Financing Technology Transfer

Global policy discussions increasingly focus on innovation and the knowledge economy as a driver of long-term growth. In parallel new forms of innovation processes are emerging, notably open innovation and innovation networks stressing the importance of connections between various stakeholders. Links between universities and the business sector are of particular importance as many inventions come out of universities but have to be further developed to become economically relevant innovations. New financing instruments and attracting private investors to technology transfer (TT) are necessary but difficult as the pattern of risk and information in this 'in-between area' is complex: Technology is not basic anymore and it requires large amounts of capital to be scaled up - with uncertain market prospects. This paper addresses new financial instruments for TT, building on European Investment Fund's experience in this field

European Small Business Finance Outlook: 2/2011

This European Small Business Finance Outlook (ESBFO) provides an overview of the main markets relevant to EIF (equity1, securitisation, microfinance). It is an update of the ESBFO 1/2011 that has been published in June this year. We start by discussing the general market environment, then look at the main aspects of equity finance and the SME Securitisation (SMESec) market. Finally, we briefly highlight important aspects of microfinance in Europe

The importance of leasing for SME finance

It is well known that Micro and Small and Medium sized Enterprises (SMEs) are the backbone of the economy. Most of these companies use external financing sources like debt and equity capital to finance their activities. However, in general, in the area of SMEs' access to finance, there are market imperfections - not only in times of crisis, but on an on-going basis as a fundamental structural issue, based on uncertainty and asymmetric information between the demand side (entrepreneur) and the supply side (financial intermediary). SMEs' access to finance is often a topic of economic or financial literature. In this context, the access to debt capital and even more often the access to Venture Capital is analysed. Research on the use and role of alternative forms of finance is however rather scarce. Various surveys on access to finance show that bank loans and overdrafts are the most widespread debt financing methods for SMEs, but that alternative sources like leasing and factoring have also a high relevance. This paper puts a spotlight on the importance of leasing as integral part of the tool-set for SME finance, also against the background of market weaknesses for SME lending. It explains the mechanics and logic of SME leasing and provides latest available market information. Furthermore, the paper explains in the form of three case studies how SME leasing can be supported via credit enhancement techniques. These examples, taken from recent EIF business cases, cover very different markets and products: a securitisation transaction in Germany, a loan guarantee in France, and a structured portfolio guarantee in Lithuania.

Guidelines for SME Access to Finance Market Assessments (GAFMA)

In the area of access to finance for Small and Medium sized Enterprises (SMEs) there are often market imperfections/failures – either as temporary effects or as fundamental structural deficiencies. To identify and analyse these issues, SME Access to Finance Market Assessments (AFMAs) are essential. The purpose of such an assessment is to identify and,if and where possible, quantify the market failures or suboptimal investment situations, and investment needs. Moreover, for the justification of public policy interventions and proposals for the implementation of financial instruments, in particular under the EU regulations for the 2014-2020 programming period, these analyses are gaining importance, i.e. as the so called "ex-ante assessments" have become mandatory under the new Common Provisions Regulation1. The document explains the AFMA framework, its structure and its various analytical tools. Moreover, it provides many relevant sources of information. These guidelines are intended to be a toolbox encompassing good practices and providing practical guidance to perform ex-ante SME finance market assessment; they are not to be seen as the assumption of the only way, but as our "cooking recipe" and a pragmatic approach to tackle the issue of analysing SMEs' access to finance.2,3 This text provides guiding principles and typical approaches for AFMAs from the authors' perspective. These guidelines have been prepared as a benchmark for the own use and for service providers conducting AFMAs on behalf of EIF, thereby ensuring a consistent structure and quality of future analyses. Moreover, they can also provide guidance to market analysts, performing assessments outside the EIF framework. This text has been prepared taking into consideration the requirements of the Common Provisions Regulation (Art. 37(2)), see i.e. Annex 1, but the guidelines cannot guarantee that the AFMA reports, using them as a basis, finally fulfill these requirements

European Small Business Finance Outlook

This analysis provides an overview of the main markets relevant to EIF. We start by discussing the general market environment, then look at the main aspects of equity finance and the SME Securitisation market. Finally, we briefly highlight important aspects of microfinance in Europe

Microfinance in Europe – A market overview

This study investigates the effects of microcredit in the European market. Based on the review of relevant literature and recent surveys, this research explores the general meaning of microcredit before addressing the European SME landscape with a special focus on micro enterprises and Microfinance Institutions (MFIs). Finally, the study reviews selected microcredit markets in both Western and Eastern Europe, analyzing aspects of social inclusion, job creation and market gaps. In the extremely fragmented European economy and in the absence of a commonly accepted microfinance business model, the findings confirm the positive impact of microfinance on both poverty and social exclusion which currently constitute major obstacles to a sustained economic growth

Access to funds: how could CMU support SME financing?

Many policy actions of the CMU have the objective to enhance access to finance for the so-called backbone of the European economy–the SMEs. The CMU aims at improving the framework conditions for SME financing, at strengthening bank lending–as the most important external financing source for SMEs– and to diversify the range of potential financing sources for SMEs–for various financial instruments from debt to equity. This article explains the SME financing-related objectives of the CMU by looking at the initiatives to enhance the lending capacity of banks, before it turns to the discussion of alternative financing. Due to the multitude of links to SMEs, not all CMU elements can be tackled in the same detail, but we focus on some key areas like securitisation and venture capital–including latest regulatory developments

Business Angels in Germany – EIF's initiative to support the non institutional financing market

Business Angels (BAs) are an important financing source for SMEs, and seed and start-up companies in particular. BAs are even more important in countries and regions lacking an institutionalised VC infrastructure, often being the only major source of equity finance for young innovative SMEs. An important additional element of their activity is often the provision of non-financial benefits like mentoring/advice, contacts etc. However, especially in comparison with the US, the European BAs segment is still in its emerging phase both in terms of the number of active BAs and the amounts invested by BAs. Strained exit markets as well as an overall deterioration of the private wealth situation of many business angels as result of the financial crisis additionally limit the investment activity of BAs with investment activity at low levels. This paper gives insights into the BA segment with a special focus on Germany. First we introduce the concept of BA financing. In a second step we analyse the BA market in Germany. We conclude that there is a significant excess demand for early stage financing. In the third part of this paper we explain, how the EIF aims to address this by providing a flexible and timely support to the BAs market through establishing an intermediation infrastructure to efficiently leverage this investor base. This infrastructure is going to be piloted in collaboration with the German Business Angel Network (BAND) in Germany soon (launch planned in the context of the Deutscher Business Angels Tag in March 2012), with the intention to conduct a roll-out in other geographies following the successful implementation of the pilot

European Small Business Finance Outlook: December 2013

This European Small Business Finance Outlook (ESBFO) provides an overview of the main markets relevant to EIF (equity, guarantees/securitisation, microfinance). It is an update of the ESBFO June 2013. We start by discussing the general market environment, then look at the main aspects of equity finance and the guarantees/SME Securitisation (SMESec) market. Finally, before we conclude, we briefly highlight important aspects of microfinance in Europe

European Small Business Finance Outlook: May/2012

This European Small Business Finance Outlook (ESBFO) provides an overview of the main markets relevant to EIF (equity1, securitisation, microfinance). It is an update of the ESBFO 2/2011 that was published in December last year. We start by discussing the general market environment, then look at the main aspects of equity finance and the SME Securitisation (SMESec) market. Finally, we briefly highlight important aspects of microfinance in Europe