Have you ever had a brilliant idea ready to take off - only to get grounded by the weight of EU funding bureaucracy? You’re not alone. Many innovative companies, research teams, and startups in Europe face the same frustration: while EU funds offer incredible opportunities, the process to access them often feels too heavy, too long, or simply out of reach.

That’s why, in recent years, the European Commission has introduced a more flexible and accessible way of distributing funds - one that brings opportunities closer to innovators and reduces the administrative burden. It’s called Cascade funding, also known as Financial Support for Third Parties (FSTP), and it’s quickly becoming a well-known and effective route to secure EU support for smaller, fast-moving projects.

In this article, we’ll explore how Cascade Funding works, who can benefit from it, and in which existing programmes companies can find active opportunities. Most importantly, we’ll show you why this model can be the key to accelerating your innovation journey - and how our team can help you identify, apply for, and manage these funding opportunities successfully.

We decided to cover this topic because Cascade Funding represents a growing share of EU innovation financing, and many organizations still don’t realize how close they are to becoming eligible beneficiaries. Whether you’re developing a new digital solution, testing an advanced prototype, or entering the EU innovation network for the first time - this funding mechanism might be your easiest entry point yet.

What Cascade Funding Is and How It Works

FSTP is a European Commission mechanism designed to make access to EU funds simpler, faster, and more inclusive. Instead of each applicant competing directly in large, highly complex EU tenders, cascade funding allows smaller organizations to enter the European innovation scene through smaller and more agile projects.

In practical terms, the European Commission first awards a large grant to a consortium of partners under programs such as Horizon Europe, Digital Europe, or the European Defence Fund. These partners then take on an additional role: they open smaller, targeted calls for proposals to invite new participants – usually start-ups, SMEs, research groups, or local authorities – to join their activities. These calls are publicly announced and managed directly by the project’s consortium.
In most EU projects, a consortium is formed with one coordinator and several partner organizations working together. When cascade funding is included, the consortium decides which partner or partners will manage the open calls, evaluate applications, and allocate part of the project’s budget to external beneficiaries.

In some cases, a single partner - often the coordinator or a specialized entity such as a digital innovation hub or consultancy - oversees all cascade funding activities. In others, multiple partners each manage their own calls, focusing on specific topics or target groups.

All partners share overall responsibility for successful project implementation, but only the designated ones handle the operational and financial aspects of distributing the funds.

Through this model, a part of the original project budget is redistributed to external innovators in the form of small grants, typically ranging between EUR 60,000 and 250,000 per beneficiary. Each selected third party implements its own mini-project that contributes to the main project’s objectives, such as testing a new technology, piloting a solution, or validating results in real-life environments.

This approach allows the European Commission to reach hundreds of smaller innovators that would otherwise find it difficult to access funding through traditional EU schemes. For project coordinators, it means greater impact and wider engagement. For applicants, it means shorter applications, faster evaluations, and more realistic administrative requirements.

The mechanism operates through a simple chain of responsibility. The European Commission funds the main project; the project’s consortium manages open calls, evaluates applications, signs sub-grant agreements, and monitors the activities of third-party beneficiaries. This structure enables funds to move quickly from large-scale EU initiatives to hands-on innovation in startups and SMEs.

In essence, cascade funding works as a bridge between large European research frameworks and practical, on-the-ground innovation. It connects high-level European priorities with the creativity and agility of smaller players, ensuring that public investment in research and development translates into visible, market-oriented results.

The EU Programs Behind Cascade Funding

As we already mentioned, cascade funding is not a separate funding program but a mechanism used within several major EU initiatives. It appears wherever the European Commission wants to make innovation support more accessible and flexible. The most common frameworks that include cascade funding are Horizon Europe, Digital Europe Programme (DIGITAL) and the European Defence Fund (EDF).

Under Horizon Europe, cascade funding supports innovation in areas such as digital technologies, climate action, mobility, and health.

In the Digital Europe Programme, it focuses on digital transformation, artificial intelligence, data spaces, cybersecurity, and advanced digital skills.

Within the European Defence Fund, it helps start-ups and SMEs test and adapt new technologies for defence applications through innovation hubs and pilot actions.

Together, these programs make cascade funding one of the most dynamic tools for accessing EU support – connecting large European projects with the creativity of smaller innovators.

Who Can Apply to Cascade Funding

Cascade funding is designed with accessibility in mind, which means that a wide range of organizations can apply. The exact eligibility criteria depend on the specific open call, but in general, the mechanism targets smaller and more agile innovators that can quickly turn ideas into practical results.

Typical applicants include small and medium-sized enterprises (SMEs), start-ups, research organizations, universities, and sometimes non-profit organizations or public bodies active in innovation. These can come from various business areas such as information and communication technologies, artificial intelligence, data management, cybersecurity, green and circular economy, smart manufacturing, mobility, energy efficiency, health technologies, or digital education. What they all have in common is that they develop new solutions that contribute to the goals of the main EU project.

In short, cascade funding is intended for those who have strong ideas but may not have the resources or experience to join large, complex EU projects. It gives them the chance to start smaller, gain visibility, and build references for future participation in European programs.

What Applicants Can Get

Successful applicants to cascade funding calls receive more than just financial support. The grants typically range between EUR 60,000 and 250,000, depending on the specific call, project objectives, and type of activities. Funding rates are usually between 50% and 100%, and projects last from six months to one year.

Beyond the financial contribution, participants gain access to a network of European partners, expert guidance from project coordinators, and often mentoring, technical support, or pilot-testing environments. These additional elements help recipients not only develop their innovations faster but also prepare for participation in larger European projects in the future.

Cascade funding therefore acts as both a source of direct financial support and a springboard for further growth, allowing smaller organizations to validate their ideas, strengthen their references, and build visibility across the European innovation landscape.

💡TikoBits: Opportunities You Shouldn’t Miss!   To help you stay informed, we’ve highlighted two of the upcoming cascade funding calls that could be a great fit for innovative SMEs and start-ups. Open Call: VRHealthChampions  🔹Deadline: 30 November 2025 🔹Funding: up to €60,000 (100% co-financing)  🔹Duration: up to 12 months 🔹Focus: VR/AR, AI, and digital healthcare solutions – development and validation of XR technologies for clinical use. 🔹Eligible: SMEs from 17 EU Member states Open Call: ENVELOPE 🔹Deadline: 4 February 2026 🔹Funding: up to €300,000 per project (up to €60,000 per partner)  🔹Duration: up to 12 months 🔹Focus: beyond 5G technologies - development, integration, and testing of new APIs and technical solutions for advanced communication services  🔹Eligible: consortia of up to 5 partners (SMEs, large companies, universities, research institutes; at least 50% industrial partners)

Don’t Let Your Idea Stay on Paper

Cascade funding is one of the most effective ways for smaller and fast-growing innovators to step into the world of European projects. It simplifies access to EU support, shortens application procedures, and opens doors to valuable partnerships and learning opportunities.

For many companies, it represents the first real opportunity to test their solutions on a European scale – without facing the complexity of traditional large-scale programs.

If you have an innovative idea and are looking for the right way to bring it to life with EU support, our team can help you identify suitable cascade funding opportunities, prepare a strong application, and turn your idea into a funded success story.