Finansiering av innovasjon og SMB
Kommisjonens arbeidsdokument: Finansiering av innovasjon og små og mellomstore bedrifter
Arbeidsdokument lagt fram av Kommisjonen 9.9.2009
Nærmere omtale
SAMMENDRAG (fra kommisjonsdokumentet, engelsk utgave)
This Staff Working Document looks at the challenges of financing innovation and SMEs and assesses Commission action and policies addressing these challenges in the period 2005-2009. Financing innovation requires a funding system that sustains entrepreneurship and drives job creation.
Venture capital is an important part of such a framework, but not the only one, as it finances only a very small fraction of businesses. In fact the most common form of external financing to start a business remains bank financing. A well performing financing system provides both types (risk capital and bank financing) and would also include an efficient loan guarantee system to complement bank lending.
The financial market crisis and the ensuing economic recession have seen many banks reduce their lending to SMEs to repair their impaired balance sheets. Debt financing has become more expensive and difficult to obtain. Risk capital financing provided by business angels and venture capital funds has dropped. The availability of mezzanine financing for SMEs has suffered, in many cases, due to its heavy reliance on securitisation. Deteriorating financing conditions can potentially lead to a cut in innovation spending. The actions by EU institutions have mitigated the effects of the financial crisis. This is expected to have a stabilising effect on innovation spending. However further measures need to be considered to limit any long-term negative effects.
The full impact of the financial market crisis on innovation financing depends on several factors. A fundamental issue is the speed at which confidence in the global financial system is restored. This means the speed at which financial institutions resume normal lending activities and equity investors return to the venture market. These developments depend on further action taken by governments and the banking sector to improve banks’ equity positions. It is also subject to equity investors increasing their risk appetite. The current economic uncertainty however has put investors and financiers on the defensive. Many angel investors and venture capital funds are shunning new investments and are attending to their current portfolio of companies. This attitude may change only once the economic horizon brightens up.
The European Economic Recovery Plan has aimed to address this situation and mandated EIB to provide € 30 billion for lending to SMEs in the 2008-2011 period, of which € 15 billion can be spent in 2008-2009. In addition, as part of the Recovery Plan, EIB has earmarked € 1 billion for mezzanine financing and given the mandate to EIF to implement the action. Furthermore, EIB aims to mobilise up to € 50 billion over the current decade for innovation under the Innovation 2010 Initiative. The Commission will use the Financial Instruments of the Competitiveness and Innovation Framework Programme (CIP) to improve SMEs’ access to guarantees and venture capital. The interim evaluation of the Financial Instruments of the Entrepreneurship and Innovation Programme (EIP) has stressed their effectiveness in addressing a market gap, but there is scope to consider streamlining the decision-making process regarding applications from financial intermediaries in Members States.
The JEREMIE joint initiative of the Commission with EIB and EIF allows Member States to use part of their Structural Funds allocation for the period 2007-2013 to improve access to finance for SMEs. The objective is to stimulate new business creation, innovation activities and investments by SMEs. Furthermore, the Commission and EIB are jointly running the “Risk-sharing Finance Facility” to increase lending to firms doing research. Ensuring coordination and synergies between these programmes will be crucial for their success. European venture capital markets remain fragmented and underperforming compared to US. There are bottlenecks at both ends: a continually underfunded early-stage segment and a difficult exit market.
The weak performance of the sector and the current challenging exit environment is already affecting fund-raising and investment volumes. This calls for measures to transform the European venture and business angels’ landscape in order to ensure adequate funds for innovation in the future. There is a need to generally revitalise the financing environment for innovation and small businesses and thereby give EU guarantee systems a more pronounced role to balance financial risks. Guarantees play a crucial role in facilitating access to financing for SMEs. By sharing the risk with lenders, they help address the problems of information asymmetry and the lack of adequate collateral often associated with new projects and SMEs. In the current economic environment their counter-cyclical feature is especially useful in helping to maintain the flow of credit to SMEs. Future actions have to be based on an intensified cooperation between the Commission, the European Investment Bank Group and concerned institutions in Member States.
Technology transfer plays a crucial role in the commercialisation of ideas. Measures should aim to network entrepreneurs, investors and the public sector (policy-makers, universities and research institutions) around technology transfer efforts. The involvement of investors at an early stage can make it easier subsequently for the entrepreneur to raise finance as there will be a greater familiarity with the project concerned.
To increase the chances of matching available funding and innovative entrepreneurs, it is important to stimulate the demand side of funding through policies targeted at investment readiness training. Entrepreneurs need to be able to present their projects in ways that respond to the concerns of investors if they want to attract investment. The Member States and the Commission should continue to facilitate networking and the exchange of best practices in the field.
This Staff Working Document looks at the challenges of financing innovation and SMEs and assesses Commission action and policies addressing these challenges in the period 2005-2009. Financing innovation requires a funding system that sustains entrepreneurship and drives job creation.
Venture capital is an important part of such a framework, but not the only one, as it finances only a very small fraction of businesses. In fact the most common form of external financing to start a business remains bank financing. A well performing financing system provides both types (risk capital and bank financing) and would also include an efficient loan guarantee system to complement bank lending.
The financial market crisis and the ensuing economic recession have seen many banks reduce their lending to SMEs to repair their impaired balance sheets. Debt financing has become more expensive and difficult to obtain. Risk capital financing provided by business angels and venture capital funds has dropped. The availability of mezzanine financing for SMEs has suffered, in many cases, due to its heavy reliance on securitisation. Deteriorating financing conditions can potentially lead to a cut in innovation spending. The actions by EU institutions have mitigated the effects of the financial crisis. This is expected to have a stabilising effect on innovation spending. However further measures need to be considered to limit any long-term negative effects.
The full impact of the financial market crisis on innovation financing depends on several factors. A fundamental issue is the speed at which confidence in the global financial system is restored. This means the speed at which financial institutions resume normal lending activities and equity investors return to the venture market. These developments depend on further action taken by governments and the banking sector to improve banks’ equity positions. It is also subject to equity investors increasing their risk appetite. The current economic uncertainty however has put investors and financiers on the defensive. Many angel investors and venture capital funds are shunning new investments and are attending to their current portfolio of companies. This attitude may change only once the economic horizon brightens up.
The European Economic Recovery Plan has aimed to address this situation and mandated EIB to provide € 30 billion for lending to SMEs in the 2008-2011 period, of which € 15 billion can be spent in 2008-2009. In addition, as part of the Recovery Plan, EIB has earmarked € 1 billion for mezzanine financing and given the mandate to EIF to implement the action. Furthermore, EIB aims to mobilise up to € 50 billion over the current decade for innovation under the Innovation 2010 Initiative. The Commission will use the Financial Instruments of the Competitiveness and Innovation Framework Programme (CIP) to improve SMEs’ access to guarantees and venture capital. The interim evaluation of the Financial Instruments of the Entrepreneurship and Innovation Programme (EIP) has stressed their effectiveness in addressing a market gap, but there is scope to consider streamlining the decision-making process regarding applications from financial intermediaries in Members States.
The JEREMIE joint initiative of the Commission with EIB and EIF allows Member States to use part of their Structural Funds allocation for the period 2007-2013 to improve access to finance for SMEs. The objective is to stimulate new business creation, innovation activities and investments by SMEs. Furthermore, the Commission and EIB are jointly running the “Risk-sharing Finance Facility” to increase lending to firms doing research. Ensuring coordination and synergies between these programmes will be crucial for their success. European venture capital markets remain fragmented and underperforming compared to US. There are bottlenecks at both ends: a continually underfunded early-stage segment and a difficult exit market.
The weak performance of the sector and the current challenging exit environment is already affecting fund-raising and investment volumes. This calls for measures to transform the European venture and business angels’ landscape in order to ensure adequate funds for innovation in the future. There is a need to generally revitalise the financing environment for innovation and small businesses and thereby give EU guarantee systems a more pronounced role to balance financial risks. Guarantees play a crucial role in facilitating access to financing for SMEs. By sharing the risk with lenders, they help address the problems of information asymmetry and the lack of adequate collateral often associated with new projects and SMEs. In the current economic environment their counter-cyclical feature is especially useful in helping to maintain the flow of credit to SMEs. Future actions have to be based on an intensified cooperation between the Commission, the European Investment Bank Group and concerned institutions in Member States.
Technology transfer plays a crucial role in the commercialisation of ideas. Measures should aim to network entrepreneurs, investors and the public sector (policy-makers, universities and research institutions) around technology transfer efforts. The involvement of investors at an early stage can make it easier subsequently for the entrepreneur to raise finance as there will be a greater familiarity with the project concerned.
To increase the chances of matching available funding and innovative entrepreneurs, it is important to stimulate the demand side of funding through policies targeted at investment readiness training. Entrepreneurs need to be able to present their projects in ways that respond to the concerns of investors if they want to attract investment. The Member States and the Commission should continue to facilitate networking and the exchange of best practices in the field.