Q: Why does Horizon 2020 put more emphasis on using financial instruments (equity and debt) to support SMEs and other participants?

A: The two main EU financial instruments currently supporting research and innovation have been very successful. For debt, the Risk-Sharing Finance Facility (RSFF) combines EU budgetary resources and EIB funding to share the risks associated with investing in projects: EUR 1 billion comes from the FP7 budget, and another EUR 1 billion from the resources of the European Investment Bank. RSFF loans are available to public and private sector promoters of any size and ownership from the Member States and the countries associated to FP7. By mid-2011, funding for 91 projects worth over EUR 9 billion had been approved. A specific facility for SMEs will start up in early 2012. For equity, the High-Growth and Innovative SME Facility (GIF) under the CIP invests in specialised funds that provide venture capital for SME financing. Managed by the EIF, the GIF covers both early and growth-stage investments. By the end of 2010, some EUR 222 million had been committed to 19 funds supporting a target fund size of some EUR 1.5 billion.
Greater use of financial instruments will help leverage yet further private research and innovation investments, including venture capital investments for innovative, high-tech companies, and in particular SMEs. In Horizon 2020, financial instruments will be expanded in both scope and scale. A debt facility will provide loans and guarantees, and an equity facility will provide finance for early and growth stage investments. Their aim will be to support the achievement of the R&I objectives of all sectors and policy areas crucial for tackling societal challenges, enhancing competitiveness and fostering sustainable growth. They will be implemented via a mandate to, or a partnership with, the European Investment Bank group and/or other international financial institutions and national intermediaries.