European fund aims to help companies scale up

European fund aims to help companies scale up

Business news |
By Nick Flaherty

A €3.75bn fund is aiming to help European technology companies scale up and be more competitive in global markets.

The European Tech Champions Initiative (ETCI) will back high-tech companies in their late-stage growth phase. The initial commitments of €3.75 billion come from the governments of Spain, Germany, France, Italy and Belgium as well as the European Investment Bank.

The size of the fund is expected to grow further with future commitments.

The aim of ETCI is to boost Europe’s scale-up venture capital (VC) markets by bridging gaps in financing availability, especially for companies seeking to raise amounts of over €50 million.

It will help create an asset class for European institutional investors to diversify their portfolios to provide a flow of funding to European scale-ups that has been missing. Europe’s tech start-ups often do not have sufficient capital to compete on a global scale and are pushed to relocate overseas. Closing this scale-up gap could create a large number of highly skilled jobs and boost growth.

This follows a €10bn fund by the European Innovation Council (EIC) that has invested directly in startups but has struggled to get the money to technology entrepreneurs.

The ETCI is the cornerstone of the Pan-European Scale Up Initiative which was unveiled in February 2022 in Pari. It will be managed by the European Investment Fund with commitments from Spain (€1 billion), Germany (€1 billion), France (€1 billion), Italy (€150 million) and Belgium (€100 million) during the initial subscription period. The EIB Group has added €500m.

“This initiative is a striking example of what we can achieve collectively to strengthen EU’s economic and industrial sovereignty,” said Bruno Le Maire, French Minister of the Economy, Finance and Industrial and Digital Sovereignty. “In doing so, European technology companies will contribute further to innovation, growth and job creation, and therefore to the EU’s economic, social and environmental future.”

“This initiative will provide the most innovative start-ups with the capital they need to scale and lead the global entrepreneurial ecosystem,” Nadia Calviño, Vice President of Government of Spain and Minister for the Economy and Digital Transformation. “Start-ups are a key asset of our strategic autonomy and with this agreement we will contribute to strengthen it. It is an investment in our future.”

“Europe is already home to world-class companies and industries with access to solid technical and financial infrastructures. To enable future European tech champions to play an equally significant international role and to boost Europe’s global competitiveness, we need to go one step further,” said Christian Lindner, Germany’s Federal Minister of Finance. “With the European Tech Champions Initiative, we are now filling a gap in the financing landscape and strengthening Europe’s strategic autonomy.”

“We share this initiative in which Europe works in synergy to mobilize public and private capital in order to support the growth of future champions of digital innovation,” said Giancarlo Giorgetti, Minister of Economy and Finance of the Italian Republic. “We hope that Italy, which has always been one of EIF’s main partners, will be able to draw from this project the right impulse for the development of this business sector.”

“Belgium welcomes the pan-European investment strategy implemented by the European Investment Fund and is delighted to be able to contribute to new developments in the technology scene,” said Belgium’s Finance Minister Vincent Van Peteghem. Belgian research lab imec is a key source of startups that need scale up support.

“Innovative businesses need to be able to find the equity capital they need right here in Europe” Marjut Falkstedt, Chief Executive of the EIF said. “As manager of the ETCI, we will be using our scale and expertise to nurture a sustainable late-stage growth ecosystem capable of supporting homegrown innovation.”

“Offering support to Europe’s innovative firms in their late-stage development, when they want to scale up their business, is essential for safeguarding the EU’s strategic autonomy,” said EIB Group President Werner Hoyer. “Europe has strong innovators, but it needs to improve the environment for companies to transition from start-up to credible competitors and market leaders. ETCI highlights our commitment to financing innovation and the rollout of technologies that will help secure a sustainable future for Europe.”

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