COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 16.07.2001
COM(2001) 399 final
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1. General introduction.....................................................................................................7
2. ETF Start-up Facility....................................................................................................92.1. Introduction............................................................................................................... ...9
2.2. Description of the Facility..........................................................................................102.3. Budgetary situation.....................................................................................................102.3.1. Overview................................................................................................................. ...10
2.3.2. Geographic distribution..............................................................................................112.3.3. Commitments.............................................................................................................1 2
2.3.4. Disbursements............................................................................................................ 14
2.3.5. Repayments by the venture capital funds...................................................................162.3.6. Accounts................................................................................................................. ....16
2.4. Financial Intermediaries.............................................................................................172.5. Beneficiary SMEs.......................................................................................................182.6. Employment...............................................................................................................213. Joint European Venture (JEV)...................................................................................223.1. Introduction............................................................................................................... .22
3.2. Description of the programme....................................................................................233.3. Development of JEV..................................................................................................233.4. Budgetary situation.....................................................................................................243.4.1. Overview................................................................................................................. ...24
3.4.2. Geographic distribution..............................................................................................243.4.3. Commitments.............................................................................................................2 5
3.4.4. Disbursements............................................................................................................ 25
3.4.5. Accounts................................................................................................................. ....25
3.5. Financial Intermediaries.............................................................................................263.6. Review of the projects................................................................................................273.7. Employment...............................................................................................................314. SME Guarantee Facility.............................................................................................324.1. Introduction............................................................................................................... .32
44.2. Description of the Facility..........................................................................................32
4.3. Budgetary situation.....................................................................................................334.3.1. Overview................................................................................................................. ...33
4.3.2. Geographic distribution..............................................................................................334.3.3. Commitments.............................................................................................................3 4
4.3.4. Loss payments............................................................................................................ 35
4.3.5. Accounts................................................................................................................. ....36
4.4. Financial Intermediaries.............................................................................................364.5. Beneficiary SMEs.......................................................................................................394.6. Employment...............................................................................................................415. Conclusions................................................................................................................425.1. Growth and Employment Initiative............................................................................425.2. Multi Annual Programme...........................................................................................42
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2.1. Breakdown by country of the Venture Capital (VC) funds........................................11
2.2. Quarterly approvals of investments in the VC funds.................................................122.3. Cumulative evolution of operations...........................................................................132.4. Disbursements to the VC funds..................................................................................142.5. Investments by the VC funds in beneficiary SMEs...................................................152.6. Repayments by the VC funds.....................................................................................16
4.1. Breakdown by country of the financial intermediaries..............................................33
4.2. Quarterly EIF commitments to financial intermediaries............................................344.3. Cumulative evolution of operations...........................................................................344.4. Loans granted to SMEs and corresponding investments............................................354.5. Utilisation by financial intermediaries.......................................................................36
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2.1. Breakdown by country of beneficiary SMEs.............................................................18
2.2. Realised investments..................................................................................................182.3. Employment in beneficiary SMEs of realised investments........................................192.4. Sector of activity of beneficiary SMEs of realised investments................................192.5. Employment in beneficiary SMEs in portfolios.........................................................202.6. Sector of activity of beneficiary SMEs in portfolios..................................................20
2.7. Impact on employment in beneficiary SMEs.............................................................21
3.1. Breakdown of financial intermediaries by country....................................................263.2. Projects status............................................................................................................ .27
3.3. Breakdown by country of the planned joint ventures.................................................283.4.Breakdown by country of joint ventures’ partners.....................................................29
3.5. Sector of activity of planned joint ventures................................................................303.6. Employment in partner SMEs....................................................................................314.1. Breakdown by country of beneficiary SMEs.............................................................394.2. Employment in beneficiary SMEs.............................................................................404.3. Breakdown of beneficiary SMEs by year of establishment.......................................40
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The 2000 annual report on the Growth and Employment Initiative is drawn up in accordance
with Article 7(1) of the Council Decision (Decision 98/347/CE) adopted on 19 May 1998.This Decision requires the Commission to submit an annual report to the European Parliamentand Council on the progress achieved on the implementation of three financial instruments,ETF Start-up Facility, JEV and SME Guarantee Facility. This is the second report of this type,
which reviews the developments that have occurred since 1999 and outlines future prospects
of the Initiative.
The report is broken down into three sections, one for each of the financial instruments. It is
complemented by annexes, referring particularly to statistics on SMEs that are beneficiariesof either the ETF Start-up Facility or the SME Guarantee Facility. These statistics are basedon questionnaires and data, concerning the year 1999, that were submitted to the Commissionat the end of 2000. These data available now for the first time, were not annexed to the firstreport. Finally, the conclusion describes further developments of the Initiative within thecontext of the multiannual programme for enterprise and entrepreneurship (2001-2005).
The European Parliament’s “Committee on Employment and Social Affairs” has submitted a
report (A5-0335/00) responding to the Commission’s first annual report on the Growth andEmployment Initiative in November 2000.
The Presidency conclusions of the Lisbon European Council of 23-24 March 2000 call for
new strategic goals for the Union: to become the most dynamic and competitive knowledge-based economy in the world, to be capable of sustainable economic growth with more andbetter jobs and to have greater social cohesion. The Lisbon conclusions consider SMEs to bestrategic tools for the development of a dynamic and competitive knowledge-based economy.Measures to foster their development focus on improving Community financial instrumentsfor SMEs and on creating a friendlier environment for starting up and developing businesses.
In response to a request by the Lisbon European Council, the Commission prepared a review
paper in October 2000 on specific Community financial instruments for SMEs, setting up aframework for future Community action which should continue to be offered through fourwindows (loans, equity, guarantees and grants). The Ecofin Council welcomed the reviewpaper on 7 November 2000. It also agreed to the Commission’s proposal to regroup similarCommission financial instruments under one budget line and one legal basis. As aconsequence, several Community SME programmes have been included under the frameworkof the multiannual programme for enterprises and entrepreneurship 2001-2005 (MAP), whichwas approved by the Council on 20 December 2000 (2000/819/EC). The new MAP proposesmodifications and extensions of the ETF Start-up Facility and the SME Guarantee Facility,and it foresees a simplification of the JEV programme and an adaptation of its eligibilitycriteria in order to respond more effectively to the needs of SMEs. Furthermore, the SeedCapital action (formerly CREA), constitutes an integral part of the financial instruments of theMAP.
8Two of the instruments of the Growth and Employment Initiative are managed on a trust basis
by the European Investment Fund (EIF). In this context it is worth mentioning that the June2000 reform of the EIF has turned it into the EIB Group's specialist risk capital arm andstrengthened its role as a guarantor to ensure continued efficient support for SMEs. The aim isto achieve the Community objectives in these key areas for growth and employment in theMember States of the Union and, for the first time, also in the Accession countries.
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Technology-based and innovative SMEs, as well as start-ups, often experience difficulty in
accessing traditional finance due to problems such as the relatively high proportion ofintangible assets and the lack of stable cash flows. They are often regarded to be higher riskthan SMEs in the traditional sectors. Hence the need for venture capital, which becomes acrucial source of financing for these SMEs. Increasing the need for venture capital is the factthat many innovative SMEs are growing or are expected to grow at a high rate, makingequity-based finance the most appropriate for their needs.
There has been a significant increase in the availability of European venture capital over the
past few years. The European Venture Capital Association (EVCA) 2000 Yearbook indicatesthat venture capital investment in 1999 has increased by 70% from the previous year, to aboutEUR 12 billion (0.14% of the gross domestic product - GDP).
Despite the rapid growth of the EU venture capital market over the past 5 years, it still
remains significantly behind that of the US. Furthermore, the EU private equity market tendsto focus on more profitable later-stage investments rather than the early-stage investments oftechnology-based and innovative SMEs.
However, in recent years there has been a shift towards early stage and high technology
investments. EVCA figures show that early-stage investments in 1999 had doubled to EUR 3billion relative to 1998, and were ten times higher than in 1995. An analysis of the expectedallocation of funds raised in 1999 confirms this trend, with about EUR 5.5 billion (22% oftotal funds raised) earmarked for future early-stage investments.
According to the EVCA 2000 mid-year survey, during the first six months of 2000, 44% of
European investee companies were in the seed or start-up phase, while 19% of the totalinvestments were allocated to these companies. The average amount invested was EUR 1million in seed companies and EUR 1.4 million in start-up companies. High technologycompanies make up almost 50% of the total investee companies and have received 33% of thetotal amount invested. However, the recent downturn in technology stocks may alter thesefigures substantially.
The ETF Start-up Facility is operated by the EIF that contributes to the pursuit of Community
objectives; in particular it is committed to the development of a knowledge-based society,centred on innovation, growth and employment, the promotion of entrepreneurial spirit, theregional development and the cohesion of the Union.
The EIF acts independently and commercially under market conditions. According to Art. 24
of its statutes, it targets appropriate returns for its shareholders.
The following chapters on the ETF Start-up Facility have been drafted on the basis of the
annual reports provided by the venture capital funds participating in the ETF Start-up Facilityto the EIF. This information relates to 31 December 2000.
The report is complemented by a specific SME annex (annex 2) based on a survey carried out
in mid-2000 on the beneficiary SMEs, which were invested in by venture capital funds
10participating in the ETF Start-up Facility. It is important to stress that this information refers
to the year 1999.
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The objective of the ETF Start-up Facility is to increase the availability of risk capital to
innovative SMEs during their establishment and their early stage development.
The EIF invests in specialised venture capital funds (hereunder referred to as VC funds)
established specifically to provide equity or other forms of risk capital to SMEs. The fundsconsidered under this Facility are smaller or newly established ones, in particular thoseoperating at a regional level, those focusing on specific industries or technologies and thosewhich finance the exploitation of R&D results.
Investments are made on equal terms with other equity investors and must represent between
10% and 25% of the total capital of the VC fund, up to a maximum of EUR 10 million.
In order to offer the EIF some flexibility in its selection of funds and not to exclude otherwise
strong candidates, the Investment Policy of the Facility allows VC funds to make available asmall percentage of their capital to investments outside the EU. In this case the EIF'sparticipation in the venture capital funds is reduced by the corresponding percentage.
The EIF examines the fund proposals based on criteria such as size, level of involvement from
the private sector, investment strategy, target market, deal flow, proposed terms, expected rateof return, management team working on the project and lastly on the extent to which the EIFinvestment in the VC fund is expected to have a catalytic effect in raising funds. Attention isalso given to ensuring that the programme as a whole maintains a balanced geographicalrepresentation across the European Union.
Following eligibility approval of the VC fund proposals by the Commission, the EIF signs
contractual agreements with the fund managers and the other equity investors in the fund.Thereafter the EIF progressively disburses the amounts committed to the VC funds forinvestment in SMEs.
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As on 31 December 2000, the total budgetary appropriations of the ETF Start-up Facility
amounted to EUR 168 million, including EUR 59 million allocated in 2000.
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As on the end of 2000, investment proposals into 17 VC funds were in principle approved by
the EIF and the Commission services, corresponding to a total amount of EUR 110 million.Ten contracts have been signed with the EIF and two are still under process. For theremaining five, negotiations were unsuccessful. These twelve VC funds account for anamount of EUR 80.7 million, which represents 48% of the total ETF Start-up budgetallocation. The global maximum funding to be raised by these VC funds amounts to EUR 440million.
The breakdown of the amounts corresponding to the twelve VC funds by country is shown
below:
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The ten VC funds with which the EIF has signed contracts cover six member states for a total
of EUR 71.7 million. Out of this amount, EUR 12.8 million are conditional on further fundraising by the VC funds. A short description of the VC funds, which have contractualagreements with the EIF, is annexed (annex 1).
Concerning the two funds, which are still under process, the EIF expects to conclude within
the coming few months.
The main reason for which negotiations were unsuccessful for the five above-mentioned VC
funds is that the final investment terms, proposed by the VC fund managers, did not complywith the eligibility criteria of the ETF Start-up Facility (for example other investors receivedpreferential terms, management fees were not calculated in accordance with market practiceor over-subscription of the fund).France
32%
Finland
2%Germany
26%Luxembourg
12%Sweden
7%United Kingdom
10%Belgium
6%Denmark
5%
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The graph below shows the quarterly approvals of investments in VC funds. It can be noticed
that the low level of activity in the year 2000 corresponds to the restructuring period of theEIF.
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13The graph below shows the cumulative evolution of the amounts approved in principle for 17
VC funds (EUR 110 million - end 2000) compared to the available committed budgetaryresources (EUR 168 million - end 2000).
It also shows the evolution of the total amount of the on going operations (i.e. contracts
signed plus those, which are still under process, corresponding to EUR 81 million - end2000).
Finally it indicates the amounts signed by the EIF with VC funds (EUR 72 million - end
2000).
020406080100120140160180
Q3/98 Q4/98 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00EUR million xx
Available committed budgetary resources Amounts approved in principle
Contracts signed + under process Contracts signed
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As on 31 December 2000, the total disbursements to VC funds amounted to EUR 32 million
compared to EUR 12 million at year-end 1999. The overall disbursement rate is now 45% ofthe amounts committed.
It is worth noting that the first ETF Start-up VC funds that have signed a contract with the EIF
(in the first two quarters of 1999) present an average disbursement rate of 63%. Consideringthat the average investment period of these VC funds is 4-5 years, the disbursement rate canbe considered quite satisfactory.
The following graph shows the progress of the disbursements of budgetary commitments to
the VC funds by 31 December 2000 in comparison with the amounts of the contracts signed.The disbursements of the EIF are made in parallel with all the other investors in the VC funds,pro rata of their investment commitments. The disbursements are used by the VC funds fortheir investment in SMEs.
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Contracts signed EIF Disbursements to VC funds
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15The graph hereunder shows the investments made by the VC funds in beneficiary SMEs
compared to the EIF disbursements to the VC funds. End 2000 the ratio of the Facilitycontribution with the investment of VC funds was 1/4.
020406080100120140
Q4/98 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00EIF Disbursements to VC funds Investments by VC fundsEUR million
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Some ETF Start-up VC funds have started repaying the EIF, following the sale of their equity
participation in some successful SMEs.
In the year 2000 a total amount of EUR 9.6 million has been repaid by the VC funds to the
EIF, which compares with an amount of EUR 0.7 million in 1999.
05101520253035
Q4/98 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00
EIF Disbursements to VC funds Repayments from VC fundsEUR million
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According to the EIF, the performance stated above is quite encouraging considering that the
first ETF Start-up contract with a VC fund was signed in January 1999. Nevertheless, thedeterioration of market conditions at the end of 2000 could have an impact on the pace ofprofit realisation and on the further development of some firms. Indeed, the technology stockdownturn has signified a decrease in the valuation of some investee companies, while othershad to postpone their quotation on the stock markets.
More information on the companies concerned by these repayments is given in paragraph 2.5
hereunder.
The Council Decision foresees that proceeds from realised investments may be reinvested
during the first four years of operations of the Facility. The reinvestment period can beextended by up to three years, subjects to a satisfactory evaluation of the Facility 48 monthsafter its adoption.
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The financial statements of the Facility are enclosed in annex 7.
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Most of the VC funds, which have contractual agreements with the EIF, have a national, if not
regional, focus, although some of them are allowed to invest on a pan-European basis. Theyare mainly oriented towards early stage investments in high technology areas, such asinformation and communication technologies, Internet, healthcare and life sciences. This is inline with the structure and the eligibility criteria of ETF Start-up.
A short description of the VC funds, which have contractual agreements with the EIF, is
annexed (annex 1).
In terms of country representation, there are still seven EU countries, which have not been
covered by ETF Start-up, i.e. Austria, Greece, Ireland, Italy, Netherlands, Portugal and Spain.Apart from the Netherlands, these are the countries where the venture capital market,particularly concerning the seed and start-up phases, is the less developed. However, in thelast months a growing number of proposals coming from these countries are being assessedand special operational efforts have been undertaken in respect of the development oftransactions in countries where the ETF start-up Facility so far has not been used.
As far as Austria is concerned, one operation has been submitted to EIF's Board in April.
In Greece, the market conditions are such that it is difficult to identify potential investments
under any of EIF's mandates.In Ireland preliminary contacts have been established for an operation to be placed in the
pipeline for later in the year.In Italy, preliminary contacts have been established for an operation to be decided in 20001.
The related request for approval by the Commission services will be sent in due course.In the Netherlands, a number of opportunities are envisaged under the enlarged investment
policy for ETF Start-up (Incubators, seed funds).In Portugal a team for a potential investment has been identified but substantial further due
diligence is required before presenting this operation.In Spain, one opportunity identified end of last year has been recently abandoned due to
difficult fund raising conditions. For the moment, it is difficult to identify potential funds
focusing on early stage investments in high technology sectors.
With these potential investments, substantial progress should be made both in the utilisation
of ETF start-up funds as well as in the extension of its geographic reach.
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As on 31 December 2000, the VC funds have invested in 141 SMEs. The total amount
invested is EUR 128.5 million, which corresponds to an average investment of EUR 0.9million per company.
The breakdown by country is as follows:
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Finland 10 4.1 0.4
France 76 66.9 0.9
Germany 34 34.0 1.0Luxembourg 2 2.3 1.2Sweden 8 12.9 1.6United Kingdom 7 4.2 0.6Non-EU (*) 4 4.2 1.1
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(*) US, Israel and Switzerland
Out of the 141 companies, 128 are still in the portfolios of the VC funds and 13 investments
are realised. Out of these 13, 12 have been sold and one has been written off.
The table below gives more details about these 13 investments:
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Written off 1 0.5 0 -0.5 -100
Sold 12 9.1 16.9 8.8 86
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19The breakdown of the 12 companies by number of employees at the time of the investment
realisation (exit) is as follows:
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11-50 7 58
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The classification of the 13 SMEs by sector of activity is as follows:
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Information Technology 6 1 7
Biotechnology/Life Sciences - - -
Communication/Media 3 0 3Electronics - - -Medical/Health related 3 0 3Other high technology activities - - -Other (non high technology) - - -Not allocated - - -
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20The breakdown of the 128 SMEs, which are currently part of the portfolios of the VC funds,
by the number of employees at the end of 2000, is as follows 
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6-10 10 8
11-50 71 55
>50 25 20
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The classification of the 128 SMEs by sector of activity is as follows:
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Information Technology 65
Biotechnology/Life Sciences 16
Communication/Media 11Electronics 2Medical/Health related 17Other high technology activities 3Other (non high technology) 11Not allocated 3
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SMEs in the high technology area make up 89% of the total number of SMEs currently in the
portfolio of the VC funds, with companies active in information technology accounting formore than 50%.
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The VC funds reported a total number of 4,796 employees at year-end 2000 in 133 investee
companies (excluding non-EU companies, written-off companies and four realisedinvestments). 71 of these companies (the ones that received an investment before the end of1999 or early 2000) reported an increase in employees from 1,901 (as on 31/12/1999) to2,686 (as on 31/12/2000). This represents an annual increase of 41%.
Following the results of the annual survey carried out in mid-2000, the expectation of the 69
concerned SMEs in terms of employment creation can be summarised as follows:
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Current 1,897 27 -
Expected in one year 3,317 48 75
Expected in two years (*) 4,081 59 23Expected in five years (*) 5,290 77 30
(*) Around 40% of the surveyed companies were unable to provide these data. For these
companies an increase of 0% has been assumed.
More detailed information is included in annex 2.
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The development of new commercial outlets in other Member States - either through
exporting products or investing directly by producing on-site - offers SMEs a strategic andproactive choice, which allows them to benefit from the considerable advantages of theinternal market. However, the fact is that the Europeanisation and internationalisation of tradeinvolves large companies more than SMEs, even in the smaller Member States where, in theabsence of a large internal domestic market, SMEs have turned towards other markets to agreater extent than those in the large Member States. This also applies to direct transnationalinvestment (the most highly developed aspect of internationalisation), where the share ofSMEs is even lower than for exports.
The European Observatory for SMEs
1 confirms the relative weakness of Europe’s 17 million
SMEs in terms of internationalisation. It notes that the proportion of exporting undertakings inItaly, the Netherlands, Portugal and Spain rises with the size of the undertaking. In theabsence of reliable statistics, the Observatory does not give any figures for the share of SMEsin direct investment, but it points out that direct investment in the form of transnationalinvestment is dominated by the 30,000 large companies, and that there is a close link betweenexporting and direct investment. A high level of direct investment goes hand in hand with ahigh level of exports. Each aspect of internationalisation meets a need on the part ofundertakings and has shown its worth. Obviously, SMEs must make only those movesnecessary to achieve their aims in terms of internationalisation. However, besides their limitedhuman and financial resources, they must face up to the problems involved in accessing aforeign market. Cultures, traditions and regulatory and financial framework are often quitedifferent and SMEs rarely have a good knowledge of foreign languages at the start of theinternationalisation phase. Against this background, co-operation with a partner offersconsiderable advantages for achieving the intended objectives, through careful managementof the limited resources and exploiting the reciprocal advantages for the benefit of eachpartner. It is up to the future partners to select the aspect which best meets their aspirationsand means. There can be no doubt that strategic alliances between SMEs, when well prepared,have a high success rate.
The realisation of the internal market created a favourable context for the creation of Joint
Ventures. But this FRQGLWLRQVLQHTXDQRQ  does not seem to be sufficient to enable SMEs to set
up joint ventures. Effectively, whereas a lot of SMEs wish to set up joint ventures
2, only a few
actually do so. Indeed, obstacles to the internationalisation of SMEs include the absence ofadequate financial resources, followed by lack of time and management resources, limitedknowledge of foreign languages and ignorance of the legislation governing foreign markets.
The Commission already has several instruments to facilitate the search for information on
other markets in the European Union and on potential partners from other Member States.However, implementation of a partnership and, even more so, the setting-up of a joint ventureare an expensive and complex affair. The real challenges of internationalisation only startwith the identification of the potential partners. The limited financial and human resources,which are traditionally characteristics of SMEs, as well as the general absence of support
                                                
1 4th report of the European Observatory on SMEs, 1996, EIM Small Business, Research and Consultancy
2 81% following a study realised by KPMG, -RLQW9HQWXUHV$7ULXPSKRI+RSHRYHU5HDOLW\ ?, KPMG, 1998
23from financial institutions because of what they consider a high risk, mean that many
transnational co-operation projects are not implemented. This situation is particularlyregrettable in the case of good projects, which could have introduced new economic activitiesand created jobs.
A lot of SME organisations regretted the absence of an instrument helping SMEs to overcome
the obstacles, especially since programmes aiming at setting up joint ventures with countriesoutside the EU existed. The JEV programme was therefore set up. By fostering transnationalinvestments of SMEs and entrusting the marketing of the Scheme and the contacts withcompanies to financial institutions, JEV fulfils the principle of subsidiarity.
  ’HVFULSWLRQRIWKHSURJUDPPH
The JEV programme aims to encourage joint ventures between European SMEs in the
European Economic Area, thereby helping them to benefit from the opportunities offered bythe single market.
The contribution is intended to cover some of the expenses related to the setting up of a joint
venture. The amount (max. EUR 100,000 per project) and the terms of this contribution are asfollows:
• The first part of the contribution covers up to 50 % of the eligible expenses with a
maximum ceiling of EUR 50,000.
Eligible expenses are those related to the conception and setting up of a transnational joint
venture created by European SMEs. These include the expenses of the market survey, thepreparation of the legal framework and the business plan, the analysis of the environmentalimpact, and any other expenses that are essential for the setting up of the joint venture.
• The second part of the contribution covers up to 10 % of the total amount of the investment
made.
In addition, JEV supports actions promoting the Programme from conception through
development and distribution of promotional material through any form; and/or- events
intended to stimulate co-operation in view of the creation of new transnational joint ventureswithin the European Union.
The maximum amount of a contribution for Promotion Facility is EUR 10.000 for
promotional action material and EUR 20.000 for events intended to stimulate co-operation. Itshall consist of 50% of all eligible expenses and shall be in the form of a grant.
Entities which are eligible to apply for a JEV Promotion Facility contribution are financial
intermediaries, European, national or regional associations of SMEs, Chambers of Commerce,Euro-Info-Centres, the Business & Innovation Centres, and all other non-profit entities fromEuropean Union, such as trade and industry associations, public agencies and other entities,promoting investments eligible for the JEV Programme.
  ’HYHORSPHQWRI-(9
The overall administrative environment of the year 2000 was quite difficult for the
development of the JEV programme. At the beginning of the year, the Commission decided toclose down the Community programmes for joint ventures with SMEs in Central and EasternEurope and the New Independent States (JOP) and for joint ventures for the countries of Latin
24America, Asia, the Mediterranean region and South Africa (ECIP). As the JOP and ECIP
programmes had existed since the beginning of the ‘90s, while the JEV programme waslaunched in 1998, most of the Financial Intermediaries of the JEV network came from theJOP and ECIP networks. The closure of the two joint venture programmes with thirdcountries induced banks to reduce their staff involved in this business.
The development of the JEV programme in 2000 was somewhat limited. The main reasons
for this were the closure of similar programmes, initial uncertainty about the future of JEV,the bureaucratic procedures involved and eligibility criteria that were not always adapted tothe market needs of the SMEs.
Indeed, when the draft proposal for a new Multiannual Programme for Enterprise and
Entrepreneurship, and in particular for SMEs (2001-2005) was presented by the Commissionin April 2000, JEV was not proposed for renewal. However, the other two instruments of theGrowth and Employment Initiative, ETF Start-up and the Guarantee Facility, were fullyintegrated into the Commission Proposal. This gave a certain confusion on the future of JEVbeyond the end of the year 2000, and hence a considerable number of financial intermediariesno longer promoted JEV. Only in late autumn, at the request of the European Parliament, didthe Commission add the JEV programme to its proposal. The Council then approved theinclusion of JEV in its decision of 20 December 2000 on the Multiannual Programme forEnterprise and Entrepreneurship, and in particular for SMEs, (2001-2005).
Moreover, the business environment for JEV was not favourable and SMEs had to wait longer
than expected for payment and approval, as the Commission had to apply very strict, timeconsuming and burdensome control mechanisms in order to protect the interests of theEuropean budget.
This explains why the number of new proposals submitted by SMEs was below forecasts.However, the prospects for the future are positive, for various reasons. Based on the mandate
given by the Council, the new JEV programme will be simplified. This will enable SMEs'requests for financial contributions to be dealt with more rapidly, both by the financialintermediaries and by the Commission services, and to ensure that Community resources areused correctly. Furthermore, the eligibility criteria of JEV will be adapted and the programmeopened to candidate countries.
  %XGJHWDU\VLWXDWLRQ
 2YHUYLHZ
The initial amount of the budgetary allocations foreseen for the JEV programme totalled EUR
89 million, including EUR 5 million allocated in 1997 for the JEV pilot action. Out of thistotal amount, EUR 57 million was committed and made available for projects. The remainingpart was transferred to the SME Guarantee Facility.
 *HRJUDSKLFGLVWULEXWLRQ
For JEV, as the projects are by definition transnational, geographic distribution of budgetary
allocations by Member States is not relevant. Hence, the geographic distribution is analysedin the context of the review of the projects under point 3.5. hereunder.
25 &RPPLWPHQWV
At the end of 2000, Commission services had committed EUR 8.8 million of the available
budgetary resources to final beneficiary SMEs.
 ’LVEXUVHPHQWV
As on 31 December 2000, the total disbursements to beneficiary SMEs amounted to EUR 1.1
million. This apparently low level of disbursements is due to the time needed for thepreparatory phases of the joint ventures and for the eventual realisation of the investments.
 $FFRXQWV
The financial statements of the programme are enclosed in annex 7.
26  )LQDQFLDO,QWHUPHGLDULHV
The JEV programme is implemented through a network of financial institutions. This
network, composed following a call for expressions of interest (official Journal S 42 of 28February 1998) comprises 85 financial intermediaries. A complete list of these financialintermediaries is attached (annex 3).
The table below gives an overview of the financial intermediaries by country:
7DEOH %UHDNGRZQRIILQDQFLDOLQWHUPHGLDULHVE\FRXQWU\
&RXQWU\1XPEHURIILQDQFLDO
LQWHUPHGLDULHV
Austria 7
Belgium 6
Denmark 2Finland 1
France 10
Germany 10Greece 2
Ireland 1
Italy 23Luxembourg 3
Netherlands 1
Norway 1Portugal 2
Spain 13
Sweden 1UK 2
7RWDO 
An SME that wishes to submit an application under this scheme must contact one of the
financial intermediaries in the network. This intermediary is entrusted with evaluating theapplication and passing it on to the Commission services. The latter will then verify theeligibility of the application and the possible impact on employment.
Out of these 85 financial intermediaries, only some are active, while the others are rather
“sleeping” partners. The 10 most active financial intermediaries account for 90% of theprojects.
27  5HYLHZRIWKHSURMHFWV
From the start in 1998 until 31 December 2000, after an in-depth assessment of potential
projects by the financial intermediaries, finally 186 projects have been received and 129 havebeen approved by the Commission services. Among them, 46 were promotion projects and 83were preparatory work and investment projects. The table below summarises the evolution ofprojects:
7DEOH 3URMHFWVVWDWXV
3URMHFWV
(Cumulative figures)
  
3URMHFWVUHFHLYHG
Joint Venture Projects 23 79 127
Promotion Facility - 25 59
7RWDO 23 104 186
3URMHFWVDSSURYHG
Joint Venture Projects 11 53 83
Promotion Facility - 12 46
7RWDO 11 65 129
3URMHFWVUHMHFWHG 251 7
3URMHFWVZLWKGUDZQ 292 3
3URMHFWVXQGHUUHYLHZ 82 51 8
The first year of the JEV programme (1998) was used by the Commission services to build
the network of financial intermediaries and to implement the scheme. In the second year ofthe programme 81 projects were received, which is four times more than in 1998. In 2000 thenumber of projects received remained at the same level as the year before. This was lowerthan expected.
During the three years, almost one out of four projects was refused or was withdrawn by the
financial intermediaries. Most of the withdrawals are due to the administrative requirements
for the processing of the files. Concerning refusals, most were due to an insufficient effect on
employment, non-compliance with the SME criteria or an unbalanced partnership.
A brief description of some of the projects approved is attached (annex 4)
28The table below shows the location of the planned joint ventures:
7DEOH %UHDNGRZQE\FRXQWU\RIWKHSODQQHGMRLQWYHQWXUHV
3ODQQHGMRLQWYHQWXUHV
  7RWDO
Austria 0 1 1
Belgium 7 1 8
Denmark 3 3 6Finland 1 0 1France 10 1 11Germany 3 4 7Greece 0 1 1Ireland 1 0 1Italy 7 3 10Luxembourg 1 0 1Netherlands 3 1 4Norway 0 0 0Portugal 5 3 8Spain 9 7 16Sweden 1 2 3United Kingdom 2 2 4To be defined 0 1 1
7RWDO   
It can be seen that almost all EU countries are involved with some having proportionally a
very large share of the projects. This coincides with the countries where the financialintermediaries are more active.
29Nationalities of partners involved in projects are as follows:
7DEOH %UHDNGRZQE\FRXQWU\RIMRLQWYHQWXUHV¶SDUWQHUV
3DUWQHUV
  7RWDO
Austria 1 3 4
Belgium 14 5 19
Denmark 7 5 12Finland 1 0 1France 22 5 27Germany 11 6 17Greece 0 1 1Ireland 1 2 3Italy 11 7 18Luxembourg 1 0 1Netherlands 6 7 13Norway 0 0 0Portugal 8 3 11Spain 13 11 24Sweden 3 3 6United Kingdom 16 5 21Other 0 3 3
7RWDO   
30The number of planned joint ventures by sector of activity is as follows:
7DEOH 6HFWRURIDFWLYLW\RISODQQHGMRLQWYHQWXUHV
3ODQQHGMRLQWYHQWXUHV
  7RWDO
Multimedia, software, audio-visual 2 0 2
Marketing and commercialisation 7 6 13
Manufacturing 3 11 14Waste management 2 0 2Biotechnology 1 1 2Transports, logistics 7 1 8Information technology 15 5 20Energy 2 2 4Construction 4 0 4Industry 5 0 5Telecommunications and data-
processing202
Other services 3 4 7
7RWDO   
31It is also worth noting that out of the 181 SMEs selected, 54 % concerned SMEs that had
fewer than 10 employees, another 31 % concerned SME with between 10 and 49 employees.This shows that JEV meets the needs of small enterprises.
The size of the SMEs, involved in the approved joint venture projects (until 31 December
2000) is as follows:
7DEOH (PSOR\PHQWLQSDUWQHU60(V
1XPEHURI60(V
(cumulative figures)
1XPEHURIHPSOR\HHV
 
< 10 48 97
10-49 46 56
50-249 21 28
7RWDO  
  (PSOR\PHQW
By the end of 2000, about 10 new joint ventures had been created; this is in line with
expectations. In fact, the average duration between the preparatory phase and the effectivecreation of the joint venture is between 18 months and two years. Since the JEV programmetook off at the end of 1998, it is only now that the first joint ventures are being set up.
Although it is too early to measure the effect on employment, first indications seem positive.
Based on the information received from applicants, the foreseen impact on job creation isapproximately 14 jobs per project on average.
32 60(* 8$5$17(( )$&,/,7<
  ,QWURGXFWLRQ
According to the sixth annual report of the European Observatory for SMEs3, SMEs
encounter specific problems in their attempts to access finance. Bank credit is common and isthe only external source of financing for many enterprises. The main reason for the difficultyto access appears to be the lack of collateral.
While the situation has improved in recent years, access to finance remains difficult for
certain companies, such as micro-enterprises, start-ups and innovative, fast growing SMEs.These enterprises present strong job-creation potential. According to the latest figuresavailable
4, very small enterprises with 1 to 9 employees recorded the biggest increase in terms
of job-creation in the European Union. Small enterprises have a higher rate of employmentexpansion and they also employ more women and young workers.
Satisfactory development of the SME Guarantee Facility reflects the market gap and explains
the subsequent acceptance by market players of this type of Community involvement. Underthe SME Guarantee Facility, small enterprises with 1 to 9 employees represent over 90% ofthe SMEs that benefited from the Facility.
The following chapters on the SME Guarantee Facility have been drafted using two types of
information:
– Aggregate figures like global commitments and guarantee volumes. This information
relates to 31 December 2000;
– Detailed information concerning the operations of the financial intermediaries in
favour of SMEs. This available information as reported by the financialintermediaries relates to 30 September 2000.
This report is complemented by a specific SME annex (annex 6) illustrating aggregate data on
the beneficiary SMEs from late 1998 until the end of 1999. The data is based on informationcontained in a specific report to be submitted by the EIF to the Commission services annuallyin September. It is important to stress that the information received in September 2000 refersto the year 1999.
  ’HVFULSWLRQRIWKH)DFLOLW\
The objective of the SME Guarantee Facility is to stimulate job-creation by supporting the
investment activities of SMEs within the European Union, through increased availability ofloan finance. This is achieved by increasing the capacity of guarantee schemes operating inthe Member States and relates to both new and existing portfolios. This Facility provideshigher volumes of guarantees for the existing guarantee products of the financialintermediaries, access to financing for a larger number of small companies for a wider varietyof investments and guarantees for riskier loans. The Facility covers part of the losses incurredunder the guarantees up to a pre-determined amount.The Facility is operated by the EuropeanInvestment Fund (EIF) on a trust basis. It manages the contacts with financial institutions
                                                
3 The European Observatory for SMEs - Sixth Annual Report, Luxembourg
4 Eurostat, Statistics in focus, Industry, Trade and services, Theme 4, 11/2000.
33interested in joining the Facility, evaluates and submits the selected proposals to the
Commission services for eligibility approval. Appropriate co-operation with Member States isensured by contacts between the EIF and the relevant national authorities.
The SME Guarantee Facility gives priority to companies with up to 100 employees. Particular
attention is given to financing of the intangible assets of SMEs. The financial intermediariesmay have stricter SME eligibility criteria depending on their specific guarantee or loanproducts. In any case, the approval process, with regard to the final SME beneficiaries, is thefull responsibility of the selected financial intermediaries.
  %XGJHWDU\VLWXDWLRQ
 2YHUYLHZ
The initial amount of the budgetary allocations foreseen for the SME Guarantee Facility
totalled EUR 168 million for three years, including EUR 59 million allocated in 2000. Due tothe rapid development of the Facility, further budgetary funds amounting to EUR 30.56million were transferred from the JEV programme to the Facility in December 2000,increasing its total resources to EUR 198.56 million.
 *HRJUDSKLFGLVWULEXWLRQ
At the end of 2000, the EIF had committed EUR 130 million of the available budgetary
resources. The geographic distribution of these commitments is shown below:
Finland
3%Germany
23%
Belgium
3%Spain
13%Portugal
1%
France
27%United Kingdom
5%
Sweden
4%Italy
11%Netherlands
5%Austria
2%Denmark
3%
)LJXUH  Breakdown by country of the financial intermediaries
34 &RPPLWPHQWV
Quarterly EIF commitments to financial intermediaries are shown in the graph below:
)LJXUH 4XDUWHUO\(,)FRPPLWPHQWVWRILQDQFLDOLQWHUPHGLDULHV
The graph below shows the evolution of the EIF commitments (EUR 130 million end 2000)
compared to the available committed budgetary resources (EUR 198.56 million end 2000). Inaddition, it indicates the actual utilisation of the budgetary resources by the financialintermediaries.
050100150200250
Q3/98 Q4/98 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00
Available committed budgetary resources
EIF commitment
Actual utilisation by the financial intermediariesEUR million
)LJXUH &XPXODWLYHHYROXWLRQRIRSHUDWLRQV0125
82827
171122
051015202530
Q3/98 Q4/98 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00EUR million
35Guarantee schemes in general have a high leverage effect. As on 31 December 2000, the
aggregate amount of loans granted to SMEs under the Facility totalled EUR 3.4 billion. At thesame time, the actual utilisation of the budgetary resources by the financial intermediariesamounted to EUR 62 million, achieving a leverage effect of 54. According to the forecasts bythe financial intermediaries, it is estimated that more than EUR 6.6 billion of loans will begranted on the basis of the commitments of EUR 130 million.
The following graph shows the development of the loans to SMEs and the corresponding
amounts that the beneficiary SMEs have invested so far:
0100020003000400050006000
Q3/98 Q4/98 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00 Aggregate SME loan volume
Aggregate SME investment amountsEUR million
)LJXUH /RDQVJUDQWHGWR60(VDQGFRUUHVSRQGLQJLQYHVWPHQWV
It is worth mentioning that the first financial intermediaries that have signed a contract with
the EIF (either in the last quarter of 1998 or in the first quarter of 1999) have already used onaverage 77% of their total guarantee portfolio by 31 December 2000. This is in line with theoriginal forecasts and states a satisfactory development of the Facility. In fact, at the end of1999 and in 2000 the EIF has already negotiated with some of the financial intermediaries toincrease the relevant portfolio volumes.
 /RVVSD\PHQWV
The first guarantee calls were made by the financial intermediaries in the third quarter 2000.
The amount of the EIF’s portion in regard to the defaulted loans totals EUR 446,028 so far.This result is in line with the nature of the guarantee or loan products covered by the Facility.It also reflects the time lag between the signing of the guarantee agreements between the EIFand the financial intermediaries and the occurrence of defaults in the underlying portfolios.All four financial intermediaries concerned (Bürges in Austria, Finnvera in Finland, DeutscheAusgleichsbank in Germany and Almi in Sweden) signed an agreement with the EIF either atthe end 1998 or in 1999.
36 $FFRXQWV
The balance sheet and the profit & loss accounts of the facility are enclosed in annex 7.
  )LQDQFLDO,QWHUPHGLDULHV
The EIF has succeeded in signing contracts with 21 financial intermediaries in 12 countries.
As anticipated, in some countries, where guarantee schemes do not exist and/or where thepublic interest in the Facility was low, the implementation by the EIF turned out to be ratherdifficult. This is in particular the case for Greece, Ireland and Luxembourg.
A list of the financial intermediaries and a short description of the financing products
guaranteed under the SME Guarantee Facility is annexed (annex 5).
The following graph shows the utilisation of the EIF commitments by country as on 30
September 2000. The utilisation is calculated as the ratio between aggregate amount of theguarantees included in the relevant SME Guarantee Facility portfolio of each intermediarydivided by the maximum guarantee portfolio volume contractually agreed for theintermediary.
0% 20% 40% 60% 80% 100%United KingdomSwedenSpainPortugalNetherlandsLuxembourgItalyIrelandGreeceGermanyFranceFinlandDenmarkBelgiumAustria
)LJXUH 8WLOLVDWLRQE\ILQDQFLDOLQWHUPHGLDULHV
37Some comments on the development of the Facility in each country are given below:
Austria
Bürges has developed its operations under the Facility very well and it will request an
extension of the contract and an increase of the relevant portfolio volumes in 2001. Thepreliminary year-end information shows an utilisation rate of 96%.
Belgium
The utilisation was delayed. At first, Fonds de Participation – Participatie Fonds introduced,
in the beginning of 1999, a new loan guarantee product in support of SMEs with up to 50employees and with a business activity of less than 5 years. However, as the utilisation of thisnew instrument by the commercial banks turned out to be unsatisfactory, EIF entered into anew contract in the summer 2000 to cover subordinated loans to start-ups. This immediatelyled to an increase in utilisation.
Denmark
The utilisation of the Facility has been highly satisfactory. The Growth Fund (Vækstfonden)
signed a contract with the EIF in June 2000. With the support of the Facility it launched a newloan guarantee scheme that began its operations in August 2000. According to the preliminaryinformation, as on 31 December 2000 the utilisation rate of the new scheme is 25% in termsof loan disbursements. However, in terms of loan granted already 90% have been committed.Therefore, an increase of the relevant portfolio volumes will be requested later on in 2001.
Finland
Finnvera requested to include its small enterprise guarantee scheme into the SME Guarantee
Facility portfolio at the end of the year. A special window was designed for companies thatare owned by young people. According to the preliminary information, as of 31 December2000 the utilisation rate is 28%.
France
The selected portfolio consists of three programmes: start-up, business transfer and
investment by micro-enterprises (up to 10 employees). The EIF has increased the relevantportfolio volumes of Sofaris to enable the institution to continue its operations. More than13,000 loans have been granted so far.
Germany
Due to an extremely positive utilisation of the loan product of Deutsche Ausgleichsbank, the
amounts of the relevant portfolio volumes were increased in August 2000. In addition, the EIFsigned a contract with Kreditanstalt für Wiederaufbau in December 2000.
Greece
The relevant law that will allow such a guarantee scheme to be established has not yet been
approved.
38Ireland
The consultations concerning possible financial intermediaries are still taking place at the
level of the national authorities.
Italy
The EIF has signed contracts with 9 guarantee schemes that operate at a regional level. The
utilisation of the Facility is satisfactory and the leverage effect of the budgetary resources isvery high. Relevant guarantee volumes of two intermediaries have already been increased toenable the institutions to continue their good performance. Further increases will beconsidered in 2001.
Luxembourg
Only one potential institution has shown interest so far. If a suitable product can be defined
under the Facility, the intermediary may join the network later in 2001.
The Netherlands
The development of the Facility by BBMKB (Besluit Borgstelling MKB kredieten) has been
more than satisfactory. Therefore, an increase of the relevant portfolio volumes will berequested in 2001.
Portugal
The EIF signed a contract with the Portuguese SPMG (Sociedade de Investimento) in June
2000. SPMG manages a newly established national guarantee scheme. The Facility supportsthe intermediary in its effort to establish a mutual guarantee system in the country. The take-up rate is quite low at the moment as the implementation process of the new system is still ongoing.
Spain
The utilisation rate of 26% by CERSA (Compañía Española de Reafianzamiento) is in line
with the expectations. The scheme provides coverage to national mutual guarantee schemesnation-wide. Thanks to the support of the Facility, CERSA changed its product from aguarantee with capped liability into a guarantee with unlimited liability.
Sweden
The Facility enabled Almi Företagspartner to increase its activities in the framework of
growth financing, start-up loans and loans to female entrepreneurs. According to thepreliminary information, as on 31 December 2000, the utilisation rate was 38%.
The United Kingdom
The Prince’s Trust signed a contract with the EIF only in December 2000 and therefore has
not yet carried out any operations that could be included in this report.
39  %HQHILFLDU\60(V
As on 30 September 2000, the total number of SMEs benefiting from the SME Guarantee
Facility is 40,778 compared with 7,223 last year. The following table shows the breakdownby country and the corresponding aggregate loan amounts:
7DEOH %UHDNGRZQE\FRXQWU\RIEHQHILFLDU\60(V
&RXQWU\ 1XPEHURIEHQHILFLDU\
60(V/RDQDPRXQWV
(EUR million)$YHUDJHORDQDPRXQW
(EUR 000)
Austria 2,218 218 98
Belgium 166 5 30
Denmark 11 2 181
Finland 356 81 228
France 13,463 1,070 79
Germany 8,950 300 34
Italy 9,836 604 61
Netherlands 1,645 272 165
Portugal *) 8 10 1,250
Spain 2,182 264 121
Sweden 1,943 62 32
7RWDO   
*) SPMG is in the process of establishing a mutual guarantee system in Portugal. As the mutual guarantee funds
are not yet operational, SPMG has issued guarantees under its normal activities to SMEs.
In accordance with the preliminary information submitted by the financial intermediaries,
more than 50,000 SMEs will have benefited from the Facility at the end of 2000.
Final beneficiaries with up to 10 employees made up 91% of the total number of SMEs. It is
interesting to compare the distribution of SMEs by size under the Facility with that of the EUin general. According to the European Observatory for SMEs, sixth report, 93% of SMEs aremicro enterprises, 6% are small enterprises and 1% are medium sized enterprises.Consequently, the population of the beneficiary SMEs of the SME Guarantee Facility issimilar to the global EU SME distribution.
40The classification in terms of the number of employees is as follows 
7DEOH (PSOR\PHQWLQEHQHILFLDU\60(V
%HQHILFLDU\60(V
1XPEHURI
HPSOR\HHV
1XPEHU 
 33,657 83
 4,286 10
 1,593 4
 948 2
 286 1
1RWDYDLODEOH 80
7RWDO  100
The classification of the SMEs, in terms of their year of establishment, is as follows:
7DEOH %UHDNGRZQRIEHQHILFLDU\60(VE\\HDURIHVWDEOLVKPHQW
<HDURIHVWDEOLVKPHQW 1XPEHURIEHQHILFLDU\60(V
 16,463
 1,749
 6,048
 8,455
 /G13 2
1RWDYDLODEOH /G13/G13 8,025
7RWDO 
*) The loans were granted as a pre-start financing before the companies were established.
**) This data mainly concerns Sofaris. It is estimated that, approximately 30% of Sofaris’s guarantee portfolio
relate to its start-up programme. Therefore, out of the 10,178 SMEs for which data on the year of establishmentis not available, some 3,000 are start-ups. Of these, it is estimated that approximately 1,200 companies werecreated in 2000.
41  (PSOR\PHQW
The 40,778 SMEs benefiting from the SME Guarantee Facility have so far declared that they
have 175,174 employees.They have also indicated that they expect an increase of 19,084employees within one year and a further increase of 33,934 within a second year. Hence it isestimated that the SMEs that have benefited from the Facility will create a total of around52,018 new jobs within two years or an average of 1.3 new jobs per SME. This is substantial,if one remembers that more than 80% of the beneficiary SMEs are very small companies withup to 5 employees.
42 &21&/86,216
  *URZWKDQG(PSOR\PHQW,QLWLDWLYH
SMEs are not homogeneous, which is why under the Growth and Employment Initiative
different kinds of support measures have been developed for different categories ofenterprises. The three financial instruments - ETF Start-up Facility, JEV and SME GuaranteeFacility - contribute in varying degrees to the development of SMEs. They support thecreation and the growth of businesses as well as co-operation between businesses.
The degree of development of these three instruments varies considerably. The ETF Start-up
Facility is still at an early stage of its investment phase. Considering the complexitiesinvolved (establishment of new VC funds often with new management teams), the resultsachieved so far may be considered to be satisfactory. The EIF expects that the total remainingbudgetary allocation will be committed by the beginning of 2002, taking into accountcommitments to further VC funds already under negotiation or in advanced stages ofappraisal as well as the steady flow of new proposals from potential fund managers andsponsors.
As regards to JEV, the take-up of the programme is slower than expected due to multiple
reasons. It is considered that the processing time of the SME submissions is too long. Inaddition, the current eligibility criteria do not respond to SMEs’ needs with regard to cross-border investments. For some SMEs the co-operation with a foreign partner, including thesharing of management responsibilities may be considered to be a burden. Therefore, the newMAP foresees a simplification of the procedures and an extension of the relevant eligibilitycriteria.
Finally, the global take-up of the SME Guarantee Facility has been satisfactory and reflects an
acceptance by market players as well as the necessity for this type of Communityinvolvement.
Taking account of the absorption of the three instruments, the Commission has adapted the
allocation between the schemes by reallocating EUR 30.56 million from JEV to SMEGuarantee Facility.
On 20 December 2000 the Council decided to extend the three financial instruments of the
Growth and Employment Initiative under a new legal basis, the multiannual programme forenterprises and entrepreneurship (MAP), and in particular for small and medium-sizedenterprises (2001-2005). Furthermore, the Seed Capital action (the former CREA) continuesto be an integral part of the MAP and will be managed by the EIF.
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The credits proposed for financial instruments under the new MAP (EUR 317 million for the
period 2001-2005) are allocated to the SME Guarantee Facility, the ETF Start-up Facility andthe Seed Capital action.
In order to provide the accession candidates with the opportunity to become familiar with
community policies and instruments, the MAP has been opened up to the potential accessioncountries. Furthermore, the agreement on the European Economic Area (EEA) concludedwith the ETFA/EEA countries as well as the Association Agreements concluded with Cyprus,
43Malta and Turkey, provide for a possibility of a participation of those countries in Community
programmes.
Within the new MAP, the ETF Start-up Facility has been adapted to support the establishment
and financing of SMEs in their start-up phase, by investing in specialised VC funds andincubators.
Concerning the SME Guarantee Facility three new sub-windows have been added in order to
enlarge the range of available instruments to guarantee:
– micro credits; furthermore additional aid to financial intermediaries can be
envisaged in order to partially offset the high administrative costs inherent insuch activities,
– equity investments and
– loans to cover IT equipment, software and training in the area of internet and e-
commerce.
The Seed Capital Action plan is intended to support seed funds, incubators or similar
organisations in which the EIF participates.
Finally, the JEV programme will be simplified and eligibility criteria adapted. It will focus on
transnational partnerships. The method of calculating the amount of the contribution will besimplified through the use of a lump sum to cover part of the preparatory works. Furthermore,the contribution will be linked both to the investment realised and the number of jobs created.
This simplification will have the effect of reducing the administrative burden and enabling
financial intermediaries and the Commission services to deal quickly with the projects. It willalso allow the Commission services to manage the scheme without the aid of a technicalassistance unit.
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