment of the metaverse and Web3.

Specifically, the BBRR define the following projects for which the grants are intended:

  1. Experimental prototype development projects that focus on the use of tools, technologies, and platforms associated with Metaverse technologies (VR, AR, XR, WebGL, Web3D, WebXR, video game engines, tools for the digital representation of humans—such as avatars or digital humans—among others—to improve the production of digital content, immersive and interactive environments, and audiovisual production, with an emphasis on narrowing the gender gap and with the potential for transformative impact on society and the industry.
  2. Process innovation projects involving the innovative creation and implementation of technologies related to the Metaverse and Web 3 in cultural, healthcare, or educational settings that promote the inclusion of women in these industries.

In both cases, projects must serve at least one of the following purposes:

  • Prototyping or innovative processes for newaudiovisual production and digital content tools.
  • Prototypes or innovative processes that utilize technologies associated with the Metaverse and Web 3 to drivesocial transformation and the integration of disadvantaged groups, particularly with regard to the gender gap.
  • Creating New Workspaces and Opportunities for Collaboration
  • Prototypes or innovative processes that implement technologies related to the Metaverse incultural, healthcare, or educational settings.

In this context, “digitalcontent”it means“the mass-scale provision of data or digital assets in reusable formats created using VR/AR/XR technologies, WebGL/Web3D/WebXR, video game engines, and other technologies associated with the concept of the Metaverse, such as tools for the digital representation of humans (avatar generation, digital humans, etc.) and technologies for the design and management of spaces.”

 

In light of the foregoing, projects whose sole or primary purpose is the mere management, issuance, trading, and/or speculation in cryptoassets and/or tokens are excluded, as they are not consistent with the described objectives . This does not preclude the funding of projects that, while complying with the objectives, engage in such transactions, provided that such transactions are not the purpose of the funded activity.

DEADLINES AND AMOUNTS

 

  • Application period: August 4 through August 31, 2022, at 1:00 p.m. All documentation must be submitted through the Ministryof Economic Affairs and DigitalTransformation’sonline portal, in Spanish and signed by the representative of the applicant company or professional.
  • Decision Deadline: The maximum period for reaching a decision and notifying the final decision may not exceed six months from the publication of the summary of the call for applications, that is, from July 14, 2022. The recipient will have 5 business days from the date of the final award decision to accept the grant.
  • Project completion date: June 30 , 2024.
  • Deadline for providing proof of use of the grant: 3 months following the completion of the project; cash payments, promissory notes, and checks made out to a specific person or to the bearer will not be accepted as proof.
  • Total Amount of Funding: The total amount available for this call for proposals is 3.8 million euros.
  • Budget of the eligible project:
    • Minimum: 150,000 euros.
    • Maximum: 1,000,000 euros.
  • Maximum amount per beneficiary: The aid shall not exceed 25 % of eligible costs. This limit may be adjusted in the following cases:
    • For medium-sized enterprises, the aid may amount to 35 percent of eligible costs.
    • For small businesses, microenterprises, or professionals registered under the Special Regime for Self-Employed Workers, the grant may cover up to 45% of the eligible budget.
  • Beneficiaries:
    1. Professionals registered under the Special Social Security System for Self-Employed Workers;
    2. Small and medium-sized businesses;
    3. Microenterprises

All of them must (1) be citizens of Spain or of any member state of the European Union or the European Economic Area Agreement, and (2) have tax residency or a permanent establishment in Spain, as defined by tax regulations.

In addition, the operational centers of companies receiving such aid must be located in Spain.

The following entities are not eligible to receive funding:

  • Public-sector companies or entities governed by public law, nor companies in which such entities hold a majority stake.
  • Companies of any type whose business involves the management of a public service.
  • Simply groups of individuals or legal entities, associations, or foundations.
  • General partnerships, communities of property, or any other type of economic unit or separate estate that lacks legal personality
  • Limit on the Number of Projects per Beneficiary: No limit has been set on the number of projects that may be submitted per applicant/beneficiary; however, it should be noted that, due to budgetary constraints, the submission of numerous projects by a single company could adversely affect the evaluation of projects that are more mature or better positioned to receive funding. Therefore, it is important to prioritize those projects that are truly ready for implementation.
  • Payment of the Grant: The grant will be paid in a single lump sum in advance for the full amount of the grant, and will be considered an advance payment until the State Secretariat for Telecommunications and Digital Infrastructure verifies that the beneficiary has met all the required criteria.
  • Provision of collateral: Collateral covering 100% of the amount of the grant awarded must be provided within 15 days of the publication of the final award decision.

The guarantee will be released once the final certification has been issued following the project’s completion, in proportion to its results and, if applicable, after the beneficiary has remitted any required refunds.

OTHER REQUIREMENTS

  • The project must includeat least 25% women in order to qualify as a beneficiary and must maintain this percentage throughout the entire project. This requirement applies to the project, not to the applicant company; therefore, if the project is carried out by the applicant company with the participation and hiring of other professionals and companies, this percentage will be considered for the project as a whole.

In any case, this is an eligibility requirement—failure to meet it results in exclusion—but it must be met throughout the entire duration of the project.

  • Verify the economic and financial solvency. To do so, one of the following four criteria must be met:
    • The applicant organization’s annual revenue for the most recent fiscal year must be equal to or greater than 50 percent of the total budget for the project or group of projects.
    • The applicant organization’s equity as of the most recent fiscal year must be equal to or greater than 50 percent of the total budget for the project or group of projects.
    • The average annual revenue for the last three completed fiscal years must be greater than or equal to 50% of the total budget for the project or group of projects.
    • Submit proof of a guarantee deposited with the General Deposit Fund for 50% of the total aid requested. This guarantee will secure the acceptance of the aid if it is granted, and is separate from the guarantee established to secure the advance payment. It will be released automatically if the aid is not granted or, if it is granted, once the guarantee for the advance payment has been established.

If an applicant submits more than one project in response to the call for proposals, this criterion will be evaluated in conjunction with all submitted proposals, and projects will be eliminated based on the scores received for the remaining evaluation criteria, starting with those with the lowest scores, until it is determined whether or not any of the criteria listed above have been met.

  • Demonstrate technical or professional competence—that is, the applicant entities’ prior experience in the project’s scope of application. Although newly established companies are not excluded from eligibility, it is true that the assessment of this competence may be affected by the limited track record they can demonstrate. This should be taken into account by companies that have created a new entity dedicated to developing these technologies; in such cases, they will have a better chance of receiving the grant if they apply through the more established company. In such cases, the provisions regarding subcontracting outlined below must be taken into account.

 

  • Subcontracting: Beneficiaries may subcontract part of the project’s implementation, up to a limit of 50% of the project’s total cost. Furthermore, subcontractors must meet the same technical eligibility criteria required of beneficiaries.

When subcontracted work exceeds 20 percent of the grant amount and that amount exceeds 60,000 euros, subcontracting is subject to certain requirements. For these purposes, it is expressly prohibited to split a contract in order to reduce its value.

The scope of the activity to be subcontracted must be defined, including the tasks to be performed, the scope of the work, and the cost estimate, as well as the justification for the need for such subcontracting.

Contracts with individuals or legal entities affiliated with the applicant under the terms of Order ETD/653/2022is not permitted unless (i) prior express authorization is obtained from the granting authority and (ii) the eligible amount does not exceed the cost incurred by the related entity. Such authorization would be requested, if applicable, following the publication of the decision granting the aid.

It is important to note that contractors will be liable only to the beneficiary, who will assume full responsibility for the implementation of the subsidized activity vis-à-vis the government.

 

  • Incentive Effect of the Grant. The recipient must demonstrate this by submitting a report that shows the incentive effect of the grant on the activities for which it is requested; this will be evaluated based on the following criteria:
  • A substantial increase in the scope of the project or activity as a result of the assistance.
  • A substantial increase in the total amount invested by the beneficiary in the project or activity as a result of the grant.
  • A substantial increase in the pace of implementation of the project or activity in question.

 

ELIGIBLE COSTS

Those that are consistent with the nature of the subsidized activity, are strictly necessary, and are performed, paid for, and documented in a timely and proper manner:

  1.  Personnel costs for researchers, technicians, and other support staff, to the extent that they are assigned to the project.
  2. Costs of instruments and materials, to the extent and for the period during which they are used for the project;
  3. Costs of buildings and land, to the extent and for the period that they are used for the project;
  4. Contract research costs, knowledge, and patents acquired or licensed from external sources under conditions of full competition, as well as costs for consulting and equivalent services. This category includes legal advisory costs, as well as the costs of external audits required to justify the grant, estimated at 1% of the eligible budget.

Indirect costs include supplementary overhead costs and other additional operating expenses that, while not directly attributable to a specific subsidized activity, are necessary for that activity to be carried out.

Activities carried out after the grant application is submitted will be eligible for funding.

At ELZABURU, we have professionals who are ready to assist you and guide you through the application process for these grants and help make your most innovative projects a reality.

Author: Sara Isabel Tortosa