The findings constitute an essential contribution to understand the relationship of EU support with the European venture capitalist (VC) ecosystem and explores ways on how to ensure appropriate access to financing for innovative, high growth European SMEs as well as further development of the VC eco-system across Europe.
The report presents challenges, needs and priorities to address the shortcomings in equity funding in the European finance landscape and provides recommendations to respond to these gaps more effectively and efficiently.
Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth said:
I welcome this report on the venture capital landscape in Europe and its recommendations. In the post coronavirus recovery phase ensuring access to financing for highly innovative SMEs and startups will be an important element of a true European Innovation Area to enable our transition to the green and digital economies.
Key findings include:
- European funds need to be easier to use and apply for by streamlining and increasing the flexibility of EU support programmes
- Equity risk constraints should be avoided through a revision of the ability of EU programmes to absorb risk with a focus on a case-by-case basis;
- Administrative procedures should be revisited to make it easier and less heavy to apply for equity funds;
- There should be more coordination among the different EU institutions that provide financing to SMEs in order to support a globally competitive later-stage equity market;
- EU support to the European VC ecosystem should be maintained and further increased through enhanced contribution to tech transfer.
The recommendations set out in the report may serve the work of the European Innovation Council (EIC), which manages direct equity investments in high-risk/high-impact start-ups and SMEs through the EIC Fund.
The report brought together experts including venture capitalists, representatives of investment banks (focusing on SME financing) and further representatives of the SME finance ecosystems. It analyses data addressing the equity investments gap in Europe with a particular focus on innovative SMEs and small mid-cap companies and assesses existing support measures at EU level. It also reviews whether recent EU policies have been catalytic in helping fund managers raise funds and provides a set of independent recommendations for EU policy making. The report delivers the insights of various stakeholders across the EU and Associated Countries to Horizon 2020, the EU framework programme for research and innovation for the period 2014-2020.
Study on equity investments in Europe
- Publication date
- 5 February 2021
- European Innovation Council and SMEs Executive Agency