New EIB report shows how to make European tech companies thrive
An EU-wide database that pulls together all available information on financing for European tech companies; that is one of the recommendations of a new report prepared by the joint European Commission–European Investment Bank (EIB) InnovFin Advisory.
It is also suggested to create a tool that helps investors to better understand the technical and economic viability of highly innovative technology ventures. Both tools can help to support European deep tech start-ups and smaller companies in obtaining financing when they need it most.
The new report, Financing the Deep Tech Revolution: How investors assess risks in Key Enabling Technologies (KETs), is supported under the EU’s research and innovation programme Horizon 2020. It aims to ensure that European deep tech start-ups and smaller companies can access the financing they need to grow and compete in the world market, so that citizens can benefit from faster deployment of advanced technologies.
The European Union defines “Deep Tech” as key enabling technologies. They are instrumental in strengthening the pace of innovation and addressing global challenges, such as climate change and demographic changes. The EU definition comprises six technologies: micro- and nanoelectronics, nanotechnology, industrial biotechnology, advanced materials, photonics, and advanced manufacturing systems.
”Today we see a new generation of start-ups that not only develops services and business models, but which pushes the technological frontier,” said Ambroise Fayolle, EIB vice president responsible for innovation, science and digital. “Key enabling technologies as identified by the EU are at the heart of the next industrial revolution. They will help us to face the social and environmental challenges of our time. We need to bring science closer to finance and finance closer to science, the EIB stands ready to help to bridge this divide.”
Currently, investors often find it difficult to engage in deep-tech projects, which are research-intensive, interdisciplinary, long-term oriented and disruptive. They require high upfront and patient, long-term financing, while not always having clear commercial applications from the start. Due to the increasing complexity of deep technologies, there is a sizeable ‘knowledge gap’ between innovators and investors.
On the other side of the divide, deep tech innovators still struggle to obtain the necessary financial backing, although many public initiatives to support new technologies and innovative companies are available. This is due to lack of information, complicated and lengthy application procedures or confusing eligibility criteria.
The European Investment Bank (EIB) is the long-term lending institution of the European Union and is owned by the EU Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals. In 2017, the EIB supported innovation and skills with EUR 13.8bn. Among other things, that reportedly enabled 7.4 million high speed digital connections.
Under Horizon 2020, the EU research and innovation programme for 2014-2020, the European Commission and the EIB Group (EIB and EIF) have launched a new generation of financial products and advisory services to help innovative firms access finance more easily.
InnovFin – EU Finance for Innovators offers a range of tailored products which will make more than €15 billion of financing support for research and innovation (R&I) available to small, medium and large companies and the promoters of research infrastructures. This finance is expected to support up to €48 billion of final research and innovation investments.
InnovFin Advisory aims to improve the ‘bankability’ and investment-readiness of projects that need substantial, long-term investments. It also provides advice to improve the conditions for access to risk finance for R&I and advises on the set-up of thematic investment platforms.
The main clients foreseen are promoters of R&I projects that meet Horizon 2020’s Societal Challenges. InnovFin Advisory has a large portfolio of horizontal activities and a strong track record in advising innovative companies to enhance access to EIB and/or other financing.