Report from the Commission to the European Parliament and the Council - Growth and Employment Initiative - Measures on financial assistance for innovative and job creating Small- and Medium Sized Enterprises (SMEs) - As at 31 December 1999
Date: 2000-05-12
Institutions: European Commission
Subjects: European Investment Fund, aid to undertakings, economic growth, job creation, small and medium-sized enterprises

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 12.05.2000
COM(2000) 266 final

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND
THE COUNCIL

Growth and Employment Initiative
Measures on financial assistance for innovative and job creating Small- and Medium
Sized Enterprises (SMEs)

As at 31 December 1999

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT
AND THE COUNCIL

Growth and Employment Initiative
Measures on financial assistance for innovative and job creating Small- and
Medium Sized Enterprises (SMEs)

As at 31 December 1999

2

CONTENTS

1.

2.

INTRODUCTION ....................................................................................................... 5

ETF START-UP FACILITY........................................................................................ 6

2.1.

Introduction............................................................................................................ 6

2.2. Description............................................................................................................. 7

2.3. Chronology of main events..................................................................................... 7

2.4.

First results............................................................................................................. 8

2.4.1.

Venture capital funds .................................................................................... 8

2.4.2.

Beneficiary SMEs......................................................................................... 8

2.5. Budgetary Data ...................................................................................................... 8

2.6.

Promotion .............................................................................................................. 9

2.7.

Forecast on employment creation ........................................................................... 9

2.8. Outlook.................................................................................................................. 9

3.

JOINT EUROPEAN VENTURE (JEV) ..................................................................... 10

3.1.

Introduction.......................................................................................................... 10

3.2. Description........................................................................................................... 11

3.3. Chronology of main events................................................................................... 12

3.4.

First results........................................................................................................... 12

3.4.1.

Financial Intermediaries.............................................................................. 12

3.4.2.

Joint Venture Projects................................................................................. 13

3.5. Budgetary Data .................................................................................................... 13

3.6.

Promotion ............................................................................................................ 14

3

3.7.

Forecast on employment creation ......................................................................... 14

3.8. Outlook................................................................................................................ 14

4.

SME GUARANTEE FACILITY ............................................................................... 15

4.1.

Introduction.......................................................................................................... 15

4.2. Description........................................................................................................... 16

4.3. Chronology of main events................................................................................... 16

4.4.

First results........................................................................................................... 17

4.4.1.

Financial Intermediaries.............................................................................. 17

4.4.2.

Beneficiary SMEs....................................................................................... 17

4.5. Budgetary Data .................................................................................................... 18

4.6.

Promotion ............................................................................................................ 18

4.7.

Forecast on employment creation ......................................................................... 18

4.8. Outlook................................................................................................................ 18

ANNEXES........................................................................................................................... 19

ANNEX 1 – ETF START-UP......................................................................................... 20

ANNEX 2 – JEV ............................................................................................................ 23

ANNEX 3 – SME GUARANTEE .................................................................................. 30

4

1.

INTRODUCTION

Following an initiative by the European Parliament to strengthen budget allocations in
favour of innovative and job-creating SMEs1, the Growth and Employment Initiative on
measures of financial assistance was adopted by the Council (Decision 98/347/CE) on
19 May 1998. Under this Decision, the Commission is required to present an annual
report to the European Parliament and the Council concerning the different schemes that
have been implemented. In particular, it should refer to the ways in which SMEs gain
access to the various methods of financing and consequently what the prospects for
employment are.

The programme follows on from the Amsterdam initiative and the Luxembourg Summit
on employment. It puts emphasis on SMEs with growth potential. Such companies are
often unable to raise finance because of the risk associated with their particular stage of
development. This applies to SMEs in their growth phase and to SMEs establishing
cross-border joint ventures.

The programme aims to foster the establishment and growth of SMEs, thus enabling
them to create jobs. For this purpose, three schemes - the ETF Start-up Facility, Joint
European Venture (JEV) and the SME Guarantee Facility - exist to help as many SMEs
as possible throughout the different growth phases.

The total multi-annual budget allocation foreseen for the three schemes amounts to
€

420 million.

1

According to the Commission recommendation of 3 April 1996, SMEs are defined as enterprises
40 million,
which have fewer than 250 employees, and have either an annual turnover not exceeding
27 million, and which conform to the criterion of
or an annual balance-sheet total not exceeding
independence.

€

€

5

2.

ETF START-UP FACILITY

2.1.

Introduction

As has been emphasised previously at both the Luxembourg and Cardiff
summits, risk capital is essential for the financing of fast growing companies,
especially those in high-tech and knowledge-based industries. As has been
shown by the US experience, these companies represent one of the key factors
in raising productivity and supporting growth, which,
in turn, leads to job
creation.

too, surveys carried out

in specific countries give evidence
In Europe,
demonstrating the above2
. A survey conducted by a British consultancy showed
that the number of people employed in venture capital-backed companies grew
by 24% per year, in comparison to the national growth rate of 1.3% per year.
The number of employees in venture capital-backed companies increased by
three times the rate of those in FTSE 100 companies; and 60% faster than those
in the FTSE Mid-250. In Germany, in venture capital-backed companies quoted
on the Neuer Markt, there was an employment growth rate of 40% per year on
average, which led to 21,000 new jobs being created. If one considers the
situation in France, it was found that, in companies quoted on the Nouveau
Marché, the growth rate for employment was 47%. In this case, 3,600 new jobs
were created.

As far as European venture capital is concerned, there has been rapid growth
over the past five years, but Europe still remains significantly behind the US. It
is also less orientated towards assisting young and innovative3 companies. In
7 billion was invested in venture capital in 1998, compared to
Europe, about
€
1.6 billion was invested in companies in their

12 billion in the US4. Only
€

€

€

early stages, compared with

4.5 billion in the US.

This weakness is being addressed by the ETF Start-up Facility, which has been
set up to strengthen the availability of seed and early stage financing, through
in specialised venture capital funds. In comparison to the other
investment
activities carried out by the European Investment Fund (EIF) and the European
Investment Bank (EIB), the investment policy of the ETF Start-up Facility is
orientated towards higher risk venture capital funds.

2 Working Document of the Commission SEC (1999) 172
3

According to the Green paper on innovation of the European Commission, 20 December 1995,
“innovation is the renewal and enlargement of the range of products and services and the associated
markets; the establishment of new methods of production, supply and distribution; the introduction of
changes in management, work organisation, and the working conditions and skills of the workforce”.
The figure refers to equity investments made for the launch, early development or expansion of a
business, excluding MBO/MBIs.

4

6

2.2

Description

The objective of the ETF Start-up Facility is to increase the availability of risk
capital
to innovative SMEs during their establishment and early stage
development.

The facility is operated by the EIF, which invests in specialised venture capital
funds established specifically to provide equity or other forms of risk capital to
SMEs. The funds considered under this facility are smaller or newly established
ones, in particular those operating at regional level, those focusing on specific
industries or technologies and those which 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 venture capital fund,
up to a maximum of

10 million.

€

The EIF examines the fund proposals on the basis of various criteria, such as
size of the fund in question, level of involvement from the private sector,
investment strategy, target market, deal flow, proposed terms, expected rate of
return, management team working on the project and extent to which the ETF
Start-up investment can be expected to have a catalytic effect in raising funds.
Attention is also given to ensuring that the programme as a whole delivers a
balanced geographical representation across the European Union.

Following the approval of the fund proposals by the Commission, the EIF signs
contractual agreements with the fund managers and the other investors in the
fund. Thereafter, the venture capital funds will receive the first ETF Start-up
instalments in order to start making investments.

SMEs interested in such financial support may contact one of the selected
venture capital organisations.

2.3.

Chronology of main events

May 19, 1998: Council Decision

July 24, 1998: Signature of fiduciary and management agreement with the EIF

October 1, 1998: Publication of a notice of implementation of the facility in the
Official Journal of the European Communities

November 11, 1998: First approval of a venture capital fund

January 27, 1999: First contract signed between the EIF and a venture capital
fund

7

2.4

First results

2.4.1.

Venture capital funds

Since the signing of the co-operation agreement, the Commission has approved
investment commitments to nine funds, selected by the EIF for a total of up to
€
54 million. Altogether, these nine funds are expected to raise a total capital
306 million. An analysis of the approvals by country of management

€

pool of
follows.

United Kingdom
14%

Denmark
7%

Sweden
11%

Netherlands
17%

Finland
4%

Germany
14%

France
33%

Legal commitments have been made to and accepted by seven of these funds for
a total amount of
189 million total funds raised.
A detailed list of these funds is annexed (see annex 1).

38 million, corresponding to

€

€

2.4.2.

Beneficiary SMEs

Up until 30th September 1999, last available contractual reporting date from
venture capital fund managers to the EIF as of today, the total number of EU
SMEs having received an investment by funds participating in the ETF Start-up
20.2 million, with an
programme is 49. The total investment amounts to
€
average investment per SME of around

0.4 million.

€

Detailed information on beneficiary SMEs will become available in August
2000, as each beneficiary SME is required to complete and submit an annual
questionnaire covering areas such as job creation and investment.

2.5.

Budgetary Data

Budget line B5-510

Year

Budget commitments
€
(

million)

* to be committed

1998

1999

50

59

2000

59*

Total

168

8

2.6.

Promotion

In addition to the Information Notice published in the Official Journal, the EIF
has produced leaflets on ETF Start-up in each of the eleven Community
languages. Moreover, the EIF has included appropriate information on the
facility in its own marketing documentation and has also dedicated separate
sections on the facility in its web-site (www.eif.org).

2.7.

Forecast on employment creation

Detailed information on the employment creation perspectives will become
available in August 2000 when the EIF has received the first completed annual
questionnaires from SMEs.

2.8.

Outlook

Further to the nine funds already approved, negotiations are ongoing with four
other venture capital funds. In addition, current active enquiries being reviewed
by the EIF total some 13 further proposals. Altogether, the EIF expects to have
25-30 venture capital funds from all 15 Member States.

9

3.

JOINT EUROPEAN VENTURE (JEV)

3.1.

Introduction

The completion of the internal market and European Monetary Union have
created the economic environment for companies to co-operate with each other,
ensuring sustainable growth and job creation throughout the European Union.
The development of new commercial outlets in other Member States - either
through exporting products or investing directly in on-site production - offers
enterprises a strategic and proactive choice, allowing them to benefit from the
considerable advantages of the internal market.

Although surveys show the interest of SMEs in co-operating with SMEs from
another European country, they also indicate that SMEs have to overcome a
certain number of obstacles before setting up a joint venture. They must face up
to the problems involved in accessing a foreign market where the culture,
traditions and regulatory and financial framework may be quite different.
Moreover, SMEs rarely have enough staff with a good knowledge of foreign
languages at the start of the internationalisation phase. And, last but not least,
SMEs must find sufficient financial resources to launch their projects.

Because of these barriers, SMEs rarely succeed in realising their ambitions and
the number of trans-national joint ventures created by SMEs is very low, as
confirmed by the European Observatory on SMEs’ 5th Report.

The JEV programme was created to address these problems and help SMEs to
establish trans-national joint ventures within the European Union.

10

3.2

Description

The EU contribution is intended to cover some of the expenses related to setting
€
up a joint venture. The amount (max.
100,000 per project) and terms of this
contribution are as follows:

€

The first part of the contribution covers up to 50% of the eligible expenses, to a
maximum of
50,000. Eligible expenses are those related to the conception and
setting-up of a transnational joint venture created by European SMEs. These
may include the expenses of the market survey, preparation of the legal
framework and the business plan, analysis of the environmental impact, 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.

Each partner of the Joint Venture should be an SME. The concept of a “joint
venture” must be interpreted broadly,
is, any form of consortium,
partnership or joint venture of an industrial, service, commercial or craft nature
between at least two SMEs or entrepreneurs from different Member States.

that

It must relate to the creation of new economic activities, involving investment
and employment creation within the European Union. None of the partners
should own more than 75% of the capital of the joint venture.

The contributions to the preparatory work and to the investment make access to
finance for joint ventures easier. This is the main reason why the JEV
programme is implemented through a network of Financial Intermediaries (FIs).

The network of FIs provides the link between the European Commission and the
SMEs. A SME wishing to submit an application under this scheme contacts one
of the financial intermediaries in the network. This intermediary is entrusted
with evaluating the application. Files, which have passed this evaluation
successfully, are forwarded to the Commission, who verifies the eligibility of
the application in relation to the programme’s objectives, especially the viability
of the project and the impact on employment.

The network, following a call for expression of interest is, as at 31 December
1999, composed of 83 financial intermediaries (banks and venture capital funds)
with more than 10,000 agencies throughout all Member States. These
institutions have signed a framework agreement with the Commission.

11

3.3

Chronology of main events

November 5, 1997: Commission Decision: Launch of JEV as a pilot action
under DG XXIII’s 3rd Multi-annual Programme for SMEs (B5-512). Beginning
of the establishment of the Financial Intermediaries (FI) network based on the
JOP FI network

December 23, 1997: Signature of the first Framework Agreements with FIs

February 28, 1998: Publication of the call for expression of interest in the
Official Journal of the European Communities in order to extend the FI network

May 19, 1998: Council Decision

July 15, 1998: First steering committee meeting: approval of the first projects;
the steering committee meets at least once per month

December 16, 1998: New Framework Agreement
Facility

including the Promotion

April 24, 1999: Publication in the Official Journal of the European Communities
of the notice of information on the Promotion Facility.

3.4.

First results

3.4.1.

Financial Intermediaries

The table below provides a breakdown of FIs by country. The network of
Financial Intermediaries remains open for new candidates. The list of the current
Financial Intermediaries is annexed (Annex 2).

Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Luxembourg
Netherlands
Norway
Portugal
Spain
Sweden
United Kingdom
Total

8
5
2
1
10
10
2
1
21
3
1
1
2
12
1
3
83

12

3.4.2

Joint Venture Projects

Up until 31 December 1999,
applications, 65 of which were approved.

the Commission services

received 104

Status

31.12.1998
(cumulative
data)

30.6.1999
(cumulative
data)

31.12.1999
(cumulative
data)

Projects received of which:

Joint Venture projects

Promotion Facility

Projects approved of which:

Joint Venture projects

Promotion Facility

Projects rejected

Projects withdrawn by FIs

Projects under review

23

23

-

11

11

-

2

2

8

59

51

8

28

27

1

3

3

25

104

79

25

65

53

12

5

9

25

A detailed breakdown of the 53 joint venture approved projects by activity
sector, project countries, geographical
location and size of the 115 SMEs
involved, job creation and investments foreseen is given in annex 2, as well as a
brief description of some of the approved and contracted projects.

Five projects have been rejected. The Financial Intermediaries withdrew nine
other projects. As at 31 December 1999, the 25 remaining projects were either
under review by the Commission services or awaiting additional information.

3.5.

Budgetary Data

Budget line B5-511

Year

Budget
commitments
€
(
million)

1997

5.0

1998

20.0

(B5-512 pilot
action)

1999

30.4

1.6
(carried
over) *

* to be committed

2000

32.0*

Total

89.0

13

3.6

Promotion

To inform SMEs about the programme, the Commission services have produced
brochures and leaflets on JEV in each of the eleven Community languages.
Moreover, appropriate information is included in the Europa web-site.

Furthermore, a Promotion Facility was included in the framework agreement
between the Commission and the financial intermediaries (16/12/98 version).
This allows financial intermediaries to forward proposals on JEV promotional
activities organised by chambers of commerce, Euro Info Centres, professional
associations and financial
to be co-financed by the European
Commission.

institutions,

A number of seminars have been organised, mainly by financial intermediaries
and Euro Info Centres. Seminars have taken place in the Belgium, France,
Luxembourg, Germany, Italy, Netherlands, Spain and United Kingdom.

3.7.

Forecast on employment creation

It is too early to predict figures for job creation. The first stage of the JEV
support is linked to a preparatory work phase and it is only thereafter that the
SMEs will decide whether, and under what conditions, the joint venture will be
undertaken. Nevertheless, even in this very first phase, SMEs have been asked
to estimate the number of jobs that could be created.

Based on this, for the 53 joint venture projects approved by 31 December 1999
and according to the declarations made by the applicants, the total job creation
could be 788 jobs (or an average of 15 jobs per project). At this stage, it is
nevertheless premature to calculate the cost for each job created.

3.8.

Outlook

The level of JEV activity in 1999 indicates the growing interest of the SMEs in
this programme. It is anticipated that around 250 proposals will be submitted by
end 2000.

Furthermore,
programme better known and acknowledged by EU SMEs.

the implementation of the promotion facility will make the

14

4.

SME GUARANTEE FACILITY

4.1.

Introduction

Difficulties concerning access to finance are one of the main barriers to the
development of SMEs. A key problem is that banks are reluctant to lend to
companies unless they can provide collateral for the loan, which is often not
possible for SMEs. The situation is particularly difficult for start-ups, which do
not have a proven track record. They are often unable to raise the finance they
require to allow their businesses to flourish, which can compromise their ability
to grow and tackle world markets. Thus the availability of appropriate
guarantees can have a major impact on their ability to access finance.

In Member States,
they have a
beneficial effect on SMEs and job creation. They are generally considered to be
more efficient than interest rate subsidies.

loan guarantee schemes have proved that

The objective of this facility is to stimulate job-creation by supporting the
investment activity of innovative SMEs within the European Union, through
increased availability of loan finance. This is achieved by increasing the
capacity of guarantee schemes operating in the Member States and relates to
both new and existing portfolios. It provides higher volumes of guarantees for
intermediaries, access to
the existing guarantee products of the financial
financing for a larger number of small companies for a wider variety of
investments and guarantees for riskier loans.

15

4.2

Description

The facility is operated by the European Investment Fund (EIF) on a trustee
basis covering losses incurred from the guarantees. The guarantee losses are
covered up to a pre-determined amount, the so-called cap. Therefore the cost of
the facility to the Community budget cannot exceed the budgetary allocations
made available to the EIF.

The guarantees issued by the EIF are partial guarantees. There is always a risk-
sharing arrangement between the EIF and the Financial Intermediary.

Following an initial consultation by the national authorities and the EIF, the EIF
receives financial intermediary proposals, makes a pre-selection and forwards
these to the Commission for approval. The intermediaries are selected following
consideration of: (a) the effect of the level of debt finance made available to
SMEs; (b) the effect on access to debt finance by SMEs and (c) the effect on
risk-taking in SME lending by the intermediary concerned. Attention is also
given to ensuring that there is a balanced geographical representation across the
European Union. The financial criteria governing the eligibility of SME lending
for guarantees will be determined individually for each intermediary. These
criteria must also adhere to the framework of the guarantee schemes in which
they are already operating, the objective being to assist as many SMEs as
possible.

Additionally, the SME Guarantee Facility places great importance on providing
loans to finance SMEs’ intangible assets. It gives priority to companies with
fewer than 100 employees.

Companies can apply for guarantees from one of the selected financial
intermediaries.

4.3.

Chronology of main events

May 19, 1998: Council Decision

July 24, 1998: Signature of the fiduciary and management agreement with the
EIF

October 1, 1998: Publication of the notice of implementation of the facility in
the Official Journal of the European Communities

November 20, 1998: First approval of a financial intermediary

December 14, 1998: First contract signed between the EIF and a financial
intermediary

16

4.4

First results

4.4.1.

Financial Intermediaries

From 1998 to date, the Commission services have approved commitments to
intermediaries selected by the EIF for a total of up to
fifteen financial
€
approved amounts by financial

90 million. The breakdown of

the
intermediary, by country, is shown below.

Sweden
6%

Finland
4%

France
23%

Italy
13%

Belgium
5%

Germany
21%

Spain
18%

Austria
3%

Netherlands
7%

The EIF has signed contracts with all the fifteen financial intermediaries. The
to
corresponding EIF guarantee portfolio under
€

the Facility amounts

1,238 million.

A detailed list of the financial intermediaries is annexed (Annex 3).

4.4.2.

Beneficiary SMEs

Up until 30 September 1999, last available contractual reporting date from the
financial intermediaries to the EIF as of today, the total number of SMEs
benefiting from a guarantee under this Facility is 7,223. Start-up SMEs, which
have been created from 1998 to 1999 total 3,472.

The classification in terms of number of employees in these SMEs is as follows:

SMEs with
£ 10 employees

0 £

SMEs with
£ 50 employees

11 £

SMEs with
£ 100 employees

51 £

6,727

430

66

Total

7,223

17

£
£
£
£
£
£
4.5

Budgetary Data

Budget line B5-510

Year

Budget commitments
€
(

million)

* to be committed

4.6.

Promotion

1998

1999

50

59

2000

59*

Total

168

In addition to the Information Notice published in the Official Journal, the EIF
has produced leaflets on SME Guarantee Facility in each of the eleven
Community languages. Moreover, the EIF has included appropriate information
on the facility in its own marketing documentation and has also dedicated
separate sections to the facility in its web-site (www.eif.org).

4.7.

Forecast on employment creation

The 7,223 SMEs benefiting from the SME Guarantee Facility so far have
declared that they have 32,869 employees. Even at this early stage, the SMEs
are required to estimate the number of jobs that should be created in the near
future. Based on this declaration, the total expected number of jobs one year
after the signing of the loan agreement is 34,319, i.e. an increase of 1,450
employees. This is expected to increase to 36,988 after another year, i.e. a
further increase of 2,669 employees. This would mean an overall increase of
13% over two years.

4.8.

Outlook

Since the signature of the management agreement and in accordance with the
requirements set out in the Council Decision, the EIF has made contacts with the
national authorities of the Member States to obtain guidance as to the choice of
financial
In addition to the fifteen intermediaries already
approved, active negotiations are continuing with four intermediaries and first
contacts have been made with eight others. The EIF expects to have 27
intermediaries in total from all 15 Member States.

intermediaries.

Furthermore, based on the reports provided by the Financial Intermediaries (up
until 30 September 1999), it is anticipated that more than 14.000 SMEs will
have benefited from the SME Guarantee Facility by the end of 1999.

18

ANNEXES

19

ANNEX 1 – ETF START-UP

The following data relate to the seven funds to which commitments have been made in
the period up to 31 December 1999.

1.

Rhône-Alpes PME (France)

Rhône-Alpes PME is a fund based in Lyon, the purpose of which is to invest in early
stage SMEs in the Rhône-Alpes region. The total funds raised amount to
22.9 million,
of which the maximum budget allocation committed by the EIF is
3.8 million (17%).
The fund will run for a duration of ten years, after which there is the possibility of it
being extended for a further two years.

€

€

Typical targets of this fund will be two to three year old SMEs and investments will
generally fall in the

0.2 – 0.5 million range.

€

The management company of the fund is part of the Siparex group, which has 20 years of
fund management experience behind it. The team involved in this project is new and
relatively inexperienced, but it is assisted by more experienced backup from the Siparex
group.

2.

Quantum Healthcare Fund (United Kingdom)

Quantum Healthcare Fund is a new fund set up to finance seed and early stage
biotechnology and healthcare companies in the UK and in the rest of Europe.

The fund has so far raised approximately
€

19.3 million and intends to raise up to
31.2 million, which will be invested in 10-15 companies over a period of 4-5 years, at
1.5 to 3 million per investment. The EIF has so far committed

€

€

4.8 million, with the possibility of an extension up to

7.8 million.

an average of
€
approximately

€

Although he has not previously managed a fund himself, the promoter is a highly
experienced and successful entrepreneur, with an excellent
track record in the
biotechnology sector. This should strengthen the support that he and the rest of the
management team will provide to the investee companies in shaping their strategic
development.

3.

Wellington Partners (Germany)

Wellington Partners is a venture capital fund based in Munich which specialises in
investing in start-up and early stage companies, primarily in the areas of healthcare,
biotechnology, telecommunications, software and multimedia. It concentrates most of its
investments in companies in the Southern states of Germany.

€

€

35.8 million, of which the amount committed by the EIF is
The size of this fund is
approximately
7.8 million or 21% of the fund. The fund aims at establishing a portfolio
of investments in 15-20 companies whose products are either undergoing an initial
technological development phase or are at the marketing stage. The maximum amount of
any single investment will not exceed 10% of the fund.

Typical investments will be minority investments ranging between
be invested through several rounds.

€

0.1 and 3 million to

20

Although the management team has had some prior experience in venture capital, this is
their first fund raised. They have made several links with a number of research centres to
enable the fund to generate deal flow in high technology.

4.

Natexis Ventech (France)

Natexis Ventech is a fund financing companies mostly in France but also throughout
Europe. The fund is managed by Natexis Ventech S.A., a subsidiary of Financière
Natexis. The fund has raised
42.7 million, of which the EIF has committed
€
approximately

9.7 million.

€

Natexis Ventech plans to put together a portfolio of 30 to 35 early stage technology
investments (75% in information technology and 25% in life sciences, biotechnology and
health-related applications). It does not intend to invest in companies in the seed phase,
but rather to concentrate on early stage opportunities.

The management team includes some individuals with a background in venture capital
funding, whilst others have industry experience.

5.

Aboa Venture II (Finland)

Aboa Venture II is a regional fund based in the Turku area of Western Finland
specialised in technological investments.
€

8.8 million, of which the EIF has committed 23 % or

This fund has raised
2.0 million.
The fund will run for a duration of ten years, after which there is the possibility of a
further extension of two years. Aboa Venture aims at investing in approximately 20
companies in their early and development stages in the electronics, biotechnological and
life sciences sectors.

€

The management has previous experience in running regional funds and has close links
with research and development centres in this area.

6.

Seeft Capital (France)

This fund invests in French businesses in the software sector which are at the start-up or
18.8 million and it
seed and early-stage of their development. The size of the fund is
will run for eight years, after which there is the possibility of an extension of two years.
EIF has committed 22% to this, which represents

4.1 million.

€

€

The fund aims at putting together a portfolio of between 20 and 30 companies which
develop and commercialise software packages for business, personal applications and
service companies, involving e-commerce, internet, intranet, educational software and
games, as well as products for niche markets.

The management team, which is experienced in the software industry, plans to assist the
portfolio companies in their product development and commercialisation activities.

21

7.

InnovationsKapital 2 Partners (Sweden)

InnovationsKapital 2 is a Swedish venture capital fund of a size of
which the EIF committed 15%, i.e.
years, after which there is the possibility of a further extension of two years.

40.9 million, to
6.1 million. The fund will run for a duration of ten

€

€

The fund aims at investing in approximately 20-25 start-up and early stage companies in
the Nordic region in the information technology and healthcare sectors.

The management team has previous venture capital experience and has close links to the
scientific community of Chalmers, Linköping and Lund.

22

This section gives a statistical overview of the JEV programme as at 31 December 1999.

ANNEX 2 – JEV

List of Financial Intermediaries

AUSTRIA
BANK AUSTRIA AG
BÜRGES FÖRDERUNGSBANK
CREDITANSTALT AG
ERSTE BANK
FGG - FINANZIERUNGSGARANTIE-GESELLSCHAFT
INVEST KREDIT
ÖSTERREICHISCHE VOLKSBANKEN (ÖVAG)
RAIFFEISEN ZENTRALBANK ÖSTERREICH AG

ITALY
BANCA COMMERCIALE ITALIANA
BANCA DI ROMA
BANCA NAZIONALE DEL LAVORO
BANCA POPOLARE ASOLO E MONTEBELLUNA
BANCA POPOLARE DI BERGAMO - CREDITO VARESINO
BANCA POPOLARE DI NOVARA
BANCA POPOLARE DI VICENZA
BANCA POPOLARE DI VERONA - BANCO S. GEMINIANO E S. PROSPERO
BANCO AMBROSIANO VENETO
CASSA DI RISPARMIO DELLE PROVINCIE LOMBARDE (CARIPLO)
CENTROBANCA

BELGIUM
BANQUE BRUXELLES LAMBERT/BANK BRUSSEL LAMBERT CONSORZIO BANCHE POPOLARI EMILIA ROMAGNA MARCHE
FORTIS BANK SA/NV
KBC BANK N.V.
SBI/BMI
SOFICATRA

DENMARK
MIDTBANK
SYDBANK A/S

FINLAND
FINNVERA

FRANCE
BANQUE DE BRETAGNE
BANQUE DU DEVELOPPEMENT DES PME
CDC-PARTICIPATIONS
CAISSE NATIONALE DE CREDIT AGRICOLE
CREDIT LYONNAIS
BANQUE NATIONALE DE PARIS
G.E.I.E. EUROSUD CAPITAL
GROUPE BANQUES POPULAIRES
NATEXIS BANQUE
UNION EUROPEENNE DE CIC

BANCA POPOLARE DI MILANO
FINLOMBARDA
MEDIOCREDITO CENTRALE
MONTE DEI PASCHI DI SIENA
SANPAOLO IMI
FRIULIA SPA
UNICREDITO ITALIANO
GEPAFIN
SVI LOMBARDIA SPA

LUXEMBOURG
BANQUE ET CAISSE D'EPARGNE DE L'ETAT
BANQUE INTERNATIONALE A LUXEMBOURG
EUREFI

NETHERLANDS
FORTIS BANK NEDERLAND NV

NORWAY
SND

PORTUGAL
CAIXA GERAL DE DEPOSITOS
BANCO BPI

SPAIN
ARGENTARIA
BANCO COOPERATIVO ESPANOL
BANCO SANTANDER CENTRAL HISPANO
CAJA DE AHORROS DEL MEDITERRANEO (C.A.M.)
COFIDES (Comp. Esp. de Fin. Desarrollo)

GERMANY
DEUTSCHE AUSGLEICHSBANK
INVESTIONSBANK BERLIN
LANDESFÖRDERINSTITUT MECKLENBURG-VORPOMMERN EL MONTE - CAJA DE HUELVA Y SEVILLA
NIEDERSÄCHSISCHE LANDESTREUHANDSTELLE
DEUTSCHE BANK
EUROPA BANK AG
INVESTITIONSBANK NRW (Zentralbereich der WestLB)
INVESTITIONSBANK SCHLESWIG-HOLSTEIN
KREDITANSTALT FÜR WIEDERAUFBAU
SÄCHSISCHE AUFBAUBANK

BANCO DE VALENCIA
BANCO SABADELL
CAJA MADRID
LA CAIXA
CECA
SA NOSTRA-CAIXA DE BALEARES

GREECE
AGROTIKI - AGRICULTURAL BANK OF GREECE S.A.
ETBA - HELLENIC INDUSTRIAL DEVELOPMENT BANK

IRELAND
BANK OF IRELAND

SWEDEN
ALMI BUSINESS PARTNER

UNITED KINGDOM
ROYAL BANK OF SCOTLAND Plc
GREATER LONDON ENTERPRISE Ltd
YORKSHIRE ENTERPRISE LIMITED

23

Sectors of Activity of the approved joint venture projects

Sector

Number of
projects

Services/Business activities

Manufacturing

Transport

Wholesale and retail trade

TOTAL

24

17

7

5

53

Breakdown by country and project (where a joint venture is to be created)

Country

France

Spain

Belgium

Italy

Portugal

Denmark

Germany

Netherlands

United Kingdom

Finland

Ireland

Luxembourg

Sweden

TOTAL

Number of
projects

10

9

7

7

5

3

3

3

2

1

1

1

1

53

24

Geographical location of the SMEs involved in the approved joint venture projects

Country

France

United Kingdom

Belgium

Spain

Germany

Italy

Portugal

Denmark

Netherlands

Sweden

Austria

Finland

Ireland

Luxembourg

TOTAL

Number of
SMEs

22

16

14

13

11

11

8

7

6

3

1

1

1

1

115

Size of the SMEs involved in the approved joint venture projects

Number of employees

Number of
SMEs

Fewer than 10

10 to 49

50 to 249

Total

48

46

21

115

25

Job creation foreseen in the approved joint venture projects
(declarations made by the applicants)

Job
creations
(new employees)

foreseen

Number of
projects

Fewer than 10

10 to 49

50 to 99

100 and more

Total

26

25

1

1

53

The total job creation foreseen in the 53 approved JEV projects as at 31 December 1999 is
788, which is, on average, 15 jobs per project.

Investment foreseen in the approved joint venture projects
(declarations made by applicants)

Investment foreseen

Number of
projects

€

100 000

Less than
€

100-499 000

€

€

500-999 000

1 million and more

Total

8

20

16

9

53

According to the declarations made by the applicants, the investment foreseen in the 53
41.5 million, i.e. close to
approved JEV projects as at 31 December 1999 is close to
€

€

780.000 on average per project.

26

JEV Projects

A. Joint venture projects

In order to illustrate the JEV activity, this section gives a description of some of the approved
and contracted joint venture projects.

1.

Italy - United Kingdom

An Italian company wants to set up a Joint Venture with a British company in the virtual
reality computer system sector. The purpose of the Joint Venture will be in the production of
virtual reality driving simulators for scooters. The Italian company is in the software service
business, whereas the British company is concerned with the supply of PC-based virtual
reality software.

2.

France - Belgium

A French company wants to set up a Joint Venture with a Belgian company in order to
commercialise tools for craftsman. The French partner specialises in manufacturing and
distributing tools for craftsman, whereas the Belgian company is involved in the commercial
assistance aspect.

3.

Germany - France

A German company wants to set up a Joint Venture with a French company in order to create
a production facility for cutting tools for making self-adhesive labels. It is planned that the
site of the Joint Venture will be on the French partner’s premises. Both companies produce
and sell self-adhesive labels. The idea to create a Joint Venture came about as the result of
previous successful co-operations.

4.

Spain - Austria

A Spanish company wants to set up a Joint Venture with an Austrian company to develop a
roll on/roll off traffic system from Barcelona to the Middle East.

5.

France - Italy

A French company wants to set up a Joint Venture with an Italian company in order to
manufacture and sell hinges to companies in the building sector (dealing with windows,
doors, frames and portals). The Joint Venture will be located in Italy. The French partner
specialises in the manufacture of hinges, whereas the Italian partner is in the building
materials trade.

6.

France - Germany

A French company wants to set up a Joint Venture with a German company in order to
produce bio-degradable and combustible products. The French partner specialises in the
commercialisation of machines for the chemical industry. In addition, it sells bio-degradable
and combustible products. The German partner is involved in engineering and consulting,
relating to waste management and energy technology.

27

7.

Denmark - Sweden

A Danish company wants to set up a Joint Venture with a Swedish company in order to
provide warehousing activities and logistics services. The Danish partner is a haulage
company operating in Sweden, Norway and Denmark. The Swedish company is also a
haulage company mainly specialising in road transportation.

8.

Finland - United Kingdom

A Finnish company wants to set up a Joint Venture with a UK company in order to develop
the use of information technology in international advertising. The Finnish partner is active in
advertising and marketing, whereas the UK partner is active in the design and management of
marketing databases and advertising.

9.

Italy - Germany

An Italian company wants to set up a Joint Venture with a German company, in Saxony, to
conduct research, engineering and manufacturing of heat shrinkable film. The Italian partner
focuses on the design and manufacturing of heat shrinkable films. The German partner
manufactures machinery and equipment for processing plastic and the recycling of plastic
waste.

10.

Italy - Netherlands

An Italian company wants to set up a Joint Venture with a Dutch company in order to
commercialise telecommunication equipment and provide technical support. The Italian
partner produces telecommunication equipment, whereas the Dutch partner is active in data-
communications and line transmission products.

11.

Denmark - Italy

A Danish company wants to set up a Joint Venture with an Italian company,
in the
Emilia-Romagna region, to establish a logistics and forwarding service between Denmark and
Italy which can administer transportation to and from Poland, the Baltic states and Russia.
The Danish partner is involved in the transportation of cold storage goods across Europe,
Russia and the Baltic States. The Italian partner specialises in the handling and storage of
perishable food products, as well as in the distribution of such goods.

12.

Belgium - France

A Belgian company and a French company want to set up a Joint Venture to provide asphalt-
paving works for the public and private sectors in France. The Belgian partner operates an
asphalt factory. The French partner has been active primarily in the agricultural sector, but has
also diversified into road and sewage system construction.

28

13.

Belgium - France - Denmark - Portugal

A Belgian company wants to set up a Joint Venture with partners from France, Denmark and
Portugal to develop software for the horticultural industry. The Belgian partner implements
generic solutions for specific horticultural production planning. The French partner
specialises in the development and installation of administrative applications in the
horticultural industry. The Portuguese partner runs a tree/shrub nursery. The Danish partner is
a national body representing 800 Danish producers of flowers, plants, fruits and vegetables.

B. Promotion events / promotional material

This section gives a list of the first approved JEV promotion events / promotional material
support. These were submitted in accordance with the Commission notice 1999/C 113/14,
published in the Official Journal, regarding actions for the promotion of JEV.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

SIAM 1999 (France)

Growth Plus Europe 1 (Italy, Germany, Austria)

Growth Plus Europe 2 (Belgium, Spain, France)

National Association of Spanish Business Innovation Centres (Spain)

SEKA (Greece)

Promotional material for Almi (JEV FI in Sweden)

Institut Catala de Tecnologia (Spain)

Consortium for commercial promotion of Catalonia (Spain)

Chamber of commerce of Nice (France)

Midest (France)

Chamber of Commerce of Liège (Belgium)

Promotional material for InvestitionsBank Berlin (JEV FI in Germany)

29

ANNEX 3 – SME GUARANTEE

The EIF has made contacts with the national authorities of the Member States to obtain
guidance as to the choice of financial intermediaries. In accordance to this guidance the
financial intermediaries in Italy have been selected following a restricted call for expression
of interest aimed at regional guarantee funds.

The fifteen financial intermediaries that have signed the SME Guarantee Facility contract
with the EIF up until 31 December 1999 are:

1.

Bürges (Austria)

Bürges is a public guarantee scheme with the status of a bank providing guarantees to SMEs.
It offers guarantee products to all financial institutions in Austria. Two Bürges programmes
have been combined with the SME Guarantee Facility. The first one is the programme for
young entrepreneurs supporting start-ups and ownership changes of small independent SMEs
in all sectors. The second is the programme for structural improvement supporting innovative
SMEs. Under the facility, these programmes are offered to SMEs by relaxing or even waiving
the normal collateral requirements for SMEs.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€
the agreement was approved by the

90.8 million over one year. An extension of

Commission services in December 1999.

2.

Fonds de Participation - FdP (Belgium)

FdP is an autonomous public institution operating through the national banking system, in
accordance with the principle of full delegation. In addition to its product range of
subordinated loans to SMEs, since January 1999 it has offered residual loss guarantees to
independent SMEs with up to 50 employees and with a business activity of less than 5 years.
7 million and total
These SMEs must also have an annual turnover, which does not exceed
assets of maximum
5 million. This new guarantee product is now eligible for cover under
the facility.

€

€

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

99.16 million over two years.

3.

Finnvera (Finland)

Finnvera provides SMEs, either directly or through guarantees, with debt finance that the
banking system would not readily provide, due to a lack of collateral. It is a state-owned
institution working closely with all Finnish financial institutions.

Under the Facility, Finnvera offers a new guarantee product targeted at SMEs employing up
to 100 employees including start-up businesses and companies in the service sector. All these
SMEs have to have job creation potential and an element of innovation in the products
offered. The guarantees are offered to the borrowers at a reduced cost as compared to the
current risk premiums charged for similar products.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

229 million over two years and one quarter.

30

4.

Sofaris (France)

Sofaris is a national guarantee institution managing several guarantee funds aimed at the
support of SMEs. It works through a large banking network in France.

Under the Facility, Sofaris will provide guarantees for investment loans, ownership transfer
loans and loans to start-up businesses. The eligible SMEs are micro enterprises with up to 10
employees. Sofaris estimates that some 20.000-25.000 micro enterprises will benefit from the
Facility.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

740 million over two years.

5.

Deutsche Ausgleichsbank – DtA (Germany)

DtA is a government-owned specialised development bank, which grants long-term loans
with low interest rates mainly for start-up businesses and young companies seeking to expand,
as well as granting loans for environmental protection programmes. DtA normally carries out
its loan activity through commercial, savings and co-operative banks in Germany. It does not
lend directly to SMEs.

The SME Guarantee Facility is combined with a new micro-lending programme offered by
DtA which provides loans to small start-ups, with an investment amount of up to
50,000, a
loan maturity of 10 years and a reduced interest rate. It aims particularly at assisting women
and the unemployed. In parallel with this, DtA offers incentives to the banks in order to
encourage them to enter into this segment of the market. All loans granted under the
programme will benefit from partial exemption from liability. This means that banks are also
prepared to grant loans to SMEs, which they would, under normal circumstances, categorise
as being high risk.

€

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

338.4 million over three years.

6.

Confidi Padova (Italy)

Confidi Padova is a mutual guarantee fund based in Padova (Veneto Region). It extends
guarantees only to its members, which are 1,176 SMEs established in the region. However,
the intermediary intends to expand its statutes and start acting as a counter-guarantor to other
industrial guarantee funds (Confidi).

The selected guarantee portfolio consists of loans granted to support the development of
enterprises. All investment loans and leasing operations with a final maturity of at least 3
years are eligible for cover. Among others, the intermediary has a product that links the
guarantee amount to the number of new employees recruited by the SME in connection with
an investment plan. Under the SME Guarantee Facility it will provide higher guarantee cover
at reduced cost.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

68.8 million over two years.

31

7.

Artigiancredito Toscano (Italy)

Artigiancredito Toscano is a regional mutual guarantee fund based in Firenze. The main
purpose of this intermediary is to facilitate access to credit for artisan SMEs by providing
counter-guarantees to its members, which are 19 local artisan guarantee funds.

These 19 funds represent some 44.000 artisan enterprises or 41% of total number of artisan
enterprises established in the region. According to Unioncamere Toscana, almost 95% of all
artisan enterprises of the region were micro enterprises with less than 10 employees in 1998.

Under the Facility, all guarantees for medium and long-term investment financing with a final
maturity of at least 3 years will be eligible. This will include special programmes for start-ups
and woman entrepreneurs.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

140 million over two years and one quarter.

8.

Unionfidi Piemonte (Italy)

Unionfidi Piemonte is an industrial mutual guarantee fund based in Turin (Piedmont region).
It extends guarantees only to its members, which consist of 3,606 SMEs established in the
region.

The intermediary has several interesting guarantee products, such as guarantees covering
loans for research and development projects and technological innovation. It also recently
launched a scheme for employment creation. Under the SME Guarantee Facility it will
provide higher guarantee cover at reduced costs to SMEs.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

103.3 million over two years.

9.

Federfidi Lombarda (Italy)

Federfidi Lombarda is a regional mutual guarantee fund based in Milano. It provides direct
guarantees to industrial SMEs and counter-guarantees to its member Confidi.

Debt finance with a minimum maturity of 3 years will be eligible for cover under the Facility
in compliance with the following criteria: Investment financing (both tangible and intangible
assets, R&D), employment creation and structured finance. The selected portfolio emphasises
the employment creation potential of targeted SMEs having up to 100 employees. According
to Inps (Istituto Nazionale della Previdenza Sociale) 99% of the SMEs in Lombardia have less
than 100 employees.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

93 million over two years and one quarter.

32

10.

Artigiancredit Emilia Romagna (Italy)

Artigiancredit Emilia Romagna is a regional mutual guarantee fund based in Bologna. The
main purpose of this intermediary is to facilitate access to credit for artisan SMEs by acting as
a counter-guarantor for its members, which are 23 artisan guarantee funds (Confidi) operating
in the region.

The intermediary’s portfolio under the Facility will consist of guarantees for investment loans
and leasing transactions with a maturity of at least three years. Special focus will be put on
loans for start-up businesses, job creation and investments in intangible assets, technology
innovation, environment and safety.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

135 million over two years and one quarter.

11.

Artigiancredit Lombardia (Italy)

Artigiancredit Lombardia is a regional mutual guarantee fund based in Milano. It extends
counter-guarantees only to its members, which are 35 artisan guarantee funds operating in the
Lombardia region.

It has implemented several interesting guarantee products, among which a few specifically
designed to support job creation. All medium-term guarantees covering investment financing
and/or employment creation with a minimum maturity of three years will be eligible under the
Facility. All SMEs with up to 100 employees will be eligible for a cover under the Facility.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

112.5 million over two years and one quarter.

12.

Confidi Sardegna (Italy)

Confidi Sardegna is a regional mutual guarantee fund based in Cagliari, Sardinia. It extends
guarantees only to its member SMEs established in the region.

The intermediary’s portfolio under the Facility will consist of guarantees for debt finance with
a maturity of at
least three years. This would include the following purposes: start-up
businesses, job creation, investment and leasing. Taking into consideration the relatively week
financial
an
Objective 1 region, the possibility to include loans for debt consolidation was included in the
portfolio.

of micro-enterprises

structure

Sardinia

that

and

in

is

it

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

100 million over two years and one quarter.

33

13.

BBMKB (Netherlands)

The SME Credit Guarantee Scheme (BBMKB Scheme) is a public guarantee scheme,
operated on a national basis and managed by the Ministry of Economic Affairs in the
Netherlands. It provides financial assistance for established SMEs, with no more than 100
employees, as well as those at the start-up stage. It also offers special guarantees to innovative
SMEs.

Under the Facility, BBMKB finances operations covering loan amounts between
€

68,000 and
680,000 and which have a maximum maturity of 6 years. The banks may not require any
collateral for the loans guaranteed by BBMKB. This portfolio was chosen to ensure a
diversified portfolio distribution.

€

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

375 million over three years.

14.

Cersa (Spain)

Cersa is a national guarantee institution that supports the mutual guarantee funds –
Sociedades de Garantia Reciproca (SGRs) - in Spain in accordance with the principal of full
delegated approval process. It has a special focus on supporting SMEs by guarantying their
lending operations.

All SGR guarantees for new investment financing to the benefit of SMEs with up to 100
employees will be eligible for a counter-guarantee by Cersa. This represents 95% of Cersa’s
investment portfolio with the average SME having 13 employees. In addition, start-up
financing is also eligible.

The intermediary expects to be able to grant a maximum guarantee portfolio amount of
€

574 million over three years.

15.

Almi Företagspartner (Sweden)

Almi is a development agency, which provides loans to SMEs with growth and job creation
potential. To a limited extent it issues also guarantees to the SMEs. Normally, Almi financing
involves high risk and it is therefore complementary to normal bank lending.

All loans within the product categories of amortising loans (working capital, investments in
machinery, market or product development), growth loans (SMEs with clear growth
potential), start-up loans and loans to female entrepreneurs will be included in the portfolio.
All SMEs with up to 100 employees will be eligible.

The intermediary expects to be able to grant a maximum loan portfolio volume of
€

227.5 million over three years.

34