EU – Baltic States, Financial Services, Funds, Innovations, Modern EU

Already in mid-2014, the European Commission recognised that the member states were lagging behind global competitors in terms of business investment in innovation. The EU institutions wanted to encourage national banks to lend to innovative business projects and help research-intensive companies get access to financial resources; the “lending” would help the states to invest about 3% of GDP in research and development by 2020.

In June 2014, the Commission and the European Investment Bank Group (EIB) launched a new generation of EU financial instruments and advisory services to help innovative firms access finance more easily.

The set of these instruments was called "InnovFin-EU Finance for Innovators" (in short, ‘InnovFin”) and consisted of a range of tailored products – from guarantees for intermediaries that lend to SMEs to direct loans to enterprises - helping support the smallest to the largest research and innovation (R&I) projects in the EU countries associated to Horizon 2020, the EU research programme for 2014-20.

InnovFin was built on the success of the Risk-Sharing Finance Facility, developed under the seventh EU framework programme for research and technological development (FP7), which helped provide over €11 billion of finance to 114 R&I projects worth more than €30 bn.

Up to 2020, the "InnovFin – EU Finance for Innovators" products will make available more than €24 billion of financing for research and innovation (R&I) by small, medium and large companies and the promoters of research infrastructures. This finance is expected to support up to €48 billion of final R&I investments.

More in the Commission press release:

http://europa.eu/rapid/press-release_IP-14-670_en.htm 

InnovFin SME Guarantee Facility

The SME InnovFin Guarantee Facility has been supporting innovative entrepreneurs from June 2016; the assistance will go up to the end of September 2020. The guarantee facility is deployed by eligible local banks, leasing companies and guarantee institutions; once selected by EIF, these local partners are acting as financial intermediaries.

Together with the Commission, the EIF is covering a portion of the losses incurred by the financial intermediaries on loans, leases and guarantees between € 25 000 and € 7.5 million which they provide under the InnovFin SME Guarantee Facility. In this way, the EU and EIF allow the provision of more debt financing to innovative SMEs and Small Mid-caps (up to 499 employees).

More in: https://www.eif.org/what_we_do/guarantees/single_eu_debt_instrument/innovfin-guarantee-facility/index.htm

Innovative SMEs can rely on numerous financial instruments; at least four are of major interest:

 = InnovFin TT (technology transfer),which supports technology transfer projects through commercial demonstration and commercialization, by targeting investments into technology transfer funds operating in the pre-seed (including proof of concept) and seed stages. Its objective is to accelerate technological innovations, especially in the areas of key enabling technologies (including, but not limited to ICT, nanotechnology, bio-tech, clean tech, and med tech) and other Horizon 2020 objectives, such as IP promotion/exploitation (licensing, sale of patents) and spin-outs, spin-offs or joint venture activities. 

More in: https://www.eif.org/news_centre/publications/innovfin-technology-transfer-leaflet.htm



- InnovFin BA (innovative business angels) targets funds pooled by business angels or business angel co-investment funds investing into innovative early-stage enterprises and social enterprises established or active in Participating Countries (see below) operating in the sectors covered by Horizon 2020, including social impact. InnovFin BA is open for experienced business angels wishing to team up and set up their first BA funds, also in countries with less developed ecosystems for early stage investments. 

More in: https://www.eif.org/news_centre/publications/innovfin-business-angels-leaflet.htm

- InnovFin VC (innovative venture capital) targets investments into venture capital funds that provide funding to enterprises (including social enterprises) in their early stage operating in Horizon 2020 sectors. Under InnovFin VC, EIF seeks to invest in first closing of the funds and also in other closings, especially if its intervention is catalytic to further fundraising. “First-time” or “emerging” investment teams seeking for the first time institutional fundraising are also eligible. Via selected venture capital funds, EIF provides risk capital financing to enterprises in their seed, start-up and other early stage phases investing predominantly in their “seed rounds”. 

More in: https://www.eif.org/news_centre/publications/innovfin-venture-capital-leaflet.htm

- InnovFin FoF (innovative fund-of-funds) targets investments into fund of funds holding or targeting to build a portfolio of investments into underlying funds with significant early stage focus. It also provides significant funding to separately managed Pan European VC Fund-of-fund programme. EIF seeks to invest in fund-of-funds which have wide geographical coverage of more than 3 countries and focus on early stage or follow balanced strategies with at least 30% early stage target allocation. 

Financial support for 11 “near-EU” countries

The mentioned financing instruments will target companies using new technologies and producing new products in one of the eleven countries where the facility is available (Albania, Bosnia and Herzegovina, Bulgaria, Georgia, Germany, Greece, Moldova, the Republic of North Macedonia, Romania, Serbia and Ukraine).

As of June 2019, the Commission has mobilised nearly €410 bn of additional investment: the EU is currently supporting 952,000 small and medium businesses across Europe.

Specific financial instruments managed by the European Investment Facility - so-called InnovFin SME Guarantee Facility - will bring a total of €1.62 bn to innovative SMEs in eleven countries, including some EU and “near-EU” states: Albania, Bosnia and Herzegovina, Bulgaria, Georgia, Germany, Greece, Moldova, the Republic of North Macedonia, Romania, Serbia and Ukraine.

See more in: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_4129

On the “general EU’s investment plan” in: https://ec.europa.eu/commission/priorities/jobs-growth-and-investment/investment-plan-europe-juncker-plan_en

The InnovFin SME Guarantee Facility, in addition to “InnovFin Equity” is part of the abovementioned “InnovFin – EU Finance for Innovators” initiative launched by the European Commission and the EIB Group in the framework of Horizon 2020.

Via InnovFin Equity, EIF provides equity investments and co-investments to companies in their pre-seed, seed, and start-up phases operating in innovative sectors covered by Horizon 2020, including life sciences, clean energy and high-tech. Under InnovFin Equity, EIF targets investments in around 45 funds, mobilizing a total amount of € 4-5 bn to be invested in enterprises located or active in the EU and Horizon 2020 Associated Countries (Participating Countries).

On Associated countries see: http://ec.europa.eu/research/participants/data/ref/h2020/grants_manual/hi/3cpart/h2020-hi-list-ac_en.pdf

InnovFin Equity contributes to the Pan-European Venture Capital Fund-of-Funds programme. 

More in: https://www.eif.org/what_we_do/equity/single_eu_equity_instrument/innovfin-equity/index.htm