Report from the Commission to the Council and the European Parliament on the financial instruments of the multiannual programme for enterprise and entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) (2001-2006) - End Report as at 31.12.2006 (including key results as at 31.12.2007) (pursuant to Article 5(1) of Council Decision 2000/819/EC, as amended by Decisions 593/2004/EC and 1776/2005/EC of the European Parliament and of the Council) [SEC(20008)2750]
Date: 2008-11-07
Institutions: European Commission
Subjects: EU programme, activity report, aid to undertakings, entrepreneurship, financial aid, financial management, small and medium-sized enterprises

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.11.2008 
COM(2008) 708 final 

REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN 
PARLIAMENT 

on the financial instruments of the multiannual programme for enterprise and 
entrepreneurship, and in particular for small and medium-sized enterprises (SMEs) 
(2001-2006) 

End report as at 31.12.2006 

(including key results as at 31.12.2007) 

(pursuant to Article 5(1) of Council Decision 2000/819/EC, as amended by Decisions 
593/2004/EC and 1776/2005/EC of the European Parliament and of the Council) 

[SEC(20008)2750] 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

3. 

General introduction..................................................................................................... 3 

Overview ...................................................................................................................... 4 

Budgetary implementation ........................................................................................... 4 

Geographical implementation ...................................................................................... 5 

SME Guarantee Facility............................................................................................... 6 

3.1. 

Budgetary situation ...................................................................................................... 6 

3.1.1.  Overview ...................................................................................................................... 6 

3.1.2.  Utilisation..................................................................................................................... 6 

3.1.3.  Leverage effect............................................................................................................. 7 

3.1.4.  Enhanced access to finance for SMEs ......................................................................... 7 

3.1.5.  State aid........................................................................................................................ 7 

3.1.6.  Net called payments and loss recoveries...................................................................... 8 

3.2. 

3.3. 

4. 

4.1. 

4.2. 

4.3. 

5. 

Financial Intermediaries............................................................................................... 8 

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

ETF Start-up Facility.................................................................................................... 9 

Budgetary situation ...................................................................................................... 9 

Financial Intermediaries............................................................................................. 10 

Beneficiary SMEs ...................................................................................................... 10 

Seed Capital Action.................................................................................................... 11 

5.1. 

Budgetary situation .................................................................................................... 11 

5.1.1.  Overview .................................................................................................................... 11 

5.1.2.  Commitments and disbursements .............................................................................. 12 

5.2. 

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

6. 

7. 

Joint European Venture (JEV) programme................................................................ 12 

General Conclusions .................................................................................................. 12

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1. 

GENERAL INTRODUCTION 

This  is  the  final  annual  report  (end  report)  on  progress  achieved  in  the  implementation  of 
financial 
for  enterprise  and 
entrepreneurship, and in particular for small and medium-sized enterprises-SMEs1. 

the  multiannual  programme 

instruments  under  MAP, 

It is drawn up in accordance with Article 5(1) of Council Decision 2000/819/EC, as amended 
by Decisions 593/2004/EC and 1776/2005/EC of the European Parliament and of the Council, 
establishing that the Commission shall submit to the European Parliament and to the Council 
an annual report on the implementation of the financial instruments and a similar end report 
for the final year.  

MAP  was  initially  designed  to  cover  the  period  2001-2005.  However,  in  order  to  ensure 
continuity  of  action  until  the  start  of  the  successor  programme  under  the  new  Financial 
Perspectives, MAP was extended in September 2005 by one year, until the end of 2006.  

The  goal  of  the  MAP  financial  instruments  is  to  improve  the  financial  environment  for 
business,  especially  for  SMEs.  MAP  builds  on  the  results  achieved  under  the  1998  Growth 
and Employment Initiative2. 

This  report  covers  the  four  Community  financial  instruments  ("measures")  implemented 
under MAP, i.e. 

•  SME Guarantee Facility 

•  Start-up Scheme of the European Technology Facility (ETF Start-up Facility) 

•  Seed Capital Action 

•  Joint European Venture (JEV) programme 

It provides an overview of progress achieved as at 31.12.2006, and comprises one chapter 
for each of the financial instruments (chapters 3, 4, 5 and 6). 

Descriptions of the above mentioned financial instruments and specific conclusions for each 
of them are provided in Sections III and IV of the Staff Working Document accompanying 
this report (SEC(2008)XXX).  

The  first  three  financial  instruments  above  are  operated  by  the  European  Investment  Fund 
(EIF),  on  behalf  of,  and  under  the  supervision  of,  the  European  Commission  (EC)3.  In  the 
Member  States,  appropriate  Financial  Intermediaries  (FIs)  have  been  selected.  The  JEV 
programme  was  included  in  the  MAP  Council  Decision  2000/819/EC  but  without  specific 
budget  under  MAP.  JEV  was  managed  by  the  European  Commission  using  budgetary 
resources from the predecessor Growth and Employment Initiative. The approval of projects 

1 

2 
3 

Council  Decision  2000/819/EC  (OJ  L  333,  29.12.2000,  p.84)  adopted  on  20.12.2000,  as  modified  by 
Decisions  593/2004/EC  of  21  July  2004  (OJ  L  268,  16.8.2004,  p.  4)  and  1776/2005/EC  of  28 
September 2005 (OJ L 289, 3.11.2005, p. 14) of the European Parliament and of the Council.  
OJ L 155, 29.05.1998, p. 43. 
On  10.12.2001,  the  Commission  adopted  its  Decision  C(2001)  3973  on  the  implementation  of  the 
financial instruments of MAP. Following this, on 18.12.2001, the Commission signed with the EIF the 
Fiduciary  and  Management  Agreements  for  the  ETF  Start-up  Facility,  SME  Guarantee  Facility  and 
Seed  Capital  Action.  These  agreements  were  revised  on  22.12.2005  in  order  to  take  into  account  the 
extension of MAP. 

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using  budgetary  funds  available  under  MAP  effectively  started  in  mid-2002.  Projects 
submitted prior to that date were approved under the Growth and Employment Initiative. 

Please note: The commitment period for the MAP ended on the 31.12.06. However: 

For  most  FIs  under  the  SME  Guarantee  Facility,  the  availability  period  for  the  inclusion  of 
guaranteed loans ended only on 30.06.2007 or on 31.12.2007. 

The  signature  period  under  the  ETF  Start-up  Facility,  during  which  the  EIF  could  make 
commitments to VC funds ended only on 30.06.2007. 

These extended availability periods mean that the Facilities therefore continued after the last 
commitments  in  2006,  the  aim  being  to  allow  a  smooth  transition  to  the  CIP,  the  MAP 
successor programme  

In order to reflect the extended availability periods, figures showing some key results at the 
end of 2007 are included in an extra box at the end of the concerned chapter of this report. 

2. 

OVERVIEW 

2.1. 

Budgetary implementation 

The financial instruments contribute mainly to the fourth objective of MAP, "to improve the 
financial  environment  for  business,  especially  SMEs"4.  They  aim  to  address  recognised 
market  gaps  and/or  failures.  They  help  to  "alleviate  risk  for  financial  intermediaries, 
consequently facilitating SMEs' access to finance and have a high leverage effect"5.  

In  budgetary  terms,  the  financial  instruments  represent  the  most  significant  of  the  areas  of 
action within MAP. The other areas are policy development and the Euro Info Centre (EIC) 
Network.  An  indicative  budget  of  EUR  450  million  for  the  period  2001-2005  was  initially 
proposed for the entire MAP programme. Taking into account the extension of MAP by one 
year,  the  increases  decided  by  the  budgetary  authorities,  and  the  transfers  made  from  other 
budget lines, the indicative budget for the period 2001-2006 amounted to EUR 653 million for 
the entire MAP. At the end of 2006, total resources allocated to MAP financial  instruments 
amounted  to  EUR  519.0  million.  This  includes,  in  addition  to  budgetary  appropriations 
committed, EUR 9.9 million of interest and other income.  
Of the total resources allocated to MAP financial instruments, only EUR 5.0 million6 related 
to  the  Seed  Capital  Action  was  not  used.  In  total,  EUR  466.5  million  was  allocated  to 
projects.  

No commitments have been made by the European Commission after 31.12.2006. After this 
date, all new projects will be submitted under the Competitiveness and Innovation Framework 
Programme (CIP), which replaces MAP. From 2007 onwards, all balances held on the MAP 
trust  account  will  be  paid  back  to  the  general  budget  of  the  EU.  Unused  budgetary 
commitments will be de-committed. 

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6 

As laid down in Council Decision 2000/819/EC, Article 2.1 (d). 
According  to  a  statement  in:  External  evaluation  of  the  multiannual  programme  for  enterprise  and 
entrepreneurship, and in particular for SMEs, final evaluation report, Brussels 2004, p. 52. 
This unused amount was decommitted in 2007. 

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Table A: MAP financial instruments - Budgetary overview – as at 31.12.2006 

(EUR million) 

SME 
Guarantee 
Facility 

ETF Start-up 
Facility 

Seed Capital 
Action 

Total 

Budgetary  appropriations 
committed 

Revenue 

Total resources 

EC Net Commitments7 

for 

Reserve 
EIF 
management fees and other 
eligible expenses 

289.0

4.0

293.0

265.28

27.8

214.5

5.9

220.4

201.1

19.3

5.6 

0.0 

5.6 

0.2 

0.49 

509.1

9.9

519.0

466.5

47.5

Total used 

293.0

220.4

0.610 

514.0

Source: European Commission, EIF; data extraction: 21 June 2007 

The total volumes of loans related to the amount committed were very high. For example, for 
approximately  EUR  262  million  of  cap  amounts  signed  under  the  SME  Guarantee  Facility, 
loans  of  nearly  EUR  17  500  million  were  backed  (details  on  this  "leverage  effect"  can  be 
found under chapter 3.2.3)11. 

2.2. 

Geographical implementation 

Overall,  29  countries  benefited  from  the  MAP  financial  instruments,  i.e.,  all  current  EU 
Member  States  and  Turkey  and  Norway.  Of  31  eligible  countries,  only  2  (Iceland  and 
Liechtenstein) did not use the MAP financial instruments. 

In  accordance  with  the  Fiduciary  and  Management  Agreements  between  the  EIF  and  the 
Commission, the EIF committed to "endeavour to achieve a balanced geographic distribution 
of the three MAP financial instruments".  

The  different  needs,  market  conditions  and  macro-economic  circumstances  in  the  various 
participating countries had an impact on the absorption capacity and the take-up of the various 
financial  instruments.  To  compensate,  a  flexible  approach  was  adopted,  for  example  by 
shifting  between  the  different  financial  instruments  in  different  countries.  The  Commission 
considers that, overall, an appropriate geographical distribution has been achieved when 
all financial instruments are taken into account. 

7 
8 

9 

10 
11 

Corresponds to projects approved by the Commission and not cancelled. 
Includes  cap  amounts  of  EUR  261.6  million  (see  table  1  in  the  Section  I  of  of  the  Staff  Working 
Document accompanying this report (SEC(2008)XXX)). 
Calculation  of  reserve  was  based  on  entire  budgetary  appropriations  committed.  In  2007  there  was  a 
decommitment, giving a reserve of EUR 0.145 million. Only EUR 15 600 had been used by the end of 
2007. 
The unused amount of EUR 5 million was decommitted in 2007. 
Based on previous experience, the maximum amount (cap amount) may not be totally used up. Should 
this be the case, the cost-effectiveness of the instrument will be even better..  

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The  three  maps  in  Section  II  of  the  Staff  Working  Document  accompanying  this  report 
(SEC(2008)XXX)  show  the  geographical  distribution  of  the  EC  net  commitments,  for  all 
financial instruments together. 

3. 

SME GUARANTEE FACILITY 

3.1. 

Budgetary situation 

3.1.1.  Overview  

In 2006, the demand for the SME Guarantee Facility continued at its previous elevated level, 
in  particular  under  the  Loan  Guarantee  and  the  Micro-credit  Guarantee  windows.  Most 
agreements  have  therefore  been  extended  to  accommodate  the  needs  of  Financial 
Intermediaries. 

As  at  31.12.2006,  the  budgetary  resources  committed  under  SME  Guarantee  Facility 
amounted to EUR 293.0 million, representing about 56 % of the total budget committed for 
the  MAP  financial  instruments.  This  includes  cumulated  interest  amounting  to  EUR  4.0 
million  at  the  end  of  2006.12  The  total  budget  covers  the  full  cost  of  the  Facility,  including 
guarantee  losses,  EIF  management  fee  and  other  eligible  costs.  The  amount  of  budget 
committed  to  FIs  over  the  entire  programme  period  was  EUR  265.2  million,  inclusive  of 
projects approved by the Commission, but still to be signed between the EIF and the Financial 
Intermediaries. See also: 

•  Table A (in section 2.1): MAP financial instruments – SME Guarantee Facility 

Additional  information  is  provided  in  Section  I  of  the  Staff  Working  Document 
accompanying this report (SEC(2008)XXX): 

•  Figure 1:  Cumulative evolution of EIF operations (per year) 

•  Figure 2:  Commitments to Financial Intermediaries (per year) 

3.1.2.  Utilisation 

Utilisation  means  the  ratio  between  actual  EIF  guarantee  volume  and  maximum  EIF 
guarantee amount. At  31.12.2006  the resources had been entirely utilised13. The availability 
period  for  most  FIs  ended  either  on  30.06.2007  or  on  31.12.2007,  the  aim  being  to  allow  a 
smooth transition to the CIP, the MAP successor programme. The CIP covers the period from 
1 January 2007 until 31 December 2013. 

These extended availability periods mean that the Facility will therefore continue after the last 
budgetary commitments in 2006. Furthermore, the bulk of the guarantees issued by the EIF 
under  the  Facility  have  maturity  periods  of  up  to  10  years.  This  means  that  payments  with 
respect to defaulted loans could still be made for up to 10 years following the end of the last 
availability period (but in no case beyond the expiry date of the MAP on 31/12/2016) and that 
reporting,  monitoring  and  control  by  the  various  actors  involved  will  continue  during  this 
time.  

There was a high demand for both the Loan Guarantee window (nearly 80 % of commitments 
to  FIs),  and  to  some  extent,  also  the  Micro-credit  window,  (about  14  %).  The  Equity 

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13 

According to the Council Decision 2000/819/EC, Annex II, point II.G, “interest earned will be added to 
the resources of the facility”. 
Including  those  projects  that  have  been  approved  and  for  which  signature  has  been  foreseen  in  the 
beginning of 2007. 

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Guarantee window has seen only limited use, (6  %),  since the target  population in terms of 
existing equity guarantee schemes is rather restricted.  

3.1.3.  Leverage effect  

The MAP guarantee schemes in general have had a very high leverage effect (defined here as 
the estimated underlying loan volume supported / SME Guarantee Facility allocated budget). . 
This is due to two reasons:  

•  The EU budget covers a maximum risk exposure at portfolio level that is capped 
on  the  basis  of  expected  losses,  net  of  expected  recoveries  and  risk  premiums 
received by the Financial Intermediaries. This capped amount allows leveraging a 
significantly higher amount of SME loans. 

•  There  is  a  chain  of  actors  with  risk-sharing  arrangements,  increasing  further  the 

leverage effect. 

Loan guarantees, for example, have high leverage as they are often provided in the form of 
counter-guarantees  to  institutions  that  in  turn  provide  guarantees  to  other  actors,  such  as 
intermediaries and banks. Due to the risk-sharing between these various actors, the leverage in 
terms of volume of loans supported is very high for the SME Loan Guarantee window. For 
micro-loans,  the  situation  is  usually  different,  in  that  most  EIF  guarantees  are  direct 
guarantees  to  intermediaries  who  typically  provide  loans  directly  to  the  Final  Beneficiaries 
(the SMEs). In addition there is a focus on high-risk SMEs for micro-loans, resulting in higher 
cap rates. Leverage is therefore generally lower than for loan guarantees. 

At the end of 2006, the leverage effect was about 67 to 1 for all windows together. 

Overall, ultimate leverage may even further increase , since experience shows that the amount 
allocated to cover losses under guarantee operations is not always fully used up, even when 
target  loan  volumes  are  achieved.  De-commitment  of  unused  cap  amounts  may  therefore 
increase the final leverage. 

Specific information about the leverage effect is provided in Section I of the Staff Working 
Document accompanying this report (SEC(2008)XXX): 

•  Table 1: Leverage effect (gearing) 

3.1.4.  Enhanced access to finance for SMEs 

The  enhanced  access  to  finance  for  SMEs  created  by  the  SME  Guarantee  Facility  has  been 
estimated based on figures provided by the EIF and using certain considerations/assumptions, 
as  specified  in  Section  I  of  the  Staff  Working  Document  accompanying  this  report 
(SEC(2008)XXX) under Table 1: 

•  Estimation of enhanced access to finance for SMEs 

Based upon these assumptions it can be estimated, that the SME Guarantee Facility helped to 
support an additional loan volume of more than 13 billion EUR. 

3.1.5. 

State aid  

Particular attention is paid to ensure that the FIs' guarantee or loan programmes are compliant 
with applicable State aid rules. Each FI is contractually obliged to sign a declaration as to the 
applicable State aid regime, and the relevant State aid rules are specifically mentioned in the 
agreements between the EIF and the FIs. 

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3.1.6.  Net called payments and loss recoveries 

Slightly more than EUR 40 million had been paid by 31.12.2006, corresponding to the EIF´s 
share  of  net  losses  for  defaulted  loans14.  The  cumulative  amount  of  payments  is  still  very 
small  compared  to  the  cumulative  volume  of  EIF  commitments,  at  this  stage  of  the 
implementation  cycle.  However,  the  Facility  period  ends  only  at  31/12/2016,  and  given  the 
duration of EU guarantees for loans, the bulk of the losses is likely to appear in the future. 

A summary of net called payments and loss recoveries can be found in Section I of the Staff 
Working Document accompanying this report (SEC(2008)XXX):  

Table 2: Calls received and recoveries 

From 2007 onwards possible reductions of cap amounts will result in de-commitments or to 
recoveries to the general budget of the EU.  

3.2. 

Financial Intermediaries  

51 contracts had been signed with 46 FIs, covering 26 of the 27 Member States (i.e. all except 
Luxembourg15)  as  well  as  Turkey  and  Norway,  as  at  31.12.2006.  An  overview,  by  window 
and  country,  can  be  found  in  Section  I  of  the  Staff  Working  Document  accompanying  this 
report (SEC(2008)XXX): 

•  Table 3: Financial Intermediaries 

3.3. 

Beneficiary SMEs 

The approval of projects under MAP started in May 2002. The number of final beneficiaries 
increased progressively and it stood at nearly 194,000 SMEs16 at the end of 2006, (of which 
almost  163,000  under  the  Loan  Guarantee  window).  This  compares  with  nearly  111,100 
beneficiary SMEs at the end of 2005. 

An  overview  on  beneficiary  SMEs  by  country  is  given  in  Sections  I  and  II  of  the  Staff 
Working Document accompanying this report (SEC(2008)XXX):: 

•  Table 4: Beneficiary SMEs – Breakdown by country 

•  Map 3: Beneficiary SMEs per country (including data from ETF Start-up) 
Information on employment is available at the date the loan is granted17. By the end of 2006 
almost  990,000  persons  were  employed  in  enterprises  receiving  guarantees  under  SMEG 
windows18. This compares with about 620,000 persons recorded as employed at the date the 
loan  was  granted  in  2005  and  approximately  328,000  in  2004.  The  increased  total  in 
employment is mainly due to the increased number of beneficiary SMEs. 

Final Beneficiaries with up to 10 employees made up more than 91% (177,625) of the total 
number of SMEs benefiting from the SME Guarantee Facility.19 

14 
15 
16 

17 

18 
19 

Net losses: guarantee calls received minus recoveries. 
Luxembourg has an agreement under the ETF Start-up facility. 
Figure represents the total number of Financial Beneficiaries who received loans/guarantees from funds 
operating under the SME Guarantee Facility.  
Some  sample-based  analyses  show  that  employment  at  the  end  of  the  year  is  likely  to  be  some  20% 
higher. 
There are no figures available about the effect of guaranteed loans on employment. 
By definition, all of the enterprises profiting from the Micro-credit window (30,552) have 10 or fewer 
employees. 

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It is interesting to compare the distribution of SMEs by size under the Facility with that of the 
EU in general. According to the most recent statistics available, 91.4 % of SMEs in the EU 
are  micro-enterprises  (0-9  employees),  7.3  %  are  small  enterprises  (10-49)  and  1.1%  are 
medium-sized  enterprises  (50-249)20.  This  clearly  demonstrates  that  the  SME  Guarantee 
Facility is firmly focused on very small enterprises and start-ups. 

In  Section  I  of  the  Staff  Working  Document  accompanying  this  report  (SEC(2008)XXX)  a 
breakdown is given by size class: 

•  Table 5: Beneficiary SMEs – Breakdown by country and size class 

Section  I  of  the  Staff  Working  Document  accompanying  this  report  (SEC(2008)XXX)  also 
gives a breakdown by sector, according to the NACE classification, for the entire Facility and 
by window. 

•  Figure 3: Beneficiary SMEs – Breakdown by sector 

The total investment supported by the SME Guarantee Facility was more than EUR 23 billion 
by  the  end  of  2006,  with  by  far  the  highest  share  under  the  loan  guarantee  window.  In 
comparison, the volume at the end of 2005 was about EUR 16 billion. An overview can be 
found 
this  report 
(SEC(2008)XXX): 

the  Staff  Working  Document  accompanying 

in  Section  I  of 

•  Table 6: Investment volume by window 

2007 Update (2006 figures are included for comparison) 

Cumulative 
figures as at 

No of 
beneficiary 
SMEs 

No of Persons 
employed at 
beneficiary 
SMEs 

Estimated loan 
volume supported 

EUR million 

Estimated 
investment 
volume 

EUR million 

Net called 
guarantees 

EUR million 

31.12.2006 

193,790 

989,773 

17,449.3 

23,383.6 

31.12.2007 

233,345 

1,169,389 

17,937.6 

27,916.1 

40.0 

70.5 

4. 

ETF START-UP FACILITY 

4.1. 

Budgetary situation 

There was a significant uptake in 2006, particularly due to the recovery of the venture capital 
market since 2005. According to a communication published by the "European Private Equity 
& Venture Capital Association", "2006 was another landmark year for the European private 
equity industry, […] showing increased fundraising and investment activity"21. 

Mainly  driven  by  the  improved  market  conditions,  2006  had  the  highest  increase  of 
investments  approved  by  the  Commission  during  the  entire  programme  period.  Indeed,  the 
investments approved in 2006 exceeded the total of those approved since 2002.  

20 

21 

Source: Eurostat. Only 0.2 % are large enterprises. See: Eurostat: European business – Facts and figures 
–  2006  edition,  p.  22;  related  to  non-financial  business  economy,  18.8  million  enterprises  were 
registered in EU-27 in 2004, of which about 18.76 million were SMEs (fewer than 250 employees). 
EVCA  [et  al.]:  European  private  equity:  Strong  2006  performance  drives  increased  allocation,  Press 
release, Brussels, 13th March 2007. 

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As at 31.12.2006, the budgetary resources committed under ETF Start-up amounted to more 
than  EUR  220  million,  representing  nearly  43  %  of  the  budget  for  the  MAP  financial 
instruments. All funds available under ETF Start-up were used by the end of 2006. 

The total budget covers the full cost of the Facility, including investments in VC funds, EIF 
management fees and other eligible costs. Of this total, EUR 201.1 million was committed to 
VC funds, including both projects already approved by the Commission and those due to be 
signed during 200722. 

The proceeds received from VC funds (repayments and dividends) in 2006 were about EUR 
1.4 million, amounting to cumulated proceeds of nearly EUR 1.6 million received from VC 
funds under MAP by the end of 2006, in comparison with only about EUR 154,000 by the end 
of 2005. This relatively low amount of proceeds, in comparison with the amount disbursed to 
VC  funds  (EUR  nearly  30  million),  is  due  to  the  fact  that  most  of  the  funds  have  not  yet 
entered  the  divestment  period,  so  very  few  exits  have  been  made.  However,  the  amount  of 
proceeds  is  expected  to  increase  significantly  over  the  coming  years  when  VC  funds  enter 
their  divestment  period.  In  the  case  of  ETF  Start-up  under  the  Growth  and  Employment 
initiative  (1998-2000),  for  a  total  disbursement  to  VC  funds  of  EUR  94  million,  EUR  46 
million had already been repaid as at the end of 2006. 

In  addition  to  the  proceeds  received  from  VC  funds,  cumulated  interest  and  other  income 
came to EUR 4.3 million, amounting in total to nearly EUR 5.9 million of revenue by the 
end of 2006.. See also: 

•  Table A (in section 2.1): MAP financial instruments – ETF Start-up Facility 

Additional  information  is  provided  in  Section  I  of  the  Staff  Working  Document 
accompanying this report (SEC(2008)XXX): 

•  Figure  4:  Cumulative  evolution  of  EIF  operations  (per  year),  including  the  total 

disbursements to VC funds, amounting to almost EUR 38 million. 

4.2. 

Financial Intermediaries 

In  2006,  12  new  investments  into  VC  funds  were  approved  (of  which  one  was  later 
cancelled). Overall, 21 investments in VC funds located in 10 countries have been approved 
under ETF Start-up.  

VC funds in which the EIF has invested are mainly oriented towards early stage investments 
in  high 
technologies, 
microelectronics, internet, healthcare and life sciences/biotechnology. This is in line with the 
investment policy of ETF Start-up. 

information  and  communication 

technology  sectors,  such  as 

A  list  of  the  VC  funds  in  which  EIF  has  invested  can  be  found  in  Section  I  of  the  Staff 
Working Document accompanying this report (SEC(2008)XXX), showing their geographical 
establishment and the sector focus:  

•  Table 7: Venture Capital funds with contractual agreements with the EIF 

4.3. 

Beneficiary SMEs 

By December 2006, VC funds under the Facility had invested in 73 portfolio companies (end 
of 2005: 35). Most of the VC funds are still in the early stages of their respective investment 
periods,  so  any  figures  on  related  employment  would  still  be  provisional  and  would  not  be 
material in the context of the MAP financial instruments. 

22 

The commitment for projects still to be signed is EUR 44.03 million. 

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2007 Update (2006 figures are included for comparison) 

Cumulative 
figures as at 

No of beneficiary 
SMEs 

Commitment to VC funds 

EUR million 

Amount disbursed to VC 
funds 

EUR million 

31.12.2006 

31.12.2007 

73 

123 

201.1 

200.5 

29.6 

62.3 

Year 

2006 

2007 

Proceeds 

(repayments and 
dividends) 

EUR million 

Interest and 
other income 

EUR million 

Total revenue 

Cumulated revenue 

EUR million 

EUR million 

1.4* 

2.0 

2.1 

3.5 

3.5 

(as of 31.12.) 5.9 

5.5** 

(as of 31.12.) 11.4 

* According to the legal base, after the end of the reinvestment period "any balances on the 
Trust Account, other than funds committed and not yet drawn down/invested and funds 
reasonably required to cover eligible costs and expenses, such as EIF's management fee, will 
be returned to the general budget of the European Union". 

** These are revenues generated after the end of the commitment period. They will be 
transferred to general budget of the EU, according to the legal base. Exchange rate for 
revenue in GBP and SEK is as of 31.12.2007. 

5. 

SEED CAPITAL ACTION 

5.1. 

Budgetary situation 

5.1.1.  Overview 

As at 31.12.2006, the budgetary resources available under SCA remained at EUR 5.6 million, 
already  committed  in  2001.  The  total  budget  covers  the  full  cost  of  the  action,  including 
grants paid to the beneficiaries, EIF management fees and other eligible costs.  

No  new  projects  were  approved  in  2006.  Instead,  4  projects  were  cancelled  at  the  end  of 
200623Due  to  this  cancellation,  the  EC  net  commitments  under  SCA  went  down  to  EUR 
200,000 and the unused budget increased to about EUR 5 million. This unused amount was 
de-committed in 2007 and returned to the general budget of the EU. 

See also: 

•  Table A (in section 2.1): MAP financial instruments – Seed Capital Action 

23 

For one project the eligible criteria were not met. Three projects were withdrawn. 

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5.1.2.  Commitments and disbursements 

The cumulative evolution of the total amount of grants to VC funds was EUR 200,000 as at 
31.12.2006.  This  is  in  accordance  with  the  schedule  and  conditions  set  out  in  the  grant 
agreements, which foresee grants to be paid in two instalments. The first instalment is payable 
at  the  earliest  18  months  after  the  signature  of  the  agreement  and  the  second  (and  last) 
instalment is payable at the earliest 36 months after the signature of the agreement. 

An overview is given in Section I of the Staff Working Document accompanying this report 
(SEC(2008)XXX): 

•  Figure 5: Cumulative evolution of EIF operations (per year) 

5.2. 

Financial Intermediaries 

The VC funds approved under SCA have contractual agreements with the EIF under the ETF 
Start-up Facility. As at 31.12.06, two grant agreements were signed with two VC funds. More 
information  can  be  found  in  Section  I  of  the  Staff  Working  Document  accompanying  this 
report (SEC(2008)XXX):  

•  Table 8: Venture Capital Funds with contractual agreements with the EIF 

6. 

JOINT EUROPEAN VENTURE (JEV) PROGRAMME 

The objective of the JEV programme was to support the creation of transnational partnerships 
established by at least two SMEs from different states within the European Economic Area.  

The conclusion of the evaluation of the Growth and Employment Initiative was that the take-
up  of  the  JEV  programme  by  the  market  was  low,  the  job  creation  effect  limited  and  the 
administrative cost very high. Two further evaluations24 concluded that the programme should 
be closed. In view of this, on 8.12.03 the Commission adopted a proposal for a Decision of 
the European Parliament and of the Council to close JEV25. This decision26 was adopted by 
the  European  Parliament  and  the  Council  on  21.07.04.  The  JEV  programme  was  closed  to 
new applications on 29.12.04. 

By the end of 2006, a cumulative total of 323 applications had been received, 230 agreements 
signed  and  EUR  19.8  million  allocated  to  projects,  with  9  projects  still  on-going.  Further 
details  are  given  in  Section  V  of  the  Staff  Working  Document  accompanying  this  report 
(SEC(2008)XXX). 

7. 

GENERAL CONCLUSIONS  

The MAP financial instruments were, in budgetary terms, the most important element of the 
MAP  programme.  Total  budget  resources  committed  at  the  end  of  the  programme  for  the 
financial  instruments  amounted  to  nearly  EUR  520  million,  of  which  only  EUR  5  million 
allocated to the Seed Capital Action were not used.  

24 

25 
26 

‘Strategic  Evaluation  of  EC  Financial  Assistance  Schemes  for  SMEs’,  Deloitte  and  Touche,  2003; 
‘Final  Evaluation  of  the  Multiannual  programme  for  enterprise  and  Entrepreneurship  (2001-2005)’, 
Infyde, 2004. 
COM(2003) 758 final. 
Decision No 593/2004/EC. 

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Overall,  74  operations  were  approved27  since  mid-2002  until  the  end  of  2006,  for  a  total  of 
EUR  467  million.  Nearly  194,000  SMEs  benefited  from  the  MAP  financial  instruments, 
which means around 1% of all EU SMEs. 

Broad geographical coverage was achieved with 29 countries covered (all EU Member States 
plus Turkey and Norway) out of 31 eligible countries28. 

The SME Guarantee Facility was very well taken up by the market. The Loan Guarantee and 
Micro-credit  windows  were  particularly  successful,  allowing  participating  Financial 
Intermediaries  to  increase  volumes  and  to  take  on  more  risk.  The  SME  Guarantee  Facility 
closely  followed  market  needs  and  was  designed  from  the  start  to  be  easily  and  quickly 
adapted to each country’s specific market conditions.  

The  total  volumes  supported  by  the  SME  Guarantee  Facility  were  very  high.  For  the 
approximately EUR 262 million of cap amounts signed, loans of nearly EUR 17 500 million 
were backed. 

Second only to the Structural Funds, which have significantly higher budgetary resources and 
a different focus, the SME Guarantee Facility is the most important EU programme in terms 
of number of final SME beneficiaries.  

The implementation of the ETF Start-up Facility faced some difficulties in the beginning of 
the programme period, due to the difficult fundraising situation prevailing on the EU venture 
capital  market.  The  improved  economic  situation  in  2005  and  2006  let  to  a  significant 
increase in demand for the Facility. 

The Seed Capital Action was less successful than anticipated due to its constraints in terms of 
eligibility criteria and to the difficult market conditions for seed capital.  
The  evaluation  of  EC  Financial  Assistance  Schemes  for  SMEs29  indicated  that  the  MAP 
financial instruments are effective and efficient. Their management by the EIF was considered 
as  a  best  practice  for  their  proximity  to  the  market.  According  to  the  evaluators,  the 
instruments play a catalytic role in increasing the supply of finance to SMEs throughout the 
EU, including in those countries where national financial instruments are less developed.  
A  more  recent  external  evaluation  of  the  MAP30  reinforces  the  conclusions  of  the  Financial 
Assistance Schemes evaluation. This evaluation concludes that the SME Guarantee and ETF 
Start-up Facilities have made a major contribution to improving the financial environment for 
business  as  instruments  of  a  public  policy  supporting  access  to  finance  for  SMEs.  The 
evaluators  consider  that  the  financial  instruments  are  efficiently  implemented  through  the 
“chain”  consisting  of  DG  Enterprise—DG  Economic  and  Financial  Affairs—European 
Investment Fund (EIF). The report confirms that the “no one-size-fits-all” approach taken is 
appropriate:  both  the  venture  capital  and  guarantee  instruments  can  be  adapted  to  different 
and evolving market conditions.  

27 
28 
29 

30 

and not cancelled. 
Only Iceland and Liechtenstein were not covered. 
The Strategic Evaluation of the EC Financial Assistance Schemes for SMEs, a report from Deloitte & 
Touche for the European Commission (DG Budget), December 2003. 
The  evaluation  report  was  published  as  a  Commission  Staff  Working  Paper  SEC(2004)  1460  of 
Europe  web 
and 
15.11.2004 
sites:http://europa.eu.int/comm/enterprise/enterprise_policy/mult_entr_programme/programme_2001_2
005.htm. 

Enterprise 

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French 

posted 

and 

on 

in 

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An ex-post evaluation on MAP will be performed together with the interim evaluation of the 
specific  "Entrepreneurship  and  Innovation  Programme"  of  the  successor  programme  CIP. 
This evaluation is scheduled to be completed in December 2008 and will analyse the results 
and impacts of MAP. 

Globally,  it  can  be  concluded  that  the  financial  instruments  under  MAP  have  helped  to 
address  some  gaps  and  failures  in  capital  markets  for  start-up  companies  and  SMEs.  In 
general,  MAP  financial  instruments  reached  the  objective  of  improving  the  financial 
environment for European business, especially for SMEs. 

The financial instruments were implemented in an appropriate and effective way, and via the 
high leverage effect. They leveraged a significant amount of additional money and supported 
a substantial number of SMEs. 

The Competitiveness and Innovation Framework Programme (2007 to 2013) (CIP), successor 
programme  of  the  MAP,  is  a  coherent  response  to  the  objectives  of  the  growth  and  jobs 
strategy. The legal base for the CIP entered into force on 29 November 200631. 

A  synoptic  description  of  CIP  can  be  found  in  Section  V  of  the  Staff  Working  Document 
accompanying this report (SEC(2008)XXX). 

31 

Decision  No  1639/2006/EC  of  the  European  Parliament  and  of  the  Council  of  24  October  2006 
establishing  a  Competitiveness  and  Innovation  Framework  Programme  (2007  to  2013),  OJ  L310/15, 
9.11.2006. 

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