Horizon 2020
The EU Framework Programme for Research and Innovation

Access to risk finance

Under the 'Industrial Leadership' pillar, this specific objective will help companies and other types of organisation engaged in research and innovation (R&I) to gain easier access, via financial instruments, to loans, guarantees, counter-guarantees and hybrid, mezzanine and equity finance.

The concrete goal is to support and facilitate access to sources of debt and equity financing by innovative companies of all sizes and also by research centres and universities, public-private partnerships, special-purpose companies or projects, and joint ventures.

Particular support is required for innovative SMEs (and in some sectors, microenterprises), especially in the start-up phase or after diversifying into new markets. The availability of early-stage and growth-stage equity finance for innovative firms also needs improvement, with better access to finance a must for the concept and proof-of-concept stage of the innovation process. For commercial-scale, first-of-a-kind demonstration plants and their market uptake and wider deployment, a more predictable and stable supply of risk capital is needed: this is a key factor in attracting the public and private input necessary for commercialisation to happen. The availability of debt finance for R&I infrastructures also needs enhancing.

Instruments

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InnovFin - EU Finance for Innovators triggered EUR 31 billion of investments into Europe's future in 2014-2016
InnovFin - EU Finance for Innovators triggered EUR 31 billion of investments into Europe's future in 2014-2016

 

InnovFin – EU Finance for Innovators is the name under which the EU promotes a range of debt and equity products and advisory services in order to effectively give a boost to the availability of finance for research and innovation activities in Europe.

InnovFin - EU Finance for Innovators consists 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 R&I projects in the EU and countries associated to Horizon 2020, the new EU research programme for 2014-20.

The InnovFin products operates in conjunction with those of EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME).

 

Financial institutions

The European Investment Bank (EIB) and the European Investment Fund (EIF) play an important role, as entrusted entities, in implementing each financial instrument facility on behalf of and in partnership with the European Commission.

The European Investment Bank provides loans to medium to larger companies, or guarantees to banks lending to them. It also provides a range of technical assistance and advisory services, in order to help project promoters to make research, development and innovation bankable. In addition, two thematic finance products were launched in 2015, for the support of combating infectious diseases and high-risk energy demonstration projects.

The European Investment Fund provides guarantees to banks lending to small and medium-sized firms and invests in venture capital funds providing start-ups and fast-growing firms with equity.

 

Accompanying measures

Apart from access to finance mainly through debt and equity instruments implemented by the EIB, Horizon 2020 also support in particular SMEs and start-ups to become more investment-ready via various capacity-building actions, directed at them and their national support organisations:

  • InvestHorizon is a programme designed to increase investments made in Innovative European SMEs through Investment Readiness development and Investor sensitization. The project aims to defragment the SME investment market, helping both SMEs and investors to make better deals by increasing their knowledge about each other, on the crossroads of finance and innovation.
  • Progress TT: Public Research Organisation GRowing Europe through best practice SolutionS for Technology Transfer (TT) is a three-year pilot initiative promoting good practice for the commercialisation of Intellectual Property. Supported TT Offices improve skills in targeted areas of the TT process, increase the Return on Investment and accelerate Technology Readiness Levels (TRLs) of the R&D projects they handle.
  • ACCESS4SMEs is a 30-month coordination and support action directed at National Contact Points in the domains of access to risk finance and SMEs, fostering the use of financial instruments (incl. through exchange of best practices) and including the establishment of a community of practice facilating access to cross-border finance.

For examples of more accompanying measures, please consult the Work Programmes on Access to Risk Finance at the bottom of the page.

EFSI Boosts Innovation!

The European Fund for Strategic Investments (EFSI) is widening the opportunities for finance for innovation support both under its Infrastructure & Innovation and SME windows. The products under EFSI will be implemented by the European Investment Bank group; more information is available here.

RDI is not only a priority sector under the EFSI Infrastructure and Innovation Window (IIW). It is a horizontal dimension, also present in other priority sectors of IIW (like Digital, Energy, Transport, etc.), as well as in the EFSI SME Window (SMEW) where debt and equity finance products are supporting the growth of RDI-driven / innovative SMEs and small mid-caps. This explains why the total level of EFSI financing devoted to RDI is 23% at the end of May 2016.

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Pan-European Venture Capital Fund-of-Funds

The Pan-European VC Fund-of-Funds is a priority action under the Commission's Capital Markets Union (CMU), and complements other actions to boost VC in Europe, notably proposed expansion of the European VC Funds (EuVECA) regulation and proposals to address the bias in the tax system towards debt over equity. It was first promoted by Commissioner Moedas in his June 2015 speech 'Open Innovation, Open Science, Open to the World'.

The EU will provide cornerstone investments of up to €300 million in one or more independently managed VC Fund-of-Funds, up to a maximum budget of €400 million for all Fund-of-funds. The selected fund manager(s) must raise at least three times as much from other sources (the EU investment is capped at 25%). This means additional investments to VC of around €1.6 billion, which is a major boost, as the total of VC funds raised last year in the EU was €5 billion. The EU investment combines resources from Horizon 2020's InnovFin Equity scheme (up to €200 million), EFSI (up to €100 million) and COSME (where up to €100 million is foreseen).

The European Commission and the European Investment Fund (EIF) are seeking applications for setting up and managing one or more private-sector led, market-driven Pan-European Venture Capital Funds-of-Funds.

Related information


Some examples of InnovFin beneficiaries


 

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