The EIB and the EIF will manage the new Fund. © EIB

EU Council confirms European Scale-up Initiative

EU Members States agreed on Tuesday to launch the pan-European Scale-up Initiative, which is aimed to provide €10bn for late-state tech companies.

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Like its predecessor for breakthrough innovations from European life sciences and digital start-ups, the EIC that was launced in 2019, Fund, the new European Tech Champions Initiative is expected to provide €10 bn in fincancing. Unlike the EIC Fund financed by the European Investment Bank (EIB), the new ETCI fund will be managed by the European Investment Bank Group will provide money from European governments to push the growth of late-stage high tech companies. The public money is intended to act as leverage for private investors.

While EIB Group will initially commit up to €500m in aggregate resources, Germany and France said they will contribute €1bn each. The other EU member states will announce their committments in the following weeks.

Up to now, a lack of European funds for tech innovations developers has made it difficult for companies to pursue their plans in Europe and has forced them to seek capital abroad, particularly in the US.  As EU Member States are keen to develop a European ecosystem for late-stage investment rounds, the European Council has now mandated the EIB Group to manage the European Tech Champions Initiative (ETCI). In concrete terms, the EIB Group will manage a multi-investor fund of fund structure that is aimed to help to develop a European ecosystem. The aim is to foster the growth phase of innovative European technology companies by mobilising additional private investors alongside initial public commitments.

The European Investment Bank Group plans to improve the  EU financial ecosystem by providing venture capital (VC) funds and fund of funds, as well as providing venture debt financing towards individual companies, notably in strategic sectors such as clean technology, biotech and digital innovation.

President Werner Hoyer said: “European tech is booming. In 2021, the European Venture Capital market set a new record, with around €100bn invested, according to estimates — that is nearly three times the 2020 figure of €35bn. The ecosystem for innovative start-ups is there. We must now make the same effort to help innovative ventures to grow beyond the start-up stage. The most promising European innovative companies see their growth held back by the difficulty of raising sufficient capital from funds based in Europe”. 

However, private investors warned not to make the same faults with the  European Tech Champions Initiative as with the EIC Fund, who raised €2bn in 2019 and 2020 but suffered from intransparent financing criteria, unprofessional management and bureaucracy due to private fund managers.

© european biotechnology
Thomas Gabrielczyk
9 February 2022

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