Financial instruments for enterprise support : final report : work package 3.
Date: 2016-06-21
Institutions: Directorate-General for Regional and Urban Policy
Subjects: EU financial instrument, European Regional Development Fund, aid to undertakings, economic and social cohesion, economic development, financial instrument

Financial Instruments for 
enterprise support 
Final Report 

Work Package 3 

Ex post evaluation of Cohesion Policy programmes  
2007-2013, focusing on the European Regional 
Development Fund (ERDF) and the Cohesion Fund (CF) 

February 2016 
Authors: t33 srl, EPRC, Metis GmbH 

EPRC  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Directorate-General for Regional and Urban Policy 
Directorate B - Policy 
Unit B.2 Evaluation and European Semester 

Contact: Daniel Mouqué 

E-mail:  REGIO-B2-HEAD-OF-UNIT@ec.europa.eu 

European Commission 
B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

Financial Instruments for 
enterprise support 
Final Report 

Work Package 3 

Ex post evaluation of Cohesion Policy programmes  
2007-2013, focusing on the European Regional 
Development Fund (ERDF) and the Cohesion Fund (CF) 

CCI: 2014CE16BAT032 

2016 

EN 

Directorate-General for Regional and Urban Policy 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Abstract 

For  many  Member  States  financial  instruments  were  a  new  approach  to  delivering 
Cohesion policy. Their increased use in 2007-13 created significant challenges especially 
for  MAs  with  limited  experience.  The  regulatory  framework  provided  flexibility  to 
accommodate  domestic  arrangements,  but  demanded  considerable  administrative 
capacity. FIs can be more sustainable than grants, generate better quality projects,  and 
may  be  considered  more  cost-effective  in  some  circumstances.  However,  their  main 
rationale in the OPs has been to facilitate access to finance for SMEs, which became more 
important  in  the  crisis.  The  scale  of  FI  varies  between  countries,  as  does  the  share 
reaching  final  recipients.  In  most  countries,  FI  are  over  80%  invested,  but  some  very 
large  FIs  have  been  overcapitalised  and  the  EU  average  is  61%.  Governance 
arrangements  tend  to  be  context  specific,  but  build  heavily  on  existing  public  financial 
institutions.  Implementing  FI  proved  complex  with  demands  for  greater  clarity  and 
certainty  met  through  successive  changes  to  the  Regulations  and  guidance,  many  of 
which  have  been  consolidated  into  the  2014-20  regulatory  framework.  Monitoring 
systems  for FI are weak, with little hard data on outcomes such as private funding, job 
creation  and  innovation,  but  some  evidence  that  FI  increase  access  to  finance  and  can 
help develop private markets.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
About this document  

This  document  is  the  final  deliverable  of  the  Ex  post  evaluation  of  cohesion  policy 
programmes  2007-2013,  focusing  on  the  European  Regional  Development  Fund  (ERDF) 
and  Cohesion  Fund  (CF)  Work  Package  3:  Financial  instruments  for  enterprise  support, 
No.  2014CE16BAT032.  The  evaluation  was  carried  out  by  a  consortium  of  three 
organisations: t33 srl (lead), EPRC - University of Strathclyde, Metis GmbH. 

Disclaimer 

The  information  and  views  set  out  in  this  report  are  those  of  the  authors  and  do  not 
necessarily  reflect  the  official  opinion  of  the  Commission.  The  Commission  does  not 
guarantee  the  accuracy  of  the  data  included  in  this  study.  Neither  the  Commission  nor 
any person acting on the Commission’s behalf may be held responsible for the use which 
may be made of the information contained therein. 

Authors of the study 

Fiona Wishlade (EPRC)  
Rona Michie (EPRC)  
Giovanni Familiari (t33)  
Peter Schneidewind (Metis GmbH) 
Andreas Resch (Metis GmbH) 

Acknowledgement 

The  study  would  not  have  been  possible  without  the  support  of  our  advisory  board 
members,  our  national  experts  in  different  EU  member  states  and  our  editors  whose 
contributions  are  gratefully  acknowledged.  We  would  like  to  thank  Marco  Cucculelli, 
Gerard Kelly, Heléne Clark, Marc Cowling, Anna Adamecz, Petra Reszkető, Ricardo Pedraz 
González,  Oto  Potluka,  Vladimir  Sodomka,  Daniel  Foltýnek,  Rolf  Bergs,  Andrea 
Gramillano,  Franҫois  Levarlet,  Klaudijus  Maniokas,  Vainius  Bartasevičius,  Jacek 
Kotrasinski, Douglas Thompson, Patricia Robertson, Tim Wills and Gina Steedley-Wills. 

We  would  also  like  to  thank  the  representatives  of  DG  Regional  and  Urban  Policy  / 
Evaluation  and  European  Semester  Unit:  Daniel  Mouqué,  Kai  Stryczynski,  Veronica 
Gaffey, Mariana Hristcheva and DG Regio FI Unit Hanna Dudka and Robert Pernetta. 

 
 
 
 
 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table of Contents 

Abbreviations ...................................................................................................  

Glossary of terms .............................................................................................  

1  Executive summary ................................................................................... i 

2 

Introduction ............................................................................................. 1 

2.1  Purpose of the evaluation ............................................................................1 

2.2  Scope of the evaluation ...............................................................................1 

2.3  Evaluation questions ...................................................................................3 

3  Method/Process followed ......................................................................... 4 

3.1  Process/Methodology ..................................................................................4 

3.2  Limitations – robustness of findings ............................................................ 12 

4  Answers to evaluation questions ............................................................ 14 

4.1  EQ1: What are the rationales and conceptual models that underpin financial 

instruments? ............................................................................................ 14 

4.1.1  The financial context for FIs .............................................................................15 

4.1.2  The role of FI in economic development policy ...................................................18 

4.1.3  Assessing the need for finance .........................................................................21 

4.1.4  Rationales for implementation of FI ..................................................................22 

4.2  EQ2: How much support has been provided through financial instruments and in 
what forms? ............................................................................................. 28 

4.2.1  Forms of support ............................................................................................29 

4.2.2  Quantification of support provided ....................................................................39 

4.3  EQ3: What are the management and operational structures for financial 

instruments, and how well are they working? ............................................... 51 

4.3.1  Management and operational structure..............................................................52 

4.3.2  Set-up times ..................................................................................................55 

4.3.3  Management fees and costs .............................................................................56 

4.3.4  Project selection criteria ..................................................................................60 

4.3.5  Capacity building ............................................................................................60 

4.3.6  FI portfolio management and risk management ..................................................62 

4.3.7  Key success factors in management and implementation .....................................62 

4.4  EQ4: What does the monitoring and evaluation system show? ....................... 64 

4.5  EQ5: What are the outcomes and how effective have financial instruments been?71 

5  Conclusions and policy implications ....................................................... 90 

6  Annex ..................................................................................................... 99 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.1  Data sources ............................................................................................ 99 

6.2  References, with bibliographical details ....................................................... 99 

6.3  List of interviewees (Name, Organisation) .................................................. 108 

6.4  Concordance table: the final report structure vs the ToR questions ............... 108 

6.5  Link of Case study sections to Task 3 Evaluation Questions .......................... 111 

6.6  Generalized ToCs for different types of firms and FIs ................................... 115 

6.7  Experts’ judgement on the contribution of FIs supported to the intended change 

(9 case studies) ...................................................................................... 125 

6.8  Effectiveness in achieving strategic and operation goals of the FIs (synthesis of 

case study findings) ................................................................................ 141 

6.9  ToC key elements ................................................................................... 143 

6.10  Country Annexes (12 MS) ........................................................................ 145 

6.10.1  Belgium .................................................................................................. 145 

6.10.2 

The Czech Republic .................................................................................. 146 

6.10.3  Case Study OP Enterprise and Innovation ................................................... 146 

6.10.4  Denmark................................................................................................. 150 

6.10.5 

France .................................................................................................... 151 

6.10.6  Case study OP Languedoc Roussillon .......................................................... 152 

6.10.7  Germany ................................................................................................ 158 

6.10.8  Case Study ERDF OP Bavaria ..................................................................... 159 

6.10.9  Hungary ................................................................................................. 164 

6.10.10 

Case Study OP Economic Development.................................................... 165 

6.10.11 

Italy.................................................................................................... 171 

6.10.12 

Lithuania ............................................................................................. 173 

6.10.13 

Case Study OP Economic Growth ............................................................ 174 

6.10.14 

Poland ................................................................................................. 178 

6.10.15 

Case Study Małopolska Regional OP ........................................................ 180 

6.10.16 

Portugal .............................................................................................. 184 

6.10.17 

Case Study OP COMPETE ....................................................................... 185 

6.10.18 

Spain .................................................................................................. 189 

6.10.19 

Case Study OP Technological Fund .......................................................... 190 

6.10.20 

United Kingdom .................................................................................... 194 

6.10.21 

Case Study OP North East England ......................................................... 196 

6.11  Management costs and fees by FI in the case study OPs .............................. 200 

 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figures, Tables and Boxes 

Figure 1: Overall methodology (Tasks 1 to 4).........................................................5 

Figure 2: Overall ToC model of FIs ........................................................................7 

Figure 3: Standard model for simple ToCs (´enriched OP intervention logic`) for FIs 

under the case study ERDF OPs ................................................................9 

Figure 4: Risk capital FIs in the OP Bavaria, Germany (example) ..............................9 

Figure 5: Level of detail of ToCs ......................................................................... 10 

Figure 6 : Overview of Market Gap Analysis ......................................................... 22 

Figure 7: A model of grant vs FI support ............................................................. 26 

Figure 8: Phases and progress in FI ‘spend’ in the stocktake countries .................... 40 

Figure 9: OP Contributions committed to FI vary widely in stocktake countries ......... 41 

Figure 10: OP contributions to FIs per year .......................................................... 55 

Figure 11: Effectiveness in achieving operational and strategic objectives of FIs ....... 81 

Figure 12: Stylised theories of change for different types of firm: start-ups ........... 116 

Figure 13: Stylised theories of change for different types of firm: mainstream SMEs117 

Figure 14: Stylised theories of change for different types of firm: disadvantaged 

groups/social enterprises ..................................................................... 118 

Figure 15: Stylised theories of change for different types of firm: high growth firms 119 

Figure 16: Stylised intervention logic underpinning loans ..................................... 120 

Figure 17: Stylised intervention logic underpinning guarantees ............................ 121 

Figure 18: Stylised intervention logic underpinning equity finance ........................ 122 

Figure 19: Overall picture: Effectiveness in achieving strategic and operation goals 

(average of ratings per OP; max = 5) ................................................... 141 

Figure 20: Detailed picture: Number of ratings per OP, objective type and rating 

category ............................................................................................ 142 

Figure 21: Graphic to illustrate the intervention logic and underlying assumptions that 

lead from inputs to outcomes for a specific FI instrument in a specific context144 

Table 1: FIs in the case study Operational Programmes ...........................................2 

Table 2: Overview of FI in the stocktake countries ................................................ 29 

Table 3: Specific financial instruments by product in the stocktake countries ........... 31 

Table 4: Overview of loan FIs in the stocktake countries........................................ 32 

Table 5: Overview of guarantee FIs in the stocktake countries ............................... 34 

Table 6: Overview of equity FIs in the stocktake countries ..................................... 35 

Table 7: Case study FIs according to role in firms’ development cycle ..................... 38 

Table 8: OP commitments to FI paid to holding funds or specific funds .................... 42 

 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 9: OP contributions paid to specific financial product funds (€m) .................... 43 

Table 10: Fund size in stocktake countries (amounts paid to holding funds or specific 

funds) ................................................................................................. 44 

Table 11: Fund sizes are extremely varied in the case study OPs (amounts paid to 

funds) ................................................................................................. 45 

Table 12: Proportion of OP payments to FI invested in final recipients (% by end 2014)46 

Table 13: Proportion of OP payments invested by loan funds >€50m in the stocktake 

countries ............................................................................................. 47 

Table 14: Absorption rates at end 2013/2014 are variable and there are data problems 
in the case study OPs, as in the stocktake countries generally .................... 48 

Table 15: Number of holding funds and specific funds in the stocktake countries ...... 52 

Table 16: Case study management structures ...................................................... 54 

Table 17: Actual management fees charged to the OP by FIs (NHF) ........................ 58 

Table 18: Monitoring systems in the case study OPs generally have few indicators and 
are inadequate to assess the intervention logic......................................... 67 

Table 19: Case study evaluation activity .............................................................. 68 

Table 20: Private sector contributions to FI (HF, NHF) in the stocktake countries are 

generally modest, though there are exceptions ........................................ 72 

Table 21: Leverage - attraction of private and public financial resources compared to 

the ERDF contribution ........................................................................... 74 

Table 22: Returns achieved and strategy for revolving funds.................................. 76 

Table 23: Scale of working capital supported through FIs ...................................... 78 

Table 24: Case study outcomes .......................................................................... 79 

Table 25: Cost-effectiveness of different types of FIs and grant schemes in terms of 

costs of additional jobs created .............................................................. 83 

Table 26: Equity funds invested in final recipients (>€50 million) ........................... 84 

Table 27: Equity fund management costs & fees and investment in final recipients in 

the stocktake countries ......................................................................... 86 

Table 28: OP key figures on FIs for enterprise support in Belgium in the 2007-2013 

period (end 2014) (€m) ....................................................................... 145 

Table 29: OP key figures on FIs for enterprise support in Czech Republic in the 2007-

2013 period (end 2014) (€m) ............................................................... 146 

Table 30: OP key figures on FIs for enterprise support in Denmark in the 2007-2013 

period (end 2014) (€m) ....................................................................... 150 

Table 31: OP key figures on FIs for enterprise support in France in the 2007-2013 

period (end 2014) (€m) ....................................................................... 157 

 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 32: OP key figures on FIs for enterprise support in Germany in the 2007-2013 

period (end 2014) (€m) ....................................................................... 158 

Table 33: OP key figures on FIs for enterprise support in Hungary in the 2007-2013 

period (end 2014) (€m) ....................................................................... 164 

Table 34: OP key figures on FIs for enterprise support in Italy in the 2007-2013 period 
(end 2014) (€m) ................................................................................ 172 

Table 35: OP key figures on FIs for enterprise support in Lithuania in the 2007-2013 

period (end 2014) (€m) ....................................................................... 173 

Table 36: OP key figures on FIs for enterprise support in Poland in the 2007-2013 

period (end 2014) (€m) ....................................................................... 179 

Table 37: OP key figures on FIs for enterprise support in Portugal in the 2007-2013 

period (end 2014) (€m) ....................................................................... 184 

Table 38: OP key figures on FIs for enterprise support in Spain in the 2007-2013 

period (end 2014) (€m) ....................................................................... 189 

Table 39: OP key figures on FIs for enterprise support in UK in the 2007-2013 period 

(end 2014) (€m) ................................................................................ 195 

Box 1: What is a Theory of Change? What is a theory-based evaluation approach? .....6 

Box 2: Division of roles in data reporting – specifities of FI reporting ...................... 13 

Box 3: What is a financial instrument? ................................................................ 30 

Box 4: Good practice in OP Languedoc-Roussillon (FR) - capacity building with EIF 

support ............................................................................................... 61 

Box 5: Good practice in OP North East England (UK) – effective monitoring and 

reporting ............................................................................................. 70 

Box 6: Good practice in OP Bavaria – encouraging the participation of Business Angels88 

 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Abbreviations 

AIR 

Annual Implementation Report 

COCOF 

Committee of the Coordination of Funds 

DG Regio 

Directorate-General for Regional and Urban Policy 

EC  

ECA 

EIF 

European Commission 

European Court of Auditors 

European Investment Fund 

ERDF 

European Regional Development Fund 

EU 

FI 

FM 

European Union 

Financial Instrument (equivalent to FEI Financial Engineering Instrument) 

Fund Manager 

GDP 

Gross Domestic Product 

HF 

IB 

Holding Fund 

Intermediate Body 

JEREMIE 

Joint European Resources for Micro to Medium Enterprises 

MA 

MTE 

OP 

NHF 

Managing Authority 

Mid-Term-Evaluation 

Operational Programme 

Specific fund set up without a holding fund 

NSRF 

National Strategic Reference Framework 

R&D 

SF 

SME 

ToC 

VC 

Research and Development 

Structural funds 

Small and medium-sized enterprises 

Theory of Change 

Venture Capital 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Glossary of terms 

Equity  

Equity investment means the provision of capital to a firm, invested directly 
or indirectly in return for total or partial ownership of that firm and where 
the equity investor may assume some management control of the firm and 
share in the firm's profits.  

Exit policy/strategy   A policy/strategy for an investor to liquidate holdings for maximum return, 

FEI Manager (= FI 
manager) 

Final Recipient  

including trade sales, write-offs, redemption of preference shares/loans, 
sale to another venture capitalist, sale to a financial institution and sale by 
public offering (including initial public offerings).  

An individual or entity responsible for implementing the investment 
strategy and managing the portfolio of investments related to the HF or to 
the Financial (Engineering) Instruments. For 2014-2020 period normally 
referred to as Fund Manager. 

The enterprises, public-private partnerships, projects or any legal or 
natural person receiving repayable investments from a financial 
engineering instrument.  

First Loss Portfolio 
Guarantees 

FI credit risk protection, guaranteeing the lender reimbursement for the 
first losses in a portfolio of loans. 

First Loss Portfolio 
Guarantees for 
Leasing 

Financial 
Engineering 
Instrument  

FI guarantees, e.g. covering losses of 80% of the lease amount on 
portfolios of new SME leases. 

Financial Engineering Instruments are those set up under Article 44 of 
Council Regulation (EC) No 1083/20061. As part of an OP, Structural Funds 
may finance:  
(a) financial engineering instruments for enterprises, primarily small and 
medium-sized, such as venture capital funds, guarantee funds and loan 
funds (examined under WP 3) 
(b) urban development funds, i.e. funds investing in public-private 
partnerships and other projects included in an integrated plan for 
sustainable urban development  
(c) Funds or other incentive schemes providing loans, guarantees for 
repayable investments, or equivalent instruments, for energy efficiency and 
use of renewable energy in buildings, including in existing housing.  

Financial Instrument  A term used in preference to Financial Engineering Instrument for the next 

programming period.  

Financial 
Intermediary  

Fund Manager  

The body that acts as an intermediary between the supply and demand of 
financial products, normally between the MA or Fund of Funds and Final 
Recipients.  

An individual or entity responsible for implementing the investment 
strategy and managing the portfolio of investments related to Financial 
(Engineering) Instruments, being funds for equity, loans and guarantee 
funds.  

1   European Commission (2012): Revised guidance note on financial engineering instruments under Article 44 

of Council Regulation (EC) n°1083/2006 

 
 
                                           
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Funding Agreement   Level I - between the Member State or the MA and the HF.  

Level II - between the Member State or MA (or the HF where applicable) 
and the individual Financial (Engineering) Instrument. Level II funding 
agreements are also referred to as operational agreements.  
Funding agreements must ensure correct implementation of the strategy, 
including goals to be achieved, target sectors and final recipients to be 
supported. Moreover the funding agreements must also contain rules, 
obligations and procedures.  

A market assessment under the JEREMIE initiative to identify the potential 
for FEIs to address market failure in SME and enterprise financing.  

A non-repayable investment.  

A commitment by a third party, called the guarantor, to repay a lender on 
behalf of a borrower when the latter cannot pay it. As stipulated in the 
agreement between the guarantor, the lender and/or the borrower.  

It is set up to invest in venture capital, guarantee, loan, equity or urban 
development funds, or other incentive schemes. In the 2014-2020 period 
normally called Fund of Funds. 

The individual or entity responsible for implementing the investment 
strategy and managing the portfolio of investments for an HF as set out in 
the funding agreement.  

An agreement that requires the lender to make available to the borrower a 
sum of money for an agreed amount and time. The borrower must repay 
the loan after a certain period. Usually the borrower must pay interest.  

This is the increase in funds available after co-investment. As per Article 
140 of the Financial Regulation No 966/2012 the leverage effect of Union 
funds shall be equal to the amount of finance to eligible final recipients 
divided by the amount of the Union contribution.  

Gap Analysis  

Grant  

Guarantee  

Holding Fund (HF) 

HF Manager  

Loan  

Leverage Effect  

Mezzanine finance 

This combines the features of debt and equity. The term covers a variety of 
instruments. Mezzanine finance includes convertible shareholder loans, loan 
notes and preference shares. These instruments are unsecured. 

Operational 
Agreement  

Risk Assessment  

Seed Capital  

Start-up Capital  

Venture Capital  

An agreement between the Member State or the MA (or the HF where 
applicable) and the individual financial instruments. In the 2014-2020 
period these are normally called funding agreements. 

This is part of a risk management procedure and determines the 
quantitative or qualitative value of the credit risk (‘valuation’). Quantitative 
credit risk assessment requires the estimation and calculation of risk 
(including ‘expected loss’ and ‘unexpected loss’), which is the magnitude of 
the potential loss and the probability that the loss will occur.  

This is financing to study, assess and develop an initial concept. The seed 
phase precedes the start-up phase. The two phases together are called the 
early stage.  

This is financing for product development and initial marketing for 
enterprises being set up, or already existing but not yet selling their 
product or service.  

Investment in unquoted enterprises by venture capital firms that manage 
individual, institutional or in-house money. In Europe, the main financing 
stages included in venture capital are early-stage (covering seed and start-
up) and expansion. It is a subset of private equity. Offsetting the high risk 

 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

is the expectation of a higher than average return on the investment.  

Winding-up  

A process that involves selling all the assets of a fund, paying off creditors, 
distributing any remaining assets to the principals, and then dissolving the 
fund. Essentially, ‘winding up’ is to be understood as ‘liquidation’.  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

1 Executive summary 

This  study  examines  ERDF  co-financed  financial  instruments  (FIs)  for  enterprises  in 
2007-13.  It  is  based  on  data  analysis  for  12  ‘stocktake’  countries,  a  literature  review, 
nine  case  study  OPs  and  a  seminar  with  stakeholders  to  refine  the  findings.  For  many 
Member  States  FI  were  a  novel  approach  to  delivering  Cohesion  policy.  Their  increased 
use  in  2007-13  therefore  created  significant  challenges,  especially  for  MAs  with  limited 
experience  in  FI  implementation.  The  regulatory  framework  provided  the  flexibility  to 
accommodate  domestic  arrangements,  but  was  also  demanding  in  terms  of  the 
administrative  capacity  needed  at  national  and  regional  levels.  Domestic  policymakers 
sought  greater  clarity  and  certainty  in  the  regulatory  framework,  and  these  were  met 
through  successive  changes  to  the  Regulations  and  guidance.  Many  of  these  and  wider 
lessons  from  2007-13  have  been  consolidated  into  the  regulatory  framework  for  2014-
20.  

What rationales and conceptual models underpin FIs for enterprises? 

FIs can be more sustainable than grants, generate better quality projects, and be more 
cost-effective.  In  the  context  of  enterprise  support,  FIs  can  address  capital  market 
imperfections;  reflecting  this,  MAs  systematically  cited  limited  access  to  finance  for 
SMEs as the rationale for FIs. 

However,  in  practice  we  found  that  pragmatic  considerations  were  often  just  as 
important. These include avoiding decommitment (ES, IT), or responding to Commission 
enthusiasm  for  FI  (OP  Bavaria  (DE)).  The  rationale  for  using  FIs,  or  not,  is  context 
specific. FIs may be used in domestic policy, but not in Cohesion policy, perhaps due to 
small  allocations  which  make  the  administrative  burden  too  high  (Flanders  (BE))  or 
because the OP focus is on projects that are less likely to generate returns. An important 
motivation  in  some  regions  was  the  development  of  local  financial  markets  to  offset 
agglomeration  tendencies  (OP  North  East  England  (UK)).  Mid-term,  the  financial  crisis 
was  important  in  justifying  use  of  FIs,  which  were  readapted  (OP  COMPETE  (PT))  or 
became  the  principal  mechanism  to  stimulate  recovery  (OP  Economic  Growth  (LT)). 
There  is  no  evidence  that  FIs  were  viewed  as  an  alternative  delivery  mechanism  to 
grants, at least initially. The relationship between grants and FIs is not well articulated in 
the OPs, but the stakeholder seminar suggested increasing importance is being given to 
coordination.  Sustainability,  cost-effectiveness  and  quality  of  investment  seem  not  to 
have  been  important  motivating  factors  for  many  MAs.  For  most,  the  priority  has  been 
operationalising  FI  against  the  backdrop  of  a  complex  regulatory  environment.  Where 
there  was  limited  experience  in  running  FI,  this  typically  overshadowed  the  long-term 
rationale  of  having  funds  to  reinvest  and  among  the  nine  case  study  OPs  only  two  of 
them (North East England and Languedoc-Roussillon) had a clear legacy strategy. 

Looking ahead, motivations  are evolving: indications are that MAs  may approach the 
rationale for FIs with more rigour in future. Experience in some regions suggests that FI 
can  sometimes  be  more  attractive  to  higher  quality  projects  than  grants,  and  as  the 
prospect of legacy funds becomes a reality, there is growing interest in the sustainability 
of FI. Moreover, although a ‘theory of change’ approach did not underpin policy design in 
2007-13,  a  fine-grained  analysis  of  potential  FIs,  is  a  valuable  tool  (under  the  now 
mandatory ex ante assessment) to align relevant interests and objectives and develop a 
common understanding of needs.  

i 

 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

How much support has been provided through FIs and in what forms?  

The  Commission  first  published  an  annual  summary  of  data  reported  by  MAs  on  the 
implementation of FIs in 2012. The 2015 Summary Report records OP commitments of 
over €17 billion to FI by end 2014, almost €14 billion of which is accounted for by ERDF 
co-financed support for enterprises, compared with just €1.3 billion in 2000-6.2 Countries 
vary widely in their use of FI: in absolute terms the largest commitments (€4.2 billion or 
over 30% of FIs to enterprises) are reported by Italy, but relative to private investment, 
FIs in Hungary, Lithuania and Portugal are more significant.  

Collectively, the 12 stocktake countries committed over €11 billion to FIs for enterprises 
under the 2007-13 OPs. While most of this (94%) was paid into holding funds or specific 
funds,  less  than  60%  of  the  OP  contributions  committed  had  actually  been 
invested  in  final  recipients  by  end  2014.  There  are  several  reasons  for  this  ostensibly 
unsatisfactory  overall  performance:  a  slow  start  in  FI  implementation  meant  it  was  not 
always  possible  for  investment  to  ‘catch  up’  with  payments;  the  very  poor  performance 
of some very large funds which, in aggregate terms, conceals quite high investment rates 
elsewhere;  and  lack  of  experience  and  capacity  among  some  MAs  and  other 
stakeholders, which needed time to develop the skills needed.  

In the stocktake countries some 784 ERDF co-financed FIs for enterprises had been 
set  up  by  end  2014.  This  figure  comprises  37  holding  funds,  410  funds  set  up  within 
holding funds and 337 funds established outside holding funds, in other words, a total of 
747  specific  instruments.  The  number  of  FI  varies  widely  between  countries  but  is  not 
straightforward to quantify meaningfully (from 2 (CZ) to 202 (PL)).  

Fund size is very diverse: In the stocktake countries, individual funds range from just 
over  €10,000  (HU)  to  some  €550  million  (IT),  but  vary  widely  in  geographical  scope, 
financial  product  and  objectives.  Some  regional  equity  funds  appear  too  small  to  have 
the critical mass referred to by the ECA; on the other hand, some large funds appear to 
be  among  the  worst  performing:  there  are  25  loan  funds  exceeding  €50  million  and  by 
end 2014, six of these had lent less than 20% of their funds to  final recipients. Overall, 
loan  funds  exceeding  €50  million  were  just  55%  invested  by  end  2014,  while  smaller 
funds (less than €50 million) were almost 82% invested. The impact of a few very large 
funds which have invested very small amounts is significant overall: three funds (two in 
Italy;  one  in  Spain) together  totalling  €486  million  (nearly  10%  of  all payments  to  loan 
funds  in  the  stocktake  countries)  have  each  invested  less  than  two  percent  in  final 
recipients.  This  overcapitalisation 
the  avoidance  of 
decommitment,3  which in turn makes it difficult to conclude on the relationship between 
fund size, product type and efficiency / effectiveness.  

is  partly  attributable 

to 

Loans are the most widely used form of co-financed FI, accounting for almost half 
(361)  of  all  FI  in  the  stocktake  countries  (747).  Guarantees  are  less  widespread  (126 
funds) but typically larger in volume. Loans and guarantees account for about two thirds 
of  the  OP  contributions  paid  to  funds  in  2007-13.  There  are  140  equity  funds  in  the 

2   There are serious deficiencies in the quality of the data reported by the managing authorities. These include 
misunderstandings of the data requirements and incomplete returns. This means that conclusions about the 
scale of spend (and other quantitative indicators) must be treated with caution. 

3   The introduction of phased payments in 2014-20 reduces the scope for this. 

ii 

                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

stocktake countries.  These are often  regional and are more likely to  be closely targeted 
(e.g. on innovative firms) than loan and guarantee funds.  

What are the management and implementation structures? 

The  implementation  of  FIs  is  characterised  by  considerable  diversity  in 
governance  and  the  funding  agreements  which  determine  project  selection.  The  FI 
landscape is so varied that implementation mechanisms defy easy comparison. They can 
involve  holding  funds  that  feed  numerous  specific  funds  each  run  by  one  fund  manager 
(OP  Economic  Growth,  LT),  or  the  same  financial  products  offered  through  a  national 
network  of  financial  intermediaries  (OP  Economic  Development,  HU).  The  experience  of 
major  domestic  players  was  often  important  (e.g.  ČMZRB  (CZ)  and  INVEGA  (LT)).  FI 
support  can range  from commercial terms offered  by co-investment funds (Scottish Co-
investment  Fund,  UK)  to  loans  at  submarket  interest  rates  (OP  Convergence  Wallonia, 
BE).  

Despite  this  diversity,  key  implementation  challenges  were  similar.  The  lack  of 
guidance  in  the  regulations  created  uncertainties,  resulting  in  significant  delays.  The 
issues  faced  are  well  documented  and  were  a  significant  obstacle  to  the  smooth 
implementation  of  FIs  in  2007-13  in  some  cases.  In  the  Enterprise  and  Innovation  OP 
(CZ) the effect of the regulatory dimension was particularly severe – even though Czech 
funds  were  among  the  first  to  be  set  up,  uncertainties  surrounding  the  precise 
requirements  contributed  to  a  suspension  of  the  funds  by  the  auditors.  However, 
implementation challenges go beyond Commission guidance and regulations, with limited 
experience  among  many  domestic  players  and  domestic  arrangements  sometimes  ill-
adapted to repayable instruments.  

It  is  extremely  difficult to  assess  the  scale  of  management  fees  and  costs  under  co-
financed FIs. For many FIs, fees and costs are not explicitly reported to the Commission, 
and detailed analysis of the relevant data did not even yield plausible results for the nine 
case  study  OPs,  though  they  do  suggest  that  management  fees  differ  widely  by  type  of 
product and intermediary.  Fees may be particularly high  for equity funds – in 18 funds, 
management  fees  and  costs  exceeded  20%  of  the  amounts  invested  in  final  recipients. 
Also  important,  while  uninvested  funds  are  returned  to  the  EU  budget  at  closure,  OP 
contributions  to  management  fees  are  paid  out  as  eligible  expenditure.  With  one 
exception,  case  study  MAs  maintained  that  FI  management  fees  were  below  the 
regulatory  thresholds  established  by  Article  43(4)  of  Commission  Regulation  (EC)  No 
1828/2006.  It  was  rare  (perhaps  only  in  the  UK)  that  fees  were  linked  to  performance 
indicators.  Looking  ahead,  the  2014-20  regulations  provide  for  stricter  limits  on  OP 
contributions to fees, and require a performance-related component.  

What does the monitoring and evaluation system show? 

Overall  the  quality  of  information  on  FIs  is  poor.  Even  though  the  provisions  on 
monitoring are an obligatory element of each funding agreement between MAs and fund 
manager,  specific  reporting  by  MAs  to  the  Commission  on  FIs  was  not  required  until 
2011,  and  the  obligatory  elements  to  be  reported  are  few.  Financial  information 
submitted by MAs is as a result patchy and reporting requirements have sometimes been 
misunderstood.  Because  many  elements  of  reporting  remained  optional,  basic  data  is 
often missing and it may be unclear whether information is unavailable on a given FI, or 

iii 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

whether  no  investments  have  been  made.  Sometimes  the  amount  invested  in  final 
recipients  exceeds  OP  commitments,  suggesting  that  either  returns  to  the  fund  have 
been  double-counted  -  they  are  no  longer  strictly  OP  contributions  (HU,  LT,  PL)  -  or 
interest  has  been  added  to  the  OP  contribution  -  which  is  not  an  error  of  interpretation 
(PL). However, it is not known to what extent this has happened, making it impossible to 
provide  basic  aggregate  data  on  the  extent  to  which  OP  commitments  have  been 
invested, let alone assessments of how much they cost to run and what impact they have 
had on jobs or investment. 

The case study analysis suggests that there is generally no ongoing quality control of 
data  monitoring  by  MAs  beyond  that  arising  from  ERDF  related  audits,  State  aid 
inspections and ECA visits. Moreover, the monitoring systems set up by MAs usually have 
only  a  few  indicators  and  these  are  generally  inadequate  to  provide  an  impact 
assessment.  Existing  evaluations  provide  very 
limited  evidence  on  the 
effectiveness of ERDF-supported FIs for enterprise support. Evaluations which assessed 
FIs  in  relation  to  recipient  firms  in  general  indicate  that  the  SMEs  created  jobs  and 
increased  their  turnover,  but  only  in  a  few  cases  were  outcomes  measured  in  terms  of 
the net effects of FI support. It remains unclear what capacity FIs have to contribute to 
regional  development  objectives.  The  relative  efficiency  of  FIs  as  opposed  to  grants  is 
also unknown and underexplored. 

What are the outcomes and how effective have FI been? 

Appraisal of the operational objectives of OP priorities within which FIs were implemented 
suggests that almost all of them were achieved, 70% to a high degree. For the strategic 
objectives  (related  to  the  regional  economy  or  the  SME  sector),  the  appraisal  was 
positive  for  fewer  than  half.  For  the  majority  of  objectives,  assessment  of  the  FI 
contribution was impossible due to lack of data. However, FIs clearly improved access to 
finance for many enterprises (FIs under the Economic Growth OP reached over 7% of all 
SMEs in Lithuania), thus achieving an objective stipulated in almost every case study OP.  

Analysis  of  OP  contributions  shows  that  out  of  €10.5  billion  paid  to  holding  funds  and 
specific funds, only €615 million (less than 6%) came from private sources. However, it 
is  important  to  note  that:  not  all  OPs  allow  for  private  contributions;  and  that  private 
funds  maybe  attracted  ‘downstream’,  but  are  not  necessarily  captured  in  the  data 
collected by MAs. This partly accounts for the wide variations between countries, with the 
UK attracting relatively significant inputs from the private sector (more than 60% of the 
total  across  all  stocktake  countries),  and  smaller  sums  in  France  and  Portugal.  Some 
countries  attract  no  private  funding  as  part  of  OP  contribution  (e.g.  BE,  HU,  LT).  Some 
€400  million  in  private  capital  was  attracted  through  equity  FIs,  mainly  in  the  UK.  The 
capacity to attract private funds for venture capital improved markedly during the period. 

Leverage4 varies widely in the case study OPs, ranging from 20.4 under the OP Bavaria 
(DE)  equity  FI,  and  18  in  the  Languedoc-Roussillon  (FR)  guarantee  scheme  to  around 
1.2-2.2  in  most  loan  FIs.  Where  the  MA  involved  experienced  venture  capitalists,  as  in 
Bavaria (DE), North East England (UK) or Languedoc-Roussillon (FR), private funding was 
high  in  both  absolute  and  relative  terms.  However,  there  may  be  other  sources  of 
funding  that  are  not  reported  which  could  represent  an  important  share  of  private 

4 Public and private funds attracted relative to the ERDF contribution. 

iv 

                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

contributions  attracted  by  FIs,  so  the  focus  in  the  AIR  on  contributions  to  the  OP 
underplays the likely role of private funds which come on top of OP contribution. 

There  is  insufficient  reliable  data  for  even  a  tentative  global  estimate  of  ‘revolved’ 
funds. For some case study OPs there is a clear indication that monies have revolved for 
some  loans  funds  (for  instance  25%  in  OP  Bavaria  (DE),  20%-200%,  depending  on  the 
FI,  in  OP  Małopolskie  (PL)  and  64%-126%  in  OP  Economic  Growth  (LT)).  With  the 
exceptions of North East England (UK) and – to a limited extent - Languedoc-Roussillon 
(FR), many of the FI in the case study OPs did not have a clear strategy for establishing 
a  legacy.  Among  the  case  study  OPs,  few  loan  schemes  (and  no  guarantee  schemes) 
have reached the stage of revolving, partly due to the late start of the loan schemes and 
the  average  loan  duration.  For  equity  funds,  the  issue  is  different;  most  equity  funds 
have  been  established  for  a  fixed  duration,  typically  10  years.  Although  there  are 
reported  exits (with positive and negative  results) from many funds, they involve fewer 
than  10%  of  the  total  number  of  deals.  With  the  exception  of  OP  North  East  England 
(UK), the future/final financial outcome, and hence the sustainability of the public money 
invested,  has  not  been  estimated  (North  East  England  expects  its  holding  fund  to 
generate close to 100 percent of ERDF plus the public sector match).  

In terms of final outcomes such as productivity, job creation etc., too few MAs provide 
such data related to FIs to make an overall assessment of their impact. For example, job 
outcomes are reported in only five cases: in Bavaria (DE) some 513 jobs were created or 
safeguarded (which was below target); in North East England (UK) the figure was 1,953, 
of which most were in disadvantaged areas; in Małopolskie (PL) 162, which seems quite 
modest; while in OP Enterprise and Innovation (CZ) and OP Economic Development (HU) 
5,780  and  61,896  jobs,  respectively,  were  reported,  which  seem  implausibly  high.  The 
case  studies  show  that  the  effects  of  FIs  on  turnover,  job  creation,  and  the  innovation 
capacity  and  competitiveness  of  supported  companies  are  not  systematically  measured 
and  it  seems  probable  that  this  pattern  is  replicated  more  widely.  Only  North  East 
England (UK) has collected data that shows the effects on innovation capacity.  

Although some final recipients used FI funding to upgrade their technology and business 
processes,  a  substantial  part  of  funding  went  into  working  capital  rather  than  fixed 
investment.  The  scope  for  FIs  to  finance  working  capital  represented  important  added 
value compared to grants, since it enabled support for business activity during the crisis 
when  access  to  finance  became  more  constrained.  It  also  provides  greater  flexibility  as 
some activities tend to be ineligible for grants since expansion is not based on fixed asset 
investment. Case study evidence suggests that around 60% of loan volumes (as a share 
of  all  co-financed  loan  and  guarantee  products)  in  Lithuania  were  for  working  capital. 
Working capital was also supported in other OPs (including Languedoc-Roussillon (FR) – 
11%; Małopolskie (PL)  – 9%; and Hungary c7.5%), but  sometimes the  scale cannot be 
estimated (OP COMPETE – PT) or eligibility is unclear (OP Enterprise and Competitiveness 
(CZ).  Elsewhere,  working  capital  is  explicitly  ineligible  (OP  Bavaria  (DE);  OP  North  East 
England (UK) and OP Technological Fund (ES)).  

Last, softer evidence can also provide insights into how FIs have worked: FIs have had 
a  tangible  positive  impact  in  improving  access  to  finance  for  SMEs  in  Lithuania,  in 
supporting  the  development  of  a  sustainable  regional  revolving  fund  in  North  East 

v 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

England  (UK),  in  developing  the  business  angel  finance  market  in  Bavaria  (DE)  and  in 
nurturing regionally-based financial intermediaries in Małopolskie (PL) and Hungary. 

Conclusions 

The  slow  start  to  implementation  in  2007-13  partly  owed  to  the  complex  skill  set 
required  to  establish  FI  and  the  lack  of  capacity  in  some  managing  authorities.  These 
demands meant that often the most straightforward route was to entrust implementation 
to  an  existing  body,  such  as  a  promotional  bank.  Such  structures  are  not  present 
everywhere,  however,  and  the  case  study  research  and  stakeholder  seminar  both 
highlighted the importance of past experience in systems which have evolved over more 
than one programme period. This enables policy design to benefit from learning and the 
evaluation  of  past  approaches  to  contribute  to  the  development  of  future  policies. 
Effective  links  with  the  private  sector  are  an  important  component  of  capacity  and  are 
needed to mobilise its resources and expertise. This requires incentives which align public 
policy  objectives  with  private  sector  motives.  In  some  cases  FI  can  be  used  to  develop 
capacity in the private sector e.g. Economic Development OP (HU) and Bavaria (DE).  

The  design  and  implementation  of  co-financed  FI  is  context  specific.  This  includes  local 
economic conditions, banking / legal systems and previous experience with implementing 
FIs. Context matters because the underlying economic situation and existing institutional 
structures  and  practices  set  the  parameters  within  which  FI  operate,  affect  how  they 
work  and  influence  domestic  policy  choices.  In  France,  for  example,  the  use  of  FI  is 
comparatively  limited,  reflecting  difficulties  in  adapting  domestic  law  to  the  use  of  FI  in 
Cohesion policy. 

In  terms  of  the  economic  context,  this  study  confirms  the  need  for  a  quality  ex  ante 
assessment  of  the  market  and  of  the  size  and  nature  of  the  funding  gap.  Such 
assessments were not obligatory in 2007-13, but are for 2014-20; these should provide 
a  firmer  evidence  base  for  the  scale  and  focus  of  policy  than  has  sometimes  been 
evident. In Spain, for example, there has been a significant underinvestment of FI under 
the Technological Fund OP, partly due to a mismatch between the geographical focus of 
the  FI  and  the  targeting  of  innovative  projects,  which  are  less  prevalent  in  more 
disadvantaged regions.  

An important lesson from this study is that the context can change and there may be a 
need to adjust the strategy during the course of implementation. Monitoring systems can 
play an important part in determining any adjustments needed, and provide information 
on effectiveness. This study shows that reporting by MAs to the Commission for 2007-13 
has  been  insufficient  for  a  concrete  assessment  of  policy  outcomes.  Notwithstanding 
these shortcomings, it is important that monitoring is also adapted to context. Reporting 
mechanisms  should  be  commensurate  with  the  scale  of  funds  in  order  for  costs  to  be 
proportionate.5  

The 2007-13 experience shows the importance of close coordination of the various actors 
involved from the outset. FI implementation is characterised by multilevel principal-agent 

5   For example, North West England (which was not one of the case studies) maintains a highly sophisticated 
bespoke real-time system for tracking FI investments by fund managers, but the cost of such a set up 
would be prohibitive in other contexts. 

vi 

                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

relationships,  the  definition  of  which  requires  detailed  calibration:  funding  agreements 
need to be sufficiently attractive to fund managers to secure their involvement, but also 
enforceable  so  that  the  policy  objectives  are  met;  balancing  the  need  for  flexibility  (to 
respond  to  changing  circumstances)  against  the  risk  of  ‘objective  drift’  may  be 
challenging.  

The  disparate  nature  and  scale  of  the  instruments  deployed  against  the  backdrop  of 
diverse  economic  and  institutional  contexts,  coupled  with  limited  data  makes  it  hard  to 
draw  concrete  or  comparative  conclusions  about  the  conduct  and  performance  of  FIs  in 
2007-13. Implementation of FIs in 2007-13 has faced challenges – the crisis, gaps in the 
regulatory  framework,  the  complexity  of  the  administrative  structures  and  the  skills 
required. If there is an overarching narrative, it is perhaps to be found in the role of time 
and experience in policy evolution. This may be a truism, but in spite of the challenges, 
FIs  under  some  OPs  have  performed  well  in  terms  of  investment  in  final  recipients  or 
development  of  local  financial  markets,  for  example,  and  arguably  those  that  have 
performed  best  are  those  that  were  able  to  draw  on  the  experience  either  of  existing 
systems  and  structures  or  past  programmes  while  committing  funding  allocations  that 
could realistically be absorbed. Even among those FIs that have performed less well, the 
indications  are  that  the  experience  of  FIs  in  2007-13  will  inform  and  enrich  the  design 
and implementation of FIs in 2014-20, contributing to more mature and responsive policy 
instruments in future. 

vii 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

viii 

 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

2 Introduction 

2.1  Purpose of the evaluation 

This study looks at the  use  of financial instruments (FIs) for enterprises in the 2007-13 
Cohesion policy planning period.  

Ex  post  evaluations  are  viewed  as  an  important  way  of  informing  national  and  regional 
authorities, the general public, the European Parliament and other stakeholders involved 
about  the  outcomes  of  the  2007-13  Cohesion  policy  programmes.  They  examine  the 
extent  to  which  the  resources  were  used,  the  effectiveness  and  the  socio-economic 
impact.  They  also  aim  to  identify  factors  contributing  to  the  success  or  failure  of 
programmes and highlight good practice. 

We  take  this  opportunity  to  thank  all  the  stakeholders  of  the  case  study  OPs  who  gave 
their time and provided valuable insights into and information on their programmes and 
instruments. 

2.2  Scope of the evaluation 

The methodology for the study was as follows: 

  A  stocktake  of  FIs  in  the  12  Member  States  (Task  1)  which  account  for  the 
majority (c.92%) of ERDF-funded FIs for enterprise support and most expenditure 
on  FIs  (c.86%  of  total  planned  equity/venture  capital  FI  expenditure;  92%  of 
loan/guarantee  expenditure).  The  stocktake  covers  108  European  Regional 
Development Fund (ERDF) Operational Programmes (OPs) in 12 Member States.6 

  A  survey  of  the  literature  (Task  2),  focused  on  a  ‘theory  of  change’  approach  to 
understand how and where FIs might work, in what conditions and for whom. 

  Nine  case  studies  (Task  3),  based  on  nine  selected  OPs  in  different  Member 
States, which explore the key issues for all FIs within that OP. The key features of 
FIs in the case study OPs are outlined in the table below.  

  A  stakeholder  seminar  (Task  4)  “Financial  Instruments  for  enterprise  support: 
Lessons  from  2007-2013”  held  on  11  September  2015,  which  was  an  important 
milestone towards the final report.7  

6  The  countries  covered  by  the  stocktake  are  Belgium,  Czech  Republic,  Denmark,  Germany,  Spain,  France, 

Hungary, Italy, Lithuania, Poland, Portugal and the United Kingdom.  

7   The seminar discussed and deepened the emerging findings of Tasks 1 (Taking stock of support), 2 
(Literature review), and 3 (Case studies). A total of 47 participants attended the seminar which was 
interactively structured and consisted of plenary sessions and breakout (‘world café’) groups. The seminar 
provided an opportunity to hear the views of stakeholders such as representatives of Managing Authorities 
(MAs) and Intermediate Bodies (IBs), chambers of commerce / enterprise associations, the European 
Commission, European Investment Fund (EIF), the academics / advisors associated with the study as 
external experts, the country experts involved in case study drafting and representatives of parallel ex-post 
evaluations commissioned by DG Regio. 

page 1 

 
                                           
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 1: FIs in the case study Operational Programmes 

o
t
d
e
t
t
i

m
m
o
c
/
d
i
a
p
s
b
i
r
t
n
o
c
P
O

)
m
€
(

F
S
r
o

F
H

F
D
R
E
P
O

l
a
t
o
t

f
o
%
a
s
a
I
F

s
t
n
e
m

t
i

m
m
o
c

e
s
i
r
p
r
e
t
n
e
r
o
f
d
e
t
t
i

m
m
o
c

F
D
R
E
l
a
t
o
t

f
o
%

s
a

s
I
F

t
r
o
p
p
u
s

s
t
n
e
i
p
i
c
e
r

l
a
n
i
f

f
o
o
N

3,774 

234.5 

4.3 

5.7 

582 

101.0 

9.7 

21.1 

860 

527.0 

28.3 

28.3 

d
e
g
a
n
a
m
-
F
I
E

F
H
n

i

t
o
n
I
F

2 

4 

3 

s
d
n
u
F
g
n
d
o
H

i

l

0 

0 

0 

s
d
n
u
F
g
n
d
o
H
n

i

l

i

I
F

0 

0 

0 

s
I
F

y
t
i
u
q
E

0 

3 

0 

d
e
x
i
M

1 

0 

1 

0 

1 

1 

1 

1 

0 

1,308 

30.0 

6.0 

14.7 

s
I
F

e
e
t
n
a
r
a
u
G

0 

0 

1 

0 

s
I
F
n
a
o
L

1 

1 

1 

0 

17 

77 

25 

43 

162 

1 

0 

14,767* 

710.9 

19.3 

20.9 

4 

3 

0 

0 

15 

11 

0 

1 

5 

0 

25 

6 

0 

0 

2 

1 

23 

2 

1 

1 

5,540 

265.8 

8.7 

25.1 

0 

26 

7 

0 

1 

1 

14 

1,544 

38.6 

2.9 

13.3 

1 

1 

6,831 

271.4 

9.3 

10.3 

771 

167.9 

17.4 

30.7 

OP name 

CZ: OP 
Enterprises & 
Innovation 

DE: OP Bavaria  

ES: OP 
Technological 
Fund 
FR: OP 
Languedoc-
Roussillon  
HU: OP 
Economic 
Development 
LT: OP 
Economic 
Growth 
PL: OP 
Małopolska  
PT: OP 
COMPETE 
UK: OP North 
East England  

Total 

25 

107 

64 

49 

219  6 

26 

2347.2 

Source: Own calculations from 2015 Summary Report, situation at 31 December 2014. *Data as of 31 
December 2013 as the situation at 31 December 2014 was not reported by the MA.  

The  full  stocktake  was  included  in  the  First  Intermediate  Report  presented  to  the 
European Commission in March 2015; this report includes only a summary.  

The  nine  complete  case  study  reports  have  also  been  published  separately.  This  report 
provides  a  comparative  overview  of  case  study  findings.  In  addition,  the  executive 
summaries  of  the  case  studies  are  included  in  the  country  annexes  appended  to  this 
report.  The  findings  in  this  report  are  structured  around  the  five  main  evaluation 
questions outlined in the following section. 

page 2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

2.3  Evaluation questions 

The  aim  of  this  ex  post  evaluation  is  to  assess  the  rationale,  implementation  and  early 
evidence  of  effectiveness  of  FIs  implemented  under  Cohesion  policy  programmes  in 
2007-13. 

The  detailed  evaluation  questions  outlined  in  the  Terms  of  Reference  (ToR)  for  the 
evaluation can be clustered into five groups. 

  What  are  the  rationales  and  conceptual  models  that  underpin 

financial 

instruments? 

  How  much  support  has  been  provided  through  financial  instruments  and  in  what 

forms? 

  What  are  the  management  and  operational  structures  for  financial  instruments, 

and how well are they working? 

  What does the monitoring and evaluation system show? 

  What are the outcomes and how effective have financial instruments been? 

The  detailed  list  of  task-specific  evaluation  questions  (EQs)  is  presented  in  the  Annex 
(6.4, 6.5) 

page 3 

 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

3 Method/Process followed  

3.1  Process/Methodology 

The  evaluation  included  three  core  elements  -  stocktaking,  literature  survey  and  case 
studies  –  designed  to  provide  quantitative  and  qualitative  dimensions,  as  well  as  the 
capacity to test empirically the principles suggested by the existing literature on FIs and 
the  scope  to  enrich  that literature.  Figure  1  summarises  the  overall  methodology  of  the 
study.  

More specifically, the stocktake (Task 1): 

  examined all ERDF programmes in the 12 Member States specified in the Terms of 
Reference, to identify and collect data for each FI scheme for enterprise support. 
Information  was  gathered  on:  (a)  the  private  markets  for  FIs;  (b)  the  main 
forms/packages of support offered; (c) the rationale for support and the types of 
business  targeted;  (d)  the  management  and  operational  structure;  (e)  the 
amount of support provided; (f) effectiveness (where available) of the schemes; 

 

cross-checked  the  above  as  far  as  possible  with  the  data  reported  by  Member 
States  to  the  European  Commission  in  their  annual  summaries  of  data  on  FIs, 
published  beneficiary  data,  as  well  as  with  the  results  of  the  parallel  ex  post 
evaluation Work Package 0 (data collection and quality assessment); 

  used  the  outcome  to  select  nine  OPs  for  in-depth  analysis  under  Task  3.  These 
were  chosen  to  be  broadly  representative  of  the  different  FI  schemes  in  the  12 
countries  in  terms  of  forms/packages  of  support  and  rationale.  The  selection  of 
OPs  also  took  into  account  of  the  availability  of  reliable  data,  as  well  as  the 
presence of significant or interesting FIs. 

The  stocktake  was  carried  out  in  parallel  with  an  examination  of  the  existing 
literature  (Task  2)  at  EU  and  national  level.  The  literature  review  sought  examples  of 
where and why publicly-funded FIs for enterprise support worked (or did not work), and 
studies comparing the performance of private sector with publicly-backed venture capital 
funds.  The  aim  was  to  identify  the  main  theories  of  change  and  contribution  stories 
underpinning how FIs might work, taking account of the context, type of support, target 
recipients, as well as the performance and final results.  

Desk  research  on  FI  schemes  and  the  literature  review  fed  into  Task  3,  the  nine  case 
studies.  These  were  the  core  of  the  evaluation.  The  case  studies  enabled  a  more  in-
depth analysis of the specific FIs set up in the programme areas.  The case studies were 
also intended to ‘test’ the theory of change approach, with a fine-grained analysis of the 
‘micro steps that lead from inputs to outcomes’. This approach posed challenges for the 
evaluators,  notably  those  conducting  the  case  studies,  since  it  involved  evaluating 
interventions  according  to  logics  that  may  not  have  been  explicit  at  the  programme  or 
policy design stage. 

The structure of the case studies included: 

  mapping  a  conceptual  model,  identifying  the  desired  change  to  be  achieved 
for 

information  on  the  context 

through  the  FI  scheme  and  providing 
implementation and the steps to reach the outcome; 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

 

 

checking  how  the  FI  worked  in  practice,  assessing  implementation  activities  e.g. 
set up, management, performance of the FI e.g. leverage, revolving of funds, and 
outcomes e.g. age, size and sector of supported enterprises; 

comparing  the  expected  impact  of  the  policy  according  to  the  theory  of  change 
with  the  actual  results,  and  drawing  evidence-based  conclusions  about  when, 
where and how FIs work or do not work. 

Case  studies  involved  both  desk  review  of  the  relevant  documents  and  field  research. 
Two  pilot  case  studies  were  undertaken  to  enable  feedback  to  be  incorporated  in  the 
remaining case studies at an early stage of the process. 

Figure 1: Overall methodology (Tasks 1 to 4) 

Source: Consortium 

The  final  task  of  the  evaluation  –  the  seminar  (Task  4),–  brought  together  the  study 
team  with  representatives  of  the  MAs,  Commission  officials  and  experts  in  the  fields  of 
theory-based  evaluation  and  FIs  (on  whose  expertise  the  study  has  drawn  from  the 
outset).  The  seminar  involved  the  discussion  of  the  rationales  and  conceptual  models 
underpinning implementation of FIs, management and operational structures, monitoring 
and  evaluation  systems,  and  the  outcomes  and  effectiveness  of  FIs.  Key  findings  and 

page 5 

First draft of the tool kitPresentation to & validation by the national experts10 pilot cases in 5 MSDocument analysisDesk reviewValidation and analysisTASK 1: Taking stock and selection of casesTASK 3: Case StudiesDesign of the tool kitDG REGIO data (FI summary, Infoview)Final tool kitTASK 2: Literature Review2 pilot case studiesLiterature reviewCase studies selectionField researchReporting of case studiesPreparation and implementationFollow up and final reportingTASK 4: Seminar and final report 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

some  outstanding questions were  explored with the stakeholders and yielded significant 
information which has in turn fed into this Final Report.  

Goals and Theory of Change (ToC) of FIs  

On the basis of the available literature, the Terms of Reference for the study proposed a 
theory-based  evaluation  -  specifically  theory  of  change  -  to  address  the  evaluation 
questions.  Theory  of  change  approaches  have  been  widely  used  in  the  field  of 
development  policies  but  are  new  to  Cohesion  policy.  Applying  a  theory  of  change 
approach at different scales and in a multidimensional context was a significant challenge 
for the study team. 

Box 1: What is a Theory of Change? What is a theory-based evaluation 
approach? 

Theory  of  change  (ToC)  is  defined  as  a  way  to  describe  the  set  of  assumptions  that 
explain  both  the  mini-steps  that  lead  to  a  desired  long  term  goal  and  the  connections 
between policy or programme activities and results that occur at each step of the way.8  

A  theory  based  evaluation  approach  follows  several  methodological  steps.  First,  a 
reconstruction  of  the  theory  underpinning  the  intervention  (including  the  preconditions 
for  the  achievement  of  the  goals),  the  development  of  evaluation  questions  (EQs)  and 
success indicators that cover the richness of the theory. Second, attention is focused on 
the  theory,  the  verification  of  theory-specific  EQs  and  the  success  indicators  against 
available evidence. This either confirms the postulated ToC or indicates implementation 
gaps. The better the preconditions have been  understood, the more likely it is that the 
expected outcomes will be achieved.  

Task 2 developed generalized ToCs for different types of firms (start-ups, mainstream 
SMEs,  social  enterprises,  high  growth  firms)  and  for  different  types  of  FIs  (loans, 
guarantees,  equity  finance).  The  detailed  results  are  presented  in  the  annex  (6.6). 
However, these remained at a generalised level and cannot reflect the complexity of real 
world instruments.  

The research found that ToC differ not just by instrument, but also by specific instance. 
In other words, the ToC underpinning FIs are  sui generis and the role and design of FIs 
depends critically on the objectives being pursued, the context in which FIs are applied, 
and  the  underlying  assumptions  concerning  their  design  and  implementation.  Also 
crucial,  FIs  must  be  viewed  as  part  of  a  wider  economic  and  social  policy  landscape, 
including  non-financial  support  and  the  development  of  appropriate  linkages  between 
different  sources  of  finance,  including  different  FIs,  the  role  of  the  private  sector  and 
availability of non-repayable funding. 

8   EVALSED - The resource for the evaluation of Socio-Economic Development : Sourcebook - Method and 

techniques (09/2013), p54 f http://ec.europa.eu/regional_policy/en/information/publications/evaluations-
guidance-documents/2013/evalsed-the-resource-for-the-evaluation-of-socio-economic-development-
sourcebook-method-and-techniques 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Because  the  context  and  pre-conditions  differ,  so  must  core  elements  of  the 
implementation  structure  and  the  design  of  policy  instruments.  In  consequence,  it  was 
not  possible  to  develop  conceptual  models  for  all  types  of  FIs  supported  across  12 
Member  States  (108  OPs)  in  sufficient  detail  to  show  how  financial  instruments  are 
expected to work and achieve their stated goals, and to be able to verify this in the Task 
3 case studies in a meaningful way.  

An  alternative  approach  was  therefore  taken  and  simple  retrospective  ToCs  were 
constructed  for  each  OP  which  could  later  be  verified.  The  broad  lines  of  the  plausible 
ToCs developed under Task 2 then helped to assess the context specific ToCs developed 
for the Task 3 case studies.   

The following figure presents an overall ToC model of FIs. The model provides all the core 
elements,  from  the  planning  phase  to  the  expected  outcomes.  The  key  elements  are 
linked  together  in  a  causal  pathway.  It  demonstrates  clearly  that  many  pre-conditions 
need  to  work  in  practice  for  FIs  to  be  appropriately  targeted  and  successfully 
implemented.  

Figure 2: Overall ToC model of FIs 

Source: Consortium 

page 7 

Achievement of Cohesionpolicy goalsLonger term stability of enterprise supportM&E-systemImproved firm performanceClear role in the development cycleUltimate goalFramework conditionsOutcomesOrganisationImproved territorial market makingLegal frame-workIdentified needs and funding gapFit with other instrumentsPlanningBoosted level of overall investmentClear role in the OPsEfficient governance structureGood information flow across levelsCapable fund managersCost-efficient managementEconomic climateInsti-tutionalcontextAttracted private capitalImproved access to financeTargeted investmentsGenerated returns for future useSpent and absorbed fundsImplementation 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Task 3 aimed at the  reconstruction of specific ToCs for all types of FIs supported in the 
nine case study programmes (nine OPs). This task was partially successful and could be 
regarded  as  a  theory  driven  (but  not  theory-based)  approach.9  The  case  studies 
demonstrate  compellingly  that  there  are  serious  limitations  to  organising  the  evaluation 
of FIs around a ToC when a policy intervention has not been designed on the basis of a 
theory  of  change.  This  may  reflect  the  fact  that  FIs  have  been  viewed  less  as  an 
alternative  delivery  mechanism  for  achieving  OP  goals  by  MAs  than  as  a  means  of 
addressing a gap in the availability of finance for SMEs.  

In the case studies, national experts refer to OP intervention logics,10 which are different 
from  theories  of  change.  In  the  2007-13  period,  ERDF  programmes  defined  highly 
simplified intervention logics of policy objectives at different levels (OP, priority axes, and 
measures) and a limited set of corresponding (core) indicators to measure achievements. 
The  OP  intervention  logic  lacks  the  intermediate  steps  and  the  specific  assumptions 
characteristic  of  a  ToC.  The  OP  intervention  logic  does  not  determine  the  pathway  of 
preconditions,  or  change  in  conditions,  needed  for  an  OP  to  reach  its  long-term 
objectives.  No  details  are  given  on  the  conditions  (assumptions)  that  connect  the 
activities to the ‘short-term results’ and to the very broad macro-level outcomes.  

Although  a  ToC  approach  was  not  used  in  developing  the  FIs  under  the  OPs,  the  case 
studies  attempted  to  retrospectively  develop  an  ‘enriched  OP  intervention logic’  for  sets 
of  FIs  under  each  OP.  National  experts  examined  to  what  extent  FIs  had  a  rationale  or 
set of hypotheses driving interventions, and to what extent there was an  implicit ToC at 
work and tried to map this. The lack of documentary evidence was in part overcome by 
the  interviews  with  OP  stakeholders.  These  interviews  helped  to  trace  the  preconditions 
necessary  for  FIs  to  work  effectively  within  the  framework  of  Cohesion  policy. 
Accordingly, simple ToCs could be posited, even in the absence of an explicit ToC. 

The  standard  model  to  map  out  a  simple  ToC  is  given  in  the  figure  below.  The  simple 
ToCs for FIs served to constitute the evaluation framework for verification; experts could 
only  make  case  studies  `theory-driven´  by  establishing  the  extent  to  which  there  were 
hypotheses and assumptions for interventions. 

9   Thanks to Heléne Clark, ActKnowledge, for clarification of this issue 
10   ‘Intervention logic’ is the term commonly used in EU Cohesion policy for the programme logic showing the 
interaction  between  the  hierarchy  of  OP  objectives  and  measures.  The  evaluation  framework  (evaluation 
questions, indicators) is connected to the intervention logic. 

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Figure 3: Standard model for simple ToCs (´enriched OP intervention logic`) for 
FIs under the case study ERDF OPs  

Source: Consortium 

Figure 4: Risk capital FIs in the OP Bavaria, Germany (example) 

Source: Case study ERDF OP Bavaria 

page 9 

Context and needsAssumptionsIndicators IndicatorsIndicators AssumptionsShort-term resultsLonger term result (broad policy objectives) Outputs of activitiesInput & ActivitiesAssumptions 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

The following overview demonstrates that the development of a retrospective ToC at the 
level  of  individual  instruments  was  only  possible  in  very  few  cases  (e.g.  Bavaria  -  Loan 
Fund;  UK  -  pilot  Creative  Content  Fund).  The  most  relevant  unit  of  analysis  varied  with 
each  case.  In  most  cases  only  summary  ToC  could  be  created  for  a  number  of 
instruments  (e.  g.  in  Lithuania,  one  ToC  for  24  FIs,  Hungary  -  one  ToC  for  one  loan 
product,  three  guarantee  products  and  three  equity  products).  The  conceptual  model  of 
FIs in the programme  documents is in most cases rather generic.  Measured against the 
standards  of  a  fully  developed  ToC,  in  many  cases  it  was  not  possible  to  reconstruct  a 
substantive  justification  and  consistent  intervention  logic  at  the  level  of  the  financial 
instrument  (the  key  elements  of  a  ToC  to  help  develop  a  clear  rationale  for  FIs  are 
presented in the annex 6.9). 

Figure 5: Level of detail of ToCs 

OP name11 

DE: OP Bavaria 

FR:OP Languedoc-
Roussillon 

UK: OP North East of 
England 

CZ:OP Enterprises & 
Innovation 

Total 
no of 
FIs 

4 

3 

8 

4 

PL: OP Małopolskie  

14 

LT: OP Economic 
Growth 

PT: OP COMPETE 

ES: OP Technological 
Fund 

HU: OP Economic 
Development  

Source: Case study research 

24 

27 

3 

11 

Level of detail of ToC 

Guarantees 

Loans 

Equity 

- 

1 ToC for 1 loan 
scheme 

1 ToC for all 3 risk 
capital funds 

1 ToC for 3 FI products: a co-financing fund, a seed loan fund 
and a guarantee fund 

- 

1 ToC for the JEREMIE fund of funds (7 
products) and 1 ToC for the pilot Creative 
Content Fund 

1 ToC for Credit 
Fund (with 2 sub-
programmes) 

1 ToC for Guarantee 
Fund (with 2 sub-
programmes) 

1 Toc for loans (7 funds) and guarantees (3 
funds) and loans to SMEs affected by natural 
disasters (4 funds) 

1 ToC for 24 FIs 

- 

- 

- 

1 ToC for VC funds, finance line for Business 
Angels and Loan funds (27 products in 
total) 

1 ToC for 
guarantee fund 

2 ToCs for loan funds 

- 

1 ToC for EDOP including five loan products, three guarantee 
products and three VC products 

The  following  section  illustrates  theory-driven  examples  and  gaps  in  the  Theory  of 
Change framework. 

The OP Bavaria (DE) case study identified relevant pre-conditions for risk capital funds 
to function well, for example: 

11   Order of case study countries by 2007-13 SMAF Index, see First Interim Report (March 2015) p 35 

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  Business angels are mobilized through effective awareness and publicity measures 

  Business  angels  and  investors  form  a  funding  consortium  that  can  follow  the 

various rounds of financing  

  Start-ups and companies receive intensive non-financial support to build up their 

business competence 

  Funds are long-term stable partners for the companies. 

These pre-conditions, which are not included in the  programme documents - but critical 
for  success  -  were  checked  in  the  case  studies  to  understand  if  they  worked  out  in 
practice. 

In  the  OP  North  East  of  England  (UK),  the  conceptual  model  of  FIs  was  well-
developed.  The  design  of  the  FIs  built  strongly  on  the  experience  of  the  previous 
financing periods. The seven product funds under a JEREMIE holding fund (FBNE), as well 
as  the  pilot  fund  for  the  commercial  creative  sector,  the  Creative  Content  Fund  (CCF), 
show a very clear and distinctive profile and the OP offered few grants to businesses 
(only  small  consultancy  grants).  A  number  of  studies  were  undertaken  to  assess 
specific  market  issues  and  needs  related  to  the  creative  sector.  Research  undertaken  in 
2007 identified the main weaknesses. The evaluation of a previous pilot - the Design and 
Creative  Fund  –  had  identified  barriers  and  challenges  at  both  the  investor  and  the 
investee levels. In addition a set of progress indicators was introduced relating to longer 
term goals and shorter term preconditions. 

In Hungary, the OP Economic Development focused on longer-term targets including 
promoting  growth  and  job  creation,  but  without  specifying  the  mechanism  to  achieve 
these  goals.  A  number  of  assumptions  influenced  the  decision  not  to  favour  specific 
regions or economic sectors and the preference for very small businesses. The rationales 
and underlying assumptions for these decisions are not  explained. For example it is not 
made clear why microcredit was considered essential to growing the Hungarian economy. 
Other assumptions were: that many financial intermediaries in competition would lead to 
better financial products; that attracting private money would increase growth; that local 
business  development  centres  provide  better  outreach  of  FIs  because  they  understand 
local  conditions.  Many  such  assumptions  underlie  the  theory,  some  of  which  may  be 
better  represented  as  precondition  outcomes  to  be  examined  and  tested  through 
evaluation.12 

The  theory-driven  approach  has  the  benefit  of  identifying  the  strategic  and  operational 
objectives for the FIs and some implicit assumptions  for performance monitoring. These 
assumptions  were  checked  to  see  if  they  were  implemented  (or  whether  this  is  likely). 
The  operational  and  strategic  goals  and  assumptions  in  the  ‘enriched  OP  intervention 
logic’ were checked in detail in ‘assessment grids’ based on the evidence collected in the 
case  studies  (see  outcomes  chapter).  In  addition,  indicators  were  proposed  that  can 
capture the  effects of the FIs such as the  change in  firm growth or innovation capacity, 
or,  if  there  are  no  data  available,  proxies,  such  as  employment  or  investment.  In  most 
cases,  however,  no  data  for  this  proposed  set  of  indicators  are  available  and  therefore 
the indicators cannot be quantified. 

12   based on a comment by Dana Taplin, ActKnowledge, July 2015 

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The  “enrichment“  of  the  simple  OP  intervention  logics  with  a  ToC  perspective  for  the 
evaluation  purpose  was,  however,  not  grounded  in  a  thorough  consultation  with  the 
policy  makers.  Developing  a  comprehensive  and  meaningful  ToC  retrospectively  would 
require the joint involvement of many stakeholders. Underestimating the time and effort 
necessary  to  develop  an  effective  theory  has  been  a  key  barrier  to  the  effective  use  of 
ToC in planning and evaluation.13  

A  theory  based  approach  (had  it  been  adopted  at  the  outset  of  the  OP)  would  enhance 
subsequent  evaluation  by  drawing  out  the  hypothesised  intermediate  outcomes  or 
preconditions between Cohesion policy goals and the immediate outputs or outcomes of 
the  OP.  This  could  provide  a  meaningful  research  design  for  measuring  correlation  and 
causation. 

3.2  Limitations – robustness of findings 

Considerable care was taken in the stocktaking exercise, but it is important to be aware 
of  the  limitations  of  the  data  collected.  The  study  team  cross-checked  the  information 
gathered  by  national  experts  as  part  of  the  stocktaking  exercise  with  the  data  reported 
by Member States to the European Commission in their annual reporting of data on FIs. 
Most data collected under Task 1 was additional to the coverage of data available to the 
Commission, so it could not be checked against this source. At the same time, a check of 
the FI summary data reported by the managing authorities  and a crosscheck with other 
sources,  including  published  beneficiary  data  and  the  results  of  the  parallel  ex  post 
evaluation Work Package 0 (data collection and quality assessment),14 showed: 

  There  were  many  blank  values  in  the  FI  summary  data  because  much  of  the 
information provided by MAs was optional rather than compulsory (there were few 
gaps in the compulsory data). Also, FIs may not have reached the relevant stage 
of  implementation  when  reporting.  This  meant  that  empty  values  were  a 
‘structural feature’ of the dataset.  However, there were also some ambiguities in 
the  use  of  blank  and  zero  values,  i.e.  blanks  used  to  represent  zero  values  and 
vice versa. This made data interpretation difficult. 

  Some  data  points  only  partially  covered  the  relevant  issue.  For  example, 
management costs and fees included a high number of zeros. Other remuneration 
of the fund managers, such as from their own contribution or fees charged to final 
recipients,  was  not  covered  by  the  data.  Similarly,  private  contributions  made 
outside the OPs were only partially covered by the data. 

 

It  is  impossible  to  clarify  the  nature  of  specific  data.  For  example,  contributions 
disbursed by the FIs that were higher than those paid to the FIs could reflect MAs 
reporting  revolving  amounts,  although  these  are  no  longer  part  of  the  OP, 
contributions  from  the  fund  manager's  own  resources,  additional  amounts 
generated  through  treasury  operations  (e.g.  interest),  or  fund  managers  being 
reimbursed  by  HF  or  managing  authorities  only  after  disbursing  money  to  final 
recipients. This  also applies to FIs with contributions to final recipients that were 
lower than contributions paid to the FI. 

13   Heléne Clark, ActKnowledge, external expert to the study.  
14   While 2013 and 2014 FI summary data has been checked, crosscheck was carried out for 2013 FI summary 

data only. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

  Unrealistic  values  were  identified  as  well  as  data  that  looked  implausible  when 
considered  in  combination  with  other  FI  information,  such  as  unrealistically  high 
or low amounts invested per contract. 

  Some reporting mistakes were found, including misinterpretation of the definition 
of  SMEs,  set-up  dates  that  were  outside  the  programming  period,  and 
misclassification of FIs by type of implementation. 

  Comparison  of  data  for  jobs  created,  reported  by  Work  Package  (WP)  0  and  the 
summary data, suggested some reporting errors. These appear to include MAs not 
counting  FI  jobs  in  the  total  for  core  indicator  1  in  the  Annual  Implementation 
Reports (AIRs). 

While  such  shortcomings  are  understandable  considering  the  complexities  of  the 
information and the fact that 2012 was the first year that MAs were formally required to 
report  on  FI  data,  the  data  limitations  make  detailed  comparisons  across  FIs  difficult. 
Case studies were used to verify the inaccuracies and inconsistencies wherever possible. 
However, analysis of the case studies which are based on a sample of nine OPs (out of a 
total of 108 in 12 Member States) may lead to specific and non-representative findings. 

Preparation  of  the  case  studies  was  also  challenging.  First,  there  are  definitional  issues 
around some of the required information and data, e.g. leverage effect, multiplier effect, 
and  amounts  committed,  paid  and  actually  invested.  Second,  in  most  cases,  access  to 
important  documents  such  as  funding  agreements,  agreements  between  holding  funds 
and  financial  intermediaries  or  audit  reports  was  not  possible.  This  problem  was  partly 
solved by using interviews and other data sources. There was also a major gap in reliable 
data  on  the  economic  performance  of  companies  participating  in  enterprise  support 
schemes. 

Box 2: Division of roles in data reporting – specifities of FI reporting 

When  referring  to  reporting/monitoring  of  FI  data,  the  distinction  between  the  different 
roles  of  the  European  Commission  and  the  Member  States  in  terms  of  the  specific 
reporting requirements for FIs should be taken into account: 

 

 

the  reporting  from  FI  to  the  Managing  Authority  (MA),  who  has  the  ultimate 
responsibility  for  the  implementation  of  the  programme  (in  line  with  the  shared 
management principle), and; 

the  reporting  from  MAs  to  the  European  Commission  on  operations  comprising 
support through FIs. Such reporting is a priori limited to OP resources. It should 
be  noted  that  reporting  requirements  introduced  for  FIs  in  the  Annual 
Implementation  Reports  (AIRs)  are  quite  extensive  and  specific  compared  to 
those for grants.  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

4 Answers to evaluation questions 

This part of the report is structured around the five main evaluation questions which the 
study sought to address, specifically: 

  What  are  the  rationales  and  conceptual  models  that  underpin 

financial 

instruments? 

  How  much  support  has  been  provided  through  financial  instruments  and  in  what 

forms? 

  What  are  the  management  and  operational  structures  for  financial  instruments, 

and how well are they working? 

  What does the monitoring and evaluation system show? 

  What are the outcomes and how effective have financial instruments been? 

4.1  EQ1: What are the rationales and conceptual models that underpin 
financial instruments?  

The  overarching  rationale  for  the  use  of  FIs  in  public  policy  is  that  facilitating  access  to 
finance  through  the  use  of  repayable  instruments  contributes  to  sustainable  economic 
growth.  An  important  dimension  to  the  rationale  for  FIs  concerns  the  extent  to  which 
they are a  substitute for, and can be articulated with, grants or non-repayable support. 
In  other  words,  FIs  are  (potentially)  an  alternative,  more  sustainable  policy  delivery 
mode. 

Key findings 

  The role and operation of FIs is often driven more by pragmatic considerations - 
such  as  interest  in  diversifying  the  range  of  policy  instruments,  pressure  to 
ensure  that  the  available  EU  resources  are  spent  or  to  maintain  funding  for 
existing  support  schemes  -  than  by  an  in-depth  consideration  of  the  design  of 
FIs, the change they would bring about and the contribution they would make to 
OP objectives. 

  The  design  and  implementation  of  FIs  is  highly  context  specific,  limiting  the 

extent to which lessons may be transferable. 

  The gap analyses should play a crucial role in the rationale for FI use, but often 
the  design  of  FIs  was  not  based  on  specific  studies,  and  the  quality  and 
usefulness of some gap assessments is questionable. 

  OP commitments to FIs are not always justified by demand – the low absorption 
rates  of  some  FIs  casts  doubt  on  the  accuracy  of  the  financing  gap  assessment 
and are sometimes indicative of the avoidance of automatic decommitment. 

  There is no optimum fund size as such. Even if the literature suggests that very 
small  equity  funds  can  be  relatively  costly  and  lack  the  critical  mass  to  be 
effective  and  spread  risk,  very  large  funds  may  be  prone  to  ‘objective  drift’  or 
may struggle to absorb the funds allocated.  

  Neither  cost-effectiveness  nor  quality  of  investments  appears  to  have  been 
important in deciding to use FIs; sustainability and the provision of a legacy were 
not high on the agenda. 

  Although  the  relationship  between  the  use  of  grants  and  repayable  instruments 
was  not  well  articulated  in  the  OPs,  in  practice  consideration  has  been  given  to 

page 14 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

the different roles of different measures within a priority axis and to using them 
in a complementary way. 

Publicly funded FIs for enterprises are typically justified on the basis of two main types of 
market  imperfection.  One  is  information  asymmetry,  the  result  of  which  is  that  certain 
types  of  project  –  such  as  start-ups  and  new  firms  in  high  technology  sectors  -  lack 
sufficient  track  record  or  other  information  for  potential  investors  to  be  able  to  assess 
risks.  Another  is  that  commercial  assessments  of  returns  in  investment  do  not 
necessarily capture all positive externalities or wider social benefits. For example, lack of 
access to finance may constrain investment in R&D and innovation, leading to suboptimal 
investment in new technologies that would benefit society more widely; similarly, urban 
development  or  energy  efficiency  projects  offer  longer-term  societal  gains  that  justify 
public  intervention,  but  would  not  attract  commercial  funding.  More  prosaically,  the 
assessment  of  very  small  projects  requiring  microfinance  may  incur  disproportionate 
transaction costs for investors, leading to a dearth of funds for initiatives that could have 
a  positive  impact  on  society  by  reintegrating  individuals  into  the  labour  market  or 
supporting disadvantaged groups.  

Against  this  background,  this  section  addresses  the  first  evaluation  question  by  briefly 
reviewing  the  wider  financial  context  in  which  ERDF  co-financed  FIs  for  enterprises 
operate.  It  goes  on  to  consider  the  role  of  FIs  in  economic  development  policy, 
before  considering  the  need  for  finance  and  the  rationales  for  using  financial 
instruments under Cohesion policy programmes.  

4.1.1  The financial context for FIs 

Markets  for  finance  vary  between  different  types  of  enterprise.  In  general,  SMEs  face 
greater  obstacles  in  accessing  finance  than  do  large  firms,  which  are  more  likely  to  be 
able to secure capital from equity markets or by issuing corporate bonds. The economic 
context for such firms has been particularly difficult in the period under study, with many 
countries  seeing  a  sharp  decline in lending  to  SMEs  and  venture  capitalists  withdrawing 
from the early-stage market. 

Access  to  finance  is  the  second  most  pressing  problem  for  SMEs  across  Europe,  after 
finding customers.15 Conventional analysis suggests that access to finance is likely to be 
especially  difficult  for  certain  categories  of  SME,  notably  start-ups,  small  and/or  young 
firms,  high 
from  disadvantaged  or 
underrepresented  groups.16  These  categories  of  firm  are  important  for  different 
dimensions  of  economic  and  social  cohesion  policy.  For  example,  despite  the  fact  that 
most SME employment is among older SMEs, young SMEs are responsible for most new 
job creation,17 and a very small proportion of new firm starts accounts for the majority of 

tech  enterprises,  and 

for  entrepreneurs 

15   European Commission (2013) SME’s Access to Finance Survey 
16   Siedschlag, I et al (2014) Access to External Financing and Firm Growth, background study for the European 

Competitiveness Report 2014, ESRI.  

17   Criscuolo, C., P. N. Gal and C. Menon (2014), "The Dynamics of Employment Growth: New Evidence from 18 

Countries", OECD Science, Technology and Industry Policy Papers, No. 14, OECD Publishing, Paris. 
DOI: http://dx.doi.org/10.1787/5jz417hj6hg6-en; NESTA (2008) The vital six percent: how high growth 
innovative businesses generate prosperity and jobs.  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

net  benefits  in  terms  of  investment,  employment  and  exports.18  Increasing  policymaker 
attention has focused on high growth firms (and a subset thereof, so-called ‘gazelles’19 – 
young  high  growth  firms)  defined  as  those  with  at  least  10  employees  and  an  average 
growth  rate  (turnover  or  employees)  of  over  20%  per  year  over  three  years. 
Comprehensive  data  on  high  growth  firms  are  rather  poor;  however,  OECD  research 
suggests  that  such  firms  typically  account  for  2.5%  to  6%  of  the  total  firm  population 
when measured by employment growth, but higher levels when measured on the basis of 
turnover. 20  

Support for this segment of the business population has become a focus of policymaker 
interest partly owing to the sharp contrasts in entrepreneurship between Europe and the 
US: six of the top ten ‘most admired’  corporations worldwide  – Apple, Amazon, Google, 
FedEx,  Starbucks,  Southwest  –  are  US  firms  started  after  1970;21  no  European 
companies feature in the top ten, and those in the top 50 are all of longstanding (BMW, 
Nestlé, Volkswagen, Unilever).22 Apple, Microsoft and Google – all established since 1970 
– feature in the top ten of the FT Global 500 by market capitalisation; the only European 
firm to do so is the Swiss pharmaceutical firm Roche.23 

The relevance and availability of different sources of finance varies by type of enterprise 
and  by  country.  Although  this  study  aims  to  evaluate  ‘financial  instruments’,  it  is 
important  to  acknowledge  that  this  term  includes  forms  of  intervention  that  are 
extremely diverse and have little in common with one another beyond the fact that they 
are intended to be repaid. Also important, the boundaries between public and private are 
often  blurred  and  in  many  countries  there  is  a  longstanding  tradition  of  public  sector 
involvement in the provision of finance for example through business development banks 
(Landesbank  in  Germany;  BGK  in  Poland),  other  funds  and  structures  (BPI  and  its 
predecessors in France) or the operation of guarantees which may involve mutual and/or 
public backing (Invega in Lithuania).  

Discussions  of  financial  instruments  conventionally  distinguish  three  main  types  of 
measure: loans, guarantees and equity. These categories are, however quite broad, and 
each  encompasses  instruments  that  differ  in  their  target  market,  the  terms  on  which 
they are operated and the mechanisms by which they are governed.  

Traditional loan finance is one of the least expensive forms of external funding, suitable 
for  comparatively  low  risk  operations  and  businesses  with  sufficient  cashflow  to  service 
capital  and  interest  repayments;  debt  finance  also  enables  entrepreneurs  to  retain 
control of their business. Guarantees are typically coupled with loans, in principle in order 
to facilitate access to capital by firms which would not be able to obtain it otherwise, and 
are  offered by various types  of guarantor.  Equity is more suited to the small number of 

18   Henrekson, M and Johansson, D (2010) Gazelles as job creators: a survey and interpretation of the 

evidence, Small Business Economics, 35 (2), 227-244; Rigby et al (2007) Are gazelles leaping ahead? 
Innovation and rapidly growing small firms, study for DG Enterprise and Industry: http://grips-
public.mediactive.fr/knowledge_base/view/128/grips-mini-study-on-gazelles/  

19   Mitusch, K. and Schimke, A (2011) Gazelles – High Growth Companies, final report, INNOVA. 
20   http://www.oecd.org/industry/business-stats/39974588.pdf  
21   Gimeno, J (2012) Where are Europe’s Gazelles? http://knowledge.insead.edu/blog/insead-blog/where-are-

europes-gazelles-2751 ;  

22   Fortune (2014) World’s most admired corporations: http://fortune.com/worlds-most-admired-

companies/2014/  

23   FT Global 500: http://www.ft.com/cms/s/0/988051be-fdee-11e3-bd0e-00144feab7de.html#axzz3T2izlnjd  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

potentially  high  growth  firms  which  lack  the  cash  flow  to  cover  debt  and  interest 
repayments, but may offer high returns to investors in the long term. 

Loans are the main source of private financing for SMEs – over 60 % of SMEs have used 
them.24  This  reflects  their  relatively  low  cost  and  the  absence  of  implications  for  firm 
ownership and control. Loan volumes vary widely between countries  – (from 15-20% of 
GDP in the Czech Republic and Poland, to highs of over 60% of GDP in Denmark, Spain 
and  Portugal).25  In  most  countries  (particularly  Portugal,  the  United  Kingdom,  Hungary, 
Lithuania  and  Spain),  levels  of  lending  to  firms  fell  in  the  wake  of  the  economic  crisis, 
with the volume of small loans falling even more sharply; only in Germany were levels of 
firms applying for finance and receiving it stable in 2007-13. In part this is a reflection of 
a  more  difficult  borrowing  climate  –  with  firms  reporting  increasing  difficulties  in 
obtaining  all  or  part  of  the  finance  sought.  Rejected  applicants  tend  to  be  very  small, 
young  and  in  the  service  sector.  Also  important,  the  proportion  of  firms  refusing  bank 
loan  offers  on  grounds  of  cost  is  low,  partly  reflecting  the  fall  in  interest  rates,  and 
supporting  the  view  that  finance  constraints  are  volume  not  cost  based.  Case  study 
research  showed  that  in  some  cases  the  supply  side  was  so  affected  by  the  crisis  that 
public  FIs  had  to  take  a  much  greater  and  less  targeted  role  than  originally  intended 
(Lithuania and Compete (PT)). 

Importantly, however, the fall in lending has also been a product of demand, with fewer 
firms confident about investing in a difficult economic  climate.  The case studies showed 
that  patterns  of  demand  for  loans  have  been  quite  different  between  countries  and 
regions. In some cases, e.g. Languedoc-Roussillon, Czech Enterprise and Innovation OP, 
North East England and Bavaria, the demand for ERDF co-financed loans (and sometimes 
other  instruments)  was  hardly  influenced  by  the  crisis,  while  in  others  demand  actually 
weakened so much that the instrument had to be redesigned. This was in particularly the 
case in Lithuania, Hungary and Portugal and to a lesser extent in Małopolskie and Spain.  

The strength of the underlying domestic finance provision determined how FIs were used 
in  the  crisis,  so  where  this  is  strong  (as  in  DE),  the  use  of  FI  was  not  affected  by  the 
downturn,  but  where  this  was  weaker  (as  in  PT  and  LT),  the  use  of  FIs  had  to  be 
adjusted to deal with wider problems of access to finance 

The  fall  in  demand  is  not  solely  a  result  of  hesitation  about  investing,  but  also  reflects 
‘fear  of  rejection’  -  thought  to  be  a  new  phenomenon  in  the  wake  of  the  crisis.26  This 
factor  is  important  because  it  implies  a  need  for  support  in  developing  investible 
propositions,  but  not  necessarily  a  finance  gap.  This  is  an  important  policy  issue  and 
points to the need for intervention in the form of training, advice, mentoring, and so on 
to improve the skills and confidence of entrepreneurs in dealing with lenders. 

Equity  and  venture  capital  finance  are  considered  of  limited  relevance  by  most 
(80%+)  SMEs.27  The  equity  market  is  small  and  specialised  in  most  countries  and  is 
arguably only well-developed in the United Kingdom. There are signs that angel investors 
and  syndicates  thereof  are  becoming  more  important  as  venture  capitalists  withdraw 

24   European Commission (2013) ibid. 
25   Calculated from ECB and Eurostat data 
26   Hutton, W and Nightingale, P (2012) The Discouraged Economy. London: The Work Foundation. 
27   European Commission (2013) SME’s Access to Finance Survey 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

from the early stage market, but in most countries apart from the United Kingdom, and 
to a lesser  extent France and Portugal, the market can be viewed as embryonic. Crowd 
funding  is  currently  marginal  but  is  expected  to  grow.  Even  in  countries  where  venture 
capital is more important, it remains niche – VC investors are highly selective and deals 
number in the hundreds and low thousands annually. 

The guarantee market is difficult to assess. Many guarantees involve public backing and 
guarantees have been an important policy tool in the recession, with terms often relaxed 
to  enable  firms  to  borrow  working  capital.  In  terms  of  volume,  guarantees  are  only 
important in a few countries – notably Italy, Hungary and Portugal; however, in terms of 
reach  they  are  far  more  significant  than  equity,  with  many  thousands  of  guarantees 
issued annually in some countries. 

4.1.2  The role of FI in economic development policy 

Against  the  backdrop  of  the  financial  context,  a  key  issue  is  the  role  of  publicly-funded 
FIs  in  economic  development  policy  and  how  well  FIs  work  in  addressing  identified 
market  imperfections.  A  number  of  studies  have  made  detailed  assessments  of  FIs  in 
relation to recipient firms or the outcomes of specific schemes, though many such studies 
assess  outcomes  that  were  not  necessarily  part  of  the  initial  policy  rationale.  There  is 
also  a  growing  body  of  policy  evaluation  work,  case  studies  and  analyses  of 
implementation,  which  are  less  focused  on  specific  outputs  or  policy  outcomes,  and 
markedly less  rigorous  in  seeking  to  establish the  net  effects  of  policy,  but  often  give  a 
more  rounded  perspective  on  the  implementation  of  policy  measures,  yielding  insights 
into  processes  and  the  practical  operation  of  schemes,  which  condition  how  measures 
operate  in  reality.  In  the  main,  the  academic  literature  on  FIs  is  focused  on  different 
dimensions of the ‘access to finance’ question. Much of the literature focuses on publicly-
backed  venture  capital  rather  than  the  more  frequently  used  loan  funds.  Few  studies 
consider the rationale for the form of intervention –repayable mechanisms as opposed to 
grants  –  or  the  relative  efficiency  of  public  funds  disbursed  in  repayable  form  and  their 
capacity to draw in private funding. 

Several  academic  studies  consider  firm  level  impacts  of  FIs,  such  as  the  effects  on 
profits, survival or sales. Findings include:  

  a  government-backed  credit  guarantee  scheme  in  Italy  improved  the  financial 
circumstances  of  beneficiary  SMEs  because  it  shifted  the  structure  of  their  debts 
towards longer-term lending.28 

  government-backed  venture  capital  did  not  affect  sales  or  employment  growth 
among  a  sample  of  EU  high-tech  entrepreneurial  investee  enterprises  observed 
from 1993-2010.29  

  a French guarantee scheme led to an increase in investment and employment, but 
not  in  the  number  of  new  start-ups;  also  that  the  scheme  significantly  increased 
the risk of defaults, raising concerns about risk-shifting.30 

28   D’Ignazio,  A  and  Menon,  C  (2013)  The  causal  effect  of  credit  guarantees  for  SMEs:  evidence  from  Italy, 
Temi  di  Discussione,  Banca  d’Italia:  http://www.bancaditalia.it/pubblicazioni/econo/temidi/td13/td900_13/ 
en_td900/en_tema_900.pdf  

29   Grilli,  L  and  Murtinu,  S  (2014)  Government,  venture  capital  and  the  growth  of  European  high-tech 

entrepreneurial firms, Research Policy, 43(9), 1523-1543.  

page 18 

                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

  a wide-ranging meta-evaluation of English-language evaluation literature reported 
limited  evidence  that  access  to  finance  policy  interventions  improved  firm 
performance  and  a  need  for  more  evidence  on  how  different  types  of  access  to 
finance  measures  contribute  to  better  or  worse  firm  and  economy-wide 
outcomes.31  

  a  study  of  microfinance  in  Belgium  found  qualitative  benefits  among  recipients  – 
in terms acquiring experience and skills, personal life satisfaction, self-esteem and 
better  social  and  economic  integration,  even  among  owners  of  aided  businesses 
which had ultimately failed. 32  

A number of studies compare public and private sector financial instruments: 

  a dual picture emerges on the efficiency and effects of government venture capital 
programmes for young innovative firms in a wide-ranging review of academic and 
policy-oriented  literature  on  the  financing  of  innovative  ventures:33  pure  public 
sector venture capital operations tend not to be very effective, but funds that co-
invest with the private sector show more positive effects. This suggests that much 
depends on the specific design of the instrument.  

found 

  analysis of a  sample of 865 young  biotech and pharmaceutical companies across 
seven  European  countries 
that  syndicates  between  private  and 
governmental  venture  capital  investors,  in  which  the  private  investor  takes  the 
lead,  are  the  most  efficient  form  in  terms  of  innovation  production  and  that  this 
outperforms  all  other  forms.34  In  other  words,  syndicates  perform  better  than 
standalone  investors  at  promoting  innovation,  and  mixed  syndicates  better  than 
homogenous  private  ones,  but  private  partners  should  lead  mixed  syndicates  for 
optimal outcomes.  

 

firms  funded  by  both  public  VC  and  private  venture  capitalists  obtain  more 
investment  than  enterprises  funded  purely  by  private  VCs,  and  much  more  than 
those  funded  purely  by  public  VCs.  Also,  markets  with  more  public  VC  funding 
have more VC funding per firm and more VC-funded firms, suggesting that public 
VC  finance  largely  augments  rather  than  displaces  private  VC  finance.  There  is 
also  a  positive  association  between  mixed  public/private  VC  funding  and 
successful  exits,  as  measured  by  initial  public  offerings  (IPOs)  and  acquisitions, 
attributable largely to the additional investment.35 

30   Lelarge,  C,  Sraer,  D  and  Thesmar,  D  (2010)  Entrepreneurship  and  Credit  constraints:  Evidence  from  a 
French  Loan  Guarantee  Program,  in  Lerner,  J  and  Schoar,  A  (eds.)  International  Differences  in 
Entrepreneurship, University of Chicago Press: http://www.nber.org/chapters/c8218.pdf  

31  What  Works  Centre  for  Local  Economic  Growth  (2014)  Access  to  Finance,  Evidence  Review  4, 

http://whatworksgrowth.org/wp-content/uploads/2014/01/14-10-31-Access-to-Finance.pdf  

32   Proximity  Finance  Foundation  and  CeFiP/KeFiK  (2007)  L’impact  de  la  microfinance  en  Belgique, 

http://www.fonds.org/02Documents/Impactstudie%20microfinanciering%20FR.pdf  

33   Manigart, S et al (2014) Revue de la littérature relative au financement des jeunes entreprises innovantes, 
statistique: 

Institut 
http://www.iweps.be/sites/default/files/evaluation_thematique_financement_spinoff.pdf  

prospective 

l’évaluation 

Wallon 

34   Bertoni, F and Tyková, T (2012) Which form of Venture Capital is Most Supportive of Innovation? Discussion 

de 

de 

de 

et 

la 

la 

paper no 12-018: http://ftp.zew.de/pub/zew-docs/dp/dp12018.pdf  

35   Brander,  J  Du,  Q  and  Hellmann,  T  (2014)  The  Effects  of  Government  Sponsored  Venture  Capital: 

International Evidence, Review of Finance Advance Access, 1-48. 

page 19 

 
                                                                                                                                    
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

  public  VC-backed  firms  underperform  private  VC-backed  ones,  and  do  not  grow 
more than non-VC-backed companies.36 The impact of public venture capital is still 
not statistically significant (even though positive) when public funds target young 
firms,  except  when  public  funds  co-finance  with  private  funds  and  both  target 
young firms.  

The geographical dimension of FI is of particular relevance in the context of Cohesion 
policy. Academic research shows that the financial environment for firms differs not only 
between  countries,  but  also  within  them,  i.e.  there  are  significant  differences  between 
regions  in  the  availability  and  type  of  investment  capital,  with  the  tendency  for 
entrepreneurial finance to focus on the metropolitan regions.37 Indeed, financial systems 
are  inherently  spatial,  characterised  by  complex  institutional  geographies  that  both 
reflect  and  influence  their  functioning.38  This,  in  turn,  produces  geographical  effects  on 
the ability of entrepreneurs to access finance, which typically work to the disadvantage of 
peripheral regional economies.  

The typical approach of governments to stimulate venture capital in the regions has been 
to establish hybrid funds with private sector fund managers which comprise a mixture of 
public  and  private  money,  with  private  investors  given  certain  incentives  that  either 
increase  their  up-side  or  reduce  their  down-side,  or  both.39  However,  it  is  debatable 
whether  constraining  equity  funds  by  restricting  their  investments  regionally  is  good 
practice40  -  although  there  may  well  be  regional-level  resistance  to  the  idea  of  funds 
being  pooled,  notably,  but  not  only,  in  the  context  of  Structural  Funds  co-financed 
measures. More generally, the literature suggests that small VC funds have a number of 
disadvantages,  i.e.  limited  ability  to  diversify  funds  and  to  make  follow  on  investments 
(thus fully sharing in successful investments).41 In addition, Nightingale et al suggest that 
the  key  problem  with  regional  VC  funds  is  one  of  ‘thin’  markets  in  disadvantaged 
regions42  -  these  regions  lack  an  appropriate  eco-system  to  support  venture  capital 
investing. Another important consideration is that of crowding-out private sector finance, 
an issue which became a concern in the context of publicly-backed loans in Finland. 43  

There is also evidence of positive effects of FIs on disadvantaged areas. A study of Small 
Business Administration guaranteed lending in the US showed a correlation between the 
level  of  guaranteed  lending  and  the  level  of  employment  in  a  local  market.44  However, 
crucially, this correlation was only significant in low income  areas, perhaps suggesting a 

36   Grilli,  L  and  Murtinu,  S  (2013)  New  technology-based  firms  in  Europe:  market  penetration,  public  venture 
capital  and  timing  of  investment,  paper  to  4th  European  Conference  of  Corporate  R&D  and  Innovation 
CONCORDi-2013, Seville, September 2013: http://iri.jrc.ec.europa.eu/concord/2013/papers.html  

37   Mason, C and Harrison R (2002) The geography of venture capital investments in the UK, Transactions of 

the Institute of British Geographers, 27, 427-451. 

38   Martin, R (1999) Money and the Space Economy, Chichester: Wiley. 
39   Murray, G C (2007) Venture capital and government policy, in H Landström (ed) Handbook of Research on 

Venture Capital, Cheltenham: Edward Elgar, pp 113-151. 

40   Veugelers R (2011) Mind Europe’s early equity gap, Bruegel policy contribution, Issue 2011/18. December 

2011.  

41   Murray, G C (2007) Op. cit. 
42   Nightingale, P et al (2009) From Funding Gaps to Thin Markets: Designing Hybrid VC Schemes for the 21st 

century, SPRU, University of Sussex for BVCA and NESTA. 

43   Ministry of Employment and Economy (2012) Evaluation of Finnvera Plc, Final Report, Innovation 28/2012. 
44   Craig, B, Jackson, W and Thomson, B (2008) Credit market failure intervention: Do government sponsored 

small business credit programs enrich poorer areas? Small Business Economics, 30, pp345-360. 

page 20 

                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

crowding-out effect in more prosperous areas, but also providing support for arguments 
in favour of regionally-discriminating guarantee schemes. 

The case studies reveal two distinct approaches to the regional development dimension: 
regional  development  goals  and  general  territorial  development  issues  play  a  significant 
role  in  the  design  and/or  implementation  of  FIs  in  some  OPs,  but  not  others. 
Interestingly, this does not depend on whether the OP is national or regional in scope. In 
Bavaria  (DE),  OP  Economic  Development  (HU),  Małopolskie  (PL),  OP  COMPETE  (PT), 
North  East  England  (UK),  regional  development  issues  are  important.  The  FIs  in  these 
OPs  pursue  explicit  regional  development  goals,  mainly  closing  development 
gaps/disparities  between  the  region(s)  or  within  the  region,  thus  in  most  cases 
addressing  the  sub-regional  or  even  local  level.  This  is  most  pronounced  in  the  Bavaria 
OP.  Nevertheless,  FI  tend  to  be  aimed  at  regional  development  generally  and  it  is  rare 
that individual instruments are restricted to disadvantaged regions.  

An  important  dimension  of  operating  FIs  is  the  extent  to  which  they  can  foster  the 
development  of  private  markets.  For  example,  an  important  aim  of  the  North  East 
England (UK) FI strategy was to offset the impact of the London-centric financial services 
sector; interestingly, in the new period, stakeholders expressed an interest in developing 
markets  beyond  the  main  urban  areas  in  the  region.  In  Hungary,  the  involvement  of 
intermediaries  throughout  the  country  was  an  important  aspect  of  the  ‘territorialisation’ 
of access to finance.  

4.1.3  Assessing the need for finance 

At  least  part  of  the  justification  for  publicly-funded  financial  instruments  hinges  on  the 
presence of a ‘funding gap’, but the presence or scale of such a gap is not tangible in a 
general  sense,  and  can  only  be  meaningfully  assessed  in  relation  to  specific  sectors, 
target groups and / or localities. Although it was not compulsory at the time, most case 
study Operational Programmes designed their co-financed FIs on the basis of market gap 
analyses.  In  five  cases,  fairly  comprehensive  dedicated  studies  on  the  financial  markets 
were undertaken, three of them by the EIF. In two cases, the MA chose not to undertake 
such  a  study,  but  to  rely  on  prior  experience  with  FIs  both  within  the  MA  and  the 
intended  fund  manager  (Bavaria  (DE)  and  OP Małopolskie  (PL)).  These  gap  analyses  by 
and large made a reasonable attempt to identify the relevant issues, especially given the 
relative novelty of the process and experimental character of the FIs, and were sufficient 
to  enable  the  identification  of  a  plausible  financial  product  mix  within  the  FI, 
accompanied by targeting of enterprise groups. In general, however, they contained little 
or no quantification of the respective market gaps identified.  

In  two  cases  (OP  Economic  Growth  OP  (LT),  COMPETE  (PT)),  the  study  was  considered 
very  useful  but  could  not  be  applied  in  their  entirety,  as  they  did  not  take  into  account 
the  changes  caused  by  the  financial  crisis  because  it  had  been  completed  in  2007.  By 
contrast, in a third case (Languedoc-Roussillon (FR)), the gap analysis and subsequent FI 
design and implementation were not affected by the crisis. 

Only  in  the  cases  of  the  OP  Enterprises  &  Innovation  (CZ)  and  OP  Technological  Fund 
(ES),  does  there  seem  to  have  been  no  adequate  analysis  of  the  market  situation 
available to the MA prior to introducing EU co-financed FIs. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

It  is  generally  accepted  that  a  financing  gap  exists  where  viable  projects  cannot  be 
financed  -  in  other  words,  firms  that  have  the  ability  to  use  funds  productively  do  not 
have  access  to  those  funds.  Assessing  the  nature  and  scale  of  the  gap  is  however, 
acknowledged  to  be  very  difficult,  although  pragmatic  methodologies  exist  which  help 
quantify  the  market  failures  or  suboptimal  investment  situations,  and  investment 
needs.45  Many  managing  authorities  are,  of  course,  currently  engaged  in  commissioning 
such  studies  for  the  new  funding  period,  an  ex  ante  assessment  of  the  funding  gap 
having  become  an  obligation  for  those  using  co-financed  financial  instruments  in  2014-
20.46 

Figure 6 : Overview of Market Gap Analysis 

OP Name 

DE: OP Bavaria  

FR: OP 
Languedoc-
Roussillon  

UK: OP North 
East England  

CZ: OP 
Enterprises & 
Innovation 

PL: OP 
Małopolskie  

LT: OP Economic 
Growth 

Total 
No of 
FI 

4 

3 

8 

4 

14 

24 

PT: OP COMPETE 

27 

ES: OP 
Technological 
Fund 

HU: OP Economic 
Development 

3 

11 

Source: Case study research 

Guaran-
tees 

Loans 

Equity  Quality of market gap 
assessment 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

No dedicated analysis, based 
on MA & FM experience 

Useful and robust study by 
European Investment Fund 

Good, detailed market 
assessment 

No specific analysis 

No dedicated study 
MA & FM experience 

Analysis by EIF was good but 
designed for normal economic 
conditions not for the crisis 

Useful study by European 
Investment Fund 

No specific analysis; FIs were 
not part of the OP at the 
beginning 

X 

Sufficient, lacks quantification 

X 

X 

X 

X 

X 

X 

4.1.4  Rationales for implementation of FI 

The  stocktake  of  FI  in  12  countries  reviewed  the  stated  rationales  for  FI  alongside  the 
market situation, the types of FI deployed and the sectors and size of firm targeted.  The 
most  striking  feature  to  emerge  from  the  analysis  is  the  lack  of  clear  patterns  and 

45   Kraemer-Eis, H and Lang, F. (2014) Guidelines for SME Access to Finance Market Assessments (GAFMA), 

EIF Working Paper 2014/22. 
46   Regulation 1303/2013, Article 37. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

trends  relating  the  rationales  for  FI  use  and  either  the  market  situation  or  the 
characteristics of the FIs chosen. 

Restricted access to finance for enterprises to start-up and grow, either in terms 
of availability or quantity of credit, is identified as a problem in all the countries studied. 
This  is  overwhelmingly  the  main  rationale  given  for  FI  use.  Related  objectives  are  in 
evidence in almost all the countries considered: lack of appropriate finance available on 
the  market  and  unwillingness  of  commercial  banks  to  lend  (DE,  DK,  HU,  PL  and  UK); 
credit  rationing  (ES,  IT,  FR,  LT  and  PT);  and  strict  banking  rules  affecting  bank  finance 
(BE - specifically, the Basel III provisions, which regulate the banks’ risk profiles for loans 
and equity investments).  

Restricted access to finance may arise from information asymmetries which make banks 
unwilling  to  lend  except  under  onerous  terms  and  conditions.  The  cost  of  credit  was 
highlighted as a rationale for FI use in some countries (CZ, DE, FR and PL). Information 
asymmetries and perceptions about the risk of investing may make it difficult for firms to 
access  funding  for  innovative  projects,  especially  in  the  R&D  sector.  Risk  sharing  to 
encourage  private  sector  funders  to  participate  in  investment  activity  is  a  frequent 
motivation (BE, DE, ES, LT, PL, PT and UK); this is often the rationale provided for (but 
not  restricted  to)  equity  FIs.  Stakeholder  participants  at  the  seminar  mentioned  a 
number of additional specific rationales for FI use - the need for the ‘territorialisation’ of 
the  financial  services  sector,  which  is  too  concentrated  on  large  urban  agglomerations, 
mainly capital cities, and responding to specific situations, notably flood damage, where 
grants (or insurance) might have been expected to be used. 

Increasing  the  cost-effectiveness  of  public  funds  is  stated  as  an  additional  rationale 
in  most  countries  (CZ,  DE,  DK,  ES,  FR,  IT,  LT,  PT),  while  improving  the  quality  of 
investments is not cited at all.  

Very few FIs explicitly target specific disadvantaged groups or sub-regional territories. 
Among  the  case  studies,  only  Bavaria  (DE)  and  to  a  limited  extent  North  East  England 
(UK)  have  this  type  of  focus  (although  North  East  England  (UK),  the  OP  Economic 
Development  (HU)  and  OP  Małopolskie  (PL)  all  monitor  the  geographic  distribution  of 
investments).  

Few stated rationales for FIs mention the wider context of the pursuit of Cohesion policy 
goals,  although  several  do  specify  the  potential  of  FIs  to  create  jobs.  Contribution  to 
wider  Cohesion  policy  goals  should  be  an  explicit  goal  within  the  relevant  OP  priority 
under which the FI is being funded, but at the level of the individual FI and certainly once 
an  FI  is  ‘marketed’,  reference  to  the  wider  goals  is  notably  absent.  There  was  a  strong 
focus  on  the  delivery  of  regional  development  goals  in  only  three  of  the  case  studies 
(Bavaria (DE), Małopolskie (PL) and North East England (UK)). 

Interestingly,  sustainability,  and  the  prospect  of  a  legacy  is  rarely  mentioned.  As  was 
evident  at  the  stakeholder  seminar,  the  emphasis  during  the  period  has  been  on 
spending  and  absorbing  funds  rather  than  on  seeking  returns.  Nevertheless,  although 
practical  implementation  issues  have  dominated  policy  agendas,  the  seminar  revealed 
growing interest  in the capacity  of  FIs  to  generate  returns  for  future  use  and  it  may  be 
that the legacy rationale plays a greater role in the next planning period.  

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There are also no clear patterns with regard to the link between stated rationale for FIs 
and  the  type  of  FIs,  the  size  of  firm  or  the  sectors  targeted.  Most  of  the  FIs  target 
general  SMEs,  with  less  support  available  for  individuals,  micro-sized  firms  and  large 
firms.  Similarly,  most  of  the  schemes  are  rather  generic  in  terms  of  sectoral  targeting. 
The exceptions are equity FIs, which are more frequently used to target specific sectors, 
for example in DE, where sectors with R&D/innovation potential such as nanotechnology, 
ICT,  bio-technology  and  medical  engineering  are  targeted,  and  the  United  Kingdom, 
where  individual  regional-level  equity  FIs  target  strategic,  regionally-significant  sectors. 
However,  there  is  not  always  a  clear  link  between  the  choice  of  a  sector-specific 
approach and the market situation, or the stated rationale for incorporating FIs under the 
OP.  

The  lack  of  clear  patterns  and  trends  makes  it  difficult  to  assess  the  logic  of  the 
approaches  taken  at  this  level.  There  is  no  clear  divide  in  approach  between  those 
countries  with  lengthier  experience  with  FIs  and  those  with  none,  in  terms  of  size  of 
Member State or Structural Funds budget; approaches vary widely also within countries, 
and  between  regions  in  a  Member  State.  This  suggests  that  the  choice  of  FI  and  the 
approach taken are determined only in part by the market situation, and that the choice 
and  approach  are  likely  to  be  determined  by  a  very  specific  set  of  circumstances  at 
programme  level.  To  look  for  such  patterns  would  imply  that  the  use  of  FIs  within 
Structural  Funds  programmes  has  been  based  on  an  intervention-logic  type  approach; 
and  that  individual  FIs  were  designed  following  OP  analysis  and  a  gap  assessment.47 
However,  gap  assessments  did  not  always  take  place,  those  that  were  carried  out  had 
weaknesses, and in any case, market conditions changed dramatically during the period 
in  many  countries  from  what  was  envisaged  when  the  OPs  were  drafted.48  This  led 
directly  to  the  introduction  of  new  FIs  and  substantial  expansion  of  some  existing  FIs 
during the period. In addition, many other factors are likely to have influenced the choice 
of instruments and targets, including previous experience with particular instruments, the 
influence of expert advisors and stakeholders, and the domestic support environment.  

Across  the  case  studies,  the  rationale  for  the  introduction  or  non-introduction  of  EU-co-
financed  guarantee  schemes  is  not  readily  visible.  There  are  several  large  guarantee 
programmes (e.g. ES, CZ) and also extremely small guarantee schemes (fund size ~ €1 
million) alongside them, and several regional guarantee schemes operating in parallel (as 
in  PL).  The  opportunity  to  benefit  from  lost-cost  capital  may  be  more  influential  in 
offsetting up guarantee schemes than the needs of the regional economy. Sometimes the 
rationale for the ‘non-use’ of an instrument may be clear - in the UK, guarantees are not 
co-financed by the ERDF since a long-standing domestic scheme is already in place. The 
equity  schemes  in  the  case  studies  seem  to  have  been  designed  carefully  to  serve 
particular  aims.  In  most  cases,  equity  instruments  are  set  up  after  a  thorough  market 
analysis.  Equity  FIs  are  typically  operated  through  a  holding  fund  structure,  increasing 
the  flexibility  to  switch  commitments  between  funds  and  instruments.  The  number  of 
equity  FIs  is  high  in  several  cases  (25  in  OP  COMPETE  (PT)  and  seven  in  North  East 
England (UK), a regional OP). 

47   This  intervention  logic-type  approach  has  been  mandated in  the  2014-20  Structural  Funds  regulations,  by 
introducing the requirement for an ex ante assessment to be carried out before any funds are committed to 
FIs.  

48   For example, the concise market gap analysis undertaken in Lithuania was deemed to no longer reflect the 

financing needs of the country’s SMEs after the onset of the crisis. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

There is also the question of whether stated  rationales provide the complete picture, as 
there  were  arguably  ‘parallel’  motivations  for  the  use  of  financial  instruments  in 
2007-13.  The  enthusiasm  of 
instruments,  and 
the  Commission 
encouragement  at  programme  negotiation  stage  to  include  FIs49  was  confirmed  by  the 
case studies as a positive influence (as well as the encouragement by the EIF, which was 
noted in at least three cases- Languedoc-Roussillon (FR), OP Economic Growth (LT) and 
OP  Małopolskie  (PL).  The  strong  Commission  support  for  FI  use  encouraged  MAs  to 
consider  the  introduction  of  “experimental”  EU  co-financed  FIs.  This  is  reflected  in  the 
relatively  small  amounts  committed  into  FIs  in  most  OPs  (compared  to  total  OP 
resources, or even total enterprise support). 

financial 

for 

The  potential  for  FIs  rapidly  to  absorb  funds  to  at  least  delay  the  prospect  of  de-
commitment50  was  not  mentioned  directly  by  stakeholders  in  the  case  study  research. 
However,  in  a  small  number  of  cases,  this  does  seem  a  likely  motivation  since  the 
disbursement to the beneficiary appears out of proportion to probable demand from final 
recipients. The stakeholder seminar confirmed that financial instruments had sometimes 
been  used  to  postpone  possible  de-commitment.  While  this  was  not  widespread,  it  was 
cause of some ‘oversized’ funds.  

At the stakeholder seminar, one participant noted that a motivating factor for FI use was 
that  audit  was  easier  than  for  grants,  since  checks  did  not  generally  need  to  be  made 
below the level of the final beneficiary.51 

The  focus  of  this  study  is  on  FI  for  enterprises,  so  it  not  surprising  that  it  should  place 
considerable emphasis on the issue of access to finance. However, it is important to note 
that  FI  are  essentially  an  alternative  delivery  mechanism  (see  Figure  7)  for  OP 
objectives.  In  principle,  FI  are  more  sustainable  (because  support  is  repaid),  more 
efficient (because they may be able to attract private finance) and more able to enhance 
the  quality  of  investments  because  of  the  due  diligence  in  investment  decision-making 
and the psychological impact of the support being lent rather than given.  

49   Prof  Danuta  Hübner  (November  2010)  EU  Perspective  on  today’s  regional  policy  and  the  relevance  of 
financial  engineering  instruments,  Speech  at  Conference  on  JEREMIE  and  JESSICA:  Towards  successful 
implementation, 29-30 November 2010, Brussels.  

50   A practice which was in evidence from early on in the current period – see Michie R and Wishlade F (2011) 
‘Between Scylla and Charybdis: Navigating FIs through Structural Fund and State Aid requirements’, IQ-Net 
Thematic Paper No. 29(2), European Policies Research Centre, University of Strathclyde, Glasgow. 
51   Later workshop sessions revealed some participants to be of the opposite opinion, having found that 

auditors were more accustomed to auditing grants, causing difficulties in the audit of FIs.  

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Figure 7: A model of grant vs FI support  

Source: Forster, B, Grajewski, R (October 2014)52, p12, own adaption 

In terms of the balance between grants and FIs in Structural Funds programmes, the 
rationale  for  MAs  introducing  FIs  in  place  of  non-repayable  measures  (aside  from  the 
possible  ‘parallel’  motivations  discussed  above)  is  largely  related  to  their  revolving 
nature,  which  has  the  scope  to  increase  the  efficiency  of  these  investments  and  reduce 
deadweight.  The  capacity  to  attract  private  investors  and  boost  the  overall  level  of 
investment  in  the  economy  was  another  purported  benefit  of  FIs  use.  This  included  the 
potential multiplier effect of FIs, whereby private resources leveraged could increase the 
overall amount spent on regional development (in practice, this effect has been limited).  

There is a trend away from offering grant support to businesses in some Member States 
due to concerns about deadweight and fostering a ‘grant culture’. Indeed, addressing the 
‘grant culture’ was one the main rationales for using FIs to emerge from the stakeholder 
seminar. It has been argued that publicly-backed finance for SMEs should be provided on 
a  repayable  basis,  unless  there  is  a  clear  and  strong  rationale  for  providing  grants  (or 
soft loans), and that such a rationale would exist only in certain circumstances.53 In this 

52   Forster, B, Grajewski, R (October 2014) Beurteilung von alternative Finanzierungsarten und –instrumenten 

zur Umsetzung von investiv ausgerichteten Fördergrundsätzen der GAP; Thünen Working Paper 29 

53   Regeneris and Old Bell (2014) A Thinkpiece, Grants for SMEs in Wales. Report to Welsh European Funding 

Office.  

page 26 

Non-repayable grantPublic bodies (EU, state, region)Final recipient (enterprise)Public bodies plus private actorsFunds (Financial Instruments)Subsidised loans,  Guarantees, Equity / Venture CapitalBeneficiary (enterprise)Recycling of fundsGrant based supportSupport by repayable fundsAttraction of private sector participationRelieving public budgets 
                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

context  it  is  perhaps  worth  observing  that  the  2014-20  Common  Provisions  Regulation 
effectively  takes  an  opposing  view,  requiring  ex  ante  quantification  and  justification  of 
the need for FI, but not of the need for grants.  

In general, there was little, if any, explicit articulation of the relationship between grants 
and  FI.  Moreover,  the  existing  literature  offers  little  –  no  studies  were  identified  that 
focus  on  the  rationale  for  the  form  of  public  intervention  –  grants  as  opposed  to 
repayable mechanisms – or the relative efficiency of public funds disbursed in repayable 
form  and  their  capacity  to  draw  in  private  funds;  these  issues  are  mentioned  in  some 
studies, but have not been the primary focus of any. This issue was, however, explored 
in the stakeholder seminar, which suggested a growing recognition of the need explicitly 
to  consider  how  different  instruments  dovetail  with  one  another.  Some  seminar 
participants  considered  that  grants  were  more  suitable  for  certain  types  of  project  than 
FIs  –  such  as  greenfield  investments  involving  infrastructure  and  early  R&D  activities. 
However, it was also noted that the eligibility criteria for FIs are more flexible, with more 
opportunities  for  working  capital  to  be  supported  than  with  grants.  Stakeholders 
considered  that  this  support  is  often  what  SMEs  actually  need,  rather  than  funding  to 
contribute  to  fixed  asset  investment.  Sectoral  coverage  of  FI  is  also  more  flexible  with 
scope to support trade and retail activities which are not really suited or often eligible for 
grants. Some stakeholders noted that the application process for loans is typically easier 
than  for  grants  and  this  is  considered  important  by  viable  firms  (who  are  motivated  by 
the need to obtain access to finance without excessive bureaucracy rather than by ‘free’ 
money).  Several  seminar  participants  shared  the  view  posited  by  one  stakeholder 
(Bavaria  –  DE)  that  a  viable  firm  would  prefer  a  loan  covering  80%  of  its  needs  than  a 
grant covering 20%.  

An important issue  in  2007-13 is  that  grants  were  implemented  sooner  than loans  –  so 
often firms applied for a grant first, then sought out other sources. So, if FIs were  open 
to applications earlier in the planning period, uptake might be higher. 

Sometimes  loans  and  guarantees  are  offered  in  combination  with  grants.  The  rationale 
for  this  has  been  to  make  the  FIs  more  attractive,  especially  for  small  and  micro 
enterprises,  or  to  allow  a  ‘smooth  transition’  from  conventional  grant-based  funding  to 
repayable  instruments.  When  FIs  are  offered  along  with  non-financial  measures  e.g. 
advisory  support,  the  motivation  is  to  offer  all-round  support  to  enterprises  to  enhance 
their  competitiveness,  besides  adapting  the  intervention  to  the  needs  of  the  market  / 
SMEs.  

In  the  case  studies,  MAs  seemed  to  be  more  concerned  with  how  and  whether  to 
combine  grants  with  FIs  and  less  with  combining  non-financial  support  with  FIs.  Non-
financial  support  is  usually  provided  alongside  equity,  but  it  is  frequently  informal  and 
rarely  from  the  same  OP.  Combining  loans  with  non-financial  support  is  less  common; 
combining  guarantees  with  non-financial  support  is  rare,  but  it  is  possible  that  final 
recipients  receive  such  support  through  lenders  rather  than  associated  with  the  FIs  as 
such. Both public and private intermediaries operating FIs tend to consider it within their 
remit  to  provide  non-financial  support  alongside  funding  (e.g.  OP  Languedoc-Roussillon 
(FR),  OP  Economic  Development  (HU),  OP  Economic  Growth  OP  (LT),  OP  Małopolskie 
(PL), OP North East England (UK)). This is an important aspect of support provision and 
potentially a major  advantage of FIs over grants insofar as FIs create an opportunity to 
develop an ongoing relationship between the beneficiary  (i.e. the financial intermediary) 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

and the final recipient which  in turn has the scope to increase the number of ‘investible 
propositions’ in the locality.  

4.2  EQ2: How much support has been provided through financial 
instruments and in what forms?  

The use of FIs in Cohesion policy has increased significantly over successive programme 
periods,  and  ERDF  co-financed  FIs  for  enterprise  support  make  up  the  vast  majority  of 
Cohesion  policy  FIs.  Although  financial  instruments  have  gained  a  higher  profile  in  the 
2007-13 period, the overall levels of commitment remain relatively modest as a share to 
total Cohesion policy expenditure.  

Key findings 

  The  number  of  financial  instruments  offered  is  surprisingly  difficult  to  quantify, 
partly  owing  to  the  lack  of  a  concrete  definition  of  what  constitutes  an  FI  and 
partly owing to the variety of arrangements for their implementation. 

  There are few obvious patterns to policy and the domestic context is important in 

shaping Cohesion policy use of FIs. 

  Loans  are  the  most  widespread  type  of  financial  instrument;  they  are  often 
preferred by policymakers because of their simplicity and ease of setting-up, and 
by firms because they do not imply loss of control. 

  There are fewer guarantee instruments, but some are large national schemes. 
  There is a broadly similar number of equity schemes, but these are more likely to 

be regional in scope. 

  Funds  vary  considerably  in  size  –  from  around  €10,000  to  €550  million,  but 

definitional issues confuse the overall picture. 

  Loans predominate (more than 50% of payments to funds). Equity is significant 

in DE, PT and the UK; guarantees in IT.  

  Support and advice is sometimes offered alongside FIs, provided under other OP 

priorities.  

  Three  types  of  ‘spend’  can  be  identified:  OP  contributions  committed  (policy 
intent);  OP  contributions  paid  to  holding  funds  or  specific  instruments;  OP 
contributions invested in final recipients (firms). 

  There  are  serious  flaws  in  the  data  available,  so  caution  is  required  in  reaching 

firm conclusions. 

  OP contributions committed vary widely – in absolute terms IT accounts for 30% 
of the total; relative to private investment, FIs are more significant in importance 
in HU, LT and PL. 

  Some  65%  of  OP  payments  (but  less  than  60%  of  OP  commitments)  to  funds 

had been invested in final recipients by end 2104. 

  Some large loan funds (>€50m) have invested very limited sums and account for 

a significant proportion of the ‘underinvestment‘. 

The  section  provides  a  stocktake  of  the  main  packages  and  forms  of  support  being 
offered  under  ERDF  co-financed  FIs  for  enterprise  support  in  2007-13 in  the  case  study 
countries.  The  section  starts  with  a  brief  overview  of  the  implementation  of  FIs  for 
enterprise  support in the 25  EU Member States which implemented FIs for this purpose 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

during the period. There then follows an overview of the main features of each type of FI 
as they are being implemented in the countries concerned. 

The use of FIs in Cohesion policy has increased significantly over successive programme 
periods,  and  ERDF  co-financed  FIs  for  enterprise  support  make  up  the  vast  majority  of 
Cohesion  policy  FIs.  Accurately  assessing  the  scale  of  FIs  for  enterprise  support  in  the 
2007-13  period  however  was  hampered  by  the  lack  of  systematic  reporting  until  2011, 
before  which  time  reporting  on  FIs  by  managing  authorities  was  not  obligatory.54  The 
first  summary  report  on  FIs  was  published  by  the  Commission  in  2012;  successive 
reports  have  improved  the  quality  and  comprehensiveness  of  data,  but  many  gaps  and 
inconsistencies  remain.  The  most  recent  report  was  published  in  2015  and  ostensibly 
covers the situation as at end 2014.55 

4.2.1  Forms of support 

In  the  countries  covered  by  this  study  some  784  ERDF  financial  instruments  for 
enterprises had been set up by the end of 2014. This figure comprises 37 holding funds, 
410  funds  set  up  within  holding  funds  and  337  funds  established  outside  holding  fund 
structures, in other words, a total of 747 specific instruments.  

Table 2: Overview of FI in the stocktake countries 

HF 

FEI 

BE 

CZ 

DE 

DK 

ES 

FR 

HU 

IT 

LT 

PL 

PT 

UK 

Total 

2 

2 

1 

12 

2 

9 

2 

7 

37 

2 

17 

168 

14 

23 

128 

36 

22 

410 

NHF 
9 

2 

36 

3 

7 

101 

1 

68 

1 

74 

9 

26 

337 

Note: HF=holding funds; FEI=specific funds set up within holding funds; NHF= specific funds set up outside a 
holding fund. 
Source: 2015 Summary Report. 

54   An amendment to Council Regulation (EC) No 1083/2006 obliged Member States to report on FIs in the 
Annual Implementation Report: (Regulation (EU) No 1310/2011 of the European Parliament and of the 
Council of 13 December 2011 amending Council Regulation (EC) No 1083/2006). 

55   European Commission (2015) Summary of data on the progress made in financing and implementing 

financial engineering instruments reported by the managing authorities in accordance with Article 67(2)(j) 
of Council Regulation (EC) No 1083/2006 (hereafter referred to as “2015 Summary Report”).  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

The  number  of  FI  varies  widely  between  countries  and,  as  explained  in  Box  3  is  not 
straightforward  to  quantify.  For  the  purposes  of  the  2015  Summary  Report  (and  its 
predecessors)  every  funding  agreement  signed  between  a  managing  authority  and  a 
holding fund or directly with a specific fund, as well as each contract between a holding 
fund and a specific fund, is reported as a separate financial instrument.  

Box 3: What is a financial instrument? 

Quantifying the use of financial instruments is not straightforward.  

FIs were not defined precisely in the 2007-13 Structural Funds regulations. The General 
Regulation  stated  that  to  qualify  as  a  financial  engineering  instrument,  an  OP 
contribution  must  target  the  specific  final  recipients/type  of  investments  referred  to  in 
Article  44  (i.e.  enterprises)  and  take  the  form  of  repayable  investments  (i.e.  equity, 
loans  and/or  guarantees).  Article  43(2)  of  the  Implementing  Regulation  specified  that 
co-financed financial engineering instruments must be set up either as independent legal 
entities governed by agreements between the  co-financing partners or shareholders,  or 
as a separate block of finance within a financial institution.  

The  template  monitoring  report  provided  with the  February  2012  revised  COCOF  note56 
supplied  a  form  for  managing  authorities  to  complete  and  submit  with  their  AIRs.  This 
invited information on Holding Funds (Form I) and on Financial Engineering Instruments 
/Financial  Intermediaries  and  provided  a  box  for  the  ‘total  number  of  financial 
engineering instruments supported (no. of agreements signed)’. 

Member States have reported different circumstances in different ways: 

 

 

funding  from  two  different  OPs  into  one  instrument  has  been  reported  variously 
as one FI (e.g. Hungary) or two FIs (e.g. UK). 
some entries seem to represent new tranches of funding to the same FI, but have 
been reported separately, perhaps because they involved a new agreement being 
signed, e.g. Poland. 

  a  fund  procured  for  delivery  at  local  level  with  the  same  terms  and  conditions 
with  many  financial  intermediaries  is  reported  as  many  FIs,  though  it  may 
essentially be only one ‘financial product’ – e.g. Poland and Hungary. 

Importantly,  the  number  of  FIs  is  distinct  from  the  number  of  financial  products  (i.e. 
loans,  guarantees,  equity)  since  a  given  FI  may  comprise  several  different  financial 
‘products’ – i.e. there is a significant number of ‘mixed’ financial instruments. 

56   Guidance Note on Financial Engineering Instruments under Article 44 of Council Regulation (EC) No 

1083/2006 COCOF_10-0014-05-EN (12/02/2012). 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 3: Specific financial instruments by product in the stocktake countries  

Loans 

Guarantees 

Equity  Mixed 

Other 

Not classified 

Total 

BE 

CZ 

DE 

DK 

ES 

FR 

HU 

IT 

LT 

PL 

PT 

UK 

Total 

8 

1 

16 

2 

5 

62 

80 

24 

15 

129 

19 

361 

1 

1 

3 

1 

3 

3 

45 

8 

5 

6 

5 

17 

16 

27 

7 

5 

11 

33 

24 

1 

15 

17 

32 

4 

57 

126 

140 

81 

22 

9 

31 

2 

6 

8 

9 

2 

36 

3 

9 

118 

169 

82 

24 

202 

45 

48 

747 

Note: ‘Not classified’ refers to measures where the type is unclear, typically because no expenditure has been 
reported as reaching final recipients by type of instrument. 

Source: Own calculations from 2015 Summary Report. 

Loans are the most widely used and well-established form of co-financed FI. Loan funds 
are  widely  viewed  as  relatively  simple  and  quick  to  launch  compared  to  other  types  of 
support, and the market uptake also tends to be more rapid.57 

Loan FIs mainly aim to provide access to credit for micro enterprises and SMEs to finance 
expansion  and  investment,  working  capital  and  innovation/R&D-type  activities.  A  very 
wide  range  of  loan  sizes  is  offered  in  the  stocktake  countries,  and  terms  also  vary 
considerably.  There  are  no  ‘typical’  loan  FI  within  countries  since  support  is  tailored  to 
the market being addressed, which generally varies by region and firm size. For example 
microfinance FIs may be included within portfolios where other loan measures operate on 
different terms.  

57   Michie R and Wishlade F, with Gloazzo C (2014) Guidelines for the Implementation of Financial Instruments: 
Building  on  FIN-EN  –  sharing  methodologies  on  FINancial  ENgineering  for  enterprises,  Report  to 
Finlombarda SpA. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 4: Overview of loan FIs in the stocktake countries  

MS  Market situation 

Loan 
range 

size 

Loan 
duration 

Interest rate 
below 
market level 

Non-financial 
support 

BE 

CZ 

DE 

DK 

ES 

Credit rationing and 
need for collateral 

N/A 

5-20 years 

Yes 

Yes, advice and 
management 

Low levels of 
lending generally; 
limited finance for 
micro-businesses 
and start-ups 

Lack of commercial 
loan finance for 
SMEs 

0.5 –15 
million CZK 
(c€18,000 - 
€500,000 

€5,000-
100,000 
(micro) to 
€4-10 million 

‘long-term’ 

Yes 

No 

3-20 years 

Yes in about 
half the 
schemes 

No, except NRW/EU 
Mikrodarlehen 
Business counselling 

Regional challenges 
e.g. in sparsely 
populated regions 

e.g. up to 
DKR 5 million 
(€700,000) 

e.g. 2-7 
years 

No 

Capital 
management, 
project plan, loan 
application 

Credit rationing and 
need for sharing 
risk re R&D 

€50,000-€5m  1-10 years 

Yes in about 
half the 
schemes 

No 

FR 

Credit rationing 

N/A 

N/A 

Mostly yes 

Business and 
management advice, 
training 

HU 

Lack of access to 
finance for SMEs 

HUF 1-20 
million 
(c€3,000-
€60,000) 

1-10 years 

No 

No 

IT 

LT 

PL 

UK 

Lack of access to 
finance for SMEs 

Need for risk 
sharing/ improved 
borrowing 
conditions for SMEs 

Lack of capital for 
SMEs 

Lack of sufficient 
finance/ gaps in 
commercial finance 

N/A 

N/A 

Mostly yes 

Advisory, 
management and 
technical support 

N/A 

1-10 years 

No 

Mostly yes, 
No for “Small 
loans to 
SMEs” funds 

N/A 

3-10 years 

Yes 

Partial: financing, 
training 

3-7 years 

N/A 

Partial 

£1,000 - £5 
million 
(€1,400-€7 
million) 

Note: The stocktake exercise gathered information on whether or not loans were offered at below market rates 
(as a ‚yes‘ or ‚no‘ answer);it is not possible to generalise about what rates were offered. These often vary within 
countries and may in any case be set on a case-by-case basis. 

Source: Consortium research. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Around half the loan funds in the stocktake countries lend at below market interest rates. 
This  suggests  that  offering  finance  on  terms  that  are  more  attractive  than  are  available 
commercially is as relevant an objective as simply improving access to finance. Interest 
rates  are  generally  calculated  in  relation  to  reference  rates  on  a  case-by-case  basis 
taking  account  of  the  creditworthiness  of  final  recipients,  and  subject  to  the  State  aid 
ceilings.  In  addition  to interest  rate  subsidies,  repayment  holidays  or  much  longer  term 
loans (in some cases up to 20 years) than would be available commercially make publicly 
backed loans more attractive.  Even where terms were not  relaxed and the measure did 
not  comprise  an  interest  rate  subsidy  (in  the  sense  of  the  Commission  reference  rate), 
the  simple  fact  of  being  able  to  access  capital  is  important  to  SMEs,  which  often  lack 
collateral  or  track  record  in  support  of  loan  applications,  and  was  especially  so  in  the 
crisis when credit was highly constrained.  

Non-financial  support  is  often  available  alongside  loan  FIs  (slightly  less  than  half  of 
cases). Where it is not described as ‘part’ of the FI, it may  still be available under other 
OP priorities. For example, in Germany, several ERDF programmes offer business advice, 
incubator facilities, R&D/technology transfer etc. as separate measures for SME support. 
Only the NRW/EU Mikrodarlehen offers non-financial support alongside financial support, 
so that in general there is no perceived need for soft-support measures as part of FIs. In 
a very few cases, grants are available alongside loans. For example, the Combined Micro 
Credit  (Hungary)  is  aimed  at  making  loans  more  attractive  for  micro  enterprises  by 
combining them with non-refundable grants.  

Guarantees  provide  support  to  firms  unable  to  obtain  finance  (typically  loan  finance) 
due  to  a  lack  of  collateral.  Guarantees  encourage  banks  or  financial  institutions  to 
advance credit to SMEs by making a commitment to pay the SMEs’ debt if they default. 
There are also examples of counter-guarantee FIs,58 which secure guarantees rather than 
loans, as in Italy and Belgium. Guarantees can be operated at national or regional level. 
Guarantee  FIs  are  used  in  ten  of  the  stocktake  countries  (not  in  Denmark  or  the  UK)  - 
see Table 5 - which also indicates the justification given for the use of guarantees, where 
this is made explicit.  

58   A counter-guarantee is a guarantee given by a guarantee agency/bank to another bank issuing a guarantee. 

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Table 5: Overview of guarantee FIs in the stocktake countries 

MS 

Market situation 

Guarantee fee subsidy 

BE  Credit rationing and lack of collateral among 

Yes 

SMES 

CZ 

Low ratio of SME loans as % of GDP and low 
provision of microfinance for start-ups 

DE 

Insufficient collateral of SMEs (Berlin) 

Yes 

Yes 

ES  Credit rationing 

FR  Credit rationing 

Mostly no, yes for JEREMIE, Canarias (ES) 

Mostly no 

HU  SMEs face difficulties in finding financing on 

No 

the market 

IT 

Credit rationing 

N/A 

LT  Need for improved borrowing conditions for 

Mostly no, yes for Guarantee Fund (LT) 

SMEs 

PL 

Lack of capital for SMEs 

PT  Difficulties in accessing bank financing and 

capital markets 

Source: Consortium research. 

Yes 

Yes 

Equity  FIs  are  less  widely  used  than  other  forms  of  FIs  under  Structural  Funds 
programmes;  within  the  stocktake  countries  they  are  not  used  in  Belgium  or  the  Czech 
Republic.  Equity  FIs  tend  to  be  used  to  support  innovative  firms  and  business  start-ups 
with  high  growth  potential  (and  therefore  high  returns),  but  also  high  risk  (and 
potentially high losses). Non-financial support is frequently available for equity FIs, which 
is  to  be  expected  given  that  equity  investments  are  larger  and  that  investors  take 
ownership  of  part  of  the  undertaking  and  have  a  stake  in  the  success  or  failure  of  the 
venture. 

Most  of  the  equity  FIs  are  regional  in  scope  (and  comparatively  small  in  size).  Such 
approaches  have  been  used  in  a  number  of  countries  under  domestic  policy.  This  has 
typically involved hybrid funds comprising public and private money, manged by private 
sector  fund  managers,  and  with  private  investors  given  incentives  that  either  increase 
their up-side or reduce their down-side, or both.59 However, the literature suggests that 
small regional funds have a number of disadvantages:60 

 

the  costs  of  due  diligence  and  management  support  are  largely  fixed  and  small 
funds  account  for  a  much  higher  proportion  of  operating  costs.  According  to  the 
European  Court  of  Auditors,  providing  access  to  finance  with  fund  sizes  below 
critical mass is very likely to be unsustainable, as the overhead costs and the risks 

59   Murray, G C (2007) Venture capital and government policy, in H Landström (ed) Handbook of Research on 

Venture Capital, Cheltenham: Edward Elgar, pp 113-151. 

60   Murray, G C (2007) Op. cit. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

associated with investments or loans cannot be spread over a sufficient number of 
SMEs.61 

  Returns  to  venture  capital  investing  are  skewed,  with  fund  performance 
depending on a small number of ‘winners’. Hence, diversification is essential but, 
small funds are less able to fully diversify their fund.  

  Small  funds  can  only  make  small  initial  investments  and  have  limited  ability  to 
make  follow-on  investments.  This  means  that  they  are  unable  to  fully  share  in 
successful  investments  and  they  are  exposed  to  dilution  if  their  investee 
businesses raise further finance from elsewhere. 

As  noted  earlier,  it  has  been  argued  that  the  problem  facing  regional  public  sector 
venture  capital  funds  is  not  simply  their  size,  investment  model  or  ability  to  support 
investee firms, but that the key issue is that of ‘thin’ markets62 – disadvantaged regions 
in  particular  lack  an  appropriate  eco-system  to  support  venture  capital  investing.  This 
implies,  among  other  things,  the  need  for  more  emphasis  on  developing  investible 
propositions.  

Table 6: Overview of equity FIs in the stocktake countries  

MS 

DE 

Market situation 

Focus 

Non-financial support 

Need to strengthen equity 
provision for innovative 
SMEs  

Many equity FIs support both 
start-ups and expansion projects, 
some specifically target young 
entrepreneurs 

No 

DK 

Identified funding gap in 
the private capital market 

ES 

Lack of adequate capital 
for businesses 

Specific enterprises considered 
unattractive for traditional VC 
funding 

Seed and expansion 

No information available 

No, except JEREMIE 
Barcelona - networking 
support (‘business angels’ 
action line only) 

FR 

Lack of capital for business 
in general, and start-ups in 
particular 

Sectors supported by venture 
capital are related to the 
competitive clusters identified in 
the “Pôle de compétitivité” or 
sectors with a “structuring role” 
in the regional economy 

Often provided with 
advisory support, delivered 
by the scheme (e.g. 
SORIDEC in Languedoc 
Roussillon) or some 
intermediate bodies 

HU 

Share of VC directed at the 
early period of enterprises 
and start-ups is low 

No 

Seed and expansion phases, in 
innovative, technology-oriented 
sectors (Exception: the 
Széchenyi Capital Investment 
scheme is open not only to 
innovative sectors but also more 
traditional ones). 

IT 

Gaps in terms of lack of 

Flexible - cover support for seed,  Partial 

61   European Court of Auditors (2012) Financial Instruments for SMEs Co-financed by the European Regional 

Development Fund, Special Report No. 2, 2012. 

62   Nightingale, P et al (2009) From Funding Gaps to Thin Markets: Designing Hybrid VC Schemes for the 21st 

century, SPRU, University of Sussex for BVCA and NESTA. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

MS 

Market situation 

Focus 

Non-financial support 

capital for business start-
ups or support investments 
considered too risky for the 
private sector 

LT 

Lack of capital for SMEs 

PL 

Capital gap in SME 
financing, especially at set-
up, early and expansion 
stage and for innovative 
start-ups 

PT 

Lack of capital for business 
start-ups / capital 

UK 

To fill gaps in early stage 
capital available 

Source: Consortium research.  

start-up and expansion stages 

All sectors eligible, priority is 
generally given to IT, high-tech 
(incl. cleantech) and innovative 
sectors 

Partial - Only for equity FIs: 
business / management 
advice, B-plan, networking, 
training 

VC funds provide equity 
investments up to €1.5 million to 
ventures at seed, early or 
expansion stage 

More extensive support for 
equity FIs: strategy, 
research, etc. 

VC funds support SMEs in early 
stage and expansion phases in 
different themes: innovation, 
internationalisation, audiovisuals 

Broad coverage – often a  
‘portfolio’ approach used to cover 
different sectors/stages 

Partial - Only for equity FIs: 
advice, management 
support, networking 

advice, etc. plus innovative 
measures 

In contrast with loans and guarantees, equity FIs vary widely in terms of focus, and have 
differentiated  target  sectors  and  markets.  The  majority  of  equity  FIs  focus  on  a  single 
phase,  such  as  early  stage  capital  or  the  expansion  of  existing  companies.  Among  the 
case study OPs there are examples of co-investment schemes in which the public sector 
invests  alongside  the  private  sector  on  a  pari  passu  basis,  (OP  Languedoc-Roussillon 
(FR),  OP  Economic  Development  (HU),  OP  Economic  Growth  OP  (LT),  OP  Małopolskie 
(PL), OP North East England (UK)), although they operate in slightly different ways.  

Case study OPs and the role of FIs in the development cycle 

Loans  also  predominate  among  the  nine  case  study  OPs.  €1.4  billion  OP  contributions 
were  committed  to  loan  funds,  €561  million  to  equity  funds,  and  €340  million  to 
guarantees funds.  

FIs  can  have  different  roles  in  the  firms´development  cycle  (e.g.  support  in  the  growth 
stage)  in  developing  particular  sectors  (e.g.  tourism)  or  specific  territories  (e.g.  to 
support economically weaker regions). However, FI are typically rather general in scope - 
aimed  at  filling  a  finance  gap,  but  not  necessarily  with  a  focus  on  a  gap  affecting 
particular  market  segments,  sectors  or  territories.  For  instance  in  the  OP  Economic 
Growth (LT) all the FIs are national, address all sectors and were introduced to tackle the 
servere  lack  of  external  finance  for  SMEs.  Only  five  FIs  under  the  JEREMIE  HF  were 
aimed at different types of enterprises. Also in the OP Małopolskie (PL), the FIs basically 
address all sectors with a few schemes concentrating on particular sectors or territories, 
e.g. tourism, rural areas and small towns. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

With respect to the lifecycle of firms, a broad coverage is achieved in different ways (e.g. 
through  one  fund  or  several  specific,  targeted  ones).  Some  funds  support  SMEs  at  all 
stages  of  their  development  (e.g.  loan  and  guarantee  products  in  OP  Małopolskie  (PL), 
OP  Economic  Growth  (LT)).  In  other  cases  the  different  phases  of  the  enterprise  life 
cycle, from seed to growth and expansion stages,  are covered by a  cascade  of different 
specific  funds  (e.g.  Bavaria  (DE),  North  East  England  (UK),  and  the  OP  Technological 
Fund (ES), which has three thematic FIs restricted to the later stage/growth phase (see 
table 7 below)). Only a few funds, however, specifically target the early business start-up 
phase  (e.g.  the  ERDF  cluster  fund  in  Bavaria); and in  some  of  the  case  study  OPs  such 
support is missing altogether – i.e. it is not part of more generic funding (e.g. in the OP 
Enterprise & Innovation (CZ), where there is no seed or start-up capital funding).  

Among  the  more  generic  FIs,  there  is  an  overlap  between  loan  and  guarantee  schemes 
since  they  provide  very  similar  products  to  final  recipients.  Usually,  the  financial 
intermediary  (generally  a  bank)  chooses  which  FI  to  use  in  a  particular  case.  In  other 
cases the FI-products are clearly differentiated according to firm size and capital needs. 
Here there is minimal overlap between the products. 

In  some  cases  FI  design  was  modified  during  implementation.  For  instance  start  up 
support  in  CZ  under  a  credit  and  guarantee  fund  only  operated  for  six  months  (due  to 
internal  reasons),  and  in  other  cases  the  design  of  FIs  was  affected  by  the  economic 
crisis.  Although  some  targeting  was  part  of  the  ToC  (start–ups,  innovation–oriented 
enterprises  and  SMEs  operating  in less-developed  regions),  the  economic  crisis  resulted 
in some FIs providing more mainstream funding than had originally been envisaged (e.g. 
in Lithuania). 

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Table 7: Case study FIs according to role in firms’ development cycle 

OP name 

DE: OP Bavaria 

FR: OP Languedoc-
Roussillon  

UK: OP North East of 
England  

CZ: OP Enterprises & 
Innovation 

PL: OP Małopolskie  

LT: OP Economic 
Growth 

PT: OP COMPETE 

Total no 
of FIs 
(exc. 
HF) 

No of FIs according their role in companies’ 
development cycle 

Seed 

Start-up 

Later 
Stages 

Growth 

Expansion 

4 

3 

8 

4 

14 

24 

27 

1 VC 

1 L 

1 VC 

1 VC 

1 VC 

1 L 

1 VC 

1 VC 

1 VC 

1 VC 

1 VC 

1 G 

1 VC 

1 L 

1 L + 1 
G 

1 L + 1 G 

14 L, G (territorialized) 

24 FIs, specific role only for 5 FIs under JEREMIE HF  

2 VC 

2 VC 

2 VC 

1 VC 

ES: OP Technological 
Fund 

3 

1 VC 

1 VC 

1 L 

1  G (Exploration, 
prototyping) 

1 L (Product 
development) 

1 L (Commercialisation) 

HU: OP Economic 
Development 

Total 

11 

98 

1 VC 

3 L  + 1 G 

2 VC 

1 G 

2 L 

Source: Case study research. Guarantees, Loans, Venture Capital. 

page 38 

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

4.2.2  Quantification of support provided 

Financial  instruments  have  increased  in  prominence  in  the  2007-13  period,  from  an 
estimated investment in FI of €0.6 billion in 1994-99 to some €1.3 billion in 2000-6,63 the 
2015 Summary Report records (OP) commitments to FI totalling over €17 billion by end 
2014.  Almost  €14  billion  of  this  is  accounted  for  ERDF  co-financed  support  for 
enterprises.64 The 12 ‘stocktake’ countries in this study account for just over 80 per cent 
of  OP  ERDF  commitments  to  FI  for  enterprises  among  the  EU28  (FI  were  not  used  in 
Croatia, Ireland or Luxembourg in 2007-13).  

There are three distinct phases in the ‘spending’ process for FIs: 

  OP contributions committed in funding agreements (OP commitments) 

  OP  contributions  paid  either  to  holding  funds  or  specific  funds;  OP  contributions 

paid by holding funds (where they exist) to specific funds (OP payments) 

  OP contributions reaching final recipients (e.g. SMEs) through financial products – 

i.e. loans, guarantees and equity (OP investments in final recipients).  

Taking the stocktake countries as a group, by end 2014 some 58.6% of OP commitments 
had been invested in final recipients. 

63   CSES  (2007)  Comparative  Study  of  Venture  Capital  and  Loan  Funds  Supported  by  the  Structural  Funds, 

report to European Commission. 

64   Article 44 of Regulation 1083/2006 also provides for financial instruments to be used for urban development 
and energy efficiency projects; and around 6 per cent of OP commitments to enterprise FIs are co-financed 
by the European Social Fund.  

page 39 

 
                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 8: Phases and progress in FI ‘spend’ in the stocktake countries 

Source: Consortium calculations from 2015 Summary Report data. 

OP commitments to financial instruments 

OP  commitments  could,  in  principle,  be  seen  as  a  broad  indicator  of  policymaker  intent 
regarding  the  scale  of  FI  spend.  Countries  vary  widely  in  their  use  of  FIs.  In  absolute 
terms  the  largest  volume  of  OP  commitments  to  FIs  are  in  Italy  (over  €3.7  billion  for 
2017-14),  which  accounts  for  over  a  third  of  OP  commitments  to  FIs  by  the  stocktake 
countries.  Relative  to  gross  fixed  capital  investment  (a  proxy  for  private  investment), 
however,  Hungary,  Lithuania  and  Portugal  have  committed  higher  sums.  Significantly, 
widespread  use  of  FIs  in  domestic  policy  is  not  necessarily  reflected  in  the  scale  of  OP 
commitments  to  FIs.  This  may  be  because,  given  the  complexities  of  Structural  Fund 
administration,  the  programme  is  too  small  to  justify  the  setting  up  of  specific 
instruments,  and  this  is  left  to  domestic  policy  (as  in  Flanders  –  all  FI  commitments  in 
Belgium  are  accounted  for  by  Brussels  and  Wallonia)  or  because  policymakers  opt  to 
focus  Structural  Funds  spending  on  particular  types  of  project  that  are  perceived  to  be 
less amenable to the use of FIs, even though repayable support is an established part of 
domestic economic development policy. 

page 40 

OP contributionsinvestedin final recipients:€6.595 billionOP contributionscommittedtothefund(HF orspecificfund):€11.252 billionOP contributionspaidtothefund(HF orspecificfund):€10.545 billionOP 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 9: OP Contributions committed to FI vary widely in stocktake countries 

Note: The whole column reflects the volume of commitments. Gross fixed capital formation (total 
period 2007-2014) is used as a proxy for private investment. 
Source: Consortium calculations from 2015 Summary report and Eurostat data. 

OP Payments to financial instruments 

Importantly,  as  both  Figure  9  and  Table  8  show,  not  all  OP  commitments  made  in 
funding  agreements  had  actually  resulted  in  OP  payments  to  holding  funds  or  specific 
funds by end 2014, but the extent of this varies by country. 

page 41 

050010001500200025003000350040000.00.10.20.30.40.50.6BECZDEDKESFRHUITLTPLPTUK€millionsCommitments as % of gross fixed capital formationCommitted (but not paid to HF/NHF)Paid (to HF/NHF, but not invested)Invested in final recipientsCommitments as % of GFCF (2007-14) 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 8: OP commitments to FI paid to holding funds or specific funds 

OP payments to funds as % of OP commitments 

BE 

CZ 

DE 

DK 

ES 

FR 

HU 

IT 

LT 

PL 

PT 

UK 

Total 

100.0 

100.0 

95.7 

81.0 

100.5 

91.0 

97.9 

98.3 

100.0 

99.4 

47.7 

88.3 

93.7 

EU28 Total 
Note: Figures exceeding 100 per cent may not involve errors, but could be due to the inclusion of interest on 
treasury operations or phasing of reimbursements to financial intermediaries. 
Source: Consortium calculations from 2015 Summary report data. 

93.5 

Table 8 shows that in some countries (notably Portugal, and to a lesser extent Denmark, 
the  United  Kingdom  and  France)  significant  sums  committed  to  FIs  have  not  actually 
been paid to holding funds or specific funds.  

The  volumes  of  OP  contributions  committed  to  holding  funds  and  specific  funds  vary 
widely between OPs. Of the 107 OPs in the stocktake countries, 45 have committed more 
than  €100  million  to  holding  funds  or  specific  funds.  Only  Denmark  and  France  do  not 
have any OPs that have committed more than €100 million to FIs. As would be expected, 
the  OPs  committing  large  sums  include  national  or  multi-region  programmes  (Czech 
Republic,  Spain,  Italy,  Hungary,  Poland,  Portugal).  In  other  OPs,  while  the  absolute 
amounts  may  not  be  not  be  large,  FIs  may  be  significant  within  the  programme, 
accounting for 40% or more of ERDF commitments to support for enterprises. 

The amounts allocated  to specific financial products varies between stocktake countries. 
In  terms  of  the  funds  paid  to  specific  instruments,  loans  predominate  overall,  as 
illustrated  in  Table  9.  However,  equity  is  particularly  significant  in  Germany  (about  a 
third  of  the  total)  and  in  the  United  Kingdom  equity  is  more  important  than  loans  in 
terms  of  payments  to  funds.  Guarantees  are  significant  in  Italy  and  to  a  lesser  extent 
Poland and Spain, but elsewhere payments to guarantee funds are low. 

page 42 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 9: OP contributions paid to specific financial product funds (€m) 

G 

L 

E 

Mixed 

N/A 

Other 

Total 

BE 

CZ 

DE 

DK 

ES 

FR 

HU 

IT 

LT 

PL 

PT 

UK 

367 

75 

751 

10 

739 

82 

530 

70 

58 

7 

1324 

1376 

49 

329 

159 

611 

215 

4914 

29 

159 

62 

4 

213 

19 

77 

260 

28 

121 

314 

483 

163 

231 

125 

35 

20 

218 

474 

396 

234 

1296 

14 

1021 

371 

845 

50 

213 

35 

3332 

243 

989 

356 

1003 

17 

1749 

1286 

263 

52 

10101 

Total 

1836 

Note: ‘N/A’ covers measures where the type is unclear, typically because no expenditure has been reported as 
reaching  final  recipients  by  type  of  instrument.  ‘Other’  includes,  for  example,  interest  rate  subsidies  or 
guarantee fee subsidies when combined with loans and guarantees in a single financing package. 
Source: Consortium calculations from 2015 Summary report data. 

At  the  level  of  specific  instruments,  whether  within  holding  funds  or  not,  fund  size 
varies  extremely  widely.  65  Among  guarantee  funds,  they  range  from  €10,657 
(Hungary)66  to  €550  million  (Italy).  Among  loan  funds,  they  range  from  €43,568  (also 
Hungary)67 to €379 million (Spain). Last, among equity funds, they range from €390,135 
(Poland) to €85.1 million (Germany).  

65   Among funds set up that have had monies paid to them – it is not always the case that funds have been 

paid. 

66   In this context, it should be recalled each funding agreement constitutes a financial instrument and that in 
Hungary, FIs are implemented through a large number of financial intermediaries who essentially operate 
the same measure(s) in different localities. 
67   See previous footnote – the same applies. 

page 43 

 
 
  
  
  
  
  
 
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
  
 
 
 
 
                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 10: Fund size in stocktake countries (amounts paid to holding funds or 
specific funds) 

Guarantees 

Loans 

Equity 

n
a
i
d
e
M

i

n
M

x
a
M

m
1
€
<

70.0  70.0 

70.0 

0.3 

3.0 

18.7 

0 

3 

0.00  0.02 

4.5  16 

n
a
i
d
e
M

i

n
M

x
a
M

5.6  42.4 

92.2 

75.4  75.4 

75.4 

0.00  22.5  237.9 

0.4 

4.8 

9.2 

0.8  24.6  379.0 

m
1
€
<

0 

0 

1 

1 

1 

0.00 

0.00 

0.5 

3.0 

26.0  34 

52.8  29 

3.6  12.3  550.0 

5.0  47.4  202.0 

1.8 

0.00 

4.8 

2.4 

37.4 

43.7  10 

0.00 

0.2 

7.5 

2.4 

36.1 

45.2  18 

0 

0 

0 

2 

m
0
0
1
€
>

0 

0 

0 

2 

0 

0 

m
0
0
1
€
>

0 

0 

2 

0 

2 

0 

0 

3 

0 

0 

n
a
i
d
e
M

i

n
M

x
a
M

m
1
€
<

m
0
0
1
€
>

1.4  25.0  85.1 

0 

0 

2.0 

1.1 

6.1  68.4 

6.3  47.5 

7.0  20.0  24.8 

4.2 

0.4 

6.3  10.4 

1.3 

4.5 

0.00 

3.8  32.0 

0 

0 

0 

0 

4 

5 

0 

0 

0 

0 

0 

0 

0 

0 

MS 

BE 

CZ 

DE 

DK 

ES 

FR 

HU 

IT 

LT 

PL 

PT 

UK 

0.5 

4.0 

61.3 

3 

0 

2.9  18.3  45.5 

Note: These data refer to sums actually paid to specific funds whether in holding funds or not; sums committed 
are higher but data are considered unreliable at instrument level. In some cases, no sums appear to have 
reached a given fund, in which case the minimum is recorded as zero.  
Source: Consortium calculations from 2015 Summary report data. 

Fund sizes are also extremely varied in the case study OPs, as reflected in Table 11.68 

68   Data on the fund size in the case study OPs cannot be directly compared to the fund size in the stocktake 

countries. Case study data refers to commitments and not to sums actually paid to specific funds. This may 
in principle explain higher figures in the case study data. Also not all case study data is from 2014 and this 
may also explain some differences. In addition some FI are classified as 'mixed' and do not appear in the 
stocktake country data. Some discrepancies (e.g. maxima exceed those in the stocktake table) exist in OP 
Enterprises & Innovation (CZ), OP Economic Growth (LT), OP COMPETE (PT), and OP Economic 
Development (HU). 

page 44 

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 11: Fund sizes are extremely varied in the case study OPs (amounts paid 
to funds) 

OP name 

No  of  FIs 
(exc. HF) 

Range  of  Fund  size  (min-max),  €m  OP 
contribution paid to funds 

Guarantees 

Loans 

Equity  

DE: OP Bavaria 

FR: OP Languedoc-Roussillon 

UK: OP North East England 

CZ: OP Enterprises & 
Innovation 

PL: OP Małopolskie 

LT: OP Economic Growth 

PT: OP COMPETE 

ES: OP Technological Fund 

HU: OP Economic Development 

Total 

4 

3 

8 

4 

14 

24 

27 

3 

11 

98 

Notes:  The figures concern the position by 2013/14. 
Source: Case study research 

OP investments in final recipients  

14 

56 

2 

8 

2-156 

2-74 

1-14 

1-37 

70 

4-13 

1-156 

1-5 

1-34 

38-143 

142-314 

5-167 

1-314 

9-16 

11 

3-33 

1-8 

1-81 

19-185 

1-185 

Arguably the key question in quantifying support is to what extent FIs have reached final 
recipients – i.e. individual enterprises. A detailed analysis is hampered by the quality of 
the  data  available.  An  important  issue  here  is  that,  in  some  cases,  it  is  evident  that 
revolved  sums  have  been  included  in  the  sums  invested  in  final  recipients;  in  principle 
these  are  no  longer  OP  funds  and  should  not  be  recorded  as  such.  In  other  cases, 
interest accruing to funds under management has also been invested in final recipients.69 
The inclusion of these sums makes it impossible to determine precisely to what extent OP 
payments  to  FIs  have  been  invested  in  final  recipients.  There  are  also  gaps  in  the  data 
and  evidence  of  misunderstandings  in  the  data  requirements  by  managing  authorities. 
Nevertheless,  it is  clear  that  there  are  wide  variations  in  the  extent  to  which  funds 
committed to FIs have been invested in final recipients – as reflected in Table 12. 

69 Technically these are OP resources. 

page 45 

 
  
  
  
  
  
  
 
 
                                           
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 12: Proportion of OP payments to FI invested in final recipients (% by end 
2014) 

Guarantees 

Loans 

Equity 

Mixed 

Total 

BE 

CZ 

DE 

DK 

ES 

FR 

HU 

IT 

LT 

PL 

PT 

UK 

Total 

EU28 Total 

72 

96 

100 

91 

20 

106 

95 

40 

100 

93 

72 

66 

73 

83 

89 

74 

123 

34 

172 

105 

7 

92 

118 

85 

67 

70 

73 

91 

89 

100 

28 

83 

89 

38 

97 

90 

92 

85 

65 

71 

74 

39 

69 

37 

81 

67 

82 

91 

73 

75 

100 

220 

105 

47 

100 

87 

63 

74 

Note: These data should be treated with caution. Investment rates exceeding 100 percent suggest inclusion of 
returns in amounts invested. 
Source: Consortium calculations from 2015 Summary report data. 

Setting  aside  issues  associated  with  data  gaps  and  the  inclusion  of  revolved  funds,  it 
appears  that  in  most  of  the  stocktake  countries,  FIs  are  85%  percent  invested  in  final 
recipients or more. However, in Italy and especially Spain it is significantly less and these 
two  countries  account  for  most  the  ‘underinvestment’  across  the  EU28  as  a  whole. 
Indeed,  the  aggregate  performance  of  FI  in  terms  of  investments  in  final  recipients  is 
skewed by the performance of some large funds. Taking loan funds as an example (since 
these  account  for  the  bulk  of  OP  contributions  paid  to  funds),  the  larger  funds  have 
invested  a  smaller  proportion  of  OP  contributions  than  loan  funds  as  a  whole 
(see Table 13). Specifically, while loan funds exceeding €50 million are on average 55% 
invested,  smaller  loan  funds  in  the  stocktake  countries  are  about  81%  invested  on 
average. In reality, though, there is no evidence that large funds per se are likely to have 
a  lower  investment  rate  (there  are  many  small  funds  that  have  invested  little),  but  the 
poor  performance  of  a  few  very  large  funds  has  a  significant  impact  on  overall  rates  of 
investment both in the countries concerned and at the level of the EU28. 

page 46 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 13: Proportion of OP payments invested by loan funds >€50m in the 
stocktake countries 

MS  Specific fund (FEI or NHF) 

Set-up 
date 

OP contribu-
tions paid to 
fund 

POR CReO FESR Regione Toscana 
2007-2013. Fondo Unico Rotativo  

2011 

131.8 

105.1 

79.7 

2010 

2010 

120.0 

105.0 

120.3 

1.3 

100.3 

1.2 

2012 

95.0 

17.2 

18.1 

ES 

ES 

JEREMIE-IDEA 

ICO INNOVACIÓN-FONDO 
TECNOLÓGICO 

2009 

2013 

DE  KMU-Darlehensfonds Sachsen-Anhalt 

2008 

DM 23/07/2009- Fondo rotativo 
(inclusi Contratti di Sviluppo) 

2011 

379.0 

314.3 

237.9 

202.0 

DE  Darlehensfonds Thüringen Dynamik 

IT 

IT 

Fondo rotativo finanziamento 
agevolato DM 6 agosto 2010  

Fondo Rotativo PON Contratti di 
Sviluppo 

BE 

Loan Fund of INNODEM2 SA 

DE  KMU-Fonds, Berlin 

IT 

IT 

IT 

Fondo FIT PIA Innovazione - Rome 

Jeremie 007/01 

Fondo FIT PON “Legge 46/82 - 
generalista” 

2009 

2008 

2009 

92.2 

91.6 

90.5 

2011,2012  89.0 

2009 

85.0 

CZ  Credit Fund E 2007, Praha 

2007 

Loan Fund of IMBC - CONVERGENCE 

2009 

Loan Fund of FONDS DE CAPITAL A 
RISQUE - CONVERGENCE 

2009 

75.4 

72.3 

68.5 

IT 

IT 

BE 

BE 

IT 

OP contri-
butions 
invested 
in final 
recipients 

129.3 

4.3 

277.1 

57.8 

% in-
vest-
ed  

34.1 

1.4 

116.5 

28.6 

57.6 

71.3 

17.3 

66.4 

27.6 

72.5 

49.7 

57.2 

62.5 

77.9 

19.1 

74.6 

32.4 

96.1 

68.7 

83.5 

Fondo di rotazione per il 
finanziamento agevolato degli 
investimenti innovativi delle PMI 

2009 

67.4 

144.1 

213.7 

2010 

67.0 

1.0 

1.5 

IT 

Fondo rotativo finanziamento 
agevolato DM 6 agosto 2010  

DE  NRW/EU.Investitionskapital 

IT 

FRIM Fesr - Milano 

2007 

2008 

UK  Scottish Investment Bank Loan Fund 

2010 

DE 

LfA Förderbank Bayern, München 

HU  Mikrofinanszírozó Pénzügyi 

Szolgáltató Zárkörűen Működő 
Részvénytársaság, Budapest 

2010 

2007 

65.0 

64.1 

61.3 

60.0 

52.8 

59.4 

22.6 

9.1 

66.4 

50.9 

91.3 

35.2 

14.9 

110.6 

96.4 

page 47 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

MS  Specific fund (FEI or NHF) 

BE 

Loan Fund of NOVALLIA SA 

IT 

Fondo regionale per la 
reindustrializzazione nelle aree 
industriali (FRAI) 

All loan funds >€50 million 

All loan funds <€50 million 

Set-up 
date 

OP contribu-
tions paid to 
fund 

2009 

2012 

50.0 

50.0 

OP contri-
butions 
invested 
in final 
recipients 

29.2 

5.6 

% in-
vest-
ed  

58.4 

11.1 

2787.1 

2129.4 

1519.9 

1726.3 

54.5 

81.1 

Note: Data should be treated with caution, not least since some funds are ‘over’ invested. The overall figures 
do not adjust for this and treat blank returns as zero (only among loan funds <€50 million). 
Source: Consortium calculations from 2015 Summary report. 

The data shortcomings and the mixed pattern of fund performance are replicated at case 
study  level:  in  a  significant  number  of  OPs  less  than  two-thirds  of  funds  had  been 
invested; elsewhere, absorption rates exceeding 100% point to the inclusion of revolved 
funds, undermining an accurate understanding of fund performance. 

Table 14: Absorption rates at end 2013/2014 are variable and there are data 
problems in the case study OPs, as in the stocktake countries generally 

OP name (cut off date)  Total no 

% OP contributions invested in final recipients 

of FIs 

Guarantees 

Loans 

Equity  

Total 

84% 

78% 

82% 

44% 

50% 

35% 

41% 

65% 

92% 

90% 

87% 

96% 

50% 

80%-100% 

90% 

84% 

166% 

108% 

78% 

117% 

59% 

37% 

45% 

307% 

12% 

51% 

64% 

97% 

90% 

94% 

DE: OP Bavaria (end 
2013) 

FR: OP Languedoc-
Roussillon (end 2013) 

UK: OP North East 
England (end 2014) 

CZ: OP Enterprises & 
Innovation (end 2014) 

PL: OP Małopolskie (end 
2014) 

LT: OP Economic Growth 
(end 2013) 

PT: OP COMPETE (end 
2014) 

ES: OP Technological 
Fund (end 2014) 

HU: OP Economic 
Development (end 2014) 

Source: Case study research 

4 

3 

8 

4 

14 

24 

27 

3 

11 

page 48 

 
  
 
 
 
 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

The following key explanatory factors for weak absorption emerged from the case study 
research: 

  Late  start  up  of  funds  (case  study  OPs  in  ES,  LT,  FR,  HU,  PT,  UK-pilot  Creative 

Content Fund)  

  High  concentration  of  resources  in  Convergence  regions  with  low  innovation 
capacity  (ES).  Focus  on  weaker  regions  with  low  number  of  technology-oriented 
enterprises (DE) 

  Uncertainty of legal framework (ES, HU, DE, PT, CZ) 

  Economic slowdown and budgetary problems in the public administration (ES) 

  Combination of OP-funded loans and guarantees but no clear legal framework for 

combined support (PL) 

  Problems with audits related to the management and control system (CZ, PT) 

  Lack  of  accompanying  measures  to  communicate  the  FI-package  to  enterprises 

(FR) 

The specific reasons for weak absorption vary widely depending on the local context, as 
illustrated in the following examples. 

In  the  French  OP  Languedoc-Roussillon,  the  JEREMIE  contribution  invested  in  final 
recipients  by  the  three  funds  was  41%  of  the  total.  Payments  to  final  recipients  by 
December 2013 were: 50% of the financial resources allocated to the seed loan; 35% to 
the  co-investment  fund;  and  44%  to  the  guarantee  fund.  The  lack  of  non-financial 
support,  including  awareness-raising,  the  small  size  of  the  instrument  and  the 
experimental character of the JEREMIE mechanism, made it difficult to communicate the 
JEREMIE FIs to enterprises. 

In  the  Polish  OP  Małopolskie,  the  guarantee  funds  have  a  generally  lower  level  of 
performance - the average investment rate at end 2014 was slightly below 50%. During 
OP  implementation,  there  was  competition  between  the  guarantees  offered  by  the  fund 
managers  and  other  guarantees  offered  by  banks.  Introduction  of  the  latter  caused  a 
sudden loss of market demand for OP products and thus significant underperformance of 
the  guarantee  FIs.  In  addition,  the  MA  faced  implementation  challenges  connected  to 
combining OP-funded loans with guarantees, where the legal framework appeared to be 
ambiguous. 

Under  the  Portuguese  OP  COMPETE,  only  half  of  the  ERDF  money  allocated  to  FIs  was 
effectively  disbursed  (end  2014).  The  credit line  funds  and  the  finance line  for  Business 
Angels performed well. However, some venture capital FIs disbursed less than one-third 
of  planned  funds.  Problems  associated  with  capturing  private  investment  or  in 
establishing a single fund instead of three led to termination of the respective projects at 
the  beginning  of  2012  and  consequent  adjustment  in  the  previously  approved  venture 
capital  funds.  A  further  implementation  problem  was  experienced  with  the  Portugal  VC 
initiative (PVCi), a project application approved in 2009 and managed in partnership with 
the  EIF.  It  was  annulled  in  2012  because  it  was  not  possible  to  guarantee  that  the 
specific OP regulations as well as EU regulations related to VC supported by ERDF funds 
would be complied with. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Under  the  Spanish  OP  Technological  Fund  by  the  end  of  2014,  the  small-volume  ICO 
Guarantee Fund had a disbursement rate of more than 312%. The medium-volume CDTI 
Loan  Fund  disbursed  almost  35%  of  allocated  funds.  The  large-volume  ICO  Loan  Fund 
was established at the end of 2013 but only 1% had been disbursed by the end of 2014. 
Two  out  of  three  FIs  were  established  too  late  to  be  spent  during  the  programming 
period.  In  addition,  the  Technological  Fund  OP  struggled  with  absorption  rates  due  to 
difficulties in finding final recipients for R&D business investment in Convergence regions. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

4.3  EQ3: What are the management and operational structures for 
financial instruments, and how well are they working?  

The implementation of FI is highly demanding in terms of administrative capacity and the 
varied  skill  sets  required.  This  chapter  addresses  aspects  of  FI  management  and 
implementation  at  the  level  of  the  stocktaking  countries  (12  MS)  and  case  studies  (9 
OPs)  such  as  governance  and  management  structures,  set  up  times,  management  fees 
and  costs,  performance  and  success  indicators,  project  selection  criteria,  capacity 
building, and the approaches taken to exit strategies and risk management. This section 
also presents good practice examples for FI management. 

Key findings 

  Management  and  operational  structures  vary  widely  across  Member  States  and 
regions.  There  is  no  obvious  link  between  the  types  of  FI  and  the  type  of 
management  structure  chosen.  This  implies  that  choices  have  been  driven  by  a 
complex  range  of  factors,  conditions  and  assumptions.  Involving  diverse  fund 
managers creates wider access for SMEs, because of their different specialisms. 

  Set up of FIs within existing structures minimises operational costs and helped to 
speed  up  implementation.  Set-up  times  were  fastest  when  no  selection  process 
was followed. Where national institutions did not have the necessary expertise or 
capacity, the use of external expertise (such as the EIF) was very helpful. 

  The  early  stages  of  the  programme  period  were  characterised  by  considerable 
uncertainty. The regulatory provisions were thin and still geared towards grants. 
FIs  were  being  implemented  in  areas  dominated  by  a  ‘grant  culture’,  where  FIs 
as  such  and  the  related  specificities  of  Structural  Funds  were  not  well 
understood.  All  in  all,  only  a  few  FI  where  operational  before  2010  and  quite  a 
considerable number of funds began operating only in the year 2013. 

  Experience  and  relationship  building  among  key  stakeholders  are  important  for 
successful  implementation.  The  level  of  human  resources  responsible  for  FIs 
within the MAs varies hugely between Member States and regions. In some cases 
the  political  will  to  introduce  FIs  preceded  the  administrative  capacity  and 
experience  of  MA/IB,  which  now  needs  to  catch  up.  As  good  practice  example 
capacity  building  with  EIF  support  helped  to  manage  the  holding  fund  for 
JEREMIE  Languedoc-Roussillon  (FR).  North  East  England  (UK)  represents  an 
example of a region maturing in experience of the use of FI. 

  Management fees and costs are difficult to assess owing to their structure. Fund 
managers  are  predominantly  selected  through  competitive  selection  processes, 
but  the  case  studies  suggest  that  management  fees  (and  costs)  differ  widely 
depending on the nature of the FI and the bodies involved in implementation.  

  The financial crisis had a significant impact on the focus of some FI,  involving a 
shift  towards  financing  working  capital  (in  case  study  OPs  in  LT,  PL  and  HU). 
Overall,  only  a  small  share  of  investments  is  made  in  innovative  enterprises. 
Setting up VC markets to finance high growth enterprises is only a minor focus of 
FIs. 

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4.3.1  Management and operational structure 

Managing  authorities  had  a  range  of  operational  structures  open  to  them  in 
establishing  financial  instruments:  whether  or  not  to  use  holding  funds;  whether  to 
procure fund managers or entrust; whether to establish funds as a separate legal entity 
or as a block of finance within an existing institution. In terms of outcomes, no obvious 
patterns emerge in organisational arrangements – four of the stakeholder countries do 
not use holding funds; the remaining eight use a mix of holding funds and specific funds 
outside  holding  funds;  some  holding  funds  comprise  large  numbers  of  specific  funds; 
some,  surprisingly,  only  one;  some  countries  operate  both  national  and  regional  level 
holding funds; and there is EIF involvement in several holding funds, but not in most, in 
spite of the large number of gap analyses undertaken by the EIF. 

Table 15: Number of holding funds and specific funds in the stocktake countries 

MS 

Holding Funds 

Specific Funds under 
Holding Funds  

Specific Funds  
(non-Holding Fund) 

BE 

CZ 

DE 

DK 

ES 

FR 

HU 

IT 

LT 

PL 

PT 

UK 

2 

2 

1 

12 

2 

9 

2 

7 

2 

17 

168 

14 

23 

128 

36 

22 

9 

2 

36 

3 

7 

101 

1 

68 

1 

74 

9 

26 

Source: Own calculations from 2015 Summary Report. 

There are a number of potential advantages to using holding funds to manage FIs. 
These  include  increased  flexibility,  the  scope  for  a  more  strategic  view  and  a  portfolio 
approach to diversifying risk, securing match funding at the level of the holding fund at a 
sufficient scale to attract EIB funds and the pooling or delegation of some administrative 
tasks at holding fund level. Use of holding funds also has disadvantages. It can involve 
an additional layer of management fees and a higher level of overheads due to the need 
for extra monitoring and scrutiny to mitigate ‘objective drift’. This raises questions about 
the  efficiency  of  models  where  there  are  holding  funds  containing  only  a  single  specific 
instrument. Among participants at the stakeholder seminar, opinion on the usefulness of 
holding funds was divided. Many MAs were strongly in favour, due to  their flexibility and 
the  option  of  moving  funds  between  instruments,  scale  factors,  and  the  expertise  and 
knowledge  a  holding  fund  manager  can  bring.  At  the  same  time,  other  MAs  remained 
sceptical of the potential benefits, citing the additional layer of costs  and reporting, and 
the  potential  loss  of  control  –  especially  as  it  is  the  MAs  which  ultimately  remain 
answerable to the Commission. 

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There  is  no  obvious  link  between  the  types  of  FI  and  the  type  of  management 
structure  chosen,  and  as  there  are  many  combinations  across  Member  States  and 
regions,  this  implies  that  choices  have  been  driven  by  a  complex  range  of  factors, 
conditions and assumptions. 

The  case  studies  illustrate  how  widely  the  simple  governance  model  for  implementation 
of  co-financed  FIs  has  been  translated  ‘on  the  ground’,  with  complex  arrangements 
reflecting  national  (or  regional)  support  structures.  Where  these  are  weak  or  new  (OP 
Languedoc-Roussillon (FR), OP Enterprises & Innovation (CZ)), structures tend to be less 
complicated,  whereas  with  well  established,  strong  national  support  structures  (already 
using  FI)  this  regularly  leads  to  more  complex  structures  for  implementation  of  EU  co-
financed  FIs  (Bavaria  (DE),  North  East  England  (UK),  Małopolskie  (PL),  OP  COMPETE 
(PT)). 

The  complexity  of  the  approach  chosen  also  reflects  the  degree  of  centralisation  of 
Structural  Funds  management  and  implementation.  Although  it  might  be  expected  that 
smaller  countries  and  regions  would  apply  simpler  governance  structures,  this  is  not 
generally the case: sub-regional structures are integrated in the delivery mechanisms of 
some regional OPs (Bavaria (DE), North East England (UK), Małopolskie (PL)); however, 
in most national programmes, the regional  delivery mechanism (i.e. how final recipients 
are  reached)  does  not  much  affect  the  governance  structure  (OP  Enterprises  & 
Innovation  (CZ),  OP  Technological  Fund  (ES),  OP  Economic  Development  (HU),  OP 
Economic Growth (LT), OP COMPETE (PT)). Delivery of FI to final recipients is done either 
through  regional  entities  with  a  strong  (direct)  link  to  the  MA  or  holding  fund  (OP 
Economic Development (HU), OP COMPETE (PT)) or directly from the (specific) fund. 

Most  fund  managers  (below  holding  fund  level)  were  selected  through  a  competitive 
process (public procurement or call for applications). In only two cases (OP Enterprises & 
Innovation  (CZ),  OP  Technological  Fund  (ES)),  public  bodies  were  directly  appointed  to 
manage the FIs. In three case studies, the fund managers are all public (OP Enterprises 
&  Innovation  (CZ),  OP  Technological  Fund  (ES),  Małopolskie  (PL)),  in  three  they  are  all 
private (Languedoc-Roussillon (FR), North East England (UK), OP Economic Growth (LT)) 
and in the remaining three they are mixed private/public. Beneficiaries (fund managers) 
tend  to  be  (a)  banks  or  other  financial  institutions,  private  and  publicly  owned;  (b) 
venture-capital  companies  (including  business  angel  entities),  all  private;  and  (c) 
regional or sectoral support institutions, predominantly public. 

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Table 16: Case study management structures 

OP Name 

Total No 
of FIs 
(excl HF) 

No of 
FM 

No 
of 
HF 

Funding 
agree’ts 
(inc HF) 

FM 
select
ion * 

Legal Status of 
FM 

Public  Private 

DE: OP Bavaria 

FR: OP Languedoc-
Roussillon 

UK: OP North East  
England 

CZ: OP Enterprises & 
Innovation 

PL: OP Małopolskie  

LT: OP Economic 
Growth 

PT: OP COMPETE 

ES: OP Technological 
Fund  

HU: OP Economic 
Development 

4 

3 

8 

4 

14 

24 

27 

3 

11 

4 

3 

5 

1 

9 

16 

~9 

3 

137 

0 

1 

2 

0 

0 

2 

1 

0 

1 

4 

4 

10 

4 

14 

26 

28 

3 

DA 

PP 

PP 

DA 

CA 

PP 

PP 

DA 

138 

CA 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

Note: DA= direct appointment; PP = public procurement; CA = call/applications 

Ownership  /type  and  background  of  fund  manager  also  varied  widely.  The  seven 
holding  funds  covered  in  the  case  studies  were  predominantly  managed  by  public  (or 
semi-public)  institutions.  In  the  case  of  North  East  England  (UK),  two  private  limited 
companies  were  entrusted  with  managing  the  holding  funds  and  the  EIF  has  managed 
holding  funds  in  another  two  cases  (Languedoc-Roussillon  (FR),  OP  Economic  Growth 
(LT)).  Most  of  the  public  holding  fund  managers  were  comparatively  new  institutions  or 
even only set up for the purpose of implementing the 2007-13 FIs. 

Fund  manager  ownership  and  type  for  specific  funds  is  much  more  mixed  among  the 
case  study  OPs.  Only  for  guarantee  instruments  is  there  a  clear  dominance  of  public 
institutions,  mostly  specialised  organisations  with  majority  public  ownership.  Loan 
instruments are managed equally by private and public fund managers and in most cases 
they  co-exist  within  the  same  OP.  For  equity  FIs,  managers  from  the  private  sector 
predominate  (VC  companies,  business  angel  associations),  although  a  considerable 
number of public entities are also involved. Taking all three types of FIs together, there 
are  only  three  OPs  where  there  is  no  (truly)  private  fund  manager  involved  in  FI 
implementation (CZ, PL, ES). 

Regional development goals played a significant role in selection of fund managers in the 
OP Małopolskie (PL). All nine fund managers were selected from regional institutions in a 
competitive, transparent procedure of calls for applications. All fund managers are public 
(or  equivalent  to  public)  bodies  and  had  previous  experience  with  EU  co-financed  FIs. 
Delivery of the FIs is based on the distribution of resources between the fund managers 
located  in  all  the  sub-regions  of  Małopolska.  In  this  way,  the  resources  are  made 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

available to the final recipients locally and reach businesses in the sub-regions, through 
financial intermediaries that are closely linked to local communities and SMEs.  

The regional development orientation is also evident in the OP Bavaria (DE). The FIs are 
managed by two public and two semi-private bodies with long-standing experience. The 
institutions  are  decentralised  with  a  strong  presence  in  the  weaker  regions  such  as 
(Bayern  Kapital in  Landshut  or  S-Refit  in  Regensburg).  Further,  the  LfA  funding  bank  is 
represented  by  the  local  banks  in  the  regions.  The  fund  managers  have  sufficient 
knowledge of the regional and local product and financial markets. The links with regional 
cluster  initiatives  help  to  identify  suitable  investments.  In  the  case  of  the  Risk  Capital 
Fund  I,  start-ups  are  mobilised  through  a  regional  cluster  initiative  focused  on 
biotechnology. 

4.3.2  Set-up times 

Set-up  time  differed  between  countries  and  OPs.  There  were  significant  delays  in 
setting up FIs in many countries; this was partly attributable to the lack of clarity in the 
regulations,  but  also  the  length  of  time  needed  to  negotiate  terms  with  the  various 
actors.  These  delays  are  reflected  in  the  phasing  of  OP  commitments  to  FIs.  Overall, 
almost half of OP commitments were paid to FIs established in or before 2009. However, 
there  were  considerable  variations  between  countries,  with  the  Czech  Republic 
committing  all  contributions  to  FIs  established  in  2007  and  Belgium  the  same  by  2009. 
By contrast, Spain, in particular, but also Denmark and Portugal committed a significant 
proportion of funds as late as 2013; and further, albeit small, amounts were committed 
in 2014.  

Figure 10: OP contributions to FIs per year 

100

90

80

70

60

50

40

30

20

10

0

2007

2008

2009

2010

2011

2012

2013

2014

BE

CZ

DE

DK

ES

FR

HU

IT

LT

PL

PT

UK

Source: Own calculations from 2015 Summary Report. 

FI set-up time varied both between the case study OPs and between different FIs within 
a particular OP.  In two  cases, the  set-up of the full operational system for FIs was  only 
achieved in 2013. Even individual FIs mostly took longer than six months to set up; there 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

was  mixed  opinion  among  MAs  as  to  whether  this  was  an  acceptable  timeframe.  The 
fastest  set-up  was  achieved  when  no  (multi-stakeholder)  selection  process  had  to  be 
followed (OP Enterprises & Innovation (CZ), OP Technological Fund (ES)).  

The stakeholder seminar highlighted that the early stages of the programme period were 
characterised  by  a  great  deal  of  uncertainty.  The  use  of  FIs  was  new  in  many  OPs  and 
the regulatory provisions were thin and still geared towards grants. In addition, FIs were 
being  implemented  in  areas  which  were  dominated  by  a  ‘grant  culture’,  where  neither 
FIs, nor the specificities of Structural Funds, were well understood. MAs considered that 
the process would have been easier if more guidance had been available from the start of 
the period and if it had been clearer, more extensive and less subject to change.  

Beside  the  selection  process,  individual  negotiations  (between  Member  States  and  the 
Commission  or  EIB/EIF)  slowed  down  the  process  considerably  (Bavaria  (DE), 
Languedoc-Roussillon  (FR),  OP  Economic  Growth  (LT),  North  East  England  (UK)).  MAs 
had  to  seek  clarification  on  many  elements  of  the  implementation  process,  and  have 
found  aspects  such  as  public  procurement,  preparation  for  closure  and  State  aid, 
challenging. Supplementing the regulations with COCOF notes also had repercussions for 
audit,  with  the  retrospective  application  by  auditors  of  guidance  notes  on  FIs  that  had 
been set up prior to the availability of the guidance. The lack of expertise of auditors with 
respect to FIs (as opposed to grants) was also problematic.  

Several ‘good practice’ examples emerged from the study. These addressed the fact that 
FIs were being implemented in fields more accustomed to grants, and involved setting up 
and  improving  communication  channels,  especially  with  potential  private  sector  fund 
managers. These aimed to make participation in FIs more attractive, and included  ‘road 
shows’  to  reach  remoter/rural  parts  of  regions  and  marketing  the  funding  logic  to 
financial intermediaries.  Maintaining  good  communication  channels  with  all levels  of  the 
implementation structure has a positive impact on implementation, the capacity to adapt 
FI to changing needs and on uptake.  

An  option  which  has  worked  well  for  some  MAs  has  been  to  use  existing  (national) 
institutions,  which  has  helped  speed  up  implementation.  However,  where  national 
institutions  did  not  have  the  necessary  expertise  or  capacity,  the  use  of  external 
expertise (such as the EIF) was view positively. Further, continuity of implementation in 
terms of stakeholder institutions played a critical role in the set-up and stability of policy 
(OP Economic Development (HU), OP Economic Growth (LT), North East England (UK)).  

4.3.3  Management fees and costs 

It is extremely difficult to provide an assessment of the scale of management fees and 
costs  under  co-financed  FIs  with  any  confidence.  For  many  FIs,  fees  and  costs  are  not 
complete  in  the  summary  data  (e.g.  HU,  LT,  see  annex  6.11),  and  detailed  analysis  of 
the  relevant  data  did  not  even  render  a  reliable  and  plausible  result  for  the  nine  case 
study OPs. 

A  consideration  of  management  fees  and  costs  must  also  take  into  account  that  these 
may  sometimes  be  paid  with  resources  other  than  those  from  the  OP,  and  that 
remuneration  of  fund  managers  may  come  from  sources  other  than  fees.  Further,  with 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

risk sharing FIs, earnings on private contributions may provide an incentive for the fund 
manager to perform even if no performance fees are envisaged. From a Cohesion policy 
perspective,  the  primary  concern  is  with  costs  and  fees  paid  from  OP  contributions,  but 
before the closure declaration is made it is not easy and sometime not possible to know 
how  (or  whether)  such  costs  have  been  paid.  In  short,  the  real  cost  of  running  FIs  is 
strikingly opaque.  

The case studies suggest that management fees and costs differ widely depending on the 
nature  of  the  FI  and  the  bodies  involved  in  implementation.  For  example,  fees  for  the 
loan  FI  in  OP  North-East  (UK)  appear  comparatively  high,  but  this  reflects  the  fact  that 
microfinance  is  being  offered  which  necessarily  carries  relatively  high  transaction  costs 
(this being one of the reasons for the limited commercial availability of microfinance).  It 
also  appears  that  public  intermediaries  do  not  identify  costs  in  the  same  way  as  do 
private  intermediaries.  For  most  of  the  case  study  FIs,  the  annual  management  fee 
charged to the MA or HF respectively, is given in Table 17, below. However, the detailed 
basis  of  the  calculation  is  usually  unclear;  rules  for  fee  calculation  specified  in  funding 
agreements are often complex and often confidential. For this reason a second measure 
or in some cases alternative measure – the cumulated contribution for management fees 
or costs from the OP to the FI product – is also given in Table 15, where available from 
the 2015 Summary report.   

Most  stakeholders  interviewed  claim  that  the  annual  fees  paid  are  (sometimes 
considerably) below the fixed threshold (generally 3%). Clearly, guarantee products and 
loan  schemes  demand  smaller  annual  management  fees  than  equity  funds.  Over  the 
duration of the funds, management fees for equity FIs in two case study OPs (LT and UK) 
exceeded  14%  of  OP  contributions  paid  to  FI  by  the  end  of  2014;  depending  on  the 
extent to which the fund had been invested, this would be even higher as a proportion of 
the  amount  reaching  final  recipients.  However,  the  data  reported  by  MAs  is  far  from 
complete,  so  detailed  comparisons  of  costs  are  not  feasible.  For  example,  in  the  OP 
Economic  Development  (HU),  all  selected  fund  managers  are  granted  an  annual 
management fee of 5% of OP funds under management, which would appear higher than 
the market rates prevailing under comparable conditions or in other countries, but in the 
AIR  and  the  2015  Summary  report,  no  OP  contribution  to  management  fees  has  been 
reported by the MA.  

The role of management fees in the selection of fund managers was called into question 
by  some  interviewees  who  argued  that  capable  financial  intermediaries  were  being 
excluded on cost grounds – in other words, competent fund managers opted not to bid to 
run funds because the levels of remuneration were inadequate. Their argument seems to 
be that the additional administrative burden for running an ERDF-funded (equity) scheme 
are  not  covered  by  the  minimal  difference  in  fees  compared  to  fully  commercial  funds. 
However,  there  is  no  evidence  that  the  fund  managers  who  claim  that  the  fees  are 
inadequate  would  actually  be  more  effective  in  managing  funds  or  supporting  final 
recipients.  

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Table 17: Actual management fees charged to the OP by FIs (NHF) 

OP  

DE: OP 
Bavaria 

FR: OP 
Languedoc-
Roussillon 

UK: OP North 
East England 

CZ: OP 
Enterprises & 
Innovation 

No 
of 
FIs  

4 

Annual management fees of funds 
under management (case study 
data) 

Management fees paid to FI 
until end 2014, in % of OP 
contribution (case study data) 

Guar-
antees 

Loans 

Equity  

Guar-
antees 

0.5% to 1.0 
%  

3%, plus 
performanc
e bonus 

Loans 

Equity  

n.a. 

n.a. 

3 

0.0%* 

3.0% 

3.0% 

0 

n.a. 

n.a. 

8 

4 

4.95%  

1.0% to 
4.5% 

n.a 

14.8%** 

Estimated 2% 
management fee 
(Deloitte, 2014) covered 
partly by non-ERDF 
sources 

n.a 

n.a 

PL: OP 
Małopolskie  

14 

0.5% to 
1.0%  

0.9% to 
2.6% 

2.2 % 

8.6% 

LT: OP 
Economic 
Growth 

PT: OP 
COMPETE 

ES: OP 
Technological 
Fund 

HU: OP 
Economic 
Development 

24 

1%  

0.6% to 
0.9%   

5% to 13% 

5.6% 

3.2% 

15.9% 

27 

n.a. 

n.a. 

3.7% 

1.8% 

3 

0 

0 

1% 

no fee 
charged 
(so far) 

11 

5% p.a. for all financial 
intermediaries; no realised data 
available 

total cost of HF until end 2013: 
EUR 10.2 million, i.e. 1.5% of OP 
contribution 

Source: Case study research, own calculation  

Note: (*) covered by HF management fee (identical FM); no fee has been paid to the financial intermediary, 
who set up a loan portfolio with risk of default partly covered through JEREMIE guarantees, and was in charge 
for, inter alia, monitoring and reporting, State aid supervision, recovery procedures. (**) all FBNE funds except 
micro-loans 

None of the fund managers interviewed was willing to reveal the “real” cost of running an 
individual  FI  as  this  would  disclose  commercially  sensitive  information.  In  OP  Economic 
Growth (LT), the holding fund publishes business data regularly, including profit and loss 
accounts, but these cannot be aligned with the financial performance data of the OP, and 
even  less  so  with  the  individual  FI.  Costs  cannot  therefore  be  compared  between 
different  bodies  (public  or  private).  Comparison  between  different  instruments  is  also 
very  limited,  beyond  the  clear  trend  that  guarantee  instruments  generally  have  the 
lowest  costs,  while  equity  instruments  are  at  the  upper  end  of  the  cost  scale.  This  can 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

largely  be  explained  by  the  fact  that  selection  of  projects  for  equity  investment  takes 
longer and is more expensive, due to the in-depth due diligence required. By contrast, in 
the case of guarantees, due diligence is often  undertaken by the lender, minimising the 
involvement of the guarantee fund in individual investments. 

From  the  case  studies  it  seems  that  fees  and  costs  for  managing  FIs  do  not  differ 
between public and private fund managers, as the procurement process rules out most of 
these  differences.  What  marks  the  difference  between  fund  managers  is  rather  the 
combination  of  financial  and  non-financial  services  applied.  For  instance  some  fund 
manager  (not  necessarily  public  ones)  offer  better  value  for  money  because  their  fees 
include business support advice, e.g. in HU, Languedoc-Roussillon. 

Management  fees  may  not  be  the  only  remuneration  for  fund  managers,  who  may  also 
earn  from  investments  in  enterprises  on  their  own  account.  Funds  may  charge  fees  to 
final recipients e.g. arrangement fees, although this was not mentioned in the case study 
OPs.  What  does  occur  is  that  public  fund  managers,  in  particular,  finance  management 
services to national bodies (ministries) themselves, regarding this as part of their general 
remit, and do not seek  fees from  the ERDF; e.g. in Czech Republic70 and in Spain71 and 
partly in Lithuania72. Integrating FIs into existing public management structures helped in 
some cases to limit management costs attributable to ERDF. However, it is difficult to get 
clear evidence on this. 

Regarding performance and success indicators for fund management, the case study 
analysis  found  that  the  remuneration  of  fund  managers  was  rarely  linked  to  any 
performance  indicators  (mainly  UK).  In  general,  the  main  incentive  is  increasing  the 
volume  of  resources  available  for  the  fund  which  is  mostly  linked  to  the  level  of 
disbursement  to  final  recipients.  The  maximum  consumption  of  available  resources  is 
seen  as  an  incentive  because  it increases  the  scope  of  the  fund  managers’  activities  (in 
most cases) and the efficiency of its operations.  

In Hungary (OP Economic development) the so-called ‘partner limits’ system provided an 
adequate incentive for the fund managers and simultaneously a risk management tool for 
the HF. Monitoring of the project portfolio of the fund managers is provided by an annual 
scoring  system.  The  MA  and  the  holding  fund  manager  used  a  sort  of  “step-by-step” 
performance-based  incentive  in  allocating  the  EU  contributions  to  the  financial 
intermediaries.  The  HF  transferred  the  (ERDF  plus  national)  contributions  to  the 
individual  intermediaries  in  sequential  steps  in  dependence  of  their  past  financial 
performance. This system could be supplemented by outcome indicators. 

70   Fees from the Credit fund are paid from funds that are not considered ERDF. This doesn´t refer to the 

Guarantee Fund. The actual amount of management costs and fees is not yet public. 

71   The public fund manager CDTI set-up the FI action line (CDTI Loan Fund) within its existing structure; 

sometimes co-financed by ERDF. Therefore no operational costs were charged to the FI since they were 
already assigned to other ERDF action lines and specific costs related to this FI were not differentiated. 
Management and control costs for all ERDF funded action lines, including the FI, were classified as technical 
assistance. Only 100% specific and new costs were considered as FI costs, such as adapting ICT software. 
72   Costs and fees are for instance low in the case of the publicly managed INVEGA HF and publicly managed 

Guarantee Fund. But also the Funded Risk Sharing Product operated by private banks has low management 
costs. 

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4.3.4  Project selection criteria 

Project selection criteria and the terms under which FIs are offered vary widely 
not  just  among  countries,  but  between  the  various  FIs  implemented.  These  range  from 
those  which  seem  near-identical  to  strictly  commercial  criteria  and  terms  that  involve 
subsidy elements in the interest rate charged or provide support on terms that would not 
be acceptable commercially (such as the length of the credit term).  

Project  selection  criteria  typically  are  similar  to  those  used  by  commercial  banks.  This 
commercial orientation of project selection criteria poses interesting questions given the 
ultimate wider Cohesion policy objectives of co-financed FIs. It also raises the question of 
how and at which level the contribution of these investments to Cohesion policy goals is 
assessed. Co-financed FIs do, however, differ from their wholly commercial counterparts 
in  several  important  ways.  The  geographical  location  of  the  recipient,  requiring 
operations  in  the  region  where  the  FI  operates,  is  an  important  criterion  common  to  all 
OPs.  Similarly,  compliance  with  the  definition  of  SMEs  or  micro  enterprises,  in  terms  of 
the  number  of  employees  and  upper  limits  on  revenue,  is  also  regularly  used  in  the 
selection  process.  The  ‘lender  of  last  resort’  principle  is  used  in  cases  where 
loan/guarantee-type FIs provide opportunities for beneficiaries that are unable to obtain 
loans elsewhere.  

From  the  case  studies  it  is  clear  that  implementation  of  a  particular  FI  ‘on  the  ground’ 
does not differ according to whether the fund manager is a private or a public body. They 
are  both  bound  by  the  same  provisions  of  the  funding  agreement  and  operate  within 
these  as  due  diligence  allows.  Profitability  criteria  play  a  minor  role  in  the  selection  of 
projects with private fund managers as well as with public ones.  This  is reflected in the 
reluctance  of  many  private  sector  institutions  to  participate  in  co-financed  support 
schemes, because this is considered (rightly or not) to endanger their profitability.  

4.3.5  Capacity building 

As  most  fund  managers  were  either  new  to  FI  management  (as  they  had  only  recently 
been  set  up)  or  new  to  Structural  Funds  implementation  (or  both),  capacity  building 
was  a  prominent  theme.  Stakeholder  seminar  participants  noted  that  that  the  level  of 
human  resources  responsible  for  FIs  within  the  MAs  varies  hugely  between  Member 
States  and  regions  –  and  the  number  of  staff  can  be  very  few.  This  has  important 
implications  for  administrative  capacity,  and  can  strengthen  the  argument  for  involving 
external  or  private  sector  expertise  where  this  is  the  case.  At  the  same  time,  the 
complexity of Cohesion policy administration can prove a disincentive to potential private 
sector  stakeholders  who  often  consider  their  own  audit  and  control  procedures  to  be 
more than adequate and are sometimes surprised at levels of further monitoring required 
as a consequence of Cohesion policy funding. 

Within  the  nine  case  study  OPs,  at  least  five  MAs  had  the  capacity  to  manage  public  FI 
readily available at the start of the period. All had a proven track record of running such 
schemes, mostly including ERDF co-financing. For these OPs this was also the case with 
respect to (most of) the planned fund managers.  

For  the  remaining  MAs  (Technological  Fund  (ES)  OP  Languedoc-Roussillon  (FR),  OP 
Economic  Growth  OP  (LT),  OP  COMPETE  (PT))  managing  FIs  was  relatively  new  and 

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capacity  had  to  be  developed.  According  to  the  interviews  this  took  place  quickly  in  all 
these  cases  and  without  major  problems.  In  two  cases,  the  capacity  building  support 
from the EIF was perceived to be crucial.  

Box 4: Good practice in OP Languedoc-Roussillon (FR) - capacity building with 
EIF support 

The  EIF  managed  the  holding  fund  for  JEREMIE  Languedoc-Roussillon  (FR);  it  was  also 
closely  involved  in  management  activities  and  delivering  technical  assistance  to  fund 
managers.  This  helped  capacity  building,  and  a  number  of  elements  of  good  practice 
emerged  from  the  management  structure,  the  fund  selection  procedures  and 
implementation  rules.  The  mechanism  was  considered  to  have  worked  well  by  the 
different stakeholders interviewed. Positive feedback was also reported in the mid-term 
evaluation  and  the  ex  ante  evaluation  for  the  2014-20  period.  Good  practice  aspects 
include: 

  Seed-loan  and  co-investment  funds:  Strong  orientation  of  the  FIs  towards 
regional  development  goals  is  demonstrated  by  strict  targeting  of  actors  and 
sectors. 

  All  funds:  Management  costs  considered  by  the  three  fund  managers  as 

moderate (low) and concentrated in the first phase of development. 

  Guarantee fund: No fee has been paid to the financial intermediary, who set up a 
loan  portfolio  with  risk  of  default  partly  covered  through  JEREMIE  guarantees, 
and  was  also  in  charge  for,  inter  alia,  monitoring  and  reporting,  State  aid 
supervision,  recovery  procedures.  Gains  from  treasury  management  have  been 
used  within  the  same  financial  instrument.  The  guarantee  fund  manager  is 
identical  with  the  HF  manager  and  thus  an  additional  layer  of  financial 
intermediary is economised. 

  All  funds:  the  EIF,  as  holding  fund  manager,  collected  a  number  of  indicators 
measuring  financial  performance  and  the  characteristics  (age,  employees, 
turnover) of the enterprises supported. 

Source: Case study research 

Interestingly,  the  challenges  encountered  by  the  MAs  (and  partly  the  holding  fund 
managers)  during  implementation  were  similar  for  both  those  the  experienced  with  FIs 
and  those  with  less  experience.  The  major  challenges  in  all  cases  related  to  the  EU 
regulations,  their  interpretation  and  legally  secure  application,  and  their  compatibility 
with  domestic  (legal  and  technical)  requirements.  The  main  areas  concerned  the 
eligibility  rules,  the  options  for  combining  grants  and  FIs  (with  very  different  solutions 
found in the nine cases studies) and hence the design of the individual FI products, and 
an  extensive  list  of  State  aid  issues.  In  some  case  these  had  serious  practical 
repercussions  -  for  example,  in  Portugal,  parts  of  the  management  and  control  system 
had  to  be  redrafted  to  release  a  payment  suspension,  just  as  the  programme  had 
seemed ready to start. Several MAs (with holding funds) found the administrative burden 
linked  to  the  selection  of  fund  managers  a  particular  challenge.  The  highly  technical 
language associated with finance/fund management was also a major challenge.  

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Once the delivery system was set up, new challenges emerged related to monitoring and 
absorption,  and  the  need  to  deal  with  poor  performance  of  individual  funds.  Capacity 
building  to  cope  with  these  challenges  predominantly  took  place  “on  the  job,”  although 
some MAs and holding funds also offered formal training for their own staff and those of 
fund managers. 

4.3.6  FI portfolio management and risk management 

The repayment structure for loan instruments varies from programme to programme. For 
example,  the  repayment  period  of  the  seed  loan  scheme  in  Languedoc-Roussillon  (FR), 
ranges from 6 to 48 months, whereas most other loan schemes in the case study sample 
start at a minimum of 3-4 years and rise to 6-7 years, with the notable exception of the 
Bavarian loan scheme, which can grant credit of up to 20 years duration. 

Exit  strategies  for  equity  funds  seem  to  be  more  similar  across  the  different  OPs, 
although  in  principle  are  less  regulated.  In  general,  equity  funds  calculate  a  five  year 
development  period  before  exiting.  Most  of  the  funds  also  orient  themselves  towards  a 
fixed  fund  closing  date  of  2020,  when  all  deals  must  be  closed  and  exited  from  (at  the 
latest). 

Targeting  the  right  balance  in  terms  of  risk  has  been  difficult  to  address  given  the 
diversity  of  implementation  options  and  situations  addressed.  However,  two  interesting 
points  emerged  from  the  stakeholder  seminar.  On  the  one  hand,  it  was  argued  that,  in 
the context of  economic development policy, there should be a focus  on riskier projects 
and investing in projects which the private sector would not. In any case, with grants the 
public funding is ‘lost’,  whereas  with FI it may be  repaid, so it is worth financing riskier 
projects  on these grounds alone. On the  other  hand, the level of risk that can be taken 
depends  on  how  the  fund  is  capitalised.  For  example,  if  the  fund  is  financed  by  a  loan 
from  the  EIB,  then  there  has  to  be  an  emphasis  on  ensuring  that  the  SMEs  which  are 
funded  can  repay  their  loans  on  time,  so  that  the  EIB  can,  in  turn,  be  reimbursed,  and 
this affects the risk strategy. 

4.3.7  Key success factors in management and implementation 

All  case  studies  offered  very  similar  suggestions  as  to  the  ‘success  factors’  for 
management and implementation:   

  The selection of appropriate fund managers. More specifically, in the case of 
equity  funds,  the  track  record  of  deals  closed,  is  ranked  very  highly  for  all  OPs. 
The requirement for knowledge of the finance sector as well as of Cohesion policy 
(Structural  Funds)  at  the  fund  manager  level  is  considered  crucial,  but  also 
difficult to find (according to case studies in UK, HU, ES, PT, DE, LT; FR, CZ; see 
case  study  section  on  success  factors  for  sound  administration  and  management 
of FIs). 

  The need for regional and local knowledge was stressed by the regional case 
study  OPs  along  with  networks  involving  both  the  business  and  financial  sectors 
(UK, PL, DE, LT, FR). 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

  Clear  organisational 

and 
responsibilities  and  smooth  information  flows  between  the  parts  of  the  system 
was unanimously regarded as key (UK, PL, HU, ES, LT, FR). 

set-up,  with  unambiguous 

competences 

  Shared  objectives.  A  common  view  of  the  relevant  issues  among  the  different 
institutions  involved  and  an  information  exchange  which  goes  beyond  obligatory 
reporting was also mentioned as a success factor by some OPs (UK, FR). 

  Flexibility  of  implementation  arrangements  was  also  mentioned  repeatedly. 
This allows a timely reaction to changes in the context of the programme and the 
ability to “right size” individual instruments or products (UK, HU, ES, LT). 

North East England (UK) represents an example of a region maturing in experience of 
the  use  of  FI.  It  has  successfully  incorporated  learning  from  previous  funds  into  the 
management  structures  and  processes  of  the  Finance  for  Business  North  East  scheme 
(FBNE),  and  this  is  leading  to  positive  outcomes  for  SMEs  in  the  region,  and  the 
achievement of strategic objectives to increase the stock of businesses, sustainability and 
growth  in  higher  value  sectors  of  the  economy.  Good  practice  aspects  include  the 
following:  

  Active  management  of  fund  managers  through  dedicated  and  experienced  HF 

team 

  High calibre, experienced Board members scrutinising performance 

 

Incorporation of learning from previous funds. Detailed operational guidelines set 
parameters  for  fund  manager  activity  but  provide  flexibility  for  investment 
decisions 

  Comprehensive reporting system provides transparency on fund performance 

  Dedicated legacy management body, providing a strategic oversight of past funds  

 

Integrated  model  with  flexibility  to  ‘right-size’  across  funds  depending  on 
performance and reflecting changing market gaps 

  Additional human resources allocated within sub-region which had not participated 

as well in the FBNE, which resulted in an uptake of funds 

  Most  funds  have  the  flexibility  to  structure  loans,  quasi-equity  and  equity.  Only 

one pure loan fund, which caters for simpler, small business needs 

  Early focus on planning for exits to maintain returns profile 

  Reaction  to  under-utilisation  in  sub-region  by  establishing  additional  presence  to 

promote fund. 

  Fund managers have successfully levered additional investment at the deal level 

  User-friendly online system to capture economic impacts. 

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4.4  EQ4: What does the monitoring and evaluation system show?  

Monitoring and evaluating progress  in FI implementation and capturing results is a vital 
part  of  sound  implementation.  This  section  describes  the  characteristics  of  the  indicator 
system  linked  to  FIs  and  comments  on  the  completeness.  The  reporting  provisions  and 
the reliability of reported data are examined. Moreover in this section evaluations carried 
out in the 2007 to 2013 programming period are reviewed. 

Key findings 

  Monitoring of most FIs appears to be inadequate to assess their performance. At 
EU and at programme levels the quality of information on the implementation of 
FIs  is  poor.  While  monitoring  provisions  were  an  obligatory  element  of  each 
funding  agreement  from  2006,  it  should  be  noted  that  data  reporting  was 
obligatory  only  from  2011,  and  even  then  some  data  was  reported  only  on  an 
optional basis. 

  Case  studies  indicate  that  there  is  no  continuous  control  of  the  quality  of 
monitoring data provided, apart from  ERDF-related audits, State aid inspections 
and European Court of Auditors visits. 

  Overall, the evidence from evaluations of the performance of FIs is very limited. 
The  academic  literature  is  focused  on  venture  capital.  However,  equity  is  the 
least  used  of  the  three  main  types  of  ERDF  co-financed  FIs.  Loans  and 
guarantees are relatively under-evaluated. 

  Few  evaluation  studies  consider  the  rationale  for  the  form  of  intervention  – 
grants as opposed to repayable mechanisms – or the relative efficiency of public 
funds disbursed in repayable form and their capacity to draw in private funding. 

  Very  few  studies  addressed  the  capacity  of  FIs  to  contribute  to  wider  regional 

development objectives (the main aim of ERDF programmes). 

The overall quality of information on FIs is poor. This is partly due to the fact that 
at the start of the 2007-13 period, specific reporting on FIs was not required (though of 
course standard requirements and the principles of sound financial management applied 
to  FIs,  as  to  the  other  areas  of  Cohesion  policy  expenditure).  However,  it  was 
subsequently  recognised  that  because  of  the  additional  complexities  of  FIs  this  was  a 
significant gap in understanding how managing authorities were implementing the Funds 
and  in  2011  an  amendment  to  the  Regulation73  obliged  Member  States  to  report  on 
financial  instruments  in  their  Annual  Implementation  Reports.  The  year  2012  was 
therefore  the  first  year  in  which  MAs  were  required  formally  to  report  on  the 
implementation of financial instruments. Even so, these requirements were rather limited 
in scope (Article 67(2)(j)): 

  a  description  of  the  financial  engineering  instrument  and  implementation 

arrangements 

 

identification of the entities which implement the financial engineering instrument, 
including those acting through holding funds 

73   Regulation  1310/2011  of  13  December  2011  as  regards  repayable  assistance,  financial  engineering  and 
certain provisions related to the statement of expenditure, OJ L337/1 of 20.12.2011, amending Article 67 of 
the General Regulation.  

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  amounts of assistance from the Structural Funds and national co-financing paid to 

the financial engineering instrument 

  amounts of assistance from the Structural Funds and national co-financing paid by 

the financial engineering instrument. 

The legacy of this is that financial information is at best patchy and there is evidence 
that  the  reporting  requirements  for  FI  spend  have  often  been  misunderstood.  Because 
many elements  of the reporting under the AIR were  voluntary, quite basic data is often 
missing so that it may be unclear, for example, whether information is unavailable on the 
operation  of  a  given  FI,  or  whether  there  really  have  been  no  investments  made. 
Conversely,  there  are  instances  where  the  amount  invested  in  final  recipients  exceeds 
the  OP  commitments,  suggesting  that  returns  to  the  fund  have  been  double  counted  if 
reinvested.  The  extent  to  which  this  has  happened  is  unknown,  making  it impossible  to 
provide quite basic aggregate data on the extent to which OP commitments have actually 
been  invested,  let  alone  assessments  of  how  much  they  really  cost  to  run  and  what 
impact they might have had on jobs or investment. 

Monitoring and  evaluation systems  were generally  not  in place  in the case  study 
OPs for the start of the period (e.g. no evaluation plans). The case studies suggest that 
there is generally no ongoing quality control of data monitoring beyond that arising 
from  ERDF-related  audits,  State  aid  inspections  and  European  Court  of  Auditors  visits. 
Audits  forced  MAs  to  improve  data  collection;  however,  these  enhanced  efforts  may  be 
misdirected  if  irrelevant  data  for  evaluation  purposes  are  collected  or  if  data  are  not 
accessible for evaluators. 

The  monitoring  systems  in  place  usually  have  only  a  few  indicators  and  these  are 
generally  inadequate  to  provide  the  basis  of  an  assessment  of  impact.  The  indicators 
collected by the MA cover in most cases spending, output indicators and a limited set of 
result  indicators  –  if  any  (jobs,  total  investment  volume).  Effects  on  employment  are 
monitored  by  many  OPs,  however,  there  are  some  OPs  with  no  result  indicators  (OP 
Technological Fund (ES), OP  Economic Growth OP (LT), OP COMPETE  (PT)). Existing FI-
related  “impact”  indicators  in  the  OPs  (e.g.  in  the  OP  Economic  Growth  OP  (LT))  are 
actually context indicators which do not reveal much relevant information on the effects 
of FIs. Indicator sets were in most cases developed for grants rather than for FIs (“grant 
thinking”).  It  is  also  worth  noting  that  little  has  been  formally  recorded  anyway  since 
investment projects are still ongoing. 

There is a great deal of soft information on the effects of FIs which is difficult to capture 
via  the  classical  indicator  sets  and  which  requires  a  FI-specific  approach  (e.g.  start-ups 
and  companies  receiving  intensive  non-financial  support  to  build  up  their  business 
competence). 

Outcomes  on  company  growth,  improved  survival  rates  of  new  businesses,  turnover, 
sales,  innovation  capacity  or  indicators  on  the  horizontal  priorities  (sustainability, 
equality) are not collected in the central monitoring system. Part of the reason for this is 
to  avoid  additional  costs  and  administrative  burden  for  the  implementing  bodies  (the 
approach being to keep monitoring light and leave the optional evaluation to collect more 
in-depth data). 

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The  exception  is  the  North  East  England  OP  (UK),  where  the  FI-related  indicator  set  is 
more  advanced.  Indicators  are  used  to  monitor  a  number  of  different  strategic 
objectives,  such  as  increasing  business  density  (including  in  disadvantaged  areas), 
improving survival rates of new businesses, and creating/safeguarding jobs (including in 
disadvantaged areas). 

Across the case study OPs as a whole, there is a general lack of information at end user 
level  (final  recipient),  however,  the  stakeholder  seminar  concluded  that  it  is  difficult  to 
impose  more  requirements.  The  collection  of  result  indicators  at  the  level  of  end  users 
(final recipients) is costly and increases the administrative burden and transaction costs 
for the financial intermediaries who deliver FIs. Micro and small companies which receive 
FI  support  are  often  overburdened  to  report  more  elaborate  performance  data.  In 
addition,  experienced  staff  are  necessary  to  establish  and  run  more  sophisticated  and 
reliable  monitoring  systems,  and  often  such  skills  are  unavailable  (and  are  anyway 
costly).  

Information  is  sometimes  collected  on  the  ground  but  not  shared  or  reported  in  the  IT 
system (i.e. it may be known to fund managers but not shared with evaluators). Venture 
capital  funds  with  a  small  number  of  investments  are,  in  theory,  easier  to  monitor; 
however, commercial confidentiality issues also arise as an important consideration. Fund 
managers  may  be  opposed  to  sharing  in-depth  information  on  their  portfolio  (e.g. 
performance  of  enterprises,  invested  sectors).  In  the  Languedoc-Roussillon  (FR)  OP,  a 
much  broader  range  of  indicators  seems  to  be  available  for  individual  FIs,  covering  the 
structure and development of each company supported, yet this information could not be 
accessed due to confidentiality rules in the funding agreements. 

Existing  evaluations  provide  very  limited  evidence  on  the  effectiveness  of  ERDF-
supported  FIs  for  enterprise  support.  Evaluations  which  assessed  FIs  in  relation  to 
recipient firms in general indicated that the SMEs increased jobs and turnover, but only 
in a few cases were such outcomes measured in terms of the net effects of FI support.  

It  remains  unclear  what  is  the  capacity  of  FI  to  contribute  to  regional  development 
objectives;  the  relative  efficiency  of  FI  as  opposed  to  grants  is  also  unknown  and 
underexplored. 

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Table 18: Monitoring systems in the case study OPs generally have few 
indicators and are inadequate to assess the intervention logic 

OP name 

Examples of indicators related to FIs 

DE: OP 
Bavaria 

FR: OP 
Languedoc-
Roussillon 

UK: OP 
North East 
England 

Output indicators 

*Supported enterprises 
*No of investments 
*VC investments 
*Loan fund investments 
*No of projects financed by FIs 
*No of companies involved 
*No of SMEs financed 
*No of innovative SMEs support.  
*No of investments in SMEs with 
high development potential 
*No of SMEs receiving financial 
assistance 
*No of start-ups supported 

CZ: OP 
Enterprises 
& Innovation 

PL: OP 
Małopolskie  

LT: OP 
Economic 
Growth 

PT: OP 
COMPETE 

ES: OP 
Technologica
l Fund 

HU: OP 
Economic 
Develop-
ment 

*No of supported projects of 
direct support to SMEs 

*No of enterprises supported 

*No of SME supported by FIs 
*private investment attracted 

*Financing oriented to potential 
growth sectors 
*No of guarantees 
*Management costs as % of 
invested capital 
*No of projects per size, sector 
*No of employees in final 
recipient 

*Decrease of the number of  
SMEs without access to financing 
resources (Loan) 

Source: Case study research 

Result indicators 
*Jobs created /safeguarded 

Context indicators 
*Employment trends 
in lagging regions 

*Gross direct jobs created in 
FTE 
*Survival rate at 3 years 
after start-up  

*No of gross jobs created / 
safeguarded 
*Private sector leverage 
*Improved environmental 
management 
*Collaboration with 
knowledge base 
*No of businesses created / 
attracted 
*No of businesses created / 
attracted surviving 12month 
*No of newly established 
firms 
*No of newly created jobs 
(gender) 
*Created jobs in micro, 
small and medium 
enterprises 
n/a 

n/a 

n/a 

*Investment in fixed 
capital formation as 
% of GDP 
*Labour productivity 
(% of EU15 average) 

*Gross no of jobs created 

*Growth of GVA 
*Change in e-
business index 
*Induced private 
investments 

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A mixed picture of evaluation activity emerges from the case studies. In some cases, no 
specific  evaluations  have  been  undertaken  (OP  Technological  Fund  (ES));  others  were 
early  in  the  lifetime  of  the  FI  (OP  Languedoc-Roussillon  (FR),  OP  COMPETE  (PT))  or  did 
not  cover  the  FI  in  sufficient  detail  to  draw  meaningful  conclusions  (OP  Economic 
Development  (HU)).  North  East  England  (UK)  was  interesting  in  commissioning  parallel 
evaluations  of  all  three  JEREMIE  instruments  in  England,  allowing  for  cross-comparison 
and shared learning. In some cases, evaluations have been designed to draw lessons to 
inform programming for 2014-20 (Languedoc-Roussillon (FR), North East England (UK)). 

In Bavaria (DE), the MA initiated a mid-term evaluation of the OP, which also addressed 
the  implementation  of  FIs.  The  focus  was  on  delivery  of  the  FIs  as  well  as  on  the  early 
effects  (a  counterfactual  evaluation  indicated  statistically  significant  effects  of  venture 
capital  funds).  For  the  new  programme  period,  three  recent  ex-ante  assessments  have 
retrospectively viewed the three venture capital instruments and the loan funds operated 
under the previous 2007-13 programme. 

Table 19: Case study evaluation activity 

OP name 

Evaluation carried out 

Comments 

DE: OP Bavaria 

OP Mid-Term-Evaluation (MTE) 
incl. FI 

Focused on delivery and early 
effects 

FR: OP Languedoc-
Roussillon 

UK: OP North East England  

Ex-ante assessment of FIs 

Early FI review 

FI MTE, in parallel with other 
JEREMIE regions 

Cross-cutting theme ex-post 
evaluation 

Additional review looking ahead to 
2014-20 

CZ: OP Enterprises & 
Innovation 

PL: OP Małopolskie 

Thematic FI MTE 

FI MTE 

LT: OP Economic Growth 

3 evaluations on FIs for 
enterprises, one of them assessing 
early impact of FIs 

PT: OP COMPETE 

OP MTE incl. FI 

ES: OP Technological Fund'  No specific FI evaluation 

Focused on lessons for 2014-
2020 

Examined delivery and early 
effects; compared 
performance across 3 regions 

Cross-cutting theme 
evaluation optimism not 
borne out by realisation 
period. 

Focused on absorption 
capacity 

Focused on system 
functioning, not effects and 
contribution to OP 

A counterfactual impact 
evaluation was carried out 

Too early in FI lifecycle to 
assess progress 

HU: OP Economic 
Development 

Source: case study research 

No informative evaluation 

Existing studies descriptive or 
partial 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Reporting  provisions  and  quality  control  mechanisms  are  defined  in  the  different 
financing  agreements  and  monitored  by  regular  audits.  Audit  reports  are  in  some  cases 
strictly confidential (e.g. Bavaria (DE)) and therefore of limited use for evaluators. 

In  the  OP  Economic  Development  (HU),  a  standardised  monitoring  information  system 
was developed to serve as a central system for collecting and monitoring all kinds of data 
from the FI managers. Data obligations  were specified for different timespans, including 
daily, monthly, quarterly and yearly reporting obligations. For venture capital operations, 
the  monitoring  system  required  more  detailed  information  about  each  project  than  for 
loans  and  guarantees.  In  the  quarterly  report,  the  funds  investment  policy  and  the 
quality and progress of the portfolio has to be summarised. The quarterly reports and the 
yearly reports of the fund managers which contain similar information are not public and 
therefore beyond the scope of evaluators. 

In the OP Enterprises & Innovation (CZ), the fund manager regularly updates the data in 
the monitoring system and regularly reports to the MA. However, the MA does not have 
special  quality  control  mechanisms  to  cross  check  data  reported  by  the  fund  manager, 
although it can check during an on-site inspection of a project. 

In the OP Economic Growth (LT), the FI manager INVEGA publishes performance reports 
four  times  a  year.  These  include  the  main  indicators  for  separate  FIs.  Key  indicators 
reported to the MA are the number of SMEs supported and private investment attracted 
through  FIs.  These  are  OP–level  indicators  and  their  accuracy  can  be  checked  by  the 
Monitoring  Committee,  especially  if  there  are  inconsistencies.  However,  there  is  no 
systematic cross-checking of data reported by FI managers to the MA. 

In North East England (UK), the funding agreements between the HF and fund managers 
require regular reporting on a range of indicators (see Box). Investee SMEs are prompted 
to  provide  updated  information  at  six-monthly  intervals  through  a  user-friendly  online 
real-time database.   

The  Languedoc-Roussillon  (FR)  case  highlighted  challenges  in  establishing  consistent 
data sets on key indicators (jobs) in a multi-actor environment. For example, the number 
of jobs created that was monitored through  the OP monitoring system is lower than the 
number  of  jobs  reported  in  the  EIF  reporting  system,  because  the  former  also  includes 
jobs  maintained.  The  2013  AIR  indicates  that  the  guarantee  instrument  had  created  or 
maintained  a  total  of  6,725  jobs  by  the  end  of  2012,  whereas  an  EIF  presentation 
quantifies the number of employees hired or maintained in SMEs by October 2012  for all 
three FIs at only 1,369.  

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Box 5: Good practice in OP North East England (UK) – effective monitoring and 
reporting  

In  the  North  East  England  OP,  reporting  by  Fund  Managers  to  the  HF  takes  place  at 
three levels (and the requirements are specified in the Funding Agreements): 

  Monthly  reports  containing  basic  compliance  information  for  each  investment; 
outline information for each investment made during the relevant month; general 
fund reporting; and manager activity. 

  Quarterly reports detailing: jobs created and safeguarded; turnover  created and 
safeguarded;  investment  leverage;  status  of  investments;  new  IPR  registered; 
etc. 

  Annual  reports  including  include  number,  amount  and  recipients  of  investment; 
failure  rate  of  investment;  level  of  arrears;  income  and  expenditure  accounts; 
valuation  of  Fund’s  assets;  jobs  created/safeguarded;  private  sector  leverage; 
variation from baseline projections in the Business Plan; geographical breakdown, 
and a general report  on the key actions and events in relation to the Fund over 
the  period.  An  overview  table  shows  clearly  performance  against  Key 
Performance Indicators, with a traffic light system to flag areas of concern. 

  The HF managers (North East Finance) have developed a real time database used 
by  all  Fund  Managers  and  investees.  The  database  includes  all  necessary 
information  from  the  point  of  enquiry  to  the  investment  decision.    The  investee 
SMEs  are  then  prompted  to  update  the  database  online  at  six-monthly  intervals 
directly,  with  data  on  performance  since  the  investment.  This  is  regarded  as 
much  more  efficient  and  effective  than  previous  methods  of  surveying  SMEs  by 
phone. 

  The HF manager makes biannual visits to each Fund Manager to undertake desk-
verification  of  files  to  cross  check  data  reported.  Other  safeguards  are  in  place, 
e.g. requirement for all jobs to be evidenced by contracts.  

Source: Case study research 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

4.5  EQ5: What are the outcomes and how effective have financial 
instruments been? 

This  section  verifies  the  initial  outcomes  of  FI  implementation  including  the  leverage 
effect,  the  extent  to  which  FIs  revolve  and  remain in  a  cycle,  and  short-  and  long-term 
results.  Ideally,  funds  invested  in  FIs  become  self-sustainable,  which  increases  their 
impact  compared  to  grant-based  mechanisms.  This  section  also  assesses  achievements 
regarding  operational  and  strategic  goals  as  set  out  in  the  ToC  based  on  the  evidence 
collected and draws conclusions on the optimum scale of the FIs, and the impact on the 
related market of venture capital and equity, where relevant. 

Key findings 

  There are large variations between countries in the level of private sector money 
attracted. Most private co-financing was for venture capital (although VC remains 
a very small part of the overall picture), while much lower contributions went to 
loans  and  guarantees.  Case  studies  show  that,  at  the  level  of  private  sector 
contributions to holding funds or individual FIs, only minimal private money was 
attracted  to  FIs  in  most  cases.  This,  however,  does  not  take  into  account  the 
amount invested directly by companies in expanding or renewing capacity, as the 
data  reported  do  not  cover  any  additional  private  resources  at  the  level  of  the 
financial  product  or  the  final  recipients.  Case  study  interviews  suggest  much 
higher levels of private contributions at firm level in all cases.  

  There is little information on revolved funds and there is insufficient reliable data 

to be used for even a tentative estimate of ‘revolved’ public money. 

  Among  the  case  study  OPs,  the  revolving  nature  of  funds  seems  to  be  treated 
very  differently.  Many  of  the  FIs  do  not  have  an  explicit  strategy  for  revolving 
funds or providing a legacy. 

  The loan schemes of five case study OPs have already reported revolved money 
– with a range between 25% and 200% of the original amount disbursed – while 
other  loan  schemes  have  not  yet  reached  the  stage  of  revolving,  partly  due  to 
the late start and the average loan duration. 

  Most  venture  capital  funds  have  been  established  for  a  fixed  duration,  typically 
10 years. With the exception of the UK, the final financial outcome and hence the 
sustainability of the public money invested has not been estimated.  

 

 

In  some  case  studies,  FIs  clearly  improved  access  to  finance  for  a  considerable 
number of enterprises (e.g. around 7% of all SMEs in Lithuania). Accordingly, an 
important OP objective, to ´increase SME access to finance´ was achieved. 

In  terms  of  final  outcomes  such  as  productivity,  employment  etc.  too  few  MAs 
provide  such  data  related  to  FIs  to  make  any  assessment  of  their  impact:  job 
outcomes are reported in only five cases; and only North East England  (UK) has 
collected data that shows the effects on innovation capacity. 

  Case  studies  show  that  effects  of  the  FIs  on  the  turnover,  job  creation,  the 
innovation  capacity  and  competitiveness  of  supported  companies  are  not 
systematically  measured.  Although  some  enterprises  were  able  to  improve 
technology  and  upgrade  their  business  processes,  FIs  were  also  used  for 
financing working capital. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

As  part  of  the  study  data  on  effectiveness  of  FI  was  sought,  including  private  sector 
money attracted, the extent to which public money has revolved and final outcomes such 
as productivity, employment etc. at the firm level. 

Overall, the evidence from evaluations of the performance of FIs is very limited, 
whether  in  the  existing  literature  or  from  information  generated  in  this  study.  The 
academic literature is focused on different dimensions of the ‘access to finance’ question 
and  much  of  it  focuses  on  publicly-backed  venture  capital.  However,  equity  is  the  least 
used of the three main types of ERDF co-financed FI and tends to be focused on market 
niches.  Loans  and  guarantees  are  relatively  under-evaluated,  particularly  in  countries 
without  a  strong  tradition  of  regular  policy  appraisal.  There  are  no  studies  that  give 
detailed  consideration  to  the  rationale  for  the  form  of  intervention  –  in  what 
circumstances are repayable instruments more effective or efficient than grants? What is 
their capacity to draw in private funding that would not have been provided otherwise? 

In  terms  of  private  sector  money  attracted,  analysis  of  OP  contributions  shows  that 
out of €10.5 billion paid to holding funds (HF) and specific funds (NHF), only €533 million 
(5.1 %) came from private sources.  

Table 20: Private sector contributions to FI (HF, NHF) in the stocktake countries 
are generally modest, though there are exceptions 

HF 

BE 

CZ 

DE 

DK 

ES 

FR 

HU 

IT 

LT 

PL 

PT 

UK 

OP 

Private 

% 

OP 

Private  % 

3,826.7 

325.0 

8.5  NHF 

6,718.7 

207.9 

3.1 

- 

- 

- 

- 

402.6 

55.2 

849.1 

724.3 

228.5 

548.0 

312.3 

706.8 

- 

- 

- 

- 

-  BE 

-  CZ 

-  DE 

-  DK 

5.7 

1.4  ES 

0 

0 

0  FR 

0  HU 

395.7 

234.5 

0 

0 

0 

0 

1,296.4 

27.4 

2.1 

13.6 

617.8 

363.5 

47.5 

2.2 

16.3 

0 

0 

55.4 

15.2 

0 

0 

3.4 

0.5  IT 

2,967.5 

35.7 

1.2 

0 

0 

0  LT 

0  PL 

6.0 

1.9  PT 

309.9 

43.8  UK 

37.4 

336.1 

31.9 

377.0 

0 

0 

5.8 

1.7 

0 

0 

81.4 

21.6 

Source: Own calculations from European Commission (2015) Summary Report. 

There  are  wide  variations  between  countries,  with  the  UK  attracting  inputs  from  the 
private  sector,  and  smaller  sums  in  France  and  Portugal,  but  some  stocktake  countries 
attract no private funding at all.  

Most private co-financing was for venture capital (€400 million – 23%), while much lower 
contributions  went  to  loans  (€105  million  -  2.1%)  and  guarantees  (€7  million  -  0.4%). 
The  capacity  to  attract  private  co-financing  for  venture  capital  improved  substantially 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

during  the  period.  Private  investors  contributed  only  10%  of  resources  for  FIs  set-up 
during  2007-09,  but  their  share  of  total  contributions  increased  to  24%  for  FIs 
established  during  2011-14.  Nevertheless,  venture  capital  remains  a  very  small  part  of 
the overall picture of co-financed FIs.  

National or regional authorities, and any other investor, may provide funding that is not 
part of the OP. However, data on these resources is very limited. Also, the data reported 
do not cover any additional private resources at the level of the financial product or the 
final  recipients.  These  resources  may  represent  an  important  share  of  private 
contributions attracted by FIs. Although considerable effort has been invested in getting 
a  clear  picture  of  the  effect  of  FIs  there  are  still  uncertainties  left  concerning  its 
quantification  in  many  case  studies.  Nevertheless,  a  tentative  indication  of  leverage  (in 
the sense of funds attracted, whether public or private, other than co-financing) is given 
below. 

National or regional authorities, and any other investor, may provide funding that is not 
part of the OP contribution. However, data on these resources is very limited. In addition, 
the  data  reported  do  not  cover  any  additional  private  resources  at  the  level  of  the 
financial  product  or  the  final  recipients.  These  resources  may  represent  an  important 
share  of  private  contributions  attracted  by  FIs.  A  proper  assessment  of  the  capacity  of 
FIs to act as a catalyst for further private funding should consider all the different levels 
at  which  additional  resources  can  intervene,  including  the  financial  products  and  final 
recipients,  so  the  AIRs  focus  on  contributions  to  the  OP  underplays  the  likely  role  of 
private funds. 

The leverage effect in the following table is calculated in principle on the basis of the total 
public  (EU  and  national)  and  private  financing  levered  in  at  various  levels  of  the 
implementation  chain  related  to  the  ERDF  contribution  (EC  definition).  The  data  base, 
however,  is  very  heterogeneous  in  the  case  studies,  which  makes  a  comparison  of  the 
figures difficult. For example, in OP Bavaria (DE) the calculation of the leverage effect is 
based on a comprehensive retrospective analysis undertaken by Prognos (2014) as part 
of the ex-ante evaluation, whereas in the case of OP Technological Fund (ES) the figures 
are  estimates,  due  to  the  lack  of  a  reliable  existing  study.  Further,  in  some  cases  the 
calculation  has  been  based  on  committed  funds  (e.g.  PT),  in  others  on  disbursed  funds 
(e.g. FR). 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 21: Leverage - attraction of private and public financial resources 
compared to the ERDF contribution 

OP name 

No of 
FIs 

G 

L 

E 

 Notes 

DE: OP Bavaria 

4 

2.2 

4.9 
to 
20.4 

Very high leverage in one risk capital fund (S-
refit) from including a further private fund 
(usual range is between 1.5 to 7) 
Source: Prognos 2014 

4 

9.0 

2.2 

PL: OP 
Małopolskie  

14 

1.2 
to 
1.5 

1.2 
to 
1.5 

FR: OP  
Languedoc-
Roussillon 

UK: OP North 
East England 

CZ: OP 
Enterprises & 
Innovation 

LT: OP 
Economic 
Growth 

PT: OP 
COMPETE 

ES: OP 
Technological 
Fund 

HU : OP 
Economic 
Development 

3 

18.0 

4.0 

8.5 

Credits to SMEs from the guarantee fund were 
entirely private  
Source: PWC-evaluation report, April 2015 

8 

3.1 

2.3 
to 
9.2 

Wide variation between FIs 
Source: Holding Fund December 2014 
quarterly reports 

Guarantee fund supports loans from private 
banks  
Source: Data given by fund manager 

Minimal leverage; mainly national public co-
financing not private contribution.   
Source: Calculation by national expert based 
on 2014 AIR  

Considerable private money only in guarantee 
funds 
Source: Calculation by national expert  

1.4 
to 
2.0  

Leverage rather modest 
Source: COMPETE Execution Report 2014 

Only minimal private money attracted to FIs 
Source: Estimate by national expert based on 
2013/2014 AIR 

Leverage is highest in the case of guarantee 
schemes 
Source: MA weekly report (first week 2015) 

24 

5.3 

1.5 

1.4 

27 

3 

2.0 

1.3 

1.2 
to 
1.35 

11 

2.4 

1.3 

1.7 

Source: Case study research; Guarantees, Loans, Equity. Please note that not all contributions at all levels are 
covered 

It  has  become  evident  that  comparison  within  and  between  Member  States  only  makes 
sense  on  the  level  of  FI  type  (guarantees,  loans,  equity).  Even  so,  the  differences  are 
higher than can be easily explained. 

For guarantee schemes, high leverage might be expected (or multiplier as it is referred 
to in the Financial Regulation) as the amount of loans disbursed to final recipients (by the 
credit  institutions  receiving  the  guarantee)  is  usually  much  higher  than  the  guarantee 
amount  (to  the  credit  institutions).  Indeed,  in  three  cases  (out  of  six  case  studies  with 
guarantee  schemes)  the  multiplier  ranges  between  5.3  (OP  Economic  Growth  (LT)),  9.0 
(OP  Enterprises  &  Innovation  (CZ))  and  18.0  (Languedoc-Roussillon  (FR)).  Other  case 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

studies  reported  leverage  of  2.4  (OP  Economic  Development  (HU))  and  below,  with  OP 
Małopolskie (PL) being the lowest (1.2-1.5). In most cases the assumption is that not all 
resources  paid  to  the  final  recipients  have  been  accounted  for.  The  money  levered  in 
comes in all cases from the loan-awarding bank, which in general is a private institution 
(with  exceptions  in  OP  Enterprises  &  Innovation  (CZ)  and  OP  Technological  Fund  (ES)), 
thus most of the multiplier is generated by private money. 

For  loans,  the  leverage  factor  ranges  between  1.2  and  4.0,  with  only  two  OPs  showing 
as  outliers  on  the  upper  end  of  the  scale  (Languedoc-Roussillon  (FR)  at  4.0  and  North 
East  England  (UK)  at  3.1).  The  values  between  1.2  and  2.2  originate  from  the  funding 
decision at OP-level and thus represent basically how much national (public)  money has 
been allocated to these FIs. Private money plays a (quantitatively) small role, unless the 
loan  funds  are  managed  by  private  institutions  (Bavaria  (DE)  and  Languedoc  Roussillon 
(FR)) and interest subsidies are not given by the scheme (North East England (UK)). 

The  differences  in  leverage  are  higher  for  equity,  yet  they  also  seem  to  be  the  most 
reliable.  The  leverage  in  the  OP  Economic  Development  (HU),  OP  Economic  Growth  OP 
(LT)  and  OP  COMPETE  (PT)  –  all  three  in  countries  where  VC  market-making  was  a 
prominent  goal  –  is  hardly  larger  than  for  loans  and  involves  only  modest  private 
contributions.  For  the  equity  schemes  in  Bavaria  (DE),  Languedoc-Roussillon  (FR)  and 
North East England (UK), the leverage is considerable, ranging from 2.3 to 20.4 (without 
the outliers between 3.8 and 10.6). Most of the money levered in is private and managed 
by  the  equity  fund  (this  does  not  include  all  (private)  investments  at  the  level  of  final 
recipient). 

In  terms  of  the  extent  to  which  public  money  has  revolved,  the  only  indication  of 
revolving  money  comes  from  comparing  contributions  invested  in  enterprises  and 
resources paid to FIs. However, there was insufficient reliable data to be used for even a 
tentative estimate of ‘revolved’ public money.  

The  revolving  nature  of  funds  seems  to  be  treated  very  differently  among  the  Member 
States. Many of the FIs do not have an explicit strategy for revolving/providing a legacy 
(with  exceptions  in  North  East  England  (UK)  and  Languedoc-Roussillon  (FR)  –  e.g.  the 
holding  fund  in  North  East  England  has  a  policy  of  repaying  the  EIB  loan  first  before 
targeting  a  sizeable  legacy  fund).  Some  case  study  OPs  aim  to  let  the  revolving  of  FIs 
(and  hence)  legacy  take  place  at  the  level  of  fund  managers,  others  at  the  level  of 
holding fund. However, few loan schemes (and no guarantee schemes) have yet reached 
the stage of revolving (except in Bayern (DE), the Economic Development OP in Hungary 
and  Małopolska  (PL))  partly  due  to  the  late  start  of  the  loan  schemes  and  the  average 
loan  duration.  In  the  ROP  Languedoc-Roussillon  and  in  Lithuania  (Economic  Growth)  a 
substantial  share  has  already  been  repaid  to  the  HF,  where  the  timing  and  process  of 
reuse is not yet fixed and will most likely not take place in the 2007-2015 period. 

For equity funds the issue is different; most of equity funds have been established for a 
fixed  duration,  typically  10  years.  Although  there  are  reported  exits  (with  positive  and 
negative results) from many funds, they involve fewer than 10 % of the total number of 
deals.  With  the  exception  of  the  UK,  the  future/final  financial  outcome  and  hence  the 
sustainability of the public money invested has not been estimated. North East England, 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

on  the  other  hand,  expects  its  holding  fund  (comprising  loan  and  equity  sub-funds)  to 
generate close to 100 % of ERDF plus the public sector match.  

Table 22: Returns achieved and strategy for revolving funds 

OP 

Clear indication of 
revolved funds 
(FI set up date) 

Actual 
paybacks 
(2013, 
estimated) 
OP contri-
bution = 
100% 

Destination of 
revolved funds  

Comments 

Loans 

Equity 

Loans 

Loans  Equity 

DE: OP 
Bavaria 

FR: OP 
Languedoc-
Roussillon 

Yes  
2010 

Yes  
2010 

UK: OP North 
East England 

No 
2011 

CZ: OP 
Enterprises & 
Innovation 

PL: OP 
Małopolskie  

LT: OP 
Economic 
Growth 

PT: OP 
COMPETE 

ES: OP 
Technological 
Fund  

HU: OP 
Economic 
Development 

No 
2007 

Yes  
2009-
2010 

Yes  
2009-
2010 

No 
2008-
2013 

No 
2012-
2013 

Yes 
2007-
2011 

No 
2007-
2009 

No  
2010 

No 
2009-
2010 

 - 

No 
2010-
2012 

No 
2010-
2013 

No 
2009-
2012 

No recycling 
foreseen within 
programme period  

No recycling 
foreseen within 
programme period 

25% 

FM 

FM 

30%* 

HF 

HF 

HF 

NHF 

    -  

0 

0 

20% -200%  FM 

- 

64% – 
126%** 

HF 

HF 

0 

0 

HF 

HF 

NHF 

- 

MA 

MA 

34%*** 

Repaid amounts are 
kept in a separate 
programme account 

Source: Case study research; FM=Fund Manager; HF=Holding Fund; *repayment to HF; **small Loans to 
SMEs only, ***repayments from fund managers to MA 

Overall, in terms of job creation, approximately 115,000 jobs were reported as created 
by the FIs, although this figure was affected by reporting inaccuracies.  

In terms of final outcomes such as productivity, employment etc. too few MAs provide 
such data related to FIs to make any assessment of their impact. In the case studies, job 
outcomes  are  reported  in  only  five  cases;  jobs  created  in  Bavaria  (DE)  are  below 

page 76 

 
 
 
 
 
 
  
 
 
 
 
  
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

expectations,  whereas  results  for  the  OP  Enterprises  &  Innovation  (CZ)  appear  over-
proportional in relation to the total OP figure. Only North East England (UK) has collected 
data that shows the effects on innovation capacity (in line with a key strategic objective); 
its  system  and  evidence  of  outcomes  appear  sophisticated.  Weaknesses  in  performance 
capture  are  evident  in  a  number  of  case  studies  (output  data  is  only  available  for  OP 
Technological  Fund  (ES),  OP  Languedoc-Roussillon  (FR),  OP  Economic  Growth  OP  (LT) 
and OP COMPETE (PT). 

In some cases, and especially for equity FIs, it is too early for an assessment, in others 
the  strategic  programme  goals  are  too  broad  e.g.  long-term  economic  growth  of  the 
programme area, to allow for any separate assessment of the net effects of FIs.  

As described in the earlier report chapter on theories of change, MAs have tended to view 
FIs as mechanisms for improving access to finance for SMEs, which is often an important 
component  of  an  OP  strategy,  rather  than  as  alternative  tools  for  pursuing  wider  OP 
(regional  development)  objectives.  Improved  access  to  finance  is  achieved  when  funds 
are  disbursed,  so  evidence  of  what  the  investment  itself  contributed  to  (and  achieved) 
would not necessarily be sought.  

Indeed,  the  case  studies  show  that  effects  of  FIs  on  turnover,  job  creation,  the 
innovation  capacity  and  competitiveness  of  supported  companies  are  not  systematically 
measured. Although some firms upgraded their technology and technology and business 
processes,  it  seems  that  FIs  in  some  countries  were  extensively  used  for  financing 
working capital as opposed to fixed investment. As reported in the case studies from PL, 
FR, PT and HU loans for working capital are often awarded in combination with loans for 
investment  as  an  accompanying  measure  to  ensure  the  implementation  of  an  overall 
project. To what scale loans are given exclusively for working capital is unclear. 

In the following table the scale of working capital supported through FIs is estimated. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 23: Scale of working capital supported through FIs 

OP name 

DE: OP Bavaria 

FR: OP Languedoc-
Roussillon 

UK: OP North East 
England 

CZ: OP Enterprises & 
Innovation 

PL: OP Małopolskie  

LT: OP Economic 
Growth 

PT: OP COMPETE 

ES: OP Technological 
Fund  

HU: OP Economic 
Development 

Total 
no of 
FIs 

Share of loans for 
working capital as 
% of all L/G-
products (volume) 

Comments 

4 

3 

8 

4 

14 

24 

27 

3 

11 

Not eligible 

11% 

Not eligible 

Unclear eligibility 

9% 

~60% 

4 Loan products with working 
capital eligible; usually combined 
with investment credit 

Estimate based on interview with 
MA 

Partly eligible, but no 
figure available 

Not eligible 

~7,5% 

1 dedicated product, (very small) 1 
product with working capital eligible 

Source: Case study research 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 24: Case study outcomes 

OP name 

Main sectors/targeted (actual) 

Target areas 

No of SMEs 
supported 
(start-ups) 

New jobs 
created 
(safeguarded) 

Effects on 
performance, 
innovation capacity, 
competitiveness 

Comments  

DE: OP Bavaria 

FR: OP 
Languedoc-
Roussillon 

UK: OP North East 
England 

Loan: crafts and trade 
VC: technology firms 
Loan: young micro-enterprises 
VC: developing SME technology firms 
Guarantee: established SME, wholesale trade, 
renting activities, ICT 
Loan: wide spectrum 
VC: large proportion of tech 

lagging areas 

unspecific 

460 

1,285 

513 

No data 

No data 

No data 

Job effect below 
expectations 

geographical 
distribution of SMEs 
supported and jobs 
created is measured 

689  
(44% start-
ups) 

1,953  
(2,803) mainly in 
disadvantaged 
areas 

136 new collaborations 
with knowledge base 
18.9 million R&D 
levered in 

Survival pattern of 
start-ups is observed 

No data 

unspecific 

2,100 

5,780 

No data 

CZ: OP 
Enterprises & 
Innovation 
PL: OP 
Małopolskie  

ES: OP 
Technological 
Fund 
HU: OP Economic 
Development 

77% Micro-enterprises 
Sectors: Manufacturing, Trade, services 

geographical 
distribution of 
investments available 
unspecific 

1,544 

162 

No data 

4,700 

No data 

No data 

LT: OP Economic 
Growth 

PT: OP COMPETE 

Guarantees: mainly young enterprises 
Loans: mainly wholesale and retail 
VC: mainly technology firms 
SMEs in a wide range of economic activities 

Convergence region 

3,900 

752 SMEs, 191 large enterprises 
Industrial sector, agriculture,  wholesale 

Convergence regions 

756 

Loans: 96% micro-enterprises 
Guarantees: 59% micro-enterprises 
VC: young micro-enterprises 
Sectors: 1) wholesale, trade 2) professional, 
scientific and technical activities 3) 
manufacturing 

geographical 
distribution of 
investments available 

14,752 

61,896 

No data 

No data available 
(only for total 
OP) 
No data 

No data 

No data 

Source: Case study research 

Over-proportional job 
effect in relation to 
total OP 

No systematic 
approach to capture 
effects 
A positive effects on 
enterprises is expected 
but evidence is lacking 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Achievement of FI objectives in the case study OPs 

The assessment of effectiveness in the case study research examines FI attainment of 
strategic  and  operational  policy  objectives  (the  intended  change).  Operational 
objectives are short-term results for the target group (e.g. improved access to finance,) 
and include also assumptions for the successful implementation of the FIs (e.g. sufficient 
response  by  start-ups  and  companies  in  the  focus  area).  Strategic  objectives  relate  to 
longer  term  Cohesion  policy  objectives  which  are  stated  in  the  OPs  (e.g.  FIs  should 
contribute  to  strengthening  of  the  entrepreneurial  base,  to  market  making  for  private 
investments  or  boosting  growth  and  job  creation).  The  evaluation  question  related  to 
effectiveness  is  ‘How  and  to  what  extent  have  the  stated  policy  objectives  been 
achieved?’ This refers back to the building blocks of the “theory of change” which should 
be  critically  assessed  based  on  evidence  and  the  perceptions  of  stakeholders.  Based  on 
the  collected  evidence  in  the  case  study  research,  a  judgement  (rating) is  made  on  the 
effectiveness  in  achieving  the  operational  and  strategic  goals  and  assumptions  for 
successful  implementation  of  the  FIs  that  were  set  out  in  the  conceptual  model.  The 
ratings provide options on a scale of 1 to 5, with 1 indicating “very low contribution” and 
5  indicating  a  “very  high  contribution”.  It  is  also  possible  to  choose  “don´t  know”  to 
indicate lacking evidence. 

In  total  114  FI-related  goals  in  the  9  OPs  were  evaluated,  of  which  63  are  operational 
objectives (e.g. improved access to finance) and 51 strategic objectives (e.g. growth and 
employment).  In  general  the  appraisal  of  all  the  operational  objectives  (63  individual 
objectives  including  assumptions  in  the  case  study  OPs  altogether)  of  the  priority  axes 
within  which  the  FI  were  implemented  showed  that  almost  all  of  them  were  achieved, 
70% to a high degree. For the strategic objectives (more related to the regional economy 
or the SME sector), the appraisal was clearly positive for less than half of them (39% of 
goals  were  achieved  to  a  high  or  very  high  extent).  For  almost  half  (45%)  of  these 
objectives  an  assessment  of  the  FI’s  contribution  was  not  possible  due  to  lack  of 
appropriate data. In these cases it was not possible to assess whether FIs have achieved 
their  strategic  goals.  The  full  list  of  rated  goals  is  provided  in  the  annex  6.7 
(Experts´judgement on the contribution of FIs supported to the intended change). 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 11: Effectiveness in achieving operational and strategic objectives of FIs  

60%

50%

40%

30%

20%

10%

0%

45% 

54% 

31% 

5% 

5% 

2% 

5% 

4% 

13% 

10% 

19% 

8% 

don´t
know

very low

low

medium

high

very high

Operational objective

Strategic objective

Source: case study research (9 OPs with 114 objectives in total); the full assessment is provided in annex 6.7 

At OP level, a very heterogeneous picture can be seen. The case study research assessed 
OP Bavaria (DE), OP Languedoc-Roussillon (FR), OP Małopolskie (PL), OP COMPETE (PT), 
and  OP  North  East  England  (UK)  highly  in  terms  of  operational  effectiveness,  whereas 
strategic  effectiveness  was  harder  to  assess  at  this  stage.  Only  OP  North  East  England 
(UK) and OP Małopolskie (PL) have achieved most of their strategic objectives so far.  

In  Bavaria  many  of  the  assumptions  for  the  successful  implementation  of  risk  capital 
funds  worked  out  in  practice,  e.g.  interviews  confirmed  a  high  response  by  business 
angels,  numerous  awareness  activities  were  introduced  by  fund  managers,  the  due 
diligence is strict, and interviews confirmed stable partnerships of financing partners.  In 
this  case  the  effectiveness  in  achieving  operational  objectives  was  rated  as  high.  In 
contrast, for the loan fund, although the fund manager confirmed the focus on innovative 
projects, there is insufficient evidence that the innovative focus is translated into practice 
and  that  in-house  innovation  really  happens  as  intended  by  the  loan  instrument.  For 
strategic OP objectives such as strengthening the entrepreneurial base and sustaining an 
adequate level of employment, it is not possible to prove whether the interventions have 
been  effective.  Some  proxies  (such  as  investment  and  employment  representing  the 
entrepreneurial base) may give an indication, but must be interpreted with caution. 

In  the  Economic  Growth  OP  (LT),  FIs  clearly  improved  access  to  finance  for  a 
considerable  number  of  enterprises,  around  7%  of  all  SMEs  in  Lithuania.  It  is  assumed 
that  for  most  of  the  SMEs  (and  in  particular  for  start-ups),  FIs  represented  the  only 
source  of  finance.  The  number  of  SMEs  supported  and  private  investment  attracted 
through  FIs  met  the  expectations  of  the  programmers.  However,  to  date,  little  can  be 
said on the effectiveness of FIs in achieving strategic objectives in the context of the OP. 
This  is  due  to  the  limited  number  of  studies  which  have  taken  place.  Evaluation  of  the 

page 81 

 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

impact  of  EU  structural  assistance  on  SMEs  (2014)74  concluded  that  FIs  were  an 
important factor in increased labour productivity in Lithuania, although this statement is 
not  supported  by  any  hard  evidence.  In  the  Lithuanian  OP,  the  clearest  inconsistency 
between  the  (retrospective)  Theory  of  Change  and  FI  implementation  was  how  SMEs 
used  FI  funds.  The  programme  documentation  identified  the  need  for  investment  in 
modern technology and equipment. However, the crisis caused a shift in the purpose and 
form  of  FIs,  as  a  result  of  which  FI  were  often  used  to  help  SMEs  survive  difficult 
economic conditions. 

In the Małopolskie Regional OP (PL), implementation of FIs has proven largely consistent 
with  the  retrospective  Theory  of  Change  and  the  respective  strategic  and  operational 
goals of the OP. However, increased competitiveness and innovation cannot be measured 
by hard evidence but can only be based on fund manager perception. 

In  North  East  England  (UK),  the  Finance  for  Business  North  East  scheme  has  fulfilled  a 
key  objective  of  the  OP  in  building  a  comprehensive  regional  revolving  fund,  and 
developing  the  private  investment  community  and  capacity  in  the  region.  Its  focus  on 
supporting  technology  and  innovation  tied  in  with  OP  objectives,  while  other  funds 
covered the broad business stock, enabling start-ups and growth in non-priority sectors. 
The  more  experimental  pilot  Creative  Content  Fund  has  been  less  successful,  however, 
with poor returns and high failure rate. 

In  the  OP  Technological  Fund  (ES)  there  are  indications  (but  no  evidence)  that  the  ICO 
Guarantee  Fund  and  CDTI  Loan  Fund  will  be  able  to  achieve  some  of  their  specific  and 
strategic objectives. However, the ICO Loan Fund is unlikely to meet its objectives. 

With  regard  to  the  cost-effectiveness  of  FIs  of  different  types  compared  to  grant 
schemes, the case studies came to very different conclusions (see also table below): 

  The costs of FIs are significantly higher than the cost of an additional job created 
by non-repayable support for SME investment (Bavaria (DE), Małopolskie (PL)) 

  The actual cost per gross job created by FIs (FBNE) are in the same range as by 
grants  from  a  major  domestic  grant  scheme,  the  Regional  Growth  Fund  (North 
East England (UK). The piloted (sector-specific) Creative Content Fund (CCF) was, 
however, less cost efficient than grants. 

  FIs  (credit  fund,  guarantee  fund)  are  more  cost  effective  to  create  jobs  than 

grants (OP Enterprises & Innovation (CZ)). 

In Lithuania the cost-efficiency of FIs and grants was evaluated in 2014. However, there 
were no clear conclusions as the instruments were found to be too different. 

In other cases (OP Technological Fund (ES), OP Economic Development (HU), COMPETE 
(PT))  there  was  not  enough  information  to  compare  the  cost-effectiveness  of  non-
refundable and refundable assistance. 

74   Evaluation of the impact of the European Union structural assistance on the small and medium-sized 

business entities. Conducted by UAB ‘BGI Consulting’ for the Ministry of Economy, March 2014 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Overall,  there  is  limited  evidence  on  cost-effectiveness  of  FIs,  but  it  seems  FIs  do  not 
perform unambiguously better than grants.  In Bavaria (DE), Małopolskie (PL) and North 
East  England  (UK)  the  costs  of  some  FIs  are  significantly  higher  than  the  cost  of  an 
additional  job  created  by  non-repayable  support  for  SME  investment.  It  is,  however, 
unclear  if  existing  calculations  take  account  of  net  grant  equivalent  and/or  revolving 
money. 

Table 25: Cost-effectiveness of different types of FIs and grant schemes in 
terms of costs of additional jobs created 

OP name 

FIs 

FI and grants 

DE: OP Bavaria 

Risk capital funds II is the most cost 
efficient and the loan fund is the least 
cost efficient to  create jobs 

Cost per job created through the grant 
scheme is significantly lower than the 
average employment effect of the FIs 

FR: OP 
Languedoc-
Roussillon 

Creation of jobs in the seed phase is 
less expensive than the creation of 
jobs in the growth phase, which 
requires more investment in 
equipment and research. 

UK: OP North 
East England 

The current net cost per deliverable 
(job created) is currently considerably 
higher than planned (FBNE planned 
€1,690 / current €42,160; CCF 
planned €29,459 / current €50,572) 

With current actual cost of €42,160 to 
€50,572 per gross job created the FIs 
are in the same range or less cost 
efficient than grants from the 
(domestic) Regional Growth Fund 
(€37,400) 

CZ: OP 
Enterprises & 
Innovation 

The Guarantee Fund is more cost-
effective to create jobs than the  
Credit Fund  

FIs are more cost effective to create 
jobs than grants 

PL: OP 
Małopolskie  

Measuring cost-effectiveness of 
different FIs is greatly distorted by 
shortcomings in reporting 
(underestimating jobs created, no 
turnover or GVA figures). The cost of 1 
additional job varies within the loan 
instruments between €45,000 and 
€300,000 (average of over €100,000).  

Costs created by FIs (€100,000) are  
twice as high as the cost of an 
additional job in non-repayable support 
for SME investment (€41,000) 

LT: OP Economic 
Growth 

The cost of 1 additional job varies 
within the loan instruments between 
54,000 lita and 109,000 lita (€15.639 
and €31.568) 

The cost-efficiency of FIs and grants 
was evaluated in 2014. However, no 
clear conclusions could be made since 
the instruments are too different.  

PT: OP COMPETE 

Full data on the cost-effectiveness is 
not yet available 

ES: OP 
Technological 
Fund 

There was not enough information to 
compare the cost-effectiveness of non-
refundable and refundable assistance 

HU Economic 
Development 

Full data on the cost-effectiveness of 
job creation is not yet available 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Source: Case study research 

In  terms  of  optimal  fund  size,  the  case  study  research  suggests  that  the  scale  of  the 
FI,  as  such,  is  not  a determinant  factor,  but  rather  it is how  well  support  is  targeted  to 
meet  its  policy  goals.  Across  the  stocktake  countries,  individual  funds  range  from  just 
over  €10,000  to  some  €550  million,  but  vary  widely  in  geographical  scope,  financial 
product and policy objectives, which means that it is difficult to generalise. Nevertheless, 
many funds appear to be too small to have the necessary critical mass referred to by the 
Court  of  Auditors;  on  the  other  hand,  some  very  large  funds  appear  to  be  among  the 
worst performing in terms of absorption.  

Among the stocktake countries,  some  of the very  loan large funds perform  much worse 
than average in terms of the share of OP payments to funds invested in final recipients. 
For  example,  there  are  25  loans  funds  exceeding  €50  million  and  by  end  2014,  six  of 
these  had  lent less  than  20%  of  their  funds  to  final  recipients.  Overall, loans  exceeding 
€50  million  were  just  55%  invested  by  end  2014,  while  smaller  funds  (less  than  €50 
million)  were  almost  82%  invested  –  see  Table  13  above.  Importantly,  however,  the 
impact of a few very large funds which have invested very small amounts is significant in 
the aggregate. For example, three of the large funds in Table 26 together totalling €486 
million – i.e. approaching 10% of all payments to loan funds in the stocktake countries – 
have invested less that two percent in final recipients.  

Table 26: Equity funds invested in final recipients (>€50 million) 

MS  Fund 

Set-up 
date 

OP contribs 
paid to fund 

DE  Risikokapitalfonds II 

2007 

FR  Nord  France  Amorçage  -  Lille  (N° 

2012 

85.1 

68.4 

présage 40255) 

OP 
contribs 
invested 
in final 
recips 

54.3 

6.4 

% 
inves
ted  

63.8 

9.3 

HU  Szechenyi 

Capital 

Investment 

2010 

47.5 

21.0 

44.3 

Programme and Fund 

DE 

Technologiegründerfonds Sachsen 

DE  VC Fonds Technologie, Berlin 

UK 

Finance Yorkshire Equity LP, Barnsley 

UK  Early  stage  equity  investments  (Low 
Carbon Innovation Fund, Norfolk) 

2008 

2007 

2010 

2010 

47.4 

47.0 

45.5 

43.1 

41.1 

41.3 

45.5 

16.2 

86.7 

87.9 

100.0 

37.6 

DE  Beteiligungsfonds  Niedersachsen  (RWB-

2009 

40.0 

27.9 

69.9 

Gebiet) 

DE  Hessen Kapital I GmbH, Frankfurt a.M. 

2007 

DE  BFB  Wachstumsfonds 

Brandenburg 

2009 

GmbH, Potsdam 

DE  VC Fonds Kreativwirtschaft, Berlin 

PT 

32822  -  FCR  REVITALIZAR  NORTE  - 
Lisboa 

2007 

2013 

38.5 

37.5 

32.0 

32.0 

31.2 

31.1 

27.7 

30.0 

80.9 

82.9 

86.7 

93.8 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

MS  Fund 

Set-up 
date 

OP contribs 
paid to fund 

% 
inves
ted  

OP 
contribs 
invested 
in final 
recips 

PT 

32823  -  FCR  REVITALIZAR  CENTRO  - 
Lisboa 

2013 

32.0 

37.5 

117.1 

UK  Biomedical Fund - Northwest Priority 1 

2010 

UK  Venture  Capital  Fund  Northwest  Priority 

2010 

30.5 

30.5 

30.5 

30.5 

100.0 

100.0 

1 

UK  NE  Accelerator  Fund,  Northstar  Equity 

2010 

30.4 

30.4 

100.0 

Investors Limited  

UK  North  East  Technology  Fund,  IP  Group 

2010 

29.3 

29.3 

100.0 

Plc 

DE 

Innovationsfonds Rheinland-Pfalz 

2008 

UK  NE  Growth  Fund,  NEL  Fund  Managers 

2010 

27.0 

26.3 

17.8 

26.3 

66.1 

100.0 

Limited 

DE  BFB 

Frühphasenfonds 

Brandenburg 

2010 

25.0 

22.8 

91.2 

GmbH, Potsdam 

Total equity funds >€25 million 

Total equity funds <€25 million 

Source: Consortium calculations from 2015 Summary report. 

795.0 

954.4 

598.9 

684.0 

75.3 

71.6 

This  pattern  does  not  hold  true  for  equity  products  where  there  appear  to  be  no 
particular differences along size lines – although in terms of absorption, funds exceeding 
€25 million perform slightly better than smaller ones on average – the majority of large 
equity funds are over 80% invested. Indeed, it is notable that the very wide disparaties 
in  levels  of  investment  by  large  loan  funds  are  not  evident  among  large  equity  funds. 
That said, the available data bear out the claim that very small funds are more costly to 
run  than  larger  ones.  Table  27  suggests  that  all  the  funds  where  fees  amount  to  more 
than 20% of sums invested in final recipients are €15 million or smaller in size. 

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Table 27: Equity fund management costs & fees and investment in final 
recipients in the stocktake countries 

MS 

Fund 

OP 
contribs 
paid to 
fund 

OP contribs 
paid: 
Manage’t 
costs & fees 

OP 
contribs 
invested 
in final 
recips 

DE 

PL 

PL 

PL 

DE 

PL 

UK 

PL 

PL 

UK 

LT 

PL 

LT 

FR 

IT 

LT 

DE 

UK 

S-Refit EFRE Fonds Bayern 
GmbH, Regensburg 

Speed Up Innovation Sp. z o.o. 
SKA, Poznań 

Inovo Sp. z o.o. Venture Fund I 
SKA, Warszawa 

Assets Management Black Lion 
Sp. z o.o. SKA SKA, Warszawa 

14.0 

2.0 

0.4 

0.1 

0.8 

0.2 

1.7 

0.6 

Beteiligungsfonds Niedersachsen 
(Konvergenzgebiet) 

16.0 

4.2 

Skyline Venture Sp. z o.o. SKA, 
Warszawa 

1.3 

0.4 

Mezzanine Fund Northwest 
Priority 1 

9.0 

3.6 

Internet Ventures FIZ, Warszawa  4.5 

Innovation Nest Sp. z o.o. SKA, 
Kraków 

1.6 

1.1 

0.3 

Lachesis Seed Fund Limited 
Partnership  

4.8 

0.7 

Business Angels Co-investment 
Fund I KUB Vilnius 

6.3 

1.2 

GPV I Sp. z o.o. SKA, Warszawa 

4.1 

LitCapital I KUB Vilnius, Lithuania  10.4 

FCPR RUN DEVELOPPEMENT 
VIVERIS MANAGEMENT,  

6.8 

0.8 

2.0 

0.3 

"Partecipazioni minoritarie e 
temporanee al Capitale di rischio 
di imprese innovative"  

Lithuanian SME Fund KUB, 
Vilnius, Lithuania 

Berlin Kapital, Berlin 

NE Angel Fund, Rivers Capital 
Partners Limited 

15.0 

1.1 

8.2 

1.4 

13.0 

9.7 

0.7 

1.9 

Source: Consortium calculations from 2015 Summary report. 

1.2 

0.2 

0.3 

1.1 

8.5 

0.9 

9.0 

3.2 

1.0 

2.4 

5.0 

3.2 

8.4 

1.5 

5.2 

6.8 

3.3 

9.7 

Manage’t 
costs & fees 
as % of 
fund 
invested 

161.9 

78.7 

72.8 

49.6 

49.2 

42.3 

39.9 

34.6 

32.9 

30.4 

24.1 

24.1 

23.8 

23.0 

21.8 

21.2 

21.0 

20.0 

More generally, it can be observed that larger and more centralised solutions tend to be 
less flexible, so the cost advantages accruing from centralized fund management need to 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

be  weighed  against  the  disadvantages  of  being  less  responsive  (see  also  Forstner  et  al 
201475). On the one hand, the Lithuanian experience shows that small FI schemes can be 
very efficient in filling a market gap; on the other, some large FIs in Spain and Italy have 
invested a small proportion of their funds. 

Participants  at  the  stakeholder  seminar  noted  that  ‘optimal’  fund  size  is  very  much 
context dependent and may also be affected by the presence of domestic funds on which 
co-financed  measures  are  sometimes  built.  Some  stakeholders  argued  that  it  was 
important  that  funds  were  not  too  specialised  because  this  would  result  in  small  funds 
that were difficult to spend, but others said that funds should be targeted otherwise they 
were too difficult to monitor. Importantly, it was also noted that there was a size below 
which  financial  intermediaries  were  simply  not  interested  in  being  involved,  though  the 
exact  level  was  difficult  to  determine.  If  the  fund  is  too  small, it  may  not  be  successful 
since it is not appealing to commercial banks (given their own resources), and  “nobody” 
wants to manage a small fund due to the associated administrative burden.  

To  establish  a  fund it is  important  to  find  private  partners  willing  to invest;  this  implies 
that  the  terms  offered  should  be  attractive  to  them.  Further,  it  is  important  also  to  get 
the  incentives  right  in  order  to  induce  the  private  actors  to  contribute  with  their  own 
resources.  The  size  of  funds  should  also  take  into  account  the  fact  that  absorption 
capacity may be limited. 

With  respect  to  improved  market  making  for  equity/venture  capital  funds  there 
are clear signs of ERDF support having helped the creation of a venture capital market in 
some  of  the  case  study  areas  where  it  was  poorly  developed  (OP  Economic  Growth  OP 
(LT),  OP  Economic  Development  (HU),  OP  COMPETE  (PT)),  including  being  the  catalyst 
for  the  adoption  of  the  necessary  legislation  e.g.  on  risk  capital  funds.  In  these  cases, 
public support is still needed to fully develop the private market. The activity of business 
angels has also been supported through co-financed FIs (see Box).  

75   Forster, B, Grajewski, R (October 2014) Beurteilung von alternative Finanzierungsarten und –instrumenten 

zur Umsetzung von investiv ausgerichteten Fördergrundsätzen der GAP; Thünen Working Paper 29 

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Box 6: Good practice in OP Bavaria – encouraging the participation of Business 
Angels  

Co-financed  FIs  in  Portugal,  Lithuania  and  Bavaria  have  had  positive  experience  of 
stimulating the domestic business angel market. In Bavaria, the ERDF Cluster Fund has 
had particular success with awareness-raising activities. The ERDF Cluster Fund (Bayern 
Capital)  has  specialised  in  co-investment,  supplementing  activities  of  lead  investors 
(business angels). The activities of the ERDF Cluster Fund provide a strong incentive for 
business  angels  to  engage,  and  thus  helps  to ‘tip  the  scales’  in  getting  them  to  invest. 
Apart  from  supplementing  business  angel  funds,  the  Cluster  Fund  also  promotes 
encounters  where  entrepreneurs  are  invited  to  present  their  business  plans  and 
expectations so business angels can decide whether to invest.  These  ‘trade fair’  events 
(so  far  there  have  been  three  major  meetings)  not  only  facilitate  networking  between 
the  parties;  there  are  also indirect  effects,  such  as  entrepreneurs  not  finding  a  partner 
immediately  but  being  referred  to  business  angels  not  participating  in  the  event,  or 
networking  effects  going  beyond  finance,  such  as  links  in  R&D  and  business.  As  an 
example,  at  a  trade  fair  event  in  Eastern  Bavaria  20  private  investors  were  present  to 
meet with start-ups.  In addition, business plan competitions are  carried out in addition 
to  internet  presentations.  Such  networking  is  also  a  major  advantage  for  business 
angels  as  information  costs  are  reduced.  Improved  information  may  render  better 
opportunities  to  diversify  the  investment  portfolio  in  terms  of  risk  and  composition. 
Business  angels  also  have  the  chance  to  build up  tailor-made  venture  capital  consortia 
with  funds  from  the  ERDF  Cluster  Fund.  Risk  reduction  thus  works  both  horizontally 
(diversification) as well as vertically (sometimes over several investment rounds).  

Source: Case study research 

The  main  added  value  of  ERDF  venture  capital  funds  as  compared  to  private  funds  is 
their  orientation  to  early  stage  investments  (seed  and  start–up).  Furthermore,  some 
ERDF–financed  risk  capital  funds  are  in  a  position  to  make  riskier  investments  as 
compared to private risk capital funds since the former have a higher tolerance of losses. 
Therefore,  ERDF–financed  risk  capital  funds  provide  funding  opportunities  for  SMEs  that 
would  not  receive  support  under  normal  market  conditions  (OP  Economic  Growth  OP 
(LT),  OP  COMPETE  (PT)).  Through  the  support  of  ERDF,  it  has  been  possible  to 
implement different types of venture capital funds to support SMEs in pre-seed stages.  

In  Bavaria  (DE)  and  Languedoc-Roussillon  (FR)  ERDF  funds  did  not  significantly  change 
the  regional  panorama  of  FIs  but  helped  the  regions  increase  their  offer  of  financing, 
focusing  on  specific  sectors  and/or  specific  phases  of  business  development.  It  is  also 
clear that OP funding strengthened the capacity of fund managers and made them more 
visible as regional players. Without ERDF, the regions of Bavaria and North East England 
could have developed access to finance instruments but at a greatly reduced level. There 
would  have  been  a  loss  of  the  ability  to  provide  a  continuum  of  finance  across  the 
funding  lifecycle.  Without  ERDF  funds,  it  would  not  have  been  possible  to  achieve  a 
critical mass of  venture capital. A minimum volume is needed to generate a perceptible 
change  in  the  performance  of  the  private  sector  in  the  economically  weaker  regions. 
ERDF  funding  allowed  a  high  initial  endowment  of  the  funds  and  the  achievement  of  a 
critical mass. 

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Regarding  a  general  market  making  for  FIs,  the  Hungarian  case  study  stressed  the 
importance of severe bottlenecks on the demand side of the financial market, i.e. lack of 
knowledge of the advantages of guarantee schemes among companies and loan agents, 
perception of high administrative burden in the case of guarantee schemes by banks, low 
number/  proportion  of  start-ups  with  viable  business  plans  and  innovative  ideas.  These 
demand-side  challenges  are  hard  to  solve  by  market  making  and  by  improving  the 
accessibility of FIs. There is a strong need  to  provide soft business support (in line with 
or even as a pre-condition to taking JEREMIE-type loans) and thereby improving the non-
financial  characteristics  of  the  main  target  groups  –  micro-  and  small  firms,  and 
innovative start-ups. 

In summary, ERDF co-funded FIs can add value in specific ways, such as:  

  A  clear  finding  from  the  stakeholder  seminar  was  that  FIs  are  considered  to 
generally  have  worked  well  in  terms  of  supporting  a  move  away  from  a  ‘grant 
dependency’  culture  and,  especially  in  the  case  of  equity,  fostering  an 
entrepreneurial culture. 

  ERDF funding can support access to and reduce the cost of SME financing. This is 
especially so in the context of the economic crisis a result of which SMEs typically 
faced greater financial difficulties in accessing credit through the banking sector. 

  Covering a broad spectrum of financing needs is simpler with FIs than with grants. 
FIs  can  be  a  ‘dealmaker’  between  banks  and  end-users  (a  catalyst  for  further 
private funding). There are more opportunities for working capital to be supported 
than under grant schemes, and working capital is often what SMEs require, rather 
than  money  to  contribute  to  fixed  asset  investment.  Where  funding  agreements 
are  appropriately  framed,  the  due  diligence  process  carried  out  by  financial 
institutions  should  distinguish  viable  enterprises  from  non-viable  ones  to  avoid 
lending support to failing companies (regardless of the purpose for which capital is 
required). Sectoral coverage is also more flexible with scope to support trade and 
retail activities which are not really suited or often eligible for grants. 

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5 Conclusions and policy implications  

The  aim  of  this  study  has  been  to  assess  the  rationale,  implementation  and  early 
evidence  of  effectiveness  of  ERDF  co-financed  financial  instruments  for  enterprises. 
The study has undertaken a stocktake of financial instruments in the 12 countries which 
account  for  the  bulk  of  FIs  and  associated  spending  commitments,  together  with  case 
studies of FIs in nine varied OPs. These have been complemented by a detailed literature 
review and an interactive stakeholder seminar. This final section of the report highlights 
the main conclusions from the study and draws out some policy implications. 

A  key  challenge  for  the  study  team  was  the  sheer  complexity  of  financial  instruments 
operated  in  widely  differing  contexts:  the  rationales  for  FIs  are  multifaceted,  the 
implementation models are extremely diverse and the evidence for their effectiveness is 
currently rather thin. It can also be said that a full analysis of the scale of FIs, the extent 
to which they are invested in final recipients, how far funds have been recycled and how 
much FIs cost to run is hampered by the lack of reliable quantitative data.  

There  are  several  dimensions  to  the  rationale  for  financial instruments  for  enterprises. 
From  a  policy  design  perspective,  FIs  are  an  alternative  delivery  mechanism  to  non-
repayable  support.  This  is  only  feasible  where  the  ultimate  investment  is  income 
generating,  enabling  the  initial  support  to  be  repaid.  Three  principal  benefits  are 
conventionally  highlighted  from  the  use  of  FIs  as  opposed  to  grants:  first,  that  FIs  are 
more  sustainable,  because  funds  are  repaid  and  can  be  reinvested  in  other  projects; 
second,  that  FIs  can  improve  project  quality  -  because  of  private  sector  involvement  in 
project  assessment  and  because  having  to  repay  support  ‘sharpens  the  mind’  of  the 
recipient.  Third,  that  FIs  can  make  more  cost-effective  use  of  public  funds  because  of 
their capacity to attract private funds.  

From  an  economic  development  perspective,  the  rationale  for  FIs  is  to  address  market 
imperfections in the availability of capital. Publicly funded FIs are justified on the basis of 
two main types of market imperfection. The first is information asymmetry: for example, 
start-ups and new technology firms may lack sufficient track records or other information 
for  potential  investors  to  be  able  to  assess  risks.  The  second  concerns  positive 
externalities  and  the  notion  that  purely  commercial  assessments  of  returns  on 
investment  may  not  capture  the  wider  societal  benefits  of,  for  example,  investing  in 
ground-breaking R&D and innovation (which may be assessed negatively due to risk) or 
reintegrating  disadvantaged  individuals  into  the  economy  by  supporting  social  or 
microenterprises  (because  the  uncertainty  of  returns  and  small  sums  sought  do  not 
justify the cost of examining investment proposals).  

These  two  sets  of  rationales  are  not  incompatible,  but  they  give  rise  to  complex 
challenges and a number of potential tensions ‘on the ground’. For example, a perceived 
benefit of FIs from a policy design perspective is the involvement of the private sector in 
project selection and the attraction of private funds, and yet the  economic development 
rationale  is  the  need  to  fill  a  finance  gap  that  the  private  sector  is  unwilling  to. 
Reconciling  these  issues  involves  the  careful  calibration  of  incentives  for  the  private 
sector  in  the  form  of  management  fees  or,  potentially,  asymmetric  returns  on 
investment. Another  challenge is the degree  of risk implied by the terms of the funding 
agreement  and  how  this  is  decided.  One  of  the  arguments  for  FIs  is  their  sustainability 
and  the  establishment  of  a  legacy  fund  for  reinvestment.  So,  final  recipients  must  be 
viable  and  repay  support,  and  yet  the  economic  development  rationale  for  public 

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intervention  is  the  need  to  take  a  risk  where  purely  commercial  interests  may  be 
unwilling to. Again careful consideration is needed to avoid crowding-out private markets 
but still produce a return that sustains the fund. 

The  stocktake  research  undertaken  for  this  study  implied  that  the  use  of  FIs  was 
principally motivated by economic development rationales  - i.e. the need to address the 
finance gap, especially for SMEs, rather than the policy design rationales related to FIs as 
an  alternative  delivery  mechanism  to  grants.  As  such,  the  justifications  related  to 
sustainability, project quality and cost-effectiveness were not prominent in the stocktake 
countries. For many MAs, the emphasis in much of the period was on the practicalities of 
set-up  and  implementation  of  the  funds  against  the  backdrop  of  a  highly  complex  and 
sometimes uncertain regulatory environment. For all but those with extensive experience 
in  running  FIs  (among  the  case  studies,  most  notably  North  East  England  (UK)),  the 
immediate operational challenges involved in setting up FIs seem to have overshadowed 
concerns  at  the  long-term  rationale  of  sustainability  through  the  creation  of  a  legacy 
fund.  Similarly,  issues  related  to  project  quality  and  cost-effectiveness  (specifically  in 
relation to the attraction of private sector finance) do not appear to have been important 
motivating  factors  in  establishing  FIs,  instead,  the  need  to  absorb  funds  seems  to  have 
taken precedence. 

That  said,  the  stakeholder  seminar  suggested  a  shift  in  perspectives  as  closure  of  the 
2007-13  programming period  approaches.  The  positive  aspects  of  ‘moving  away  from  a 
grant  culture’  were  noted  by  several  seminar  participants,  as  well  as  by  the  case  study 
for the Languedoc-Roussillon OP (FR). One managing authority (OP Bavaria, DE) claimed 
that  viable  firms  would  prefer  a  loan  covering  80%  of  investment  needs  to  a  grant 
covering  20%  of  the  same.  This  reflects  the  fact  that  maximum  grant  levels  are 
insufficient  to  cover  investment  costs  and  that  loans  can  cover  total  financing 
requirements.  This  claim  was  endorsed  by  participants  at  the  seminar.  Related,  some 
participants  maintained  that  viable  firms  preferred  loans  to  grants  because  the 
application process was less onerous and the use to which the funds could be put more 
flexible. For instance, there is greater scope to use FIs to finance working capital needs; 
this proved to be widespread in the wake of the financial crisis, but is also important for 
activities  that  are  not  capital  intensive.  This  view  was  generally  shared  among  seminar 
participants, suggesting that ‘project quality’ as a motivation for FIs could gain traction in 
the  future.  However,  stakeholder  discussions  focused  on  the  preferences  of  investee 
firms,  rather  than  on  the  role  of  financial  intermediaries  in  judging  project  quality. 
Similarly, while sustainability (in the sense  of repayments available to reinvest) was not 
generally high on the agenda at the  start  of the programming period,  the prospect  of a 
legacy  fund  seems  to  have  become  an  attractive  proposition  and  is  likely  to  be  a  more 
significant motivating factor in future.  

The  case  studies  showed  that  other  motivations  were  important  in  certain  contexts.  In 
some - for example in the Economic Growth OP (LT) and OP COMPETE (PT) - the need to 
respond  to  the  economic  crisis  was  important,  reflecting  the  severe  impact  of  the 
downturn  on  certain  economies.  Indeed,  in  Lithuania,  the  gap in  access  to  finance  prior 
to the crisis was considered modest, but in the aftermath, FIs were used as the principal 
mechanism  to  stimulate  recovery.  In  the  North  East  England  OP  (UK)  one  of  the 
rationales  was  to  develop  local  financial  markets  to  offset  the  agglomeration  tendencies 
that concentrate such activities in London or in secondary  regional markets in Yorkshire 

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and  the  North  West  of  England.  Related,  in  the  Economic  Development  OP  (HU),  FIs 
were,  among  other  things,  seen  as  a  mechanism  to  foster  competition  in  certain 
segments  of  the  financial  sector.  External  or  indirect  factors  are  sometimes  also  in 
evidence – under the Technological Fund OP (ES) the need to avoid decommitments did 
not underpin the use of FIs as such, but it did play a role in the scale of funding allocated 
to them, with the result that some funds are overcapitalised and are unlikely to be fully 
invested  before  closure.  In  the  Małopolskie  OP  (PL),  FIs  were  an  important  part  of  the 
response  to  flooding,  providing  support  to  viable  SMEs  enabling  them  to  remain  in 
business,  although  here  too  there  was  ultimately  an  underspend.  More  generally, 
Commission  enthusiasm  for  FIs  also  played  a  role,  as  evinced  in  the  Bavaria  OP  (DE), 
where  the  managing  authority  was  encouraged  to  deploy  FIs  and  did  so  on  an 
‘experimental’ basis, and with some success.  

In  short,  while  a  range  of  specific  and  general  factors  underpinned  the  use  of  FIs  in 
2007-13,  the  overriding  motivation  was  to  improve  access  to  finance  among  SMEs, 
rather  than  to  consider  FIs  as  an  alternative  policy  delivery  mechanism  to  grants. 
However,  as  the  2007-13  programmes  approach  closure,  indications  are  that  MAs  are 
addressing the rationale for FIs with more rigour in the new period, that the generation 
of legacy funds will, for many, become a higher priority than in the past  and that closer 
attention will be paid to the respective roles of grants and FIs. Also important, the future 
development  of  financial  markets  emerged  as  an  important  factor  in  several  case  study 
OPs,  including  North  East  England  (UK),  Economic  Growth  (LT)  and  Economic 
Development (HU).  

The  implementation  of  FIs  is  characterised  by  extreme  diversity.  This  is  true  of  the 
scale of FIs, governance structures and the funding agreements which determine project 
selection  criteria.  The  Structural  Fund  Regulations  left  open  many  aspects  of  how  FIs 
could function, so that national and regional contexts and institutions played a significant 
role  in  outcomes.  The  landscape  of  co-financed  FIs  is  so  varied  that  implementation 
mechanisms  defy  easy  comparison.  Measures  range  from  major  nationwide  guarantee 
mechanisms  for  firms  in  general  (as  under  the  OP  Research  and  Competitiveness  (IT), 
with  commitments  of  €550  million),  to  small  tightly  focused  equity  schemes  targeting 
narrow  market  segments  in  single  regions  and  with  less  than  €10  million  under 
management  (such  as  the  Creative  Content  Fund  in  the  North  East  England  OP). 
Governance  structures  can  involve  holding  funds  that  feed  several  specific  funds,  each 
run by one fund manager (as in Lithuania), or the same set of financial products offered 
through  a  national  network  of  financial  intermediaries  (as  in  Hungary).  The  EIB  Group 
(EIB or EIF) has played a significant role in FI planning and implementing enterprise FIs 
in  some  countries,76  including  in  Bulgaria  and  Romania  (which  were  not  among  the 
stocktake countries), as well as some regions. Indeed the EIF conducted a large number 
of  gap  analyses,  many  of  which  concerned  French  regions,  although  the  Languedoc-
Roussillon  OP  (FR)  was  alone  among  them  in  appointing  the  EIF  as  holding  fund 
manager.  FI  support  can  range  from  commercial  terms  offered  through  co-investment 
funds  to  loans  comprising  a  substantial  subsidy  element  through  submarket  interest 
rates. The only commonality is the implementation of co-financed repayable support. 

76   The EIB notably through FIs set up under the Jessica initiative, which is outside the scope of this study. 

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Despite  management  and  operational  structures  varying  widely  across  Member  States 
and  regions,  key  implementation  challenges  were  very  similar  for  many  stakeholders. 
While the lack of detail in the regulations offered flexibility in some respects, it also gave 
rise to uncertainties, which in turn often caused significant delays in operationalising FIs. 
The  issues  faced  have  been  documented  elsewhere77  and  need  not  be  rehearsed  here. 
However,  it  is  fair  to  say  that  regulatory  lacunae  were  a  significant  obstacle  to  the 
smooth  implementation  of  FIs  in  2007-13,  and  this is  reflected  in  the  slow  take  up  and 
low  levels  of  investment  in  final  recipients  under  many  FIs.  In  the  Enterprise  and 
Innovation OP (CZ) the effect of the regulatory dimension was particularly severe – even 
though  Czech  funds  were  among  the  first  to  be  set  up,  uncertainties  surrounding  the 
precise requirements contributed to a suspension of the funds by the auditors.78  

The  implementation  of  FIs  is  highly  demanding  in  terms  of  administrative  capacity  and 
the varied skill sets required. The set-up and operation of FIs is administratively complex 
and, among other things, requires detailed understanding of Structural Fund Regulations, 
State aid compliance, procurement rules and investment principles. This complexity may 
mitigate  against  one  of  the  claimed  advantages  of  FIs,  namely  the  involvement  of  the 
private sector in implementation. This may be because the presence  of existing  (public) 
promotional  banks  offers  a  quicker  and  simpler  implementation  route  (funds  which  did 
not involve a competitive selection or procurement process were the fastest to be set up) 
or because the regulatory context can act as a disincentive to private actors.  

Evidence on the effectiveness of FIs has proved difficult to compile. This partly owes to 
the rather limited scope  of data collection and partly to the fact that  such analysis may 
be  rather  premature  given  the  delays  in  implementation  and  the  time  lags  implicit  in 
seeing  the impact  of  support.  Nevertheless,  there  is  evidence  that  co-financed  FIs  were 
successful  in  improving  access  to  finance  for  SMEs  –  in  Lithuania,  for  example,  co-
financed FIs benefited over seven percent of all SMEs – some 4,270 firms and 83 percent 
of the target set. More generally, data shortcomings notwithstanding, several points can 
be made even at this early stage.  

First, the scale of private sector finance appears to be disappointing, especially as this is 
one of the benefits claimed for FIs. Where there does appear to be private co-financing, 
this  is  mainly  through  venture  capital  schemes,  but  as  these  are  a  modest  part  of  the 
overall  picture  (less  than  20  percent  of  FI  investments  in  final  recipients),  so  too  is 
associated private funding. Importantly, however, the scale of private funding other than 
at the co-financing stage is difficult to detect and quantify so that the real picture may be 
less negative than initially appears. Indeed, the case studies suggest that guarantees, in 
particular,  can  leverage  significant  private  funding  –  as  reflected  in  the  data  for 
Languedoc-Roussillon (FR) and OP Economic Growth (LT).  

77   See, for example, Michie R and Wishlade F (2011) op cit and Van Ginkel et al (2013) op cit. 
78   At the beginning of the programming period, the Managing Authority selected the public Fund Manager 

(ČMZRB) directly, without opening of public tender. ČMZRB was not selected by the Public Procurement Act, 
but was appointed for providing guarantees in accordance with Czech Law. According to the EC auditors, it 
was non-transparent and in conflict with EU legislation in the field of public procurement (despite the fact 
that Czech Law No 47/2002 Coll., on support of SMEs, as amended, as a public law expressly entitles 
ČMZRB as an entity that is authorised to provide funding, guarantees or loans with reduced interest rates, 
essentially to allow the use of public funds for this purpose through other entities). The EC also disagreed 
with the management fees. According to the EC’s observation management fees were paid indirectly by 
contributing to the price of the guarantee while the EC challenged this setup. Provision of guarantees from 
the Guarantee Fund had been suspended for over two years because of these issues. 

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Second,  the  scale  of  legacy  funds  is  largely  unknown.  Sustainability  is  one  of  the 
perceived  benefits  of  FIs,  but  it  remains  unclear  whether  sums  have  simply  not  yet 
revolved or whether the systems are not yet in place to track it. Nevertheless, among the 
case  study  OPs  it  appears  that  only  Languedoc-Roussillon  (FR)  and  North  East  England 
(UK) have clear legacy  strategies. At the same time, and again among the case studies 
only,  very  few  loan  schemes  and  no  guarantee  schemes  have  yet  reached  the  stage  of 
revolving. 

Third,  in  terms  of  final  outcomes  such  as  productivity  and  employment  on,  too  few  MA 
collect  enough  data  to  make  any  realistic  assessment  of  the  impact.  Among  the  case 
studies  only  five  report  job  creation  data;  among  these,  those  in  the  Bavaria  OP  (DE) 
were below expectations, while the figures for OP Enterprise and Innovation (CZ) appear 
disproportionately high.  

Last, while quantitative data may be lacking, softer evidence provides some insight into 
how  FIs  have  been  working  in  practice,  and  in  ways  that  go  beyond  simple  impact 
indicators.  For  example,  FIs  can  be  seen  to  have  had  a  tangible  positive  impact  in 
improving  access  to  finance  for  SMEs  in  Lithuania,  in  supporting  the  development  of  a 
sustainable  regional  revolving  fund  in  North  East  England  (UK),  in  developing  the 
business angel finance market in Bavaria (DE) and in nurturing regionally-based financial 
intermediaries in Małopolska (PL) and in Hungary. 

In thinking about the wider policy implications of this study,  the overarching theme that 
emerges  relates  to  capacity.  In  general  terms,  the  emphasis  on  promoting  FIs  as  a 
policy  delivery  mechanism  was  not  coupled  with  the  level  of  guidance  needed  in  many 
OPs.  While  for  some,  the  rather  thin  regulatory  framework  was  positive  insofar  as  it 
enabled existing domestic approaches to be deployed relatively quickly, typically, lack of 
detail  contributed  to  insecurity  among  MAs  about  how  the  mode  of  implementation 
chosen  would  be  perceived  at  audit.  This  has  resulted  in  a  regulatory  environment  that 
has  evolved  during  the  lifetime  of  the  2007-13  programmes,  many  of  the  lessons  from 
which have been consolidated into the regulatory framework for 2014-20. 

Some  of  the  particularities  of  Structural  Fund  spending  mechanisms  had  unforeseen 
consequences  in  the  context  of  FIs.  In  particular,  the  emphasis  on  ensuring  that 
Structural Funds are committed and paid, or subject to automatic decommitment works 
for  grants  where  the  beneficiary  is  the  project  or  SME.  In  the  context  of  FIs,  the 
beneficiary  is  the  fund,  the  unintended  consequence  of  which  has  been  an  incentive  to 
‘park’  monies  in  funds  as  a  way  of  avoiding  decommitment  in  the  short-term  and 
increase  flexibility  longer-term.  It  is  difficult  to  quantify  the  extent  to  which  this  has 
happened, but a number of large funds appear significantly overcapitalised, though ‘true’ 
absorption will not be known until closure in early 2017. The phasing of payments to FIs 
is one of the key changes introduced in 2014-20 regulations. This, alongside the explicit 
requirement  for  an  ex  ante  assessment  prior  to  introducing  an  FI,  should  contribute  to 
more evidence-based allocations.  

The  slow  start  to  implementation  in  2007-13  also  partly  owed  to  the  complex  skill  set 
required  to  establish  financial  instruments  and  the  lack  of  capacity  in  some  managing 
authorities.  The  set-up  and  operation  of  financial  instruments  is  administratively 

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challenging  and  the  detailed  knowledge  of  a  range  of  regulatory  and  other  matters 
require a steep learning curve.  

These  demands  meant  that  often  the  most  straightforward  route  was  to  entrust 
implementation  to  an  existing  body,  such  as  a  promotional  bank  –  in  the  Walloon  OPs 
(BE)  for  example,  co-financed  FIs  are  implemented  through  so-called  ‘Invests’.  These 
fund structures are the same as those for purely domestic policy, so that Cohesion policy 
co-finances  an  additional  source  of  funding  for  SMEs,  but  not  one  that  actually  differs 
from  existing  sources.  The  experience  of  major  domestic  players  was  important  in 
several case study OPs, including ČMZRB in the Czech Republic, INVEGA in Lithuania and 
BGK  in  Poland.  Indeed,  this  study  and  other  research  suggests  that  FI  implementation 
should, at least initially, build on previous experience in the region/Member State before 
setting up new structures for FI implementation - for example, the implementation of co-
financed FIs in Germany has typically involved the Land-owned investment banks where 
the perceived advantages include familiarity with the financial situation and difficulties of 
local  firms,  longstanding  working  relationships  with  Land  ministries  and  existing  links 
with commercial/cooperative banks.79  

Such structures are not present everywhere, however, and the case study research and 
stakeholder seminar both highlighted the importance of past experience in some ‘mature’ 
FI  systems  such  as  those  in  North  East  England  (UK).  These  are  not  dependent  on  a 
major promotional bank, since historically these are not present in the UK, but FIs have 
evolved over more than one programme period and policy is able to benefit from learned 
wisdom and the evaluation of past approaches to develop future policies. In the absence 
of  such  domestic  structures,  some  OPs  have  implemented  FIs  with  EIB  Group  support 
(e.g. Languedoc-Roussillon (FR)), but reflecting growing experience and confidence some 
plan to implement independently of the EIB Group in 2014-20 (e.g. Slovakia). 

Effective  links  with  the  private  sector  are  an  important  component  of  capacity  and  are 
needed to mobilise its resources and expertise. This may require incentives such as the 
introduction  of  yield  restriction  or  loss  mitigation  clauses,  or  asymmetric  models  for  the 
distribution  of  profit  (such  as  in  OP  COMPETE  (PT))  and  more  widely.  Careful 
consideration must be given to the design of such incentives in order to ensure adequate 
alignment  of  public  policy  objectives  with  private  sector  motives  for  involvement.80  In 
some cases FIs can be used a means to mobilise or develop capacity in the private sector 
– as seen in a number of case studies, including the Economic Development OP (HU) and 
Bavaria OP (DE).  

An important dimension of capacity is understanding that the design and implementation 
of co-financed FI is also context specific. This includes local economic conditions, banking 
and  legal  systems  and  previous  experience  with  implementing  FIs.  Context  matters 
because  the  underlying  economic  situation  and  existing  institutional  structures  and 
practices  set  the  parameters  within  which  FIs  operate,  affect  how  they  work  and 
influence  domestic  policy  choices  about  what  instruments  to  co-finance.  In  France,  for 
example,  the  use  of  FIs  is  comparatively  limited,  largely  reflecting  the  difficulty  in 
adapting  the  domestic  legal  context  to  the  use  of  FI  in  Cohesion  policy  which  proved 

79   Michie R and Wishlade F (2011) Op cit.  
80   Michie R, Wishlade F and Gloazzo C (2014) Op cit. 

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complex  and  contributed  to  the  low  uptake  of  FIs  in  French  regional  OPs.  In  some 
countries  and  regions,  even  though  there  is  domestic  experience  with  FIs,  they  are  not 
used  under  Cohesion  policy  owing  to  small  allocations  which  make  the  administrative 
burden too high (as in Flanders (BE)) or because the OP focus is on projects that are less 
likely to generate the returns required to make FIs workable.  

In  terms  of  the  economic  context,  this  study  confirms  the  need  for  a  quality  ex  ante 
assessment of the market and of the size and nature of the funding gap.  As mentioned, 
such assessments were not obligatory in 2007-13, but are for 2014-20; these may prove 
technically challenging and are not a panacea, but should provide a firmer evidence base 
for  the  scale  and  focus  of  policy  than  has  sometimes  been  evident.  In  Spain,  for 
example,  there  has  been  a  significant  underinvestment  of  FIs  under  the  Technological 
Fund  OP,  partly  owing  to  an  over-allocation  of  funds  to  avoid  decommitment,  but  also 
due  to  a  mismatch  between  the  geographical  focus  of  the  FI  (with  70  percent  of  the 
allocation earmarked for Convergence regions) and the targeting of innovative projects, 
which are less prevalent in more disadvantaged regions.  

An important lesson from this study is that the context can change. There may be a need 
to  adjust  the  strategy  during  the  course  of  implementation,  drawing  on  evaluations, 
market  research  and  monitoring  data  to  recalibrate  instruments  to  reflect  changing 
market  needs.  However,  of  particular  note  in  2007-13  was  the  impact  of  the  crisis.  In 
several  of  the  case  study  OPs  (for  example  COMPETE  (PT)  and  Economic  Growth  (LT)) 
co-financed  FIs  were  used  in  response  to  the  economic  crisis.  In  Lithuania  this involved 
diluting  the  planned  focus  on  innovative  SMEs  in  order  to  provide  more  general 
investment and working capital. Indeed, case study evidence suggests that around 60% 
of loan volumes (as a share of all co-financed loan and guarantee products) in Lithuania 
were  for  working  capital.  Working  capital  was  also  supported  in  other  OPs  (including 
Languedoc-Roussillon  (FR)  –  11%;  Malopolskie  (PL)  –  9%;  and  Hungary  c7.5%),  but 
sometimes the scale cannot be estimated (OP COMPETE – PT) or eligibility is unclear (OP 
Enterprise  and  Competitiveness  (CZ).  Elsewhere,  working  capital  is  explicitly  ineligible 
(OP Bavaria (DE); OP North East England (UK) and OP Technological Fund (ES)).  

Effective  monitoring  systems  set  up  by  the  MAs  can  play  an  important  part  in 
determining  the  nature  of  any  adjustments  needed,  as  well  as  providing information  on 
the effectiveness of intervention. It is clear from this study that the information collected 
for 2007-13 has been insufficient for a concrete assessment even of the extent to which 
monies paid to funds have actually been invested in final recipients, let alone a detailed 
understanding of the impact of policy across a range of indicators. Notwithstanding these 
shortcomings,  it  is  important  that  monitoring  is  also  adapted  to  context.  It  is  arguable 
that reporting mechanisms should be commensurate with the scale of funds in order for 
costs  to  be  proportionate.  For  example,  North-West  England  maintains  a  highly 
sophisticated bespoke real-time system for tracking FI investments, but the cost of such 
a set up would be prohibitive in other contexts. 81 

The  importance  of  policy  coordination  as  a  contributor  to  and  reflection  of  capacity  is 
evident both in relation to the components of policy and the roles of the various actors. 
More specifically, FIs should be part of a holistic package of SME support. FIs will be only 

81   Michie R, Wishlade F and Gloazzo C (2014) Op cit. 

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one component of the business support ecosystem and should take account of the wider 
business support/entrepreneurship and innovation environment, as these structures help 
develop investible propositions for FIs.82 Demand side policies to develop entrepreneurial 
and investment talent and networks are  critical and there is a strong need for provision 
of information, advice and hands-on support.83 There is also a need for the SME support 
offer to be appropriately dovetailed with grant support, and for the availability of support 
to  be  communicated  –  in  Languedoc-Roussillon  OP  (FR)  for  example,  availability  of 
support  was  considered  poorly  communicated  owing  to  the  absence  of  non-financial 
support in the package.  

Related,  the  2007-13  experience  shows  the  importance  of  close  coordination  of  the 
various actors involved from the outset. In this context policymakers have pointed to the 
importance  of  understanding  of  the  market,  as  implied  by  an  ex  ante  assessment,  but 
also the motivations of different actors in the field and the need to ensure that interests 
and  incentives  are  aligned.  FI  implementation  is  characterised  by  multilevel  principal-
agent relationships, the definition of which requires detailed calibration. As such, funding 
agreements  need  to  be  sufficiently  attractive  to  fund  managers  to  secure  their 
involvement,  but  also  enforceable  so  that  the  policy  objectives  are  met;  balancing  the 
need  for  flexibility  (to  respond  to  changing  circumstances)  against  the  risk  of  ‘objective 
drift’  may  be  challenging.  There  is  potential  for  tension  between  the  complex  range  of 
managing authority goals and the profit-oriented focus of private sector fund managers. 
This  may  be  seen  for  example  in  relation  to  attitudes  towards  risky  or  innovative 
projects,  with  managing  authorities  typically  seeking  to  support  innovative  projects  and 
private  fund  managers  seeing  these  as  potentially  undermining  profit.  While  the 
development of a regional SME base is a core objective for the managing authority, it is 
merely an incidental by-product to a profit-driven private investor. Importantly, though, 
the  principal-agent  relationship  cuts  both  ways.  The  potentially  large  number  of  actors 
involved in implementation and the consequent distance between the managing authority 
and the actual delivery of financial products to final recipients ‘on the ground’ means that 
managing authorities may lose a sense of ‘ownership’ of FIs, having effectively delegated 
responsibility  elsewhere.  This  risk  is  arguably  higher  in  the  context  of  FIs  where  the 
emphasis is on commercially managed operations than in other areas of Cohesion policy 
and  points  to  the  need  for  carefully  crafted  funding  agreements  and  appropriate 
monitoring mechanisms.   

The  disparate  nature  and  scale  of  the  instruments  deployed  against  the  backdrop  of 
diverse  economic  and  institutional  contexts,  coupled  with  limited  data  makes  it  hard  to 
draw  concrete  or  comparative  conclusions  about  the  conduct  and  performance  of  FIs  in 
2007-13. The implementation of co-financed FIs in 2007-13 has faced many challenges – 
the impact of the financial crisis, gaps in the regulatory framework, the sheer complexity 
of the administrative structures involved and the wide range of skills required. If there is 
an overarching narrative, it is perhaps to be found in the role of time and experience in 
policy evolution. This may be a truism, but in spite of the challenges, FI under some OPs 

82   Mason C and Brown R (2013) Creating good public policy to support high-growth firms, Small Business 

Economics, 40 (2), 211-225 http://link.springer.com/article/10.1007/s11187-011-9369-9; Brown R, Mason 
C and Mawson S (2014) Increasing ‘The Vital 6 Percent’: Designing Effective Public Policy to Support High 
Growth Firms, Nesta Working Paper No. 14/01, NESTA; Saublens C and Walburn D (2009) Smaller Firms, 
the Equity Gap, Regional Policy and Growth: Will We Ever Learn?, Local Economy, 24:6-7, 620-624. 
83   Wilson, K and Silva, F (2013) Op cit.; NEA2F (2013) North East Access to Finance: The Future Shape of 

Access to Finance: Strategic Overview and Recommendations. 

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have  performed  well  in  terms  of  investment  in  final  recipients  or  development  of  local 
financial  markets,  for  example,  and  arguably  those  that  have  performed  best  are  those 
that  were  able  to  draw  extensively  on  the  experience  either  of  existing  systems  and 
structures  or  past  programmes  while  committing  funding  allocations  that  could 
realistically  be  absorbed.  Even  among  those  FIs  that  have  performed  less  well,  the 
indications  are  that  the  experience  of  FIs  in  2007-13  will  inform  and  enrich  the  design 
and implementation of financial instruments in 2014-20, contributing to more mature and 
responsive policy instruments in future. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6 Annex 

6.1  Data sources 

Data sources used for the brief stocktaking of the private markets in the twelve relevant 
Member States are listed below (see the first intermediate report for more details): 

European Central Bank data on the euro area for non-financial corporation 

European Commission Survey on Access to Finance for Enterprises 

European Business Angel Network (EBAN) 

European Mutual Guarantee Association (AECM) 

Eurostat, General and regional Statistics, European and national indicators for short-term 
analysis, National Accounts 

Eurostat, Industry, trade and services, Structural business statistics, Access to finance 

Eurostat,  Industry,  trade  and  services,  Structural  business  statistics,  Business 
demography 

Eurostat, Industry, trade and services, Structural business statistics, Main indicators 

European Venture Capital and Private Equity Association (EVCA) 

6.2  References, with bibliographical details 

Amendment  to  Council  Regulation  (EC)  No  1083/2006  obliged  Member  States  to  report 
on  FIs  in  the  Annual  Implementation  Report:  (Regulation  (EU)  No  1310/2011  of  the 
European  Parliament  and  of  the  Council  of  13  December  2011  amending  Council 
Regulation (EC) No 1083/2006) 

Astebro  T  and  Bernhardt  E  (2003)  The  winners  curse  of  human  capital.  Small  Business 
Economics, 24. 1-16 

Armstrong, A et al (2013) An Assessment of Bank Lending to UK SMEs in the wake of the 
crisis, National Institute Economic Review August 2013, 225(1) 

Augusto  Mateus  &  Associados  and  PwC  Portugal  (2013),  Estudo  de  Avaliação  Intercalar 
do Programa Operacional Fatores de Competitividade (COMPETE): Relatório Final 

Baldock  R  and  North  D  (2012)  The  Role  of  UK  Government  Equity  Funds  in  Addressing 
the  Finance  Gap  facing  SMEs  with  Growth  Potential,  Paper  for  the  Institute  for  Small 
Business and Entrepreneurship Conference, 7-8 November 2012, Dublin 

Bank  of  England  Credit  Conditions  Surveys 
http://www.bankofengland.co.uk/publications/Pages/other/monetary/creditconditions.as
px; 

for  Q3/2007  and  Q2/2008: 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Berggren,  B  and  Silver,  L  (2012)  Financing  Entrepreneurship  in  Different  Regions:  the 
failure to decentralise financing to regional centres in Sweden, Journal of Small Business 
and Enterprise Development, 17(2) 

Bertoni,  F  and  Tyková,  T  (2012),  Which  form  of  Venture  Capital  is  Most  Supportive  of 
Innovation? 
http://ftp.zew.de/pub/zew-
docs/dp/dp12018.pdf  

Discussion 

12-018: 

paper 

no 

BGI  Consulting  (2014),  Europos  Sąjungos  struktūrinės  paramos  poveikio  smulkiajam  ir 
vidutiniam verslui vertinimas. Galutinė vertinimo ataskaita 

Block,  J  and  Sandner,  P.  (2009),  What  is  the  effect  of  the  financial  crisis  on  venture 
capital  financing?  Empirical  evidence  from  US  Internet  start-ups  -  Venture  Capital:  An 
International Journal of Entrepreneurial Finance, 11(4), 295-309 

Brander, J Du, Q and Hellmann, T (2014), The Effects of Government Sponsored Venture 
Capital: International Evidence, Review of Finance Advance Access, 1-48 

Brown  R,  Mason  C  and  Mawson  S  (2014)  Increasing  ‘The  Vital  6  Percent’:  Designing 
Effective Public Policy to Support High Growth Firms, Nesta Working Paper No. 14/01 

Caseya,  E and O'Toole, M (2014),  Bank lending constraints, trade  credit and alternative 
financing during the financial crisis: Evidence from European SMEs, Journal of Corporate 
Finance, 27, 173–193 

Community Strategic Guidelines 2007-13, COM(2005)229, section 4.2.4. 

Cordova,  A  Dolci,  J  and  Gianfrate,  G  (2013)  The  Bearable  Lightness  of  Crowdfunding: 
Evidences from Technology, 4th European Conference on Corporate R&D and Innovation 
CONCORDi-2013, 26-7 September 2013, Seville 

Cowling,  M  (1998)  Regional  determinants  of  small  firm  loans  under  the  UK  Loan 
Guarantee Scheme, Small Business Economics, 11 (2) 155-167 

Cowling  M  (2010)  Economic  Evaluation  of  the  Small  Firms  Loan  Guarantee  (SFLG) 
Scheme, Report to BIS, Department for Business, Innovation and Skills 

Cowling,  M.  (2012),  Financial  engineering  Literature  review  –  Credit  rationing,  equity 
gaps and policy solutions for financing entrepreneurial business in Europe: Theory, tests, 
evidence and the design and effectiveness of policy instruments 

Craig,  B,  Jackson,  W  and  Thomson,  B  (2008)  Credit  market  failure  intervention:  Do 
government  sponsored  small  business  credit  programs  enrich  poorer  areas?  Small 
Business Economics, 30, pp345-360 

Criscuolo, C., P. N. Gal and C. Menon (2014), The Dynamics of Employment Growth: New 
Evidence  from 18 Countries, OECD Science, Technology and Industry  Policy Papers, No. 
14, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/5jz417hj6hg6-en 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

CSES  (2007),  Comparative  Study  of  Venture  Capital  and  Loan  Funds  Supported  by  the 
Structural Funds - report to European Commission 

CSES  (2008)  Evaluation  of  ERDF  Supported  Venture  Capital  and  Loan  Funds,  Report  to 
Government. 
the 
http://www.scotland.gov.uk/Resource/Doc/209231/0055411.pdf  

Scottish 

D’Ignazio,  A  and  Menon,  C  (2013)  The  causal  effect  of  credit  guarantees  for  SMEs: 
d’Italia: 
evidence 
http://www.bancaditalia.it/pubblicazioni/econo/temidi/td13/td900_13/en_td900/en_tem
a_900.pdf 

Discussione, 

Banca 

Italy, 

Temi 

from 

di 

ECA  (2012),  Financial  instruments  for  SMEs  co-financed  by  the  European  Regional 
Development Fund 

European Commission (2009), Indicative Guidelines on Evaluation Methods: Reporting on 
core  indicators  for  the  European  Regional  Development  Fund  and  the  Cohesion  Fund  – 
Working Document no. 7 

European Commission (2012) Financial Instruments in Cohesion Policy, Commission Staff 
Working Document, SWD(2012)36 final, Brussels 27 February 2012 

European Commission (2013), SME’s Access to Finance Survey report 

European  Commission  (2014),  A  Partial  and  Fragile  Recovery,  Annual  Report  on 
European SMEs 2013/2014 

European Commission (2014), European Competitiveness Report 

European Commission (2014), Summary  of data on the progress made in financing and 
implementing  financial engineering instruments,  Programming  period 2007-13,  situation 
as at 31 December 2013 

European Commission (2014), Summary Report on Financial Instruments 

European  Court  of  Auditors  (2012),  Financial  instruments  for  SMEs  Co-financed  by  the 
European Regional Development Fund - Special report No. /2 2012 

European  Investment  Fund  (2012),  European  Small  Business  Finance  Outlook,  working 
paper 
http://www.eif.org/news_centre/research/eif_wp_2012_14_esbfo-
may2012_fv.pdf 

2012/14: 

European  Parliament  (2012)  Overview  of  Financial  instruments  used  in  the  EU 
Multiannual  Financial  Framework  period  2007-2013  and  the  Commission’s  proposals  for 
2014-2020, DG for Internal Policies, Policy Department D: Budgetary Affairs, Brussels 

European  Venture  Capital  Association  (2014),  European  Private  Equity  Activity: 
http://www.evca.eu/media/142790/2013-European-Private-Equity-Activity.pdf 

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Eurostat 
http://www.oecd.org/industry/business-stats/39974588.pdf  

(2007),  Manual 

-  OECD 

on 

business  Demography 

Statistics 

Evans,  D  J  (2013)  Access  to  Finance  Review:  Stage  1  Report  &  Stage  2  Report,  Welsh 
Government 

Expert  evaluation  network  delivering  policy  analysis  on  the  performance  of  Cohesion 
Policy  2007-2013,  report  to  the  European  Commission  Directorate-General  Regional 
Policy: 
http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/eval2007/expert_in
novation/literature_review_financial_engineering.doc  

Faiña  A,  Lopez-Rodriguez  J,  Montes-Solla  P,  and  Varela  Candamio  L  (2012)  Expert 
evaluation  network  delivering  policy  analysis  on  the  performance  of  Cohesion  Policy 
2007-2013. 
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http://ec.europa.eu/regional_policy/sources/docgener/evaluation/pdf/eval2007/expert_in
novation/2012_synt_rep_es.pdf 

Financial 

Task 

1: 

Florida,  R  (1988),  Venture  capital-financed  innovation  and  technological  change  in  the 
USA, Research Policy 17(3), pp119-137 

Fortune  (2014),  World’s  most  admired  corporations:  http://fortune.com/worlds-most-
admired-companies/2014/ 

Gimeno, 
http://knowledge.insead.edu/blog/insead-blog/where-are-europes-gazelles-2751 

Europe’s 

(2012), 

Where 

are 

J 

Gazelles? 

Gompers, P and Lerner, J (2001), The Money of Invention: How Venture Capital Creates 
New Wealth, Boston: Harvard Business School Press 

Greunz  L  (2012)  Financial  engineering:  Belgium  Expert  evaluation  network  delivering 
policy  analysis  on  the  performance  of  Cohesion  policy  2007-2013,  A  report  to  the 
European Commission Directorate-General Regional Policy 

Grilli,  L  and  Murtinu,  S  (2013)  New  technology-based  firms  in  Europe:  market 
penetration,  public  venture  capital  and  timing  of  investment,  paper  to  4th  European 
Conference of Corporate R&D and Innovation CONCORDi-2013, Seville, September 2013: 
http://iri.jrc.ec.europa.eu/concord/2013/papers.html 

Grilli, L and Murtinu, S (2014) Government, venture capital and the growth of European 
high-tech entrepreneurial firms, Research Policy, 43(9), 1523-1543 

Growth  analysis  (2011),  Competent  capital?  Three  countries,  three  trials,  Swedish 
Agency for Growth Policy Analysis, Östersund 

Guidance  Note  on  Financial  Engineering  Instruments  under  Article  44  of  Council 
Regulation (EC) No 1083/2006 COCOF_10-0014-05-EN (12/02/2012) 

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Harrison,  R  T  and  Mason,  C  M  (1986)  The  regional  impact  of  the  Small  Firms  Loan 
Guarantee Scheme in the United Kingdom, Regional Studies, 20, 535-549 

Hayton  K  et  al.  (2008)  Evaluation  of  the  Scottish  Co-Investment  Fund,  A  Report  to 
Scottish Enterprise, May 2008, Scottish Enterprise. 

Henrekson,  M  and  Johansson,  D  (2010),  Gazelles  as  job  creators:  a  survey  and 
interpretation of the evidence, Small Business Economics, 35 (2), 227-244 

Hutton,  W  and  Nightingale,  P  (2012),  The  Discouraged  Economy.  London:  The  Work 
Foundation 

Hyytinen  A  &  Ylhäinen  I  (2012)  Julkisen  yritysrahoituksen  vaikuttavuus:  Esimerkkinä 
erityisrahoitusyhtiö  Finnvera,  In  Työ-  ja  elinkeinoministeriö  Kasvuyrityskatsaus  2012, 
Työ- ja elinkeinoministeriön julkaisuja. Innovaatio 20/2012, pp81-85 

Jensen,  N  and  Wilhelmsen,  J  (2008)  Observations  on  a  Crisis,  Investor  insight,  Outside 
the 
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6.3  List of interviewees (Name, Organisation) 

Interviewees are listed in the case study reports 

6.4  Concordance table: the final report structure vs the ToR questions 

Evaluation Question 

Task 1 

1.1 Take brief stock of the private markets for equity/venture capital, loans and 
guarantees operating in the programme area. To what extent do markets exist 
and are they growing? Under what terms are private sector equity / venture 
capital, loans or guarantees typically offered? What are the gaps in markets for 
each instrument? The intention is not to conduct a lot of original research, but to 
briefly provide a baseline. 

1.2 Outline the main forms/packages of support offered by each FEI scheme. 
This may include non-financial support such as advice, management support and 
networking help. 

1.3 Outline the rationale underlying these forms of support and the types of 
business eligible/targeted (e.g. size, sector, etc.). 

1.4 Outline the management and operational structure of the scheme. How are 
projects selected, how is support delivered, what is the repayment structure 
and/or exit strategy? 

1.5 Quantify the support (total and firm-level expenditure, number and type of 
enterprises, form of support, timing, level and involvement of the public sector 
etc.) and set out other available descriptive statistics. 

1.6 Where available, collect data on effectiveness, including private sector 
money levered in, the extent to which public money has revolved already and 
final outcomes such as productivity, employment etc. at the firm level. 

1.7 Crosscheck the above (as far as possible) with the data reported by member 
states in the 2012 summary of data on FEIs, published beneficiary data, as well 
as with the results of the parallel ex post evaluation work package 0 (data 
collection and quality assessment). 

Task 2 EQs  

1.1 Where and why do publicly funded FEIs to enterprise work (or don’t work)? 
What are the theories of change and contribution stories of FIs? 

Task 3 EQs (The case Studies) 

Reference 

FR section 

4.1.1 

4.2.1 

4.1.3 

4.3.1 

4.2.2 

4.5 

3.2  

FR section 

4.1.2 
Annex  

CS section 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Evaluation Question 

Reference 

1. Goals and theory of change.  
1.1 What are the goals of the schemes and the theory of change?  
1.2 What is the quality of the market gap assessment?  
1.3 How do the schemes contribute to the regional development goals of the 
operational programme as a whole? 
1.4 What motivated the managing authority to set up one or more FEIs?  
1.5 Does implementation and practice (e.g. selection of firms, forms of support, 
outcomes) actually fit with statements of goals and theory of change?  
1.6 Where there is more than one FEI in a programme, what is the division of 
labour between them?  
1.7 How do they fit with other instruments offered by the programme (notably 
grants or non-financial support) or (if relevant) similar, non-Cohesion Policy 
instruments operating in the same area? 

2. Management.  
2.1 What is the governance structure of each FEI?  
2.2 Who are the fund managers (or managers within the programme) and what 
is their background?  
2.3 In their understanding, what are the key differences between public and 
private sector FEI schemes?  
2.4 What is success for the manager (and is this translated into an indicator, 
reported to the managing authority)? What are managers’ incentives/packages 
and performance requirements?  
2.5 What can be done to keep management costs to an acceptable level, while 
still running the funds adequately?  
2.6 What is the relationship with the managing authority and the programme 
strategy? 

3. Implementation and costs.  
3.1 How much did the schemes cost to set-up and how long did it take?  
3.2 How much do they cost to run?  
3.3 How well do they manage in attracting firms (especially where there are 
other forms of support e.g. grants available)?  
3.4 Are there other implementation issues?  
3.5 How do costs and other implementation issues compare to private FEIs and 
other public financial support (grants, guarantees etc.) in the same 
region/country?  
3.6 Are there good examples in terms of management, including not just 
successful investments, but also costs and delays?  
3.7 What features of administrative and institutional capacity are crucial in 
successfully running such funds?  
3.8 To what extent do the case study Member State and regions have these 
capacities?  
3.9 How could such capacities be built/developed further and which instruments 
could be used to do this? 

4. Managing the portfolio.  
4.1 What is the status and health of the projects in their portfolio? 
4.2 What is the approach to risk, e.g. do they target safe investments or high 

2.1 
2.2 
2.3 

2.4 

2.5 

2.6 

3.1 
3.2 

3.3 

3.4 

3.6 

3.1 

3.5 
3.5 
3.7 

3.8 
3.9 

6.7 

3.11 

3.11 

3.11 

3.12 
3.13 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Evaluation Question 

risk, high return projects?  
4.3 What is the repayment structure for loans, the exit strategy for equity and 
venture capital? What happens when a firm does not fail, but does not turn a 
profit? 

5. Monitoring and evaluation.  
5.1 What indicators are collected? Do they cover spending and outputs only, or 
also results and other long term outcomes?  
5.2 What is reported to the managing authority? How does this relate to the 
reliability of data reported to the Commission, notably in terms of expenditure 
codes and the 2012 summary of data on financial instruments? What data is 
available on repayments?  
5.3 Have there already been evaluations of these or similar schemes (and if so, 
what did they find)? Are evaluations planned? What will they contain – and what 
data is already being collected to feed them? 

6. Outcomes.  
6.1 How much private money has been levered in?  
6.2 How much of the money has revolved?  
6.3 What is the initial evidence of effectiveness? This last should include 
productivity and jobs, but also failure rates – it should also include other goals 
relevant to the scheme, e.g. if a venture capital scheme sets out to stimulate 
early stage research, development and innovation.  
6.4 What is the initial evidence for efficiency/cost-effectiveness (i.e. comparing 
outcomes to costs such as those in point 3 above)? How does this compare 
between different FEIs and with the main alternative sources of finance in the 
region/country (e.g. grants, private schemes)?  
6.5 What is the evidence for and against the theories of change and contribution 
stories? 

7. Optimum scale. Given implementation, costs and outcomes what can be said 
about the minimum, optimum and maximum sizes of scheme and level of 
individual support? 

8. Market-making for equity/venture capital funds. Is there evidence of 
successful creation/expansion of the equity/venture capital market in the 
region/country? Is this likely to be sustained / sustainable in the long term, even 
if public money is withdrawn? How much of a funding gap remains, what links 
with universities, what other means of supporting high-tech start-ups?  
8.1 Is there any evidence of added value of ERDF vs private equity/venture 
capital funds? 

9. Good practice.  
Are there any good practice examples in the above terms 
(setup/implementation, early signs of effectiveness, sustainability/expansion of 
markets, good practice projects). What do we learn from comparing good 
practice cases with others? What makes the difference? 

Reference 

3.14 

4.1 

4.2 

4.3 

5.1 
5.2 
5.3 

6.3 

6.2 

6.4 

6.5 

6.6 

6.7 

Task 4 EQs 

FR section 

4.1 Which of the theories of change and contributions stories drawn up in task 2 
(and rationales from task 1) are actually borne out by the case studies (including 
the good practices) in task 3. The evidence for and against each narrative should 
be critically examined. 

On the 
level of  
Case 
studies 

page 110 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Evaluation Question 

4.2 The costs (e.g. in setting up schemes) and initial evidence of benefits (e.g. in 
terms of private money levered in, public money revolved, increased investment, 
production, productivity and jobs). How do these vary between different FEIs 
(equity/venture capital, loans and guarantees) and what we know of the effects 
of other forms of support (grants, non-financial support)? The analysis should 
also include wider benefits such as creating a venture capital market. 

Reference 

4.5 

4.3 What has been learned about when, where, how various FEIs work – and 
when they don’t work. This should include a discussion of: 
4.3.1 A comparison of the main characteristics (pros and cons, roll out time and 
mechanism, target group, impacts) of each type of FEI. What can be said about 
how to choose one or more FEIs in the light of the goals and context of a given 
region or Member State? 
4.3.2 The optimum size of a given FEI scheme. 
4.3.3 Optimum scope (e.g. sectors and firms targeted, combination of 
instruments etc.). 
4.3.4 How to keep implementation delays and management costs to a minimum, 
while still running an effective scheme which achieves the desired results. What 
administrative and institutional capacities are necessary to run such schemes 
successfully – how a Member State or region could go about building them. 
4.3.5 How to optimise the impact of FEIs. Impact includes not just leverage and 
revolving, but also final impact in terms of productivity and jobs. 

4.1 

4.5 
4.5 

5 

5 

6.5  Link of Case study sections to Task 3 Evaluation Questions 

Case study sections 

Task 3 EQs 

1 

1.1 

1.2 

1.3 

2 

2.1 

2.2 

2.3 

Short presentation of the FIs in the OP 
and context 

OP characteristics 

Description of FIs 

Financial performance at the level of the 
OP and the funds 

Goals and theory of change of FIs 

Overview on goals of the FI schemes and 
the theory of change (ToC) 

1.1 What are the goals of the schemes 
and the theory of change?  

Market gap assessment in the context of 
the private market in a given region (key 
element of the ToC) 

1.2 What is the quality of the market 
gap assessment?  

Contribution of FI schemes to regional 
development goals of the OP (key 
element of the ToC) 

1.3 How do the schemes contribute to 
the regional development goals of the 
operational programme as a whole? 

2.4 

Motivation of the MA to set up FIs 

2.5 

Division of labour between FIs in an OP 
(key element of the ToC) 

1.4 What motivated the managing 
authority to set up one or more FEIs? 

1.6 Where there is more than one FEI in 
a programme, what is the division of 
labour between them? 

page 111 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Case study sections 

Task 3 EQs 

2.6 

Fit of FIs set out in the OP with other OP 
instruments (grants, non-financial 
support) and similar non-cohesion policy 
instruments in the same area 

3 

Management and implementation of FIs 

3.1 

Governance structure of FIs, role of MA 

3.2 

Type and background of fund managers 

1.7 How do they fit with other 
instruments offered by the programme 
(notably grants or non-financial support) 
or (if relevant) similar, non-Cohesion 
Policy instruments operating in the same 
area? 

2.1 What is the governance structure of 
each FEI? 
2.7 What is the relationship with the 
managing authority and the programme 
strategy? (Extent to which the MA can 
influence the conduct of the FI) 

2.2 Who are the fund managers (or 
managers within the programme) and 
what is their background? 

Key differences in the management of 
public and private sector FI schemes 
(goes partly beyond the OP scope) 

2.3 In their understanding, what are the 
key differences between public and 
private sector FEI schemes? 

3.3 

3.4 

Performance and success indicators for 
fund management; incentives linked to 
performance 

2.4 What is success for the manager 
(and is this translated into an indicator, 
reported to the managing authority)? 
What are managers’ incentives/packages 
and performance requirements? 

3.1 How much did the schemes cost to 
set-up and how long did it take? How 
much do they cost to run? 

2.6 What can be done to keep 
management costs to an acceptable 
level, while still running the funds 
adequately? 

3.2 How well do they manage in 
attracting firms (especially where there 
are other forms of support e.g. grants 
available)? 

3.3 Are there other implementation 
issues? 

3.4 How do costs and other 
implementation issues compare to 
private FEIs and other public financial 
support (grants, guarantees etc.) in the 
same region/country? 

2.4 What is success for the manager 
(and is this translated into an indicator, 
reported to the managing authority)? 
What are managers’ incentives/packages 
and performance requirements? 

3.5 

Preparation time and costs to set-up FIs 

3.6 

Management costs and fees for sound 
fund management 

3.7 

Capacity to attract firms for FIs 
compared to other forms of support 

3.8 

Implementation challenges 

3.9 

Comparison of costs and implementation 
issues of FIs with private and other 
public financial support (goes partly 
beyond the OP scope) 

3.10  Success factors for sound administration 

and management of FIs 

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Case study sections 

Task 3 EQs 

3.11  Capacity of MA and fund managers to 
successfully run FIs; capacity building 

3.12  Status and health of projects in the FI 

portfolio 

3.13  Approach to risk management 

3.14  Key features of the repayment structure 

for loans / exit strategy for equity and 
venture capital 

4 

4.1 

4.2 

Monitoring and evaluation of FIs 

Characteristics and completeness of the 
indicator system 

Reporting provisions for fund managers 
to the MA and reliability of reported data 
to various stakeholders 

4.3 

Evaluations carried out to date or 
planned 

5 

5.1 

Outcomes of FI implementation 

Private money levered in at the various 
levels of the implementation chain 
(leverage effect according to ec 
definition) 

5.2 

Financial sustainability of FIs  

3.6 What features of administrative and 
institutional capacity are crucial in 
successfully running such funds? To what 
extent do the case study Member State 
and regions have these capacities? How 
could such capacities be built/developed 
further and which instruments could be 
used to do this? 

4.1 What is the status and health of the 
projects in their portfolio? 

4.2 What is the approach to risk, e.g. do 
they target safe investments or high 
risk, high return projects? 

4.3 What is the repayment structure for 
loans, the exit strategy for equity and 
venture capital? 
4.4 What happens when a firm does not 
fail, but does not turn a profit? 

5.1 What indicators are collected? Do 
they cover spending and outputs only, or 
also results and other long term 
outcomes? 

5.2 What is reported to the managing 
authority? How does this relate to the 
reliability of data reported to the 
Commission, notably in terms of 
expenditure codes and the 2012 
summary of data on financial 
instruments? What data is available on 
repayments? 

5.3 Have there already been evaluations 
of these or similar schemes (and if so, 
what did they find)? Are evaluations 
planned? What will they contain – and 
what data is already being collected to 
feed them? 

6.1 How much private money has been 
levered in? 

6.2 How much of the money has 
revolved? 

5.3 

Actual, expected and unexpected 
outcomes (output and results, wider 
effects) for each fi implemented, 

6.3 What is the initial evidence of 
effectiveness? This last should include 
productivity and jobs, but also failure 

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Case study sections 

Task 3 EQs 

concrete examples of outcomes 

Conclusions on the effectiveness and 
added value of FIs 

Consistency of implementation and 
practice with statement of goals and 
theory of change 

rates – it should also include other goals 
relevant to the scheme, e.g. if a venture 
capital scheme sets out to stimulate 
early stage research, development and 
innovation. 

1.5 Does implementation and practice 
(e.g. selection of firms, forms of support, 
outcomes) actually fit with statements of 
goals and theory of change? 

Achievement of FI strategic and 
operational objectives in the context of 
OP objectives, as defined in the TOC 

6.5 What is the evidence for and against 
the theories of change and contribution 
stories? 

6 

6.1 

6.2 

6.3 

Cost effectiveness of different types of 
FIs and grant schemes 

6.4 

Optimum scale of FI schemes 

6.5 

Improved market making for 
equity/venture capital funds 

6.6 

Added value of ERDF vs. private 
equity/venture capital funds 

6.7 

Elements of good practice from the case 
study 

6.4 What is the initial evidence for 
efficiency/cost-effectiveness (i.e. 
comparing outcomes to costs such as 
those in point 3 above)? How does this 
compare between different FEIs and with 
the main alternative sources of finance 
in the region/country (e.g. grants, 
private schemes)? 

7. Optimum scale. Given 
implementation, costs and outcomes 
what can be said about the minimum, 
optimum and maximum sizes of scheme 
and level of individual support? 

8. Market-making for equity/venture 
capital funds. Is there evidence of 
successful creation/expansion of the 
equity/venture capital market in the 
region/country? Is this likely to be 
sustained / sustainable in the long term, 
even if public money is withdrawn? How 
much of a funding gap remains, what 
links with universities, what other means 
of supporting high-tech start-ups? Is 
there any evidence of added value of 
ERDF vs private equity/venture capital 
funds? 

8.1 Is there any evidence of added value 
of ERDF vs private equity/venture capital 
funds? 

9. Good practice. Are there any good 
practice examples in the above terms 
(setup/implementation, early signs of 
effectiveness, sustainability/expansion of 
markets, good practice projects). What 
do we learn from comparing good 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Case study sections 

Task 3 EQs 

practice cases with others? What makes 
the difference? 
3.5 Are there good examples in terms of 
management, including not just 
successful investments, but also costs 
and delays? 

6.8 

Problems and solutions in carrying out 
the case study 

6.6  Generalized ToCs for different types of firms and FIs  

Input from First Intermediate Report section: A stylised theory of change 

Developing retrospective theories of change through the case studies 

A  significant  challenge  in  the  present  study  is  applying  a  theory  of  change  approach  at 
different scales and in a multidimensional context. The discussion above has highlighted 
the  crucial  role  of  a  robust  ex  ante  assessment/  gap  analysis  in  determining  what  role 
financial  instruments  might  play  in  contributing  to  the  objectives  of  the  Operational 
Programme. This in turn implies an in-depth analysis of the entrepreneurial landscape of 
the  region  (or  country).  From  here  the  picture  becomes  more  complex.  A  range  of 
different  target  enterprises  may  emerge  from  the  gap  analysis  –  including  start-ups, 
‘mainstream’  SMEs,  high  growth  firms,  spin-out  companies,  social  enterprises,  etc.  The 
financing  needs  of  such  enterprises  are  diverse  and  there  may  be  little  commonality 
emerging  from  the  gap  assessment  beyond  the  fact  that  the  existing  capital 
requirements of apparently viable operations are not being met by the market. The aim 
of the discussion and illustrations that follow is to ‘unpack’ this outcome in a stylised way 
first from the perspective of various types of enterprise and their needs and second from 
the perspective of the main forms of  financial instrument and how they are intended, in 
principle, to address those needs. 

Start-ups  and  ‘mainstream  SMEs’  most  commonly  turn  to  debt  finance  (Figure  12  and 
Figure 13).  

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Figure 12: Stylised theories of change for different types of firm: start-ups 

Context: rationale for intervention: information asymmetry (e.g. 
firms lack track record), firms lack collateral, high transaction costs… 

Problem 
being 
addressed: 

Lack of suitable 
credit/at 
affordable price 

Financial 
instruments 
offered: 

Microfinance 
(loans, loan 
guarantee on 
commercial 
loan)  

Target firm:  

micros 

start-ups 

entrepreneurs 

Assumptions  and  pre-conditions:  soft  support  may  be  needed 
alongside  FIs  to  improve  skills,  high  business  birth  rate  underpins 
regional economic growth 

Intended 
change: 

Firm 
started up, 
creates 
new jobs 
(contribute 
to OP 
targets) 
increases 
profits, 
repays 
investment 

c
i
m
o
n
o
c
e

l

e
b
a
n
a
t
s
u
s

i

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g

o
t

e
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b
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o
c

:

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a

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For  small  firms,  debt  instruments  imply  no  loss  of  control  over  how  the  business  is 
managed and the amount of capital and interest are known amounts that can be factored 
into  business  planning.  For  MAs  and  intermediaries,  loans  are  relatively  straightforward 
to administer. Mezzanine finance may be attractive to small firms which are resistant to 
pure equity. Where small firms lack collateral or track record, guarantees can be useful in 
addressing credit rationing. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 13: Stylised theories of change for different types of firm: mainstream 
SMEs 

Context: rationale for intervention: information asymmetry (e.g. 
firms lack track record), firms lack collateral 

Problem being 
addressed: 

Lack of suitable 
credit/at 
affordable price 

Relevant FI: 

Loans, loan 
guarantees, 
mezzanine 
finance 

Target firm:  

SMEs 

Assumptions and pre-conditions: 

Mature  SMEs  may  prefer  loan  funding  as  allows  control  to  be  kept  of 
firm and they have stable cash flow to allow repayments to be made 

Intended 
change: 

Firm 
grows, 
creates 
new jobs 
(contribute 
to OP 
targets), 
increases 
profits, 
repays 
loan 

c
i
m
o
n
o
c
e

l

e
b
a
n
a
t
s
u
s

i

h
t
w
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g

o
t

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:

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The  use  of  micro-finance  is  widespread  to  tackle  problems  of  exclusion  from  financial 
markets, with a focus on the long-term unemployed and on disadvantaged areas (Figure 
14). 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 14: Stylised theories of change for different types of firm: disadvantaged 
groups/social enterprises 

Context: rationale for intervention: information asymmetry (e.g. 
firms lack track record), firms lack collateral 

Problem being 
addressed: 

Lack of access 
to financial 
markets 

Relevant FI: 

Target firm:  

Microfinance 
(loans, loan 
guarantee on 
commercial 
loan) 

Disadvant-
aged groups/ 
social 
enterprises 

Assumptions  and  pre-conditions:  soft  support  needed 
alongside FIs to improve skills? 

Intende
d 
change: 

Social 
benefits, 
reduction 
in 
unemploy
-ment, 
increase 
in 
employm
ent (OP 
targets) 

c
i
m
o
n
o
c
e

l

e
b
a
n
a
t
s
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s

i

h
t
w
o
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g

o
t

e
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i
r
t
n
o
c

:

m
i
a

e
t
a
m

i
t
l
U

Firms  with  high  growth  potential  may  lack  the  cash  flow  necessary  to  borrow  from 
conventional  sources,  and  may  find  equity  finance  attractive  Figure  15.  On  the  other 
hand, managing authorities and investors may find equity investment attractive as it has 
the  potential  to  generate  substantial  returns,  and  contribute  to  regional  economic 
development. The level of capital input may be very substantial, and it does not have to 
be repaid (although an entrepreneur may ultimately opt to buy out an investor in order 
to regain total control of the firm). 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 15: Stylised theories of change for different types of firm: high growth 
firms 

Context: market unwilling to take risk, takes too long until profitability, 
information asymmetry (e.g. firms lack track record), firms lack 
collateral 

Problem 
being 
addressed: 

Funds not 
available at 
scale required 

Financial 
instruments 
offered: 

Loans 

Equity finance 

Mezzanine 
finance  

Support for VC 
industry  

Target firm:  

High growth 
firms 

Intended 
change: 

Firm grows, 
creates 
additional 
jobs (OP 
targets), 
increases 
profits, 
repays 
investment 

Assumptions  and  pre-conditions:  only  HGFs  contribute  to 
regional economic growth? 

h
t
w
o
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g

c
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l

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:

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Thus, as noted above, the barriers faced by different types of undertaking may differ and 
require different types of intervention to address them.  

Figure 16 illustrates the basic logic underlying loan schemes. In practice, there are many 
different  possible  options  in  the  design  of  loan  schemes  (institutional  issues  aside) 
including not only variants in the seniority of the debt, the rate of interest and repayment 
period, but also the scope to combine loan funds with guarantees – particularly common 
for microfinance – or to convert debt into quasi-equity in the form of mezzanine funding.  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 16: Stylised intervention logic underpinning loans 

Barrier to address? 

Credit  rationing  /  risk 
aversion 

1 

Failure  to  access  due 
to  high 
transaction 
costs  and  information 
asymmetries 

PUBLIC 
FUNDS 

6 

LOAN FUND 

4 

DEFAULT 

LO
AN 
FU
ND
IN
G 

IN
T
E
R
ES
T 

ENTERPRISE 

2 

3 

5 

REPAYMENT 

1.  An  enterprise  fails  to  gain  access  to  the  funding  required  because  insufficient 
funds are available for lending resulting in commercial banks focusing on investor 
with a track record or larger project where transaction costs are lower.  

2.  The loan fund manager assesses the application, taking account of the viability of 
the project and wider elements of the investment strategy. The terms of the loan 
are set, including collateral, interest rate, duration, repayment holidays, etc. 

3.  The  loan  fund  advances  capital  to  the  enterprise  which  it  would  not  otherwise 

have been able to access.  

4.  The enterprise pays interest on the loan. 

5.  The firm repays the loan in full or  

6.  The firm defaults, in which case there is a loss to the fund. 

There are potential negative effects of different types that should be noted, and factored 
into  the  design  of  the  measure.  First,  that  the  loan  fund  should  not  crowd  out  the 
commercial  banking  sector  by,  for  example,  lending  to  creditworthy  investments  at  less 
than  market  rates,  or,  for  that  matter,  fund  uncreditworthy  firms  to  the  detriment  of 
their more efficient competitors; and second, that rates of interest payable are sufficient 
to  cover  the  defaults  on  loan  payments  and  management  costs  of  the  fund  in  order  for 
the fund itself to be sustainable. As such, a key part of the investment strategy must be 
concerned with identifying projects that are too risky for commercial banks to take on or 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

that  rank  lower  in  terms  of  returns  on  capital,  and  yet  offer  sufficient  viability  and 
interest from a policy perspective.  

Figure  17  illustrates  the  basic  logic  underlying  guarantee  schemes.  Again,  in  practice, 
there are many different possible designs of guarantee fund, with scope to adjust interest 
rates, coverage, fees and so on, as well as so-called counter guarantee options which are 
commonplace in some countries. Figure 17 represents the most basic model. 

Figure 17: Stylised intervention logic underpinning guarantees 

Barrier to address? 

Risk aversion 

Public 
funds 

3 

GUARANTEE 
FUND 

Guarantee 
Fees 

4 

DEFAULT 

Guarantee 
application 

2 

7 

ENTERPRISE 

5 

LOAN FUNDING 

LENDER 

1 

REPAYMENT 

6 

Failure 
loan 
commercial terms 

to  access 
on 

finance 

1.  An  enterprise  fails  to  gain  access  to  the  funding  required  because  the  lender 
considers  it  too  risky  or  will  only  lend  at  rates  of  interest  that  render  the  loan 
untenable for the firm. 

2.  The  lender  applies  for  a  guarantee  from  a  publicly-backed  fund,  which  will 

typically cover 80 % of the loan. 

3.  The  guarantee  fund  also  vets  the  loan  application  and  may  specify  a  maximum 

interest rate. 

4.  The enterprise pays the guarantee fund a fee. 

5.  The  lender  advances  capital  to  the  firm  which  is  would  not  otherwise  have  been 

able to access. 

6.  The firm repays the loan in full or  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

7.  The firm defaults, in which case the guarantee fund repays the lender the agreed 

proportion of the loan. 

Again there are potentially negative effects of public guarantees. First, that risk is shifted 
inappropriately  with  the  guarantee  fund  taking  on  risk  that  the  bank  would  otherwise 
have accepted; second, that the fees payable by borrowers to the fund fail to cover the 
defaults  arising,  undermining  the  sustainability  of  the  fund  in  the  longer  term.  As  such, 
an important element in the design of the scheme is to maximise the additionality of the 
guarantee while seeking to ensure that costs are covered on the portfolio of guarantees 
offered.  

Equity is the most complex (and least used) form of publicly-funded financial instrument 
Figure 18. Like loans and guarantees, equity can take different forms. The two principal 
forms are so-called hybrid funds where public funds are invested by a fund manager and 
co-investment  funds,  where  public  funds  are  invested  alongside  private  funds  on  a  pari 
passu basis with due diligence being undertaken by private investors. This second model 
depends on the presence of sufficient private investment capital in the region.  

Figure 18: Stylised intervention logic underpinning equity finance 

Barrier to address? 

High  risk  /  scale  of 
capital needs 

PUBLIC 
FUNDS 

2 

EQUITY FUND 

4 

IN
VE
ST
M
EN
T 
FU
N

ENTERPRISE 

EXIT: 
SALE; IPO 

TRADE 

3 

1 

Failure to access 
sufficient capital due to 
high risk and 
information asymmetries 

1.  An  enterprise  fails  to  gain  access  to  the  funding  required  because  the  lender 
considers it too risky, the amounts sought are too large or the enterprise will not 
be in a position to make repayments within an acceptable timescale. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

2.  Investment is sought from an equity fund; this may charge for the due diligence 

process and may seek close involvement in the management of the firm 

3.  Assuming the enterprise grows, the value of the equity rises. 

4.  This enables the sale of the holding at a profit the “exit”, in principle returning a 

profit to the fund. 

This  section  has  developed  what  might  be  termed  elements  of  a  ‘stylised’  theory  of 
change and provided a narrative of the issues implicit in developing such a theory. These 
elements  or  building  blocks  are  necessarily  broad  and  generic.  The  nature  of  FI,  and  of 
the  context  within  which  they  operate,  means  that  the  extent  to  which  a  theory  of 
change  can  be  generalised  is  very  limited.  A  genuine  theory  of  change  capable  of 
answering  evaluative  questions  must  be  specific  and  must  be  developed  at  case  study 
level, based on the answers to questions designed to elicit information on how FIs were 
intended to achieve certain goals within certain contexts.  

The  importance  of  context,  pre-conditions  and  assumptions  were  already  emphasised: 
these are decisive in determining “implementation approaches” and “instrument design” 
highlighted in  the  centre  of  the  diagram.  These  currently  appear  as  ‘black  boxes’  in  the 
stylised  theory  of  change.  Some  of  the  implications  of  targeting  different  types  of  firm, 
and the implications of using different types of instrument, are illustrated in the diagrams 
which  followed.  A  key  task  of  the  case  study  phase  of  the  project  is  to  explore  and 
expose the implementation and design of FIs within the specific case study contexts. This 
in  turn  means  that  the  case  study  questions  must  be  tailored  to  the  case  at  hand. 
Nevertheless, the key issues to be explored at a general level can be framed as follows: 

  What was the change that the intervention sought to bring about? 

-  This will be determined by the Operational Programme, the OP Priority under 

which the FI has been introduced and the objectives of the FI itself.  

  Who were the intended beneficiaries of that change? 

-  Again, at a general level the region as a whole is the intended beneficiary, but 

which markets or sectors are specifically targeted? 

  What were the barriers to achieving the change? 

-  Some of these are beyond the scope of FI, or even the OP, to influence (e.g. 

tax and regulatory structures), but others can be components of key 
complementary policies – such as investment readiness or business mentoring 
programmes. 

  How was the change quantified? 

-  What indicators reflect the change brought about? 

  What  assumptions  were  made  about  the  context,  behaviours,  finance,  target 

market? 
-  What was assumed, for example, about the finance gap or the extent to which 

absence of finance was a constraint on business development? 

  How did all of the above lead to the choice of instrument(s)? 

-  What other factors contributed e.g. perceptions of efficiency of FI, expected 

project quality, ease of disbursement of funds? 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

  How were the instruments designed and implemented to reach the change 

sought? 

More  specifically,  does  the  design  and  implementation  of  FIs  deliver  the  desired  end 
result, and if not, why not? 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.7  Experts’ judgement on the contribution of FIs supported to the intended change (9 case 
studies) 

OP name 

FI 

Objective 
type 

Full Objective 

DE: OP 
Bavaria 

Equity  

Operational 
objective 

DE:  OP 
Bavaria 

DE:  OP 
Bavaria 

DE:  OP 
Bavaria 
DE:  OP 
Bavaria 
DE:  OP 
Bavaria 
DE:  OP 
Bavaria 

Equity  

Equity  

Equity  

Equity  

Equity  

Equity  

Operational 
objective 

Operational 
objective 

Operational 
objective 
Operational 
objective 
Operational 
objective 
Operational 
objective 

DE:  OP 
Bavaria 

Equity  

Operational 
objective 

DE:  OP 
Bavaria 
DE:  OP 
Bavaria 

Equity  

Equity  

Operational 
objective 
Strategic 
objective 

Sufficient response by start-ups 
and companies in the focus area 
(out of the planning region of 
Munich)  
Mobilisation of business angels 
through awareness and publicity 
measures 
Private funds mangers are 
motivated to cope with ERDF 
obligations (extra burden) 
Properly selected start-ups and 
companies 
Raised awareness of business 
angels and investors 
Generated investment volume 

Business angels and investors 
form a funding consortium that 
can go along with the various 
rounds of financing  
Start-ups and companies 
receive intensive non-financial 
support to build up their 
business competence 
Funds are long-term stable 
partners for the companies 
There is an open market for 
private investments in the long 

Rating 
(max 
5) 
4 

4 

4 

5 

5 

4 

4 

4 

4 

0 

Justification 

The adjustment of the target area resulted in a high 
response from companies. 

Interviews confirmed a high response of business 
angels. Numerous awareness activities were 
introduced by fund management. 
There was an enormous increase in knowledge by 
learning on the job. 

The due diligence is strict. 

Multiple action was taken by the fund managements. 

Good progress 

Interviews confirmed high interest from financing 
actors. 

Interviews confirmed a high level of support, but not 
via other ERDF interventions. 

Interviews confirmed stable partnerships. 

No evidence available 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

DE:  OP 
Bavaria 
DE:  OP 
Bavaria 

Equity  

Equity  

Strategic 
objective 
Strategic 
objective 

DE:  OP 
Bavaria 

Equity  

Strategic 
objective 

DE:  OP 
Bavaria 

Equity  

Strategic 
objective 

DE:  OP 
Bavaria 

Equity  

Strategic 
objective 

DE:  OP 
Bavaria 

Loans 

Operational 
objective 

page 126 

run 
Local businesses and local jobs 
remain in the region  
It is assumed that some of the 
exits are profitable and the risk 
capital funds are revolving and 
can be multiplied to support 
growth and job creation in the 
long run 
Short- and medium term 
objective is strengthening of the 
entrepreneurial base (M2.1 
goal) 

Long term-strategy is sustaining 
an adequate level of 
employment under 
consideration of globalisation 
and technological progress (PA2 
goal)  
Broad policy objectives: 
Boosting growth and 
convergence of struggling areas 
through strengthening of 
competitiveness of existing 
SMEs and supporting promising 
business ideas of start-ups 
(overall strategic goal) 
Support provided only to 
innovative projects in growing 
enterprises, such as new 
machinery, new process 

0 

0 

0 

0 

No evidence available 

Too early for a final answer 

No direct evidence available on the improvement of 
the innovation capacity and competitiveness of 
supported enterprises. The monitoring indicators 
showing investment and employment effects may be 
used as proxy variables to show progress. 
Positive development trend of employment in 
economically weak regions in the 2005-2013 period 
(context indicator, source: AIR 2013, p 6). The 
contribution of FIs to that positive trend is not yet 
known 

0 

Unclear how to assess that goal in relation to FIs.  

0 

The fund manager confirmed the focus on innovative 
projects, furthermore, there are also clear provisions 
in the application guidelines and forms, and 
apparently the allocation of loans in enterprises is 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

DE:  OP 
Bavaria 

Loans 

Operational 
objective 

DE:  OP 
Bavaria 

Loans 

Operational 
objective 

DE:  OP 
Bavaria 

Loans 

Operational 
objective 

DE:  OP 
Bavaria 

DE:  OP 
Bavaria 

Loans 

Loans 

Operational 
objective 

Strategic 
objective 

DE:  OP 
Bavaria 

Loans 

Strategic 
objective 

systems, logistics, energy 
efficiency, eco-friendly 
production, diversification of the 
product profile, patents 
It is assumed that domestic 
banks as distributors of the FI 
are interested in offering the 
instrument to their clients 
It is assumed that domestic 
banks make a thorough 
assessment of the applications 
based on their local knowledge 
of firms  
It is assumed that targeting 
works and domestic banks as 
distributors of the FI have 
selected innovative investments 
with growth perspective only 
Supported credit investment 
volume in the pre-defined fields 
and areas 
It is assumed that most of the 
firms can repay the loan and the 
loan funds are revolving and can 
be multiplied to support growth 
and job creation in the long run 
It is assumed that the ex-ante 
assessed job effect at the 
application stage will last for a 
longer period (no ex post 
validation of job effects is 
made) 

also controlled by random audits. There is no 
evidence showing that theory is translated into 
practice and that in-house innovation really happens 
as intended by the loan instrument.  
Up to now the loan instrument has been attractive 
but demand has already slumped due to low interest 
rates. 

Interviews confirmed a thorough assessment 
(perception). 

Interviews confirmed a thorough assessment 
(perception). 

3 

4 

4 

4 

Territorial targeting is implemented. 

4 

The loan fund already started to revolve; whether it 
will further revolve in the long run cannot be said at 
the moment. 

0 

No sufficient information available. 

page 127 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

DE:  OP 
Bavaria 

Loans 

Strategic 
objective 

DE:  OP 
Bavaria 

Loans 

Strategic 
objective 

DE:  OP 
Bavaria 

Loans 

Strategic 
objective 

HU:  OP 
Economic 
Development 

All FIs 

Operational 
objectives 

Short- and medium term 
objective is strengthening of the 
entrepreneurial base (M2.1 
goal) 
Long-term strategy is sustaining 
an adequate level of 
employment under 
consideration of globalisation 
and technological progress (PA2 
goal) 
Boosting growth and 
convergence of struggling areas 
through strengthening of 
competitiveness of existing 
SMEs and supporting promising 
business ideas of start-ups 
(overall strategic goal) 
Number of FI schemes available 
to the target group increased 

HU:  OP 
Economic 
Development 

All FIs 

Operational 
objectives 

Volume of total funds allocated / 
invested to SMEs with no access 
to bank loans (no track record 
of bank loans) 

HU:  OP 
Economic 
Development 

All FIs 

Operational 
objectives 

Increasing share of SMEs 
benefiting from partial 
compensation of interest rates / 

Rating 
(max 
5) 
0 

0 

0 

4 

3 

3 

Justification 

No sufficient evidence is available on the 
improvement of the innovation capacity and 
competitiveness of supported enterprises. 

Positive development trend of employment in 
economically weak regions in the period 2005 to 2013 
(Source: AIR 2013, p 6)). Net impact of FI is not 
known. 

Unclear how to assess that goal in relation to FIs. 
This would stipulate an ex-post assessment of all 
enterprises supported and how they developed over 
time (in turnover and employment) as compared to 
similar enterprises not being supported.  

There was a considerable gain from learning by doing 
in the financial market (especially in case of LEDAs 
and FEs). The adjustments to the first set of FI 
schemes (launched in 2008-2009) were made in view 
of changing market context taking into account  
feedback from final recipients.   
Monitoring data confirms targeting of SMEs with no 
bank loans - even if their share decreases throughout 
the period Numerous training and demonstration 
activities introduced by Holding Fund (targeted on 
LEDAs and FEs, dealing with the highest share of the 
target group SMEs) 
The EDOP FIs may have contributed to the market 
expansion and closing the financial gap - but hard 
evidence is missing due to lack of a counterfactual-

page 128 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

Strategic 
objectives 

Improving access to equity 
finance  

All FIs 

Operational 
objectives 

HU:  OP 
Economic 
Development 

HU:  OP 
Economic 
Development 
HU:  OP 
Economic 
Development 
HU:  OP 
Economic 
Development 
HU:  OP 
Economic 
Development 
HU:  OP 
Economic 
Development 
HU:  OP 
Economic 
Development 

All FIs 

All FIs 

All FIs 

All FIs 

All FIs 

All FIs 

Strategic 
objectives 

Strategic 
objectives 

Strategic 
objectives 

Strategic 
objectives 

Strategic 
objectives 

HU:  OP 
Economic 
Development 

All FIs 

Strategic 
objectives 

guarantees / venture capital  

Proper selection of new, 
innovative start-ups and 
companies - in case of venture 
capital funds 
Induced investment volume  

There is a market making for 
private investments in the mid 
run 
There is a market making for 
private investments in the long 
run 
Strengthening regional position 
of the domestic capital market 

It is assumed that some of the 
exits are successful in economic 
terms and the risk capital funds 
are revolving and can be used 
multiply to support growth and 
job creation in the long run 
Broad policy objectives: 
Boosting growth and job 
creation to help Hungary catch 

based impact assessment. In the case of loan 
schemes the max. 9% interest rate threshold is far 
below the benchmark market rate (15-20% in 
dependence of the scope of loans).  
The  due  diligence  is  strict,  investment  strategies  are 
in line with the overall strategic framework 

Good  progress  in  leveraging  private  money  -  even  if 
lower leverage effect than planned 

Both  market  data  and 
the 
increased interest of financing actors in equity finance 

interviews  confirm 

Increased  number  of  VC  funds  in  the  programme 
period 

4 

3 

4 

4 

0 

No evidence available 

0 

No evidence available 

0 

Too early for a final answer 

0 

Unclear how to assess that goal in relation to FIs 

page 129 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

LT:  OP 
Economic 
Growth 

All FIs 

Operational 
objective 

up with Europe (overall strategic 
goal) 
Increase of SMEs to financing 
sources 

LT:  OP 
Economic 
Growth 

All FIs 

Operational 
objective 

Flexibility of the MA and 
Intermediate Body in the face of 
changing conditions of FI 
implementation 

LT:  OP 
Economic 
Growth 

LT:  OP 
Economic 
Growth 

All FIs 

Operational 
objective 

All FIs 

Operational 
objective 

Institutions responsible for the 
implementation of FIs must 
have good knowledge of the 
situation in the financial market 
and its developments 
Differences between FIs and 
grants must be taken into 
account in the administration of 
FIs 

4 

4 

0 

3 

LT:  OP 
Economic 

All FIs 

Operational 
objective 

Risk capital funds satisfy SME 
need for finance in early stage 

4 

page 130 

The effect of FIs has been augmented by the 
economic crisis. The problem of external financing 
became even more pressing for SMEs and for some of 
them FIs represented the only source of finance. The 
number of SMEs supported and private investment 
attracted through FIs met the expectations of the 
programmers. 
The MA and Intermediate Body reacted to the 
economic crisis by increasing the budget allocation to 
JEREMIE HF from EUR 80 million to EUR 210 million in 
2009. Furthermore, INVEGA HF was founded. These 
measures were meant to help SMEs to deal with the 
lack of external financing during the economic 
downturn. 
There is no data allowing for this assumption to be 
assessed. 

Different administration systems were created for 
grants and FIs. Administration of grants was assigned 
to the Implementing Body (state agency), while FIs 
were implemented by financial intermediaries (mostly 
private banks). However, in some cases the MA and 
Intermediate Body disregarded the differences of 
grants and FIs, asking HF managers to apply 
excessive control mechanisms in their interaction with 
financial intermediaries. 
A total of 63% of all investments made by JEREMIE 
venture capital funds by the end of 2013 were seed 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

Growth 

LT:  OP 
Economic 
Growth 
LT:  OP 
Economic 
Growth 

LT:  OP 
Economic 
Growth 
LT:  OP 
Economic 
Growth 

LT:  OP 
Economic 
Growth 

LT:  OP 
Economic 
Growth 
LT:  OP 
Economic 
Growth 
LT:  OP 
Economic 

All FIs 

All FIs 

All FIs 

All FIs 

of development and encourage 
innovation 

Operational 
objective 

Popularity of risk capital among 
SMEs grows 

Operational 
objective 

Loans and guarantees improve 
SME access to finance 

Operational 
objective 

Operational 
objective 

Partial compensation of interest 
improves borrowing conditions 
for SMEs 
SME investment is aimed at 
improving technology and 
processes which leads to higher 
labour productivity 
New enterprises supported by 
risk capital are innovative and 
successful with high labour 
productivity 

All FIs 

Operational 
objective 

All FIs 

All FIs 

All FIs 

Operational 
objective 

Economic climate is suitable for 
SME investment 

Operational 
objective 

Strategic 
objective 

Risk capital funds predominantly 
oriented towards seed and 
start–up capital 
Increase in labour productivity 

and start–up. A significant share of investments by 
this specific instrument was made in innovative 
enterprises. 
Increased popularity of risk capital followed the start 
of activities of ERDF–funded risk capital funds but still 
needs to be increased. 
Up to the end of 2013, 4,720 SMEs benefited from FIs 
(7% of all SMEs). Almost all of these enterprises 
received loans and guarantees while 55 enterprises 
benefited from risk capital funds. 
Interviewees singled out partial compensation of 
interest as the key advantage of FIs. 

Although some enterprises were able to improve 
technology and upgrade their business processes, FIs 
were extensively used for financing working capital. 

According to the 2014 evaluation, turnover of 
enterprises supported by risk capital funds increased 
by 43%, the number of employees by 12% while 
losses fell by 71%. In 12 of 30 enterprises analysed 
the turnover increased despite the number of 
employees staying the same, or reducing, both 
signalling a rise in labour productivity. 
Economic crisis made the economic climate unsuitable 
for SME investment. 

63% of all investments made by JEREMIE venture 
capital funds by the end of 2013 were seed or start–
up. 
Higher productivity was largely a result of a cut in 
wages, reflecting the economic and financial crisis. 

4 

5 

4 

2 

4 

1 

4 

2 

page 131 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

Growth 
LT:  OP 
Economic 
Growth 
LT:  OP 
Economic 
Growth 
CZ:  OP 
Enterprises & 
Innovation 
CZ:  OP 
Enterprises & 
Innovation 
CZ:  OP 
Enterprises & 
Innovation 
CZ:  OP 
Enterprises & 
Innovation 
CZ:  OP 
Enterprises & 
Innovation 

All FIs 

All FIs 

All FIs 

All FIs 

All FIs 

All FIs 

All FIs 

FR: OP 
Languedoc-
Roussillon 
FR: OP 
Languedoc-

All FIs 

All FIs 

page 132 

Strategic 
objective 

Increase in investment in fixed 
capital formation 

3 

Investment has not recovered to the pre-crisis level, 
but the fall was less marked than expected. 

Strategic 
objective 

Long-term economic growth of 
the country 

0 

Not possible to asses net effects of FIs 

Operational 
objective 

Increase SMEs access to 
financing sources 

Increase employment  

Operational 
objective 

Operational 
objective 

4 

5 

2,100 SMEs benefitted from better access to finance; 
the specific characteristics of the SMEs are not known 

Reported created jobs contribute greatly to the 
overall outcome of OP EI in employment. 

Improved start-up support 

1 

Start up support was weak 

Strategic 
objective 

Increase the motivation for 
starting a business 

0 

No specific impact evaluation is available 

Strategic 
objective 

Operational 
objective 

Increase the competitiveness of 
firms through implementation of 
new production technologies; 
intensify development of 
information and communication 
technologies and business 
services. 
Promote the creation, takeover 
and transfer of enterprises  

Operational 
objective 

Increase capital for the 
development of innovative SMEs 

0 

3 

4 

No  evidence  available  on  the  attribution  of  FIs  to 
improvement  of 
innovation  capacity  and 
competitiveness  of  supported  enterprises,  but  it  is 
increasing generally. 

the 

The transfer of enterprises less covered by the three 
FIs 

As a result of JEREMIE more than EUR 130 million 
was made available in addition to grants and the FIs 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

Roussillon 
FR: OP 
Languedoc-
Roussillon 
FR: OP 
Languedoc-
Roussillon 

FR: OP 
Languedoc-
Roussillon 

FR: OP 
Languedoc-
Roussillon 

All FIs 

All FIs 

Operational 
objective 

Operational 
objective 

Develop the offer of seed and 
start-up capital for new and 
young innovative companies 
Facilitate access to loans and 
risk capital 

All FIs 

Operational 
objective 

All FIs 

Strategic 
objective 

Put devices for microcredits and 
‘prêt d’honneurs’ at the disposal 
of project promoters and 
companies 
Transform innovations and 
research into economic success 
by encouraging the 
development of an environment 
conducive to innovation 

PL: OP 
Małopolskie 

All FIs 

Operational 
objective 

Supported investments. It is 
assumed that the support is 
provided in the form of loans of 
guarantees to financially viable 
projects in all sectors of the 
regional economy (without 
restrictions applicable in the 
case of grants - i.e. imposed by 
the State aid rules).  

5 

5 

4 

3 

5 

already available a regional level.  
The funds completed and strengthened the regional 
offer for investments in SMEs 

Loans  were  easily  accessed  by  firms,  especially  with 
the  reduction  in  collateral  requirements.  More  capital 
the  early  phase  of 
was  made  available 
in 
development  with  seed 
loans  and  capital  risk 
development.  Financial  resources  increased  in  the 
first round of investment, the most risky time for the 
funds.  
The microcredit line was not activated; while the seed 
loan 
its 
objectives. 

instrument  achieved 

‘prêts  d’honneurs’ 

The FIs helped to reach the strategic objective of axis 
1 for innovation and competitiveness; completing the 
financial offer of grants and the funding of networking 
activities.  The  character  experimental  of 
the 
intervention  limited  however  its  economic  impacts  at 
regional level. In addition, no OP indicator was able to 
provide  a  clear  picture  on  the  real  FIs  impacts  in 
economic terms. 
By the end of April 2015, 1,794 investments had 
been supported (loan and guarantee agreements 
signed). Allmost all loan schemes, including the best 
performing ones, have managed to avoid State aid 
restricitions.   

page 133 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

PL: OP 
Małopolskie 

All FIs 

Operational 
objective 

New funds created or capital for 
existing debt funds increased. 

Rating 
(max 
5) 
5 

PL: OP 
Małopolskie 

All FIs 

Operational 
objective 

PL: OP 
Małopolskie 

All FIs 

Operational 
objective 

PL: OP 
Małopolskie 

All FIs 

Strategic 
objective 

PL: OP 
Małopolskie 

All FIs 

Strategic 
objective 

5 

4 

5 

4 

Territorialised deployment of 
support, esp. to locally based 
SMEs. 
SMEs that recovered after 
natural disasters. It is assumed 
that half-repayable loans are 
the least burdensome, efficient 
and effective instrument for the 
recovery of the SMEs affected 
by natural disasters. 
It is assumed that enterprises 
receive investment and working 
capital (if applicable) for 
development purposes which 
directly influences their 
competitiveness (mostly in 
terms of scale of operations - 
investments/assets, 
employment, outputs). 
It is assumed that the fund 
managers grow in terms of 
financial and institutional 
capacity, and their business 
support offer (financial and non-
financial) is enhanced, which 
allows for further strengthening 
of the regional SMEs 

Justification 

The high number of funds supported under the MROP. 
14 funds have been selected in the calls for 
applications (against the target of 4 under the OP 
output indicator). All of the funds have received OP 
contributions that increased their investment capital. 
The funds are based in all the sub-regions. All the 
fund managers are regional or local entities. 

Loans  for  SMEs  affected  by  natural  disasters  allowed 
to  generate  the  investment  volume  of  EUR  5.5 
million.  By  the  end  of  2014,  115  enterprises  have 
been supported and 49 gross jobs have been created. 
3  out  of  4  funds  have  disbursed  to  SMEs  its  entire 
initial OP contribution. 

The IB reporting provides evidence on the amounts of 
investment  and  working  capital  paid  to  enterprises. 
There  is  also  evidence  of  jobs  created  by  supported 
SMEs.  There  is  indirect  evidence  of  the  increase  in 
the  scale  of 
SMEs  competitiveness 
operations  (fund  managers  and  OP 
institutions 
opinions  based  on  e.g.  returning  clients,  further 
investments, etc.). 

regarding 

The fund managers have received OP contributions to 
their  investment  capital  and  to  cover  management 
costs  (incl.  staff,  equipment,  premises).  This  has 
increased  their  operational  (institutional)  capacities. 
All  the  loan  funds  have  increased  their  investment 
capital in more than one revolving round. By the end 
of 2015, they are likely to serve 1,915 companies, 75 
%  more  than  the  OP  target.  All  of  the  funds  offer 

page 134 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

PL: OP 
Małopolskie 

All FIs 

Strategic 
objective 

PL: OP 
Małopolskie 

All FIs 

Strategic 
objective 

PL: OP 
Małopolskie 

All FIs 

Strategic 
objective 

PL: OP 
Małopolskie 

All FIs 

Strategic 
objective 

competitiveness.  
The short/medium-term goal 
particularly for FI support is 
creating strong and competitive 
SME sector through providing 
alternative sources for financing 
enterprise activities (M2.1 goal) 

The short/medium-term goal for 
the overall grant & FI support is 
increasing the competitiveness 
of enterprises (PA 2 goal) 

It is assumed that most of the 
firms can repay loans, the loan 
and guarantee funds revolve 
and can be used again to 
support growth and job creation 
in the long run. 
The long-term specific OP goal 
is increasing competitiveness 
and innovativeness of Lesser 
Poland (OP specific goal) 

PL: OP 
Małopolskie 

All FIs 

Strategic 
objective 

The long-term specific OP goal 
is the development of 
institutional potential of Lesser-
Poland-based entities (OP 

5 

5 

5 

4 

4 

non-financial advisory support.  
The FIs and OP indicators' achieved values prove that 
the resources  are  paid to the final recipients and are 
revolved (1,915 expected to be supported by the end 
of  2015).  There  is  a  publicly-funded  system  of 
external  financing  of  the  SME  business  activity.  The 
value of loans and guarantees expected by the end of 
2015 (PLN 195.8 million / EUR 48.9 million) is 8 times 
higher than the OP target 
There  is  the  evidence  of  jobs  created  by  supported 
SMEs.  There  is  indirect  evidence  of  the  increase  in 
the  scale  of 
SMEs  competitiveness 
operations  (fund  managers  and  OP 
institutions 
opinions  based  on  e.g.  returning  clients,  further 
investments, etc.).  
All the loan funds have revolved the resources initially 
contributed from the OP allocation. 

regarding 

The  increased  competitiveness  in  the  region  can  be 
justified  based  on  the  achievements  of  the  PA2 
indicator related to Microenterprises that owing to the 
OP support have become Small enterprises (37 by the 
end of 2014 and 60 expected by the end of 2015; 43 
is the OP target). The impact of innovativeness would 
require further studies. 
As above. This could also be  justified in  terms of  the 
indicator related to the number of FI supported under 
the MROP (target of  4, achievement expected by the 
end of 2015 of 14). 

page 135 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

PL: OP 
Małopolskie 

All FIs 

Strategic 
objective 

specific goal) 
The long-term general OP goal 
is to create conditions 
facilitating economic growth and 
employment (OP strategic goal) 
Support companies in 
commercial creative sector 

0 

2 

The impact of the OP intervention to the regional GDP 
and  net  jobs  created  will  be  subject  to  economic 
modelling after the OP closure. 

Mostly TV and film projects were supported, rather 
than the diverse portfolio envisaged 

Operational 
objective 

Operational 
objective 

Funds are matched by private 
sector investment 

5 

50:50 match achieved 

Strategic 
objective 

To create revolving fund  

1 

Poor level of returns 

Strategic 
objective 

To test the market for co-
investment in creative sector 

3 

Market was tested (albeit restricted range of sub-
sectors) 

Strategic 
objective 

Private sector more engaged in 
sector 

2 

CCF model confirmed risk level 

Operational 
objective 

Operational 
objective 

Operational 
objective 

Operational 
objective 

Strong networks with financial 
services, intermediaries, 
universities generates dealflow 
Specific funds target 
investments in technology 
sectors 
Representation of investment 
across region (objective added 
later) 
Increased participation of 
business angels 

4 

High application rate 

4 

IT, scientific, health are well represented 

4 

3 

Steps  taken  to  increase  presence  and  investment  in 
Tees Valley after slow start 

Still hard to attract angel investment in start ups; 
more progress with existing companies 

UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 

Creative 
Content 
Fund 
Creative 
Content 
Fund 
Creative 
Content 
Fund 
Creative 
Content 
Fund 
Creative 
Content 
Fund 
FBNE 

FBNE 

FBNE 

FBNE 

page 136 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

Generated investment volume 

5 

Progress on target 

England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 
UK: OP North 
East of 
England 

FBNE 

FBNE 

FBNE 

FBNE 

FBNE 

FBNE 

FBNE 

FBNE 

FBNE 

FBNE 

Operational 
objective 

Operational 
objective 

Operational 
objective 

Fund managers add value to 
companies through strong 
portfolio management 
Fund managers achieve 
successful exits to timetable 

Strategic 
objective 

Increase capacity of private 
investment community in NE 

Strategic 
objective 

Increasing business density by 
creating new start-ups 

Strategic 
objective 

Stronger priority sectors 

Strategic 
objective 

Increasing start-ups in 
disadvantaged areas 

Strategic 
objective 

Improving survival rates of new 
businesses 

4 

3 

4 

4 

4 

4 

4 

Consultancy and input of non-executive directors 
common 

Economic  conditions  delaying  optimum  exit  period; 
behind schedule on some product funds; concern that 
some exits will be earlier than optimum 
New  players  attracted to  region.  Healthy  competition 
between investment companies. 

304  new  starts  supported  by  31  December  2014 
(44% of all SMEs receiving financial assistance) 

Evidence  of  rising  enterprise  rates  in  key  priority 
sectors 

Some 2/3 of Microloan start ups are in disadvantaged 
areas 

Survival rates are monitored. Data indicates 90% 
survival rate at 12 months. 

Strategic 
objective 

Increasing the growth rate and 
profitability of existing SMEs 

0 

No data available on profitability. 

Strategic 
objective 

Creating/safeguarding jobs 

4 

4,756 jobs created/safeguarded by end 2014. Further 
500 in Q1 2015 

page 137 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

UK: OP North 
East of 
England 
ES: OP 
Technological 
Fund 
ES: OP 
Technological 
Fund 

ES: OP 
Technological 
Fund 
ES: OP 
Technological 
Fund 

FBNE 

Strategic 
objective 

Creating/safeguarding jobs in 
disadvantaged areas 

Guarantee  Operational 

objectives 

1. To promote innovative 
business behaviour 

Guarantee  Operational 

objectives 

3. To support R&D for 
companies 

Guarantee  Strategic 

objectives 

To contribute to Spanish 
economic modernisation 

Guarantee  Strategic 

objectives 

To contribute to structuring the 
Spanish science and technology 
system throughout the territory 

ES: OP 
Technological 
Fund 

Loans 

Operational 
objectives 

1. To promote innovative 
business behaviour 

Rating 
(max 
5) 
4 

4 

4 

0 

4 

2 

Justification 

High proportion of jobs created and safeguarded in 
top 30% most deprived areas. 

Demand for guarantees from eligible companies has 
been high, and therefore it is assumed it has sped up 
R&D project investment. 
It is assumed that most projects achieve some 
product innovation and enable the promoter to take a 
leadership market position through expansion of 
product range and quality improvement. 
No evidence available 

Most  programmes  have  to  be  spent  in  Convergence, 
Phasing-out  and  Phasing-in  regions  although  less 
than  half  the  population  and  companies  are  in  those 
areas. 
Although  the  CDTI  Loan  Fund  might  contribute  to 
improved 
investment  within 
businesses,  it  is  too  early  to  verify.  According  to  the 
investment  type  promoted,  this  kind  of  project  will 
not  really  change  the  structural  framework  of  final 
recipients 
The 
commercialisation stage. 

innovation 

projects 

closely 

linked 

and 

pre-

are 

to 

Operational 
objectives 

3. To support R&D in companies 

4 

Operational 
objectives 

1. To promote innovative 
business behaviour 

0 

The  11  projects  approved  do  not  provide  enough 
information to form a judgement. 

Operational 
objectives 

3. To support R&D results to 
companies 

1 

No suitable proceeding 

ES: OP 
Technological 
Fund 
ES: OP 
Technological 
Fund 
ES: OP 
Technological 
Fund 

Loans 

Loans 

Loans 

page 138 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Strategic 
objectives 

To contribute to Spanish 
economic modernisation 

Strategic 
objectives 

To contribute to structuring the 
Spanish science and technology 
system throughout the territory 

Strategic 
objectives 

To contribute to Spanish 
economic modernisation 

Loans 

Loans 

Loans 

Loans 

ES: OP 
Technological 
Fund 
ES: OP 
Technological 
Fund 

ES: OP 
Technological 
Fund 
ES: OP 
Technological 
Fund 
PT: OP 
COMPETE 

Strategic 
objectives 

All FIs 

Operational 
objective 

To contribute to structuring the 
Spanish science and technology 
system throughout the territory 
Encourage venture capital 
intervention in support of SMEs, 
favouring the early stages of 
their life cycle and investment in 
innovative projects 
Strengthen the mutual 
guarantee system and promote 
the expansion of its intervention 
to companies and projects that, 
considering their risk or 
innovative nature, present 
greater difficulties in obtaining 
bank financing 
Promote the contracting of 
credit lines within the financial 
system to facilitate SME access 
to finance 
Promote the use of new 
instruments, including the 

PT: OP 
COMPETE 

All FIs 

Operational 
objective 

PT: OP 
COMPETE 

All FIs 

Operational 
objective 

PT: OP 
COMPETE 

All FIs 

Operational 
objective 

Rating 
(max 
5) 
0 

Justification 

No evidence available 

4 

0 

0 

3 

4 

4 

5 

The  CDTI  Loan  Fund,  at  the  end  of  2014,  had 
approved  76%  of  projects  and  committed  73%  of 
funds  to  Convergence,  Phasing-out  and  Phasing-in 
regions 
The  11  projects  approved  do  not  provide  enough 
information to form a judgement. 

The  11  projects  approved  do  not  provide  enough 
information to form a judgement. 

Three VCFs aiming at early stages and investment in 
innovation and internationalisation were 
implemented: Pre-Seed, Early Stages and Innovation 
and Internationalization. 

The  Investe  QREN  Credit  Line  involved  the  financing 
of  the  mutual  guarantee  system.  Investe  QREN 
supported approximately 96 SMEs. 

The  Investe  QREN  Credit  line  involved  financial 
systems,  e.g.  national  banks  to  facilitate  SME  access 
to finance. 

Before  the  introduction  of  COMPETE  (prior  to  2007) 
the  involvement  of business  angels  was  insignificant. 

page 139 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

OP name 

FI 

Objective 
type 

Full Objective 

Rating 
(max 
5) 

Justification 

participation of venture capital 
investors (business angels) in 
order to maximise funding for 
SME small projects 

Support SME financing and 
innovation in an integrated 
perspective of equity and debt 
components 
Encourage entrepreneurship 
while providing capital and 
management skills required in 
higher risk initiatives 
Increase the spread of 
alternative FIs 

PT: OP 
COMPETE 

All FIs 

Operational 
objective 

PT: OP 
COMPETE 

All FIs 

Operational 
objective 

PT: OP 
COMPETE 

All FIs 

Strategic 
objectives 

PT: OP 
COMPETE 

All FIs 

Strategic 
objectives 

Facilitate access to credit for 
SMEs (particularly those 
managed by women and young 
people) 

4 

4 

4 

3 

page 140 

The  COMPETE  Programme  promoted  Business  Angel 
financing  and  a  total  of  51  business  angels  vehicles 
(companies  mainly 
the 
management  of  business  angels  whose  investment 
policy is to participate in companies in stages of seed 
capital or early stages). 
Implemented FIs covered the spectrum of equity and 
debt components.  

owned 

under 

and 

With  VCFs,  a  detailed  application  and  selection 
process required proof of capacity to not only manage 
the  fund,  but  also  have  the  human  resources  to 
support SME entrepreneurship.  
Three main types of FIs were implemented: VCFs, 
Finance Line for Business Angels and Credit Lines. For 
VCFs, 6 different funds were created, aiming at 
different SME development stages. 
However, despite the significant number of FIs, the 
number of SMEs that received financial support is 
considered low. In some cases, only 1 and sometimes 
no SMEs received support from the different VCFs 
(numbers from COMPETE Execution Report 2013. 
From an interview with COMPETE, there is indication 
that during 2014, all FIs were supporting at least 1 
SME).  

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.8  Effectiveness in achieving strategic and operation goals of the FIs 
(synthesis of case study findings) 

Figure 19: Overall picture: Effectiveness in achieving strategic and operation 
goals (average of ratings per OP; max = 5) 

PL: OP Małopolskie

PT: OP COMPETE

FR: OP Languedoc-Roussillon

UK: OP North East of England

Average

HU:  OP Economic Development

LT:  OP Economic Growth

DE:  OP Bavaria

CZ:  OP Enterprises & Innovation

ES: OP Technological Fund

0.0

1.0

2.0

3.0

4.0

5.0

Strategic objective

Operational objective

Source: case study research (9 OPs with 114 objectives in total; please note that case studies were elaborated 
by different experts which could lead to a biased rating) 

page 141 

 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 20: Detailed picture: Number of ratings per OP, objective type and rating 
category 

Source: case study research (9 OPs with 114 objectives in total); very high = 5 

page 142 

veryhigh1212213high3110724241medium112211low111verylow111don´tknow111veryhigh4high212713medium11111low11verylow1don´tknow42101411LoansGuaran-teesLoansLoansLoansEquity Guaran-teesLoansLoansGuaran-teesLoansEquity Guaran-teesEquity LoansEquity Equity Guaran-teesEquity Guaran-teesLoansES: OP Technolo-gicalFundCZ:  OP Enter-prises& Inno-vationDE:  OP BavariaLT:  OP EconomicGrowthHU:  OP EconomicDevelop-mentUK: OP North East of EnglandFR: OP Langue-doc-RoussillonPT: OP COMPETEPL: OP Małopol-skieStrategic objectivesOperational objectivesCase studyOPs andFI type appliedTotal4165212312348333114Numberofratingsper OP, objectivetype andratingcategory 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.9  ToC key elements 

The ToC illustrates the intervention logic and the underlying assumptions that lead from 
inputs  to  outcomes  for  a  specific  FI  instrument  in  a  specific  context.  Key  elements  of  a 
ToC are the following: 

  Context  &  needs  related  to  FIs  for  enterprise  support  (addressed  e.g.  in  the 

SWOT, market gap assessment) 

  The longer term results or broad policy objectives of FIs in the framework of 
cohesion  policy  (end-objective  of  OP)  related  to  context  and  needs,  and 
corresponding indicators and target values. Barriers to achieving the broad policy 
objectives  (expected  change)  and  conditions  to  remove  the  barriers  (within  or 
beyond the scope of the OP, e.g. on the demand or supply side) related to policy 
objectives  /  expected  change.  Conditions  form  an  important  building  block  to 
establish a plausible theory at the objective-level. Conditions are required (not in 
place yet) to remove the barriers and bring about the broad policy objectives (e.g. 
a suitable legal framework has to be created, a capable implementing body has to 
be established, there is a critical mass of enterprises which want to grow). 

  Target  group,  intended  beneficiaries,  sectors,  markets  of  FIs  (detailing  policy 

objectives)  

  Short  term  results  which  should  delivered  by  the  support  schemes  at  different 
levels  (enterprises,  market,  instrument,  target  group)  reflecting  the  broad  policy 
objectives and related quantified indicators  

  Design  and  nature  of  support,  inputs  and  activities  (financial  &  non-financial)  to 
bring about the policy objectives and reach the focus areas, target group, sectors 
and related quantified indicators 

  Underlying  assumptions to implement the  planned support and to achieve the 
expected outcomes. In contrary to conditions (which have to be newly created or 
significantly improved), the so called underlying assumptions are more related to 
the  mechanism  and  micro-steps  associated  with  the  implementation  of  the 
planned support (activity level) and should be in place to achieve step by step the 
expected  outcomes.  Assumptions  describe  what  the  “arrows”  in  the  intervention 
logic  or  result  chain  imply.  Assumptions  are  crucial  because  if  they  are  incorrect 
(e.g. targeting should be in place but is not working in practice or there should be 
mechanism  against  objective  drift)  it  can  completely  alter  how  the  intervention 
works. There it should be checked during the verification process if the stated key 
assumptions required for a successful intervention work in practice. 

The key elements can be translated into a graphic to illustrate the intervention logic of a 
FI (narrowing down the full ToC). 

page 143 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Figure 21: Graphic to illustrate the intervention logic and underlying 
assumptions that lead from inputs to outcomes for a specific FI instrument in a 
specific context 

Source: consortium 

page 144 

Context and needsAssumptionsIndicators IndicatorsIndicators AssumptionsShort-term resultsLonger term result (broad policy objectives) Outputs of activitiesInput & ActivitiesAssumptions 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10  Country Annexes (12 MS) 

6.10.1  Belgium 

There is a longstanding history of using non-grant funding as an instrument of domestic 
economic development policy in Belgium. Responsibility for economic development policy 
lies  principally  at  the  subnational  level  with  the  Walloon,  Flanders  and  Brussels 
governments.  The  ERDF  has  co-financed  FIs  in  Belgium  since  1994-99.  In  the  current 
period,  of  the  four  Belgian  ERDF  OPs,  three  contain  at  least  one  FI.  The  Flanders 
government  opted  not  to  offer  any  FI  for  their  small  programme  with  the  associated 
costs of establishing a co-financed OP. None of the ESF OPs contain FIs. 

In all three  ERDF OPs,  support is  overwhelmingly in the form  of loans (of various types 
and with different degrees of seniority). There is a small guarantee scheme in Wallonia. 
Loan terms vary but State aid is  covered by the General Block  Exemption Regulation in 
most  cases,  or  is  below  the  de  minimis  threshold.  Financial  support  is  typically 
accompanied by a package of advisory support. 

Table 28: OP key figures on FIs for enterprise support in Belgium in the 2007-
2013 period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 145 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Wallonia (Hainaut)'5221.188.431.80.0221.1165.274.72,149OP 'Brussels Capital Region'15.62.810.1-5.65.6100.0291OP 'Wallonia (not including Hainaut)' 5169.067.640.50.0169.0117.069.31,795 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.2  The Czech Republic 

Interest  rate  support  and  guarantee  FIs  were  first  used  in  the  Czech  Republic  in  the 
1990s, financed from national sources. Since then Structural Funds enabled the support 
to be broadened and new tools to be introduced.  

In the 2007-2013 period, the Operational Programme Enterprise and Innovation (OP EI) 
had  a  total  ERDF  contribution  of  EUR  3.1  billion.  Some  5%  of  the  OP  allocation  (EUR 
147.5  million)  should  be  delivered  through  two  FIs  (Guarantee  Fund  and  Credit  Fund), 
which  are  linked  to  four  sub-programmes.  The  Guarantee  fund  has  committed  OP 
contributions  of  EUR  159  million  and  the  Credit  fund  EUR  75  million.  The  funds  come 
solely from public funding sources. Both of them support SMEs. The Credit Fund provides 
SMEs  with  assistance  through  interest  rate  support  and  loans.  The  Guarantee  Fund 
provides SMEs with guarantees for loans. 

Table 29: OP key figures on FIs for enterprise support in Czech Republic in the 
2007-2013 period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

6.10.3  Case Study OP Enterprise and Innovation  

Financial instruments (FIs) in the form of interest rate support and guarantees started in 
the  Czech  Republic  in  the  1990s,  financed  from  national  sources.  Since  then  Structural 
Funds enabled the support to be broadened and new tools to be introduced.  

page 146 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Enterprises and Innovations'2234.5133.35.70.0234.5213.891.25,579 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

The FIs under scrutiny  

In the 2007-2013 period, the Operational Programme Enterprise and Innovation (OP EI) 
had a total ERDF contribution of EUR 3.1 billion. A total of 5% of the OP allocation (EUR 
147.5  million)  should  be  delivered  through  two  FIs  (Guarantee  Fund  and  Credit  Fund), 
which  are  linked  to  four  sub-programmes.  The  Guarantee  fund  has  committed  OP 
contributions  of  EUR  159  million  and  the  Credit  fund  EUR  75  million.  The  funds  come 
solely  from  public  funding  sources.  Both  of  them  support  small  and  medium-sized 
enterprises (SMEs). The Credit Fund provides SMEs with assistance through interest rate 
support and loans. The Guarantee Fund provides SMEs with guarantees on loans. 

The context for introducing FIs 

  The  Czech  Republic  is  one  of  the  Member  States  with  the  highest  allocation  per 
capita  under  European  Union  Cohesion  Policy.  This  is  because  the  managing 
authorities  (MAs)  prefer  grants  to  ensure  high  financial  absorption  capacity. 
Venture Capital (VC) and loans are seen more as an experimental approach. 

  Generally,  FIs  have  not  been  widely  introduced  in  the  Czech  Republic,  although 

some programmes supported SMEs in the 1990s. 

  Only  one  institution  has  implemented  revolving  funds  at  this  time:  the  Czech-
Moravian Guarantee and Development Bank [Českomoravská záruční a rozvojová 
banka (ČMZRB)]. 

  The  key  actors  (Ministry  of  Industry  and  Trade,  ČMZRB)  are  conservative.  FIs 
implemented  under  the  2007  –  2013  programming  period  were  created  and 
implemented as an ‘extension’ of the older European Union and nationally funded 
instruments. Additionally, the financial products offered to SMEs were very similar 
to programmes used in the past, i.e. without VC. 

Goals and theory of change (ToC) of FIs 

  There  was  no  explicit  ToC  in  the  OP.  It  was  necessary  to  reconstruct  this  from 

different information sources. 

  A market gap assessment had not been conducted when the FIs were established. 
The  FIs  were  based  on  a  previous  generation  of  revolving  funds,  which 
determined their goals. 

  Goals  for  both  FIs  and  indicators  to  measure  results  are  very  similar.  The  key 
element  of  ToC  is  access  to  finance  through  subordinated  loans  or  guarantees. 
Both ToCs have the same short- and long-term goals and objectives (there is not 
a ToC specifically for FIs within the OP).  

  There is no regional or sectoral preference within the OP and FIs. The strategy is 

broadly defined. 

  The  FIs  have  no  specific  targets  or  results  included  in  the  funding  agreement. 
There is a mutual assumption that the FIs should contribute ‘as much as possible’ 
to the OP goals. 

  There was no experience with VC funds. Thus, preparation of this instrument was 

delayed and finally postponed to the 2014-2020 programming period. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Management and implementation of FIs 

  The  governance  structure  of  the  FIs  is  simple  and  functional.  ČMZRB  is  the  only 
manager  and  was  appointed  directly  by  the  MA.  The  fund  manager  used  its 
extensive  experience  to  select  the  financial  instrument  manager.  ČMZRB  is  a 
state-owned bank with a long history of implementing nationally funded FIs in the 
2004 – 2006 programming period. 

  However, selection without a public procurement process resulted in spending that 
was not certified by the European Commission and the programmes were stopped 
until the issue was resolved. The Guarantee Fund has not provided guarantees for 
over two years, being suspended because of correction issues. 

  Despite  these  delays,  the  financial  performance  of  FIs  is  good.  Recently,  90%  of 
the planned volume of funds has been paid to FIs, of which 91% has already been 
disbursed to final recipients. The investment strategy of both funds has remained 
stable since they were set up in 2007. 

Monitoring and evaluation of FIs 

  The  system  of  monitoring  indicators  is  the  same  for  both  FIs  and  provides  only 
basic  information  without  details  of  final  recipients.  This  low-profile  monitoring 
limits the opportunity to evaluate intervention and impacts. 

 

Indicators  collected  by  the  MA  include  financial  and  output  indicators,  a  result 
indicator  (newly  established  firms)  and  an impact  indicator  (newly  created  jobs). 
Outcomes  on  company  growth,  turnover,  and  sales  are  not  recorded  by  the 
monitoring  system.  The  horizontal  priorities  are  observed  only  within  the  result 
indicator  (newly  created  jobs  for  men  and  women).  Reporting  provisions  are 
detailed  in  the  funding  agreement.  The  fund  manager  reports  the  main 
characteristics  such  as  loan  draw-downs  as  well  as  the  indicators  required  and 
reported  in  the  programme  monitoring  system.  These  indicators  need  to  be 
reported at the end of project implementation and three years later. 

  The  fund  manager  has  a  monitoring  system  that  provides  information  for 
reporting  and  managing  FIs.  Achievements  are  not  yet  formally  recorded,  since 
projects are still being implemented. 

  The MA has carried out one evaluation on absorption capacity of the FIs as well as 
several  programme  evaluations,  which  also  covered  FIs  in  the  OP  EI.  There  has 
not  been  any  specific  impact  evaluation  of  FIs.  Impact  evaluation  would  provide 
the MA with important evidence of overall effects in sectors and regions as well as 
comparisons between grants and FIs. 

Outcomes of FI implementation 

  The  FI  contributed  significantly  to  job  creation  (in  non-specific  sectors).  This  is 
explained  through  the  focus  on  growth  projects,  rather  than  risky,  earlier  stage 
investments. Around 17% of newly created jobs in the OP have been reported as 
due to FIs. These seem to be more cost-efficient than grants in the use of public 
funds.  Costs  of  one  additional  job  are  significantly  lower  for  FIs  as  compared  to 
grants. 

  Start  up  support  is  weak  and  below  expectations.  The  START  programme  lasted 

only for six months. 

page 148 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

  The  MA  did  not  set  any  outcome  targets  when  FIs  were  established.  The  only 
information  that  the  fund  manager  reports  concerns  horizontal  themes.  The  role 
of FIs in the context of Cohesion Policy has not yet been firmly set,  except  for a 
generic consideration that the MA should promote FIs because of their benefits. 

  The  Guarantee  Fund  has  a  high  leverage  effect.  Leverage  for  the  Loan  Fund  is 
only 2 because there is no private participation. Co-investment in the Credit Fund 
is  EUR  57  million  and  the  leverage  effect  is  2.  The  leverage  effect  for  the 
Guarantee fund is also 2; however these figures do not include the loans granted. 
With  these  the  total  leverage  on  ERDF  sources  is  9  (with  guaranteed  credits  of 
EUR 626 million). 

  The financial sustainability of the Credit Fund is not yet clear, because there is no 
defined  exit  policy  and  defaults  are  expected  to  increase.  However,  the  fund 
manager  expects  that  residual  funding  will  be  used  either  for  a  special 
government development credit programme or will be added to  existing financial 
products. According to the fund manager, the Guarantee Fund has been designed 
to  be  non-revolving,  which  means  that  guarantees  on  non-performing  loans  will 
probably consume the entire Fund allocation. 

  The Guarantee and the Loan funds will be able to achieve some of their short term 
objectives, such as increasing access to finance and increasing employment. It is 
not  possible  to  assess  achievement  of  longer  term  objectives,  for  example,  the 
competitiveness of companies due to lack of evidence. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.4  Denmark 

In  Denmark,  the  first  FI  funded  by  Structural  Funds  was  set  up  in  the  2000-06 
programme period (Mål 2 Lånefond). The FIs are capital funds at regional level that make 
investments  or  provide  loans  to  businesses.  In  the  2007-13  programme  period  there 
were nine regional capital funds in Denmark, five co-financed by ERDF and four by ESF. 
Of these, seven were for enterprise support (Article 44a of Regulation 1083/2006), three 
of  which  were  co-financed  by  ERDF  under  the  OP  Innovation  and  Knowledge.  The 
remaining two ERDF funds were categorised under Article 44c related to energy efficiency 
and renewables. There were no national FIs supported by Structural Funds.  

The  Danish  Business  Authority  (Erhvervsstyrelsen,  DBA)  acts  as  managing  authority  for 
the two Structural Funds programmes in Denmark (one ERDF and one ESF). The regional 
growth  fora  (RGF)  are  responsible  for  making  recommendations  to  the  managing 
authority  on  the  use  of  Structural  Funds  and  for  setting  up  the  regional  capital  funds. 
Support  under  the  regional  capital  funds  includes  loans,  equity  investments  or  a 
combination  of  the  two.  Non-financial  support  is  also  offered,  for  instance  the  Fonden 
CAT  Invest  Zealand  not  only  provides  capital  for  SMEs,  but  also  help  for  entrepreneurs 
with  business  development,  including  counselling  and  establishing  strong  management 
and networks. 

Table 30: OP key figures on FIs for enterprise support in Denmark in the 2007-
2013 period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

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OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Innovation and Knowledge'   316.88.33.93.813.613.7100.366 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.5  France 

French  ERDF OPs have  been using FIs since the 2000-2006 programming period, partly 
with  the  support  of  national  institutions,  like  OSEO  (National  Innovation  Agency)  for 
loans and guarantees to innovative firms. In the 2007-2013 period, 16 OPs had at least 
one FI, and only Region Bretagne decided not to activate any.  

Compared to similar countries such as  Germany and  the UK, French  OPs have not used 
FIs  on  such  a  large  scale  up  until  now84.  Innovative  enterprises  have  significant 
requirements for financial support for firm creation, growth and transferring results from 
research activities into innovation. These will be major challenges to be addressed in the 
2014-2020 programming period. 

Increased  use  of  FIs  has  been  constrained  by  the  legal  framework85,  but  also  by  the 
cultural  gap  between  regional  and  managing  authorities  on  one  side  and  financial 
intermediaries on the other. 

In the 2007-2013 period, ERDF FIs provided loans in about one third of the schemes, as 
well  as  venture  capital  (18%)  and  guarantees  (15%).  Each  OP  co-funded  five  schemes 
on average, and around half of them offered each of the three products.  

Prêts  d’honneurs  (soft  loans  with  a  zero  interest  rate)  are  the  most  common  loan 
instrument.  Guarantee  schemes  are  managed  at  regional  level  mostly  through 
agreements  with  OSEO-Régions.  Venture  capital  is  mainly  used  to  support  the  creation 
and  expansion  of  innovative  firms  and,  more  rarely,  for  innovation  transfer.  Venture 
capital  supports  economic  sectors  that  are  in  the  competitive  clusters  identified  in  the 
“Pôle  de  compétitivité”  or  sectors  with  a  “structuring  role”  in  the  regional  economy. 
Under some OPs, venture capital (VC) also targeted ICT or the green economy, especially 
eco-efficiency, renewable energy and energy efficiency. 

Venture capital is often provided together with advisory support, delivered by the scheme 
(for  example  SORIDEC  in  Languedoc  Roussillon)  or  intermediate  bodies.  Such  packages 
include support for partner selection, fund raising and financial management. 

Loans  or  guarantees  were  mostly  provided  with  no  aid,  or  were  below  de  minimis 
thresholds. ‘Pari passu’  was often ensured with venture capital, while any State aid was 
provided under specific schemes notified at national level86. 

84   FIs account for around 2% of ERDF allocation in France in the 2007-2013 programming period, against 12% 

in UK and 8.5% in Germany. Source: Datar, 2013.  

85   The  general  framework  evolved  during  the  programming  period  to  allow  Regional  Councils  (Conseils 

Régionaux) to invest directly in capital risk funds. 

86   As  specified  in  the  “Vademecum  sur  les  règles  applicables  aux  dispotifs  d’ingénierie  financière”  5568/SG 

issued on 5 January, 2012. 

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6.10.6  Case study OP Languedoc Roussillon  

The FIs under scrutiny 

Three FIs were set-up under Priority Axis (PA) 1 of the Operational Programme (OP) for 
Languedoc-Roussillon in the 2007–2013 programming period. The FIs were a ‘seed loan’ 
instrument, offering unsecured and zero interest rate loans, a co-investment fund, which 
was an equity fund, and a guarantee fund, i.e. first-loss portfolio guarantee. The FIs were 
implemented through a Holding Fund (HF), ‘Fond de Participation Jeremie’ (FPJ). 

The OP Languedoc Roussillon invested EUR 30 million of public money, half of this from 
the  ERDF.  The  funds  were  6%  of  the  ERDF  financial  allocation  to  the  programme  and 
16%  of  the  financial  allocation  of  PA  1,  devoted  to  enterprise  innovation  and 
competitiveness. 

There was no comprehensive public policy for FIs in the 2000-2006 programming period 
and the FIs implemented over the 2007-2013 period were considered experimental in the 
public  policy  field.  This  resulted  in  a  slow  start.  The  specific  funds  became  only 
operational  between  September  2010  and  June  2011,  more  than  three  years  after  the 
ROP started. 

Less than half of the commitments were paid to the individual FIs by the end of 2013; by 
which time the final recipients had received 33.7% of the total JEREMIE contributions. 

Goals and theory of change (ToC)  

The goals of the JEREMIE instruments are only vaguely described in the OP and concern 
PA 1 in general. Together with the market gap analysis from the OP and the FIs’ business 
case,  a  retrospective  ToC  has  been  constructed  with  a  plausible  pathway  and  a  feasible 
chain of outcomes (including long-run outcomes). Each of the three FIs contributes to the 
objectives in a specific manner, mainly through targeting SMEs with different needs and 
at different development stages. 

However,  the  OP’s  indicator  system  does  not  fully  capture  the  real  outcomes.  The  HF’s 
more comprehensive and meaningful monitoring system was not available to the country 
experts. 

The market gap analysis showed the need for four different instruments. The market was 
fairly well developed, with active investors in the region, even though these had limited 
scope  and  limited  resources.  Three  of  the  proposed  FIs  were  later  implemented,  with  a 
target of financing 300 projects. 

The  main  motivation  for  FIs  was  driven  by  a  long-term  desire  to  change  the  delivery 
process of regional business support and to better meet the specific needs of enterprises 
in Languedoc-Roussillon.  

The  lack  of  non-financial  support  actions,  including  awareness-raising,  the  small  size  of 
the  instrument  and  the  experimental  character  of  the  JEREMIE  mechanism  made  it 
difficult to give information about the JEREMIE tools to enterprises. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Management and implementation of FIs 

The management of the HF was entrusted to the EIF jointly by the MA and the Regional 
Council.  The  Regional  Council  was  designed  as  an  Intermediate  Body  (IB)  by  the  MA  to 
implement FIs and other measures of PA 1. Three regional financial intermediaries were 
selected  by  the  EIF  through  calls  for  tenders:  Banque  Populaire  du  Sud,  a  non-
governmental  organisation  (NGO),  LRTI  -  CREALIA  and  a  risk  capital  investor  (EIG  - 
SORIDEC). 

The HF and the three specific funds have funding agreements between them with regard 
to implementation. A steering committee with an MA representative, an IB representative 
and EIF experts supervised the activities of the HF and the three specific funds. The EIF 
provided technical support while the other members of the steering committee took the 
operational  decisions.  The  steering  committee  was  at  the  heart  of  the  decision-making 
process for FIs. 

The  whole  JEREMIE  structure  took  more  than  two  years  to  establish.  Selection  of  the 
three fund managers (out of 18 tenders) took the most time (25 months) and unforeseen 
State  aid issues  further  slowed  the  process.  After  the  governance  structure  was  set  up, 
no changes or amendments had to be made.  

The  fund  managers  needed  specific  support  from  the  EIF  on  the  EU  legislative 
framework,  especially  in  the  FIs’  set-up  phase.  Additional  administrative  costs  arose 
principally  during  the  set-up  phase  of  the  specific  instruments,  e.g.  preparation  of  the 
proposal,  fund  manager  selection,  and  set-up  of  the  monitoring  and  reporting  systems. 
Once fully operational, no subsequent costs were reported by the funds. 

Apparently,  there  is  good  cooperation  between  the  HF  and  the  specific  funds  as  well  as 
between  the  MA  and  the  HF.  The  HF  has  provided  technical  assistance  to  CREALIA  and 
SORIDEC throughout the implementation, which is considered by both parties as crucial 
for successful management of the funds.  

Management fees for the FIs are capped at 3% per year. The guarantee instrument does 
not  claim  any  management  fee,  since  the  related  loans  are  provided  on  a  commercial 
basis (and thus the net-margin covers their cost). There is no evidence of a link between 
fund  manager  performance  (and  their  remuneration)  with  the  OP  objectives  and 
indicators as reported in the AIRs.  

Monitoring and evaluation of FIs 

Four indicators from the OP were relevant for monitoring. However, these indicators were 
not suitable for capturing the intended changes to meet specific objective 1.2.1 (‘Number 
of  projects  financed  by  financial  engineering  devices’)  and  they  were  even  less  suitable 
for  capturing  the  change  to  meet  PA  1’s  strategic  objective.  This  was  because  only  one 
result indicator  was  directly  related  to  measure  1.2.1,  while  the  other  three  results  and 
impact  indicators  also  covered  other  PA  1  measures  with  no  visible  separation  between 
them.  

The indicator system established by the HF only partially compensates the OP’s indicator 
deficiencies.  Although  these  indicators  cover  the  most  important  items,  they  are  not 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

documented  in  a  standardised  form  and  do  not  always  cover  the  same  items  and  the 
same periods. There are also unresolved issues with the methodology used for individual 
indicators.  A  much  broader  range  of  indicators  seems  to  be  available  for  individual  FIs, 
covering the structure and development of each company supported, yet this information 
could not be accessed due to confidentiality rules in the funding agreements.  

The  three  FIs’  ’bottom-up’  reporting  to  the  EIF  took  place  monthly,  quarterly  and 
annually. This was challenging for the financial intermediaries, especially during the early 
stages due to a much higher than usual reporting demand, different rules and procedures 
and  the  need  to  write  in  English.  During  the  remainder  of  the  implementation  period, 
however, the reporting process worked smoothly.  

The  FIs  were  evaluated  in  2012,  relatively  shortly  after  becoming  operational,  outlining 
the strengths and weaknesses of JEREMIE in Languedoc-Roussillon with clear indications 
of  modifications  for  the  new  programming  period.  While  the  evaluation  considers 
JEREMIE to be a real success for the region, it also states open issues, such as the lack of 
strategy for the guarantee fund. 

Outcomes of FI implementation 

The  financial  performance  of  the  funds  is  well-documented  and  reveals  moderate  risks. 
CREALIA  (seed  loans)  demanded  a  coach  from  the  SYNERSUD  network  to  guide  each 
applicant; hence they reported no defaults up to 2014, by which time a considerable part 
of the fund had been repaid to the HF. The equity instrument fund manager (SORIDEC) 
has reported two defaults to date and expects another in 2015. The portfolio lifespan of 
five years is not yet over and already two investments have had IPOs, leaving the fund 
with a portfolio of 22 companies. The last exit is set for 2020. The guarantee instrument 
reported  EUR  1  million  in  default  so  far,  which  is  less  than  1%  of  the  disbursed  loans 
(EUR 126.3 million). Risk for the guarantee fund was restricted by limiting the funding to 
a maximum of EUR 1.5 million for each project and 20% in any one NACE sector.  

The  ERDF  money  disbursed  to  the  HF  (EUR  15  million)  triggered  a  considerably  higher 
amount of support to SMEs. By March 2015, EUR 169 million had been disbursed to final 
recipients.  The  major  part  of  this  originated  from  the  guarantee  instrument,  where  the 
fund  managers  disbursed  EUR  126.3  million  in  loans  from  their  own  funds  with  the 
backing of EUR 7 million from ERDF (EUR 14 million from the HF), a multiplier of 18. Co-
investment  in  the  VC  fund  was  EUR  30  million,  a  leverage  factor  of  8.5  which  is  in  the 
upper range of what can be expected.  

Payments from the seed loan instrument to final recipients were EUR 3.9 million, with the 
contribution from the HF to CREALIA being increased by 100%. Since there are no other 
contributors,  the  effect  must  originate  from  revolving  funds,  with  short-term  loan 
repayments (minimum 6 months, maximum 48 months) being invested again. This effect 
is  even  higher  since  CREALIA  has  already  repaid  EUR  700  000  (35%  of  the  funds 
received)  to  the  HF.  Repaid  funds  would  be  allocated  to  FIs  or  other  instruments  for 
enterprise  support  in  the  2014-2020  period.  Funds  of  the  co-investment  and  guarantee 
FIs are not yet revolving. 

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Altogether,  one  Euro  invested  by  ERDF  in  JEREMIE  prompted  EUR  11.30  from  the 
regional  development  system  as  well  as  public  and  private  bodies.  In  total,  more  than 
EUR 168 million was invested in SMEs, compared to EUR 30 million allocated to the HF by 
both the ERDF and the Regional Council. 

Information  about  the  structure  of  the  final  recipients  is  unreliable  and  remains  mostly 
qualitative. The AIR reports more than 6,800 new jobs for all instruments (97% from the 
guarantee fund), while the HF only gives 1,369 new or maintained jobs. Neither of these 
figures  can  be  verified  by  this  study  but  they  are  clearly  overestimated  for  the  three 
funds. 

Only the reported number of supported enterprises seems reliable and is above target for 
all  three  instruments.  By  March  2015,  81  innovative  SMEs  had  been  financed  through 
seed loans; 26 SMEs of high development potential had benefited from the co-investment 
fund,  while  1,228  SMEs  had  received  funding  from  the  guarantee  instrument.  In  the 
same  period,  97.5%  of  the  funding  allocated  to  the  seed  loans  was  spent  (EUR  1.95 
million by JEREMIE) and 84% for the co-investment instrument (EUR 9.2 million invested 
directly by JEREMIE), while the guarantee instrument covered loans of EUR 126.3 million.  

There is no hard  evidence of the type  of SMEs  supported. A recent evaluation gives the 
average  enterprise  age  and  size  on  a  random  sample  from  all  three  funds.  The  main 
sectors  of  final  recipients  are  recorded.  These  are  ICT,  biotechnology,  robotics,  green 
businesses and health for the seed loan and the VC instrument, but wholesale trade and 
rental services (plus ICT) for the guarantee instrument. 

The ToC outcome of increased innovation capacity at enterprise level has probably been 
achieved by the co-investment fund. This focused on high-growth technological firms and 
financed  research  and  development  activities.  The  seed  loan  fund  has  improved  the 
survival rate of  enterprises and their broad  orientation towards innovative projects. The 
guarantee instrument, by far the largest of all three, covered a broad range of economic 
sectors. 

At first sight, the scale of the seed loan scheme seems very small. In addition, there was 
an  expectation  that  600  innovative  SMEs  would  be  supported  per  annum.  Only  around 
100 could be screened by the fund manager, which then selected 30 per year. However, 
the management fees are very modest and a larger instrument may have stretched the 
fund  managers’  and  the  HF’s  capacity-building  resources.  All  stakeholders  consider  the 
size of the fund appropriate for the market gaps to be addressed. 

The  Languedoc-Roussillon  region  had  a  VC  market  prior  to  2007,  albeit  with  gaps 
concerning the OP’s target group, little participation from regional companies and limited 
resources.  The  regionally-backed,  co-financed  VC  fund  widened  the  market  and  the  co-
investment  fund  attracted  more  companies  than  expected.  The  viability  of  the  VC 
instrument should lead to a larger fund for the new financing period.  

The  co-financed  VC  has  shown  added  value  in  relation  to  private  (non-co-financed)  VC 
funds  due  to  the  size  of  supported  projects  and  companies  being  smaller  than  the 
average  for  VC  funds.  It  also  seems  that  the  JEREMIE  VC  funds  could  support  riskier 

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projects  than  non-co-financed  funds.  However,  only  the  complete  funding  cycle  will 
reveal any differences in risk management.  

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Table 31: OP key figures on FIs for enterprise support in France in the 2007-
2013 period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 157 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'French Guiana'  410.35.77.70.19.42.829.3345OP 'Réunion'  526.916.214.20.026.450.9193.1613OP 'Aquitaine'  1311.05.73.40.811.015.9144.31,856OP 'Centre Region'  1027.411.011.111.021.227.2128.3-OP 'Alsace'  533.16.516.716.114.95.536.890OP 'Auvergne'  1725.218.017.9-25.2---OP 'Basse-Normandie'  318.28.09.78.112.019.0158.259OP 'Burgundy'  66.81.82.91.76.1---OP 'Franche-Comté'  36.02.13.11.54.54.497.319OP 'Upper Normandy'  14.02.02.00.02.8---OP 'Languedoc-Roussillon'  230.015.014.70.030.021.471.41,653OP 'Lorraine'  1134.18.78.010.631.826.382.5885OP 'Loire'  12.00.60.50.02.04.6232.326OP 'Poitou-Charentes'  212.56.39.10.012.07.764.125OP 'Provence-Alpes-Côte d'Azur'  239.519.714.20.039.56.215.7-OP 'Champagne-Ardenne'1110.54.45.00.08.1---OP 'Corsica' 849.022.539.017.049.064.1130.81,442OP 'Ile-de-France'312.86.48.7-12.1---OP 'Limousin region'515.94.48.42.615.95.937.4779OP 'Nord-Pas-de-Calais'578.970.825.60.078.928.536.1906OP 'Midi-Pyrénées'  36.04.92.10.16.019.6328.9328 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.7  Germany 

FIs are used in most German ERDF programmes. There are two minor exceptions for the 
2007-2013  period:  Bremen  and  Saarland.  Both  programmes  will  however  use  FIs  in 
2014-2020 programmes. Altogether, the German ERDF  OPs operate 36 FIs. At the level 
of  programmes,  there  are  between  zero  FIs  (ERDF  OPs  Saarland  and  Bremen)  and  six 
(ERDF OP Berlin). Most Bundeslaender operate two or three such funds. FIs within ERDF 
programmes have been organised  either under the umbrella of the managing authority, 
or  by  assigning  state  banks  or  private 
investment  companies.  “Convergence” 
programmes  (Eastern  Germany  and  the  “Regierungsbezirk”  Lüneburg)  have  put  more 
emphasis  on  revolving  credit  instruments,  while  “Regional  Competitiveness”  regions 
prefer equity funds. 

Table 32: OP key figures on FIs for enterprise support in Germany in the 2007-
2013 period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 
Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 

page 158 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Thüringen'2145.0108.815.70.0145.0144.299.51,015OP 'Brandenburg'382.561.98.61.382.569.384.0100OP 'Mecklenburg-Vorpommern'  235.535.57.20.015.532.7211.2-OP 'Saxony'  277.455.53.62.477.471.292.1105Regional OP for Lüneburg (Lower Saxony)  116.012.06.10.016.08.553.023OP 'Saxony-Anhalt'  4359.2261.324.20.0342.3341.899.91,380OP 'Bavaria'  4105.052.521.115.0101.089.088.1630OP 'Schleswig-Holstein'  254.024.011.410.450.340.580.5236OP 'Berlin'  5194.697.318.10.0194.6143.974.0-OP 'Hessen'  361.130.524.80.048.140.283.575OP 'North Rhine-Westphalia'  3119.359.17.70.0119.399.883.7809OP 'Baden-Württemberg'  11.70.80.80.01.41.390.77OP 'Hamburg'  112.06.025.40.012.05.847.932OP 'Lower Saxony' (excluding Lüneburg)  264.032.010.60.064.047.073.489OP 'Rhineland-Palatinate'  127.013.510.20.027.017.866.1138 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

6.10.8  Case Study ERDF OP Bavaria  

The FIs under scrutiny 

  Bavaria has implemented four different FIs – three risk capital funds and one loan 
fund - covering the entire region and administered in a decentralised manner. The 
approach  is  closely  linked  to  regional  development  policy,  specifically  addressing 
small  and  medium-sized  enterprises  (SMEs) 
in  regions  that  lag  behind 
economically,  even  though  the  Financial  Instruments  (FIs)  cover  the  entire  Free 
State of Bavaria except for the Munich metropolitan region. The FIs total EUR 105 
million, of which EUR 55 million is from the ERDF.  

  The funds allocated at the start of the programming period have been almost fully 
disbursed.  About  80%  of  financial  targets  at  different  levels  from  Operational 
Programme (OP) to final recipients were met by the end of 2013. 

The context within which FIs were introduced 

  The  Bavarian  Managing  Authority  (MA)  has  always  favoured  grants  as  the  main 
funding instrument for  the private sector. During the 2007-2013 period, FIs with 
venture  capital  (VC)  or  loans  were  considered  as  an  experimental  instrument. 
They  were  partly  supplementary  tools  to  grants  and  partly  an  alternative  to  be 
examined for any wider effects. The major purpose of introducing FIs has been to 
offset  temporary  imbalances  in  local  financial  markets.  By  and  large,  this  policy 
offers enterprises a wider range of funding opportunities.  

Goals and Theory of Change (ToC) of FIs 

  There was no explicit ToC for the four new FIs under the ERDF OP. There was no a 
priori  document  sketching  out  the  needs  for  structural  change  in  the  regions,  or 
defining  variables  indicating  the  change,  or  defining  a  specific  system  of 
mechanisms leading to the desired change. There was no explicit ToC for the OP 
though  it  may  include  elements  of  one.  However,  the  FIs  are  systematically 
embedded  into  the  regional  Cohesion  Policy  strategy.  This  may  be  considered  as 
an  implicit  ToC.  Programme  documents  indicate  a  general  system  of  objectives 
that is  further  developed  by  the  implementing bodies  in  a  decentralised  manner. 
Significant  issues  are  governed  by  agreements  between  the  MA  and  the 
implementation  bodies.  These  agreements  are  commensurate  with  the  overall 
needs. 

  Cohesion  Policy  objectives  to  support  economically  weaker  regions  are  the  only 
visible  components  of  a  ToC.  These  objectives  are  delivered  through  grants  and 
FIs, where FIs play a supplementary role (10% of total OP volume, or 32% of the 
volume of Priority Axis 2). 

  Orientation  of  the  FIs  towards  regional  development  goals  is  demonstrated  by 
targeting  less  economically  advanced  regions.  The  emphasis  is  on  small 
investments,  coordination  with  regional  cluster  initiatives,  partnership  with  local 
banks as agents of subsidised loans and, in part, implementation by local venture 
capital  funds.  The  ERDF  Cluster  Fund  was  specifically  designed  to  support  the 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

‘Cluster  offensive  2006’  when  19  regional  R&D/enterprise  clusters  in  the  IT, 
sensor technology and life sciences sectors were established in the regions.  

  A  detailed  market  gap  analysis  for  the  FIs  was  not  required  in  the  2007-2013 
period.  The  programme  stakeholders  took  advantage  of  this  freedom  to 
experiment  with  FIs  under  the  ERDF  regime  and  to  collect  implementation 
experience. 

  The European Commission (EC) encouraged the MA to use these new tools in the 
context  of  the  ERDF.  ERDF  supported  FIs  have  only  been  included  since  2007; 
however,  there  has  been  substantial  experience  with  FIs  in  Bavaria,  mostly  with 
private or national public funding. 

  The  role  of  the  various  instruments  in  supporting  different  stages  of  business 

development (seed, start-up, later stages, and growth) is systematically defined. 

  There is no competition between grants and FIs.  Eligible enterprises  may choose 
one  but  not  both  options.  Instead,  their  supplementary  character  is  emphasised 
by  the  MA  and  the  LfA  Foerderbank  Bayern  Muenchen  (LfA),  which  is  the  fund 
manager. The MA is looking for a highly diversified portfolio of funding products, 
which are tailored to the various conditions and needs of enterprises. 

 

In  practice,  it  was  difficult  to  focus  only  on  the  initial  target  areas.  The  areas 
covered  were  broadened  for  technology  firms  that  are  rare  in  the  initial  target 
territories. 

Management and implementation of FIs 

  FIs  under  the  Bavarian  ERDF  programme  have  been  governed  by  a  four-tier 
intermediary-final 
administrative 
recipient). The MA is supported in-house by ministerial units 43 and 53, which act 
as the technical unit for administering and supervising all venture capital and loan 
funds. 

(MA-intermediate  body-financial 

system 

  The  FIs  are  managed  at  operational  level  by  two  public  and  two  private  bodies 
with  long-standing  experience  and  established  regional  representation.  The 
intermediary institutions managing the funds have qualified staff. Fund managers 
have in-depth knowledge of the regional and local product and financial markets. 
(i) 

The  LfA  Förderbank  Bayern,  founded  in  1951,  is  the  public  development 
bank of the Free State of Bavaria. 

(ii)  Bayern  Kapital  GmbH  in  Landshut  is  a  public  Bavarian  venture  capital 
company, founded under the ‘Bavarian Future Initiative’ in 1995 as a wholly-
owned  subsidiary  of  the  LfA  Förderbank  Bayern.  Bayern  Kapital  usually  co-
invests with a private lead investor. The ‘Bayern Kapital model’ seems to be 
unique in Germany.  

(iii)  BayBG  is  a  private  enterprise  and  has  been  active  in  the  Bavarian  venture 

capital market for 42 years.  

(iv)  S-Refit, founded in 1990, is a private company (with municipal shareholders 
via  the  savings  banks)  based  in  Regensburg.  S-Refit  covers  the  private 
sector in Eastern Bavaria. 

  The  public  bank  LfA  was  directly  assigned  to  run  the  loan  scheme.  Loans  are 
distributed via local banks, which assess applications and conclude loan contracts 
with final recipients. The loans support in-house innovation in eligible businesses.  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

  The venture capital funds were established by open tender. For the ERDF Cluster 
Fund  (Bayern  Kapital),  it  took  eight  months  to  get  approval  for  the  70:30 
financing model, rather than the standard 50:50. This model is very attractive for 
business  angels  but  requires  a  separate  notification  process  through  DG 
Competition. It took around one year between tender and award to establish the 
S-Refit Risk Capital Fund I. 

  Management  costs  and  fees  range  between  0.5%  (2010-2015)  per  year  for  the 
loan funds, and 3.0% per year for the risk capital funds. Technical assistance was 
not used to develop the FIs.  

  All these FIs have a commercial strategy and seek financial sustainability.  

  According  to  the  MA  and  the  institutions  managing  the  four  FIs,  implementation 
experiences  are  largely  positive.  Some  challenges,  however,  relate  to  ERDF 
administrative requirements, which can be burdensome. There is a perception that 
the administrative burden imposed on FIs is much greater than for grants. 

Monitoring and evaluation of FIs 

  The  MA  initiated  a  mid-term  evaluation,  which  included  an  assessment  of  FI 
implementation. The focus was on adequacy of the FI approach and on assessing 
the first detectable effects. For the 2014-2020 programme period, recent ex-ante 
assessments  have  included  ex-post-reviews  of  the  three  venture  capital 
instruments and the loan funds. This included an estimate of the leverage effects. 

  The  indicators  collected  by  the  MA  cover  financial  and  output  indicators  and  a 
limited  set  of  result  indicators  (jobs,  total  investments  volume).  Outcomes  on 
company  growth,  turnover,  sales  or  indicators  on  the  horizontal  priorities 
(sustainability,  equality)  were  not  recorded  by  the  monitoring  system.  Lean 
monitoring  avoids  ‘data  cemeteries’,  saving  costs  and  administrative  burden  for 
the implementing bodies.  

  There are clearly defined reporting provisions between fund managers and the MA 
on  the  output  and  result  indicators  and  data  provision.  Monitoring  data  are 
available  on  fund  absorption.  The  financial  agreements  contain  definitions  of 
reporting provisions with regular reports to monitor financial absorption, including 
an auditor’s statement. 

  Unfortunately, achievements on employment and value added have not yet been 

documented due to some projects still being in progress. 

Outcomes of FI implementation 

  The  three  risk  capital  funds  leveraged  investment  capital  by  a  factor  of  between 
4.9  (ERDF  Cluster  Fund)  and  20.4  (Risk  capital  Fund  I  -  S-Refit).  However,  such 
leverage should be interpreted cautiously, especially in comparison to each other. 
Leverage  for  Risk  Capital  Fund  I  appears  to  be  particularly  high,  but  can  be 
explained by the inclusion of the S-Refit med tech funds, which was counted as an 
additional private contribution (Prognos 2014). 

  The  loan  fund  Investivkredit  100  Pro  (LfA)  has  already  revolved  around  25% 
(second round). This suggests that the fund serves its purpose. However it is too 
early to confirm that Investivkredit 100 Pro will operate sustainably with fees and 
interest being sufficient to cover default risk and costs. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

 

It  is  not  yet  clear  how  profitable  the  risk  capital  fund  will  be  by  its  scheduled 
closure at the end  of 2015. The fund managers  expect the fund to show a profit 
by that time. ERDF’s added value was crucial from the viewpoint of venture capital 
fund  stakeholders.  Without  ERDF  funds,  it  would  not  have  been  possible  to 
achieve a critical mass of venture capital. 

  Networking  support  was  an  important  added  value  for  equity  funds.  The  fund 
managers  and  their  networks  made  access  to  new  investors  and  markets  much 
easier. In addition, knowledge of strategic issues was transferred, leading to more 
transparency  in  local  markets  and  more  local  policy  coordination.  The  fund 
managers  are  also  very  involved  in  establishing  regional  business  support 
initiatives and business angel networks in economically struggling sub-regions. 

  The main result indicator is for job creation in less economically advanced regions 
and  border  areas  in  line  with  the  Cohesion  goal  pursued  by  the  programme.  In 
total,  1,200  jobs  should  be  created  and  2,500  safeguarded,  especially  in 
technology  but  also  in  more  conventional  sectors  such  as  crafts  and  retail. 
According to the MA, it is too early to demonstrate the actual job effects because 
all  four  funds  are  currently  still  in  the  implementation  phase  and  no  final 
examination has been made. A simple extrapolation estimate, based on data from 
the mid-term  evaluation, suggests  either moderate  success  or an  over-optimistic 
ex-ante  forecast.  There  is  some  preliminary  indication  that  traditional  grants  are 
more effective in creating jobs. 

  With respect to outcomes beyond financial absorption, there are major gaps in the 
result  chain,  which  are  partly  due  to  data  protection  regulations.  Positive  effects 
on  innovation  capacity  and  the  competitiveness  of  supported  enterprises  are 
assumed  but  cannot  be  assessed  due  to  a  lack  of  published  data.  Key 
stakeholders argue that all instruments have generated positive effects in addition 
to job creation; however, the evidence is too weak to prove any such effects. 

  For  the  ‘Investivkredit  100  Pro’  loan  fund  (LfA),  monitoring  data  and information 
are  available  on  financial  distribution  across  the  target  areas.  There  are  also 
unofficial estimates of job effects per  sector and gender. However, these are not 
sufficiently reliable. A first analysis, based on data from the mid-term evaluation, 
indicates that cost per job supported by the loan scheme is 2.9 times higher (EUR 
696 000 per job) than one supported by the grant scheme (EUR 242 000 per job). 
The open question is therefore whether this can be comprehensively explained by 
systematic differences between grant recipients and loan recipients. 

 

In the 2011 mid-term evaluation, a counterfactual analysis was carried out on the 
employment  effects  of  the  FIs.  The  evaluators  found  some  evidence  that 
employment effects were significant for final recipients – but only those addressed 
by venture capital.  

  A  retrospective  ToC  viewing  the  transmission  mechanism  along  with  the 
intervention  logic  at  a  micro-economic  scale  remains  fuzzy.  A  ToC  may  be  re-
constructed at the overall policy level (goals of cohesion policy). 

 

In  general,  the  mix  of  monitoring  data  and  interview-based  information  on  FI 
implementation  suggests  progress  in  terms  of  employment,  sales/turnover  and 
innovation  capacity  but  due  to  the  lack  of  micro-datasets  on  enterprises,  such 
impacts  cannot  be  quantified  or  precisely  defined.  It  is  not  yet  possible  to  show 
that FIs, notably loans, have encouraged more growth than traditional enterprise 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

grants.  In  fact,  preliminary  early  data  extrapolation  suggests  the  opposite.  In 
order to shed light on this potential ‘opportunity cost’ issue, a detailed analysis of 
the  different  types  of  enterprises  addressed  by  the  different  instruments  is 
recommended, e.g. by cluster and MANOVA87/discriminant analysis in addition to a 
counterfactual comparison analysis.  

87 Multivariate Analysis of Variance (MANOVA)  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.9  Hungary 

Before the launch of the JEREMIE programme there were a wide variety of government-
funded  FIs  targeting  SMEs  (some  20  programmes  per  year,  each  offering  different 
financial products). Some of these instruments were co-funded by the EIB and the EBRD, 
and some of them were part of the PHARE programme. The JEREMIE products introduced 
in 2007 were the  first  to be  co-financed by the ERDF.  There had been large overlaps in 
the aims and target groups of the various financial instruments when they were running 
under different conditions. In some cases, they even competed with each other. The high 
number of products led to costly and inefficient delivery, and some of the sector-oriented 
FIs introduced unreasonable market distortions.  

During the 2007-2013 programming period, all OPs with an SME development focus offer 
JEREMIE  type  FIs.  National  authorities  were  and  still  are  in  charge  of  programming  and 
implementation.  This  is  also  the  case  for  the  seven  regional  OPs,  which  have  one 
common  central  managing  authority.  Most  of  the  support  is  administered  through  loans 
or venture capital funds. 

Table 33: OP key figures on FIs for enterprise support in Hungary in the 2007-
2013 period (end 2014) (€m) 

Number of FIs in the OP 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 
Legend: 
 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 164 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Economic Development'   163727.1618.020.90.0710.9601.684.60OP 'West Pannon'   16.85.88.40.06.82.131.50OP 'South Great Plain'   16.85.84.40.06.82.638.80OP 'Central Transdanubia'   16.85.87.00.06.83.856.30OP 'North Hungary'   16.85.84.40.06.81.826.50OP 'North Great Plain'   16.85.83.70.06.83.145.60OP 'South Transdanubia'   16.85.87.60.06.82.231.90OP 'Central Hungary'   53147.8125.725.30.0145.0135.193.20 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.10 

Case Study OP Economic Development  

The FIs under scrutiny 

The FIs concentrated on small loans, guarantees  and venture capital schemes. The  first 
loan  schemes  were  introduced  under  Priority  Axis  4  (PA  4)  of  the  EDOP  in  2007.  There 
were  two  schemes  in  2007  and  in  2014,  and  another  four  introduced  in  2010.  The 
guarantee  schemes  varied  less  across  the  programme  period  than  the  loan  schemes. 
Venture  capital  investments  were  exclusively  for  new,  innovative  start-ups,  with  special 
emphasis on firms in need of seed capital.  

Targets  for  the  credit  schemes  were  very  narrow  in  the  first  half  of  the  implementation 
period  (2007-2010),  focusing  only  on  micro-businesses  with  no  specific  sectoral  or 
geographical  targeting.  From  April  2010  onward,  small  companies  could  also  apply  for 
loans,  followed  by  medium-sized  companies  in  January  2013.  There  was  a  similar  shift 
with venture capital funds. 

The various  schemes’  financial performances differ  significantly. The loan schemes have 
disbursed  122%  of  allocated  funds,  followed  by  the  guarantee  schemes  with  64%  and 
the VC schemes with 53%.  

While  the  credit  schemes  have  overperformed  their  targets,  the  guarantee  and  VC 
schemes  had  a  very  slow  take-up  and  consequently,  slower  allocation.  There  are  many 
reasons for the different performance:  

 

 

 

institutional,  due  to  the  time-consuming  set-up  process  in  the  first  half  of  the 
programming period; 

contextual, due to post-crisis effects; and  

strategic,  with  higher  demand  for  credit  schemes,  especially  for  the  ‘Combined 
Microcredit’  scheme,  which  provided  simultaneous  access  to  both  refundable  and 
non-refundable support within the scheme. 

There was a breakthrough in 2010 and 2011, after which the credit schemes and venture 
capital  schemes  accelerated  disbursements.  One  reason  was  the  new  Combined 
Microcredit  scheme,  which  combined  small  loans  and  grants  for  micro  and  small 
businesses.  This  FI  scheme  has  turned  out  to  be  the  top  JEREMIE-type  product  in 
Hungary.  Secondly,  from  2010  onwards  several  amendments  were  introduced,  resulting 
in some stringent credit conditions being significantly relaxed, such as: 

 

 

 

increasing  the  maximum  credit  thresholds  and  refinancing  rates  per  type  of 
financial intermediary;  

fixing the interest rate threshold at 9%;  

increasing the duration for both investment and working capital loans;  

  decreasing the required co-investment.  

Within  the  credit  schemes,  financial  entreprises  and  local  economic  development 
agencies  (LEDAs)  were  the  most  active  intermediaries  for  the  number  of  operations 

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(80%).  Notably,  from  2012,  both  financial  enterprises  and  LEDAs  concentrated  on  the 
Combined Microcredit scheme. 

Credit  institutions  could  offer  guarantees  during  the  first  EDOP  implementation,  but 
interest  was  very  limited,  particularly  from  banks.  The  average  guarantee  was  close  to 
EUR  10,000  (HUF  3  million)  but  there  were  only  1,140  operations  by  the  end  of  2014. 
While  15  banks  and  28  savings  cooperatives  offered  the  portfolio  guarantee  scheme, 
from  2008  to  2013,  when  it  was  phased  out,  the  counter-guarantee  scheme  was  highly 
centralised,  provided  first  by  the  HF,  followed  by  the  publicly-owned  garantor 
organisation, Garantiqua Ltd from 2011.  

Although  the  conditions  for  the  guarantee  schemes  were  substantially  relaxed  during 
implementation by, for example, raising the trigger threshold for defaulting portfolios and 
easing rules on collateral, the slow progress of these schemes can be explained by: 

(a) 

(b) 

restrictive regulatory rules, for example: 
(i) 

restrictions on coupling JEREMIE-type credit schemes with guarantee 
schemes at final recipient level; 
double financing rules; 
limiting guarantees to only investment loans;  

(ii) 
(iii) 

low demand for guarantee schemes by final recipients, for example:  
lack of information on the benefits of the schemes; 
(i) 
low trust in the conditions’ predictability. 
(ii) 

The  23  VC  funds  financed  198  projects,  with  an  average  of  EUR  1.17  million  for  New 
Hungary,  EUR  1.27  million  for  New  Széchényi  VC  funds  and  EUR  147,000  for  New 
Széchényi Seed Capital. After slow take up in the first years (2009-2010), the number of 
fund  managers  and  volume  of  disbursements  steadily  increased  after  2010.  Improved 
macroeconomic  conditions  in  the  second  half  of  the  progamme  period  contributed 
significantly to this upward trend.  

The context in which FIs were introduced 

Slow  economic  growth  in  the  Hungarian  regions  meant  there  was  little  if  any 
convergence  in  the  2007-2013  period.  Structural  challenges  to  growth  and  signs  of 
recession were already evident before the economic crisis hit in 2009. 

Throughout  the  programme  period,  the  main  macroeconomic  indicators  were  weaker 
than  for  other  countries  in  the  Central  and  Eastern  European  region,  such  as  the  Czech 
Republic,  Poland  and  Slovakia.  This  underperformance  was  coupled  with  widening 
territorial inequalities. 

Goals and theory of change (ToC)  

The main strategic objectives of the EDOP FIs were to: 

(1) provide  access  to  finance  for  SMEs  with  a  viable  business  plan  or  feasible 
investment ideas; and  

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

(2) promote start-ups with innovative potential.  

There  was  no  specific  geographical  or  sectoral  targeting.  In  addition  to  the  SME  policy 
objectives,  the  interventions  were  also  aimed  at  market-making  and  market  facilitation 
where SME financing was underdeveloped, such as microcredit, or in effect non-existent, 
such as seed and venture capital.  

The long-term FI targets are vaguely defined in the OP documents, i.e. promoting growth 
and job creation. The programme documents also lack any explanation of how to achieve 
these goals.  

Although the strategic goals are consistent with the ex-ante gap analysis and justified by 
other  analyses,  absorption  pressures  dominated  the  second  half  of  the  programming 
period.  These  resulted  in  slight  changes  to  targets,  including  amendments  to  the  credit 
schemes,  relaxing  screening  by  allowing  companies  with  a  credit  history  access  to  the 
funds and easing the conditions of the schemes.  

For  the  second  strategic  objective,  the  programme  encouraged  a  large  number  of 
financial  intermediaries,  to  generate  competition  and  to  ensure  efficiency  with  several 
types  of  private  and  public  fund  managers.  These  intentions  have  been  justified, 
especially with seed capital.  

The  MA’s  motivation  shifted  during  the  programming  period.  The  planning  process  was 
driven  by  the  efficiency  of  support  instruments  to  simplify  market  entry,  promote  new 
intermediaries  and  foster  competition.  In  the  second  half  of  the  programming  period, 
absorption became more important.  

The  combined  microcredit  scheme  was  very  successful.  Combinations  with  non-financial 
support were not developed at programme level but this practice is common with some 
fund managers, such as LEDAs. 

Management and implementation of FIs 

The governance structure does not obviously match the structure in EU regulations. This 
was one of the biggest challenges to clarify according to the government representatives 
interviewed. Adaptation of EU regulations to the national context required a lot of effort 
due to the unique approach of the national authorities.  

The  bottom  line  of  the  ongoing  controversy  was  that  the  high  number  of  implementing 
bodies  did  not  mean  a  corresponding  high  number  of  FIs.  In  total,  the  country  ran  11 
different  FI  schemes  managed  by  one  MA,  one  central  Holding  Fund  and  137  financial 
intermediaries. The schemes used standardised calls and funding agreements.  

There were five types of intermediaries: a guarantee institute, Garantiqa Ltd, (exclusively 
offering  the  counter-guarantee  scheme),  credit 
institutions  (banks  and  saving 
cooperatives),  financial  enterprises,  LEDAs,  and  VC  funds.  Funding  agreements  differed 
for each of these groups, including the interest rate and the maximum disbursement. The 
approaches  were  quite  different,  with  credit  institutions  showing  little  interest  in 
promoting the support products, whereas many of the financial enterprises were founded 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

with  the  purpose  of  acting  as  fund  manager.  These  financial  enterprises  and  LEDAs 
offered FIs across the whole country. 

Banks were highly underrepresented, mainly due to:  

(a) a low maximum for loans of around EUR 166,000 (up to 2013);  
(b) perceptions of high administrative and reporting costs; and  
(c) complexity of procedural rules in the funding agreements. 

The MA and the  Holding Fund relied on performance-based incentives to calculate next-
phase allocations to the financial intermediaries. So-called ‘partner-limits’ were based on 
past performance. Although these limits were raised during implementation, they proved 
to  be  good  benchmarks  for  assessing  beneficiary  performance  and  helped  to  reduce 
implementation risk through the sequential allocation of the funds.  

The  key  performance  incentive  for  venture  capital  funds  was  the  asymmetric  loss  and 
revenue-sharing system, where the Holding Fund takes losses above a low limit, but does 
benefit less than proportional from the revenues.  

The  Holding  Fund  was  established  in  the  summer  of  2007.  The  various  calls  took  from 
four weeks to four months to prepare for credit schemes and up to 1½ years for some VC 
schemes.  Some  loan  and  guarantee  schemes  were  very  quickly  established,  but  were 
modified during implementation.  

HF management costs were on average EUR 1.47 million per year and totalled EUR 10.32 
million at the end of 2013. The annual management fee for the intermediaries is fixed at 
5%  for  all  FIs  in  Hungary.  How  this  compares  to  the  actual  (or  planned)  cost  is  still 
unknown,  but  it  seems  that  these  management  fees  are  significantly  above  the  market 
and are among the highest in all case studies. 

Monitoring and evaluation of FIs 

The monitoring system focuses on operative indicators and uses a specific scoring model 
from the HF managers to assess the soundness and health of the portfolios. Performance 
data at the level of final recipients is based on self-reporting rather than on government 
databases.  

Programme-  and  priority-level  indicators  are  poorly  designed  for  almost  all  types  of 
monitoring  and  strategic  indicators.  Values  are  missing  in  several  AIRs  for  several 
indicators,  for  instance  in  the  2011  AIR  for  ‘Access  of  financial  mediation  in  the  SME 
sector’.  For  2007  and  2008  and  there  is  no  methodological  guide  on  the  meaning  and 
interpretation  of  the  values.  During  the  interviews  the  MA  and  fund  managers  were 
obviously uncertain about indicators. 

Outcomes of FI implementation 

The  majority  of  credit  schemes  were  for  investment  loans,  with  two  ‘outlier’ 
intermediaries, banks and credit cooperatives, which concentrated their efforts mostly on 
working capital loans to businesses. The average amount of the loans varied substantially 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

across  schemes  and  type  of  financial  intermediary,  also  depending  on  the  scheme.  In 
general, the investment pattern was:  

 

 

credit institutions, i.e. banks and credit cooperatives focused on SMEs with larger 
volumes.  Both  the  average  and  median  loan  amounts  are  significantly  higher  for 
banks, e.g. EUR 83,000 for the average and EUR 42,000 as the median loan; 

financial  entreprises  took  the  chance  to  invest  primarily  in  micro-  and  small 
entreprises with substantially smaller needs; 

  LEDAs  concentrated  on  micro-  and  small  businesses  with  very  low  average  loan 
size,  e.g.  under  EUR  20,000  and  occasionally  with  more  personalised  services, 
such  as  mentoring  and  coaching  in  business  planning  -  at  least,  with  the  most 
successful local agencies.  

The  top  sectors  benefiting  from  the  credit  and  guarantee  schemes  were  commerce, 
manufacturing and tourism, compared to firms with a strong Research and Development 
profile for venture capital funds. 

The  EDOP  and  its  PA  4  was  designed  specifically  to  support  SMEs  and  enterprise 
development  in  the  Convergence  regions.  Although  FIs  were  already  widely  used  in 
Hungary in the 2000s (financed by national funds), this was the first time that Cohesion 
Policy  introduced  JEREMIE  instruments  as  an  alternative  to  the  non-refundable  support 
used  exclusively  in  the  previous  programme  period.  This  new  PA  under  the  economic 
development  programme  was  planned  to  be  a  large-scale  pilot  initiative  to  see  how 
microcredit,  small  loans  and  guarantees  could  perform  better  than  grants  in  terms  of 
financing micro- and small firms and in terms of cost-efficiency. 

The EDOP was successful with a high commitment rate (over 90%). In 2014, over 90% 
of final recipients were micro and small firms, 64% of them with no credit history. These 
figures are very much in line with the initial intentions.  

By the end  of 2014 there were 13,055 final recipients under PA 4, with close to 14,000 
transactions.  Regional  allocation  of  funds  was  relatively  balanced,  and  monitoring  data 
also suggest that almost 62,000 new jobs were created by 2013 for the whole EDOP, but 
there were no separate data available for FIs.  

According  to  our  estimates,  EUR  1  contributed  by  ERDF  funds  generated  EUR  1.42  of 
total public and private capital investment.  

It  is  hard  to  assess  the  effectiveness  of  the  interventions  in  terms  of  result  and  impact 
indicators  since  all  the  FI  schemes  are  still  in  progress  (only  25%  of  the  14,000 
transactions were closed by the end of 2014). Nevertheless, the official AIR 2014 reports 
on some of the result indicators – such as:  

 

the  decrease  in  micro  enterprises  and  SMEs  without  access  to  loans  by  5.8%  by 
2013 under PA 4 (target value: 12.8 % decrease by 2015). 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

 

improved  access  to  financial  mediation  for  SMEs  by  4.2%points  change  in  the 
share of SMEs having access by the end of 2013 (target: +10% points change by 
2015).  

Unfortunately,  the  source  of  these  data  and  the  calculation  methods  are  not  clearly 
specified in the official reports. Nevertheless, the SMAF index for Hungary between 2007 
and 2014 shows that the overall score for Hungary has improved,  rising from 81 to 95. 
The SMAF debt sub-index and the SMAF equity finance sub-index performed even better, 
hitting the EU baseline in 2013 with a score of 103. 

These  figures  suggest  a  slow  convergence  in  SME  financing  and  a  slowly  closing  gap  in 
the Hungarian financial markets. Further analysis is required with regard to: 

(a) sustainability  of  the  improvement  in  both  the  credit  and  equity  financing 

indicators; and  

(b) the  effective  contribution  that  EDOP  FIs  generate  in  terms  of  growth  and 

productivity at the micro enterprise level.  

Counterfactual impact assessments should answer these  questions after the programme 
is closed.  

In our interviews, both government and market stakeholders emphasised the significant 
market-making  effect  generated  by  the  venture  capital  funds  and  a  potential  market-
clearing effect  for SME  microcredits. They also pointed to some indirect effects,  such as 
the start-up network linked to the interventions, improved market know-how of FIs and 
positive perceptions of these instruments. 

The added value of FI implementation in Hungary is clearly reflected in the quick  revival 
of the Hungarian VC market after the 2008 financial crisis. Without the EDOP measures, 
the market would be much more limited. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.11 

Italy 

Italy has a lengthy tradition of FIs within domestic enterprise support policy. In addition, 
FIs were used extensively by ERDF OPs to support enterprises in the 2007-2013 period.  

There are 19 OPs using FIs in Italy, out of 28 regional competitiveness and employment 
(RCE)  and  convergence  programmes.  FIs  are  less  used  by  multiregional  and  national 
programmes  (2  OPs  out  of  7),  while  they  are  used  by  all  convergence  OPs  except  OP 
‘Sicily’. The RCE programmes not using FIs are 'Valle d'Aosta',  'Autonomous  Province of 
Trento' and 'Autonomous Province of Bolzano'. 

As  in  other  EU  countries,  OP  contributions  are  in  some  cases  invested  in  the  capital  of 
existing  legal  entities  dedicated  to  implementing  FIs  consistently  with  ERDF  objectives.  
Confidi is one example of the mutual or co-operative consortia working at the local level 
on a quasi-commercial basis to provide loan guarantees to their members. 

The large majority of FIs for enterprise support are implemented without a Holding Fund 
(HF) and 61 of the FIs are specific funds (NHFs). HFs are used by seven OPs with a total 
of just 12 FEIs. This indicates the very limited number of FIs under each HF as only HFs 
in  OP  'Campania'  and  'Latium' have  more  than  one.  Interestingly,  OP  'Calabria',  OP 
'Latium' and  OP  'Lombardia' set  up  both  FEI  and  specific  funds  (NHFs),  suggesting  the 
need to adopt different implementation mechanisms to address local enterprise needs. 

FIs co-financed by Italian ERDF OPs offer loans, guarantees, and equity. Guarantee and 
loan  schemes  prevail,  being  offered  by  11  and  10  OPs  respectively.  Equity  is  offered 
through  seven  instruments  by  six  OPs  (OPs  'Emilia-Romagna  region',  'Latium',  'Liguria', 
'Tuscany',  'Veneto' and  'Sardinia').  A  limited  number  of  schemes  provide  non-financial 
support alongside the FI, usually as conventional advice and management support. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Table 34: OP key figures on FIs for enterprise support in Italy in the 2007-2013 
period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 172 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Renewable Energy and Energy Efficiency'   8356.0267.0-0.0356.06.01.7413OP 'Research and Competitiveness'   91,115.5836.630.8-1,115.5411.336.921,046OP 'Attrattori culturali, naturali e turismo'3110.081.6--110.022.620.63,057OP 'Calabria'   4121.791.349.10.0121.74.13.436OP 'Campania'   6430.0326.366.1-400.066.416.6469OP 'Puglia'   17298.2186.630.20.0298.260.720.4-OP 'Basilicata'   232.015.729.10.029.00.00.05OP 'Abruzzo'   132.112.118.8-32.12.67.9489OP 'Emilia-Romagna region'   331.57.75.510.524.3---OP 'Friuli Venezia Giulia'   122.07.024.20.022.021.296.3119OP 'Latium'   9145.572.847.7-145.556.338.73,695OP 'Liguria'   373.820.225.410.073.815.721.277OP 'Lombardia'   5145.857.859.5-145.853.136.4387OP 'Marche'   217.06.612.4-17.0---OP 'Molise'   230.611.340.4-30.610.534.4197OP 'Piemonte'   4100.039.618.60.0100.065.265.23,934OP 'Tuscany'   5226.460.930.726.7206.5156.075.62,674OP 'Umbria'   144.914.719.810.844.913.429.9391OP 'Veneto'   6121.856.052.30.0121.8231.8190.3346OP 'Sardinia'   3300.2212.069.30.0296.964.421.72,846 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.12 

Lithuania 

Prior to 2007–2013 programming period, SMEs  benefited from two FIs – guarantees for 
loans and microcredits. These instruments  were financed from national funds as well as 
the PHARE programme.  

ERDF–financed  FIs  were  first  introduced  in  the  2007–2013  programming  period.  All 
ERDF–financed  FIs  for  enterprises  are  covered  by  OP  ‘Economic  Growth’.  One  FI  for 
enterprises  is  financed  from  ESF  (‘Promoting  Entrepreneurship’  under  OP  ‘Human 
Resources  Development’).  One  OP  does  not  contain  FIs  for  enterprises  (OP  ‘Cohesion 
Promotion’)  as  this  is  for  infrastructure  development.  The  Ministry  of  Economy  is 
responsible for programming and implementation of ERDF–financed FIs for enterprises. 

Support  is  overwhelmingly  in  the  form  of  loans,  followed  by  guarantees  and  venture 
capital.  No  non-financial  support  is  offered  in  pure  loan  or  pure  guarantee  schemes.  All 
venture capital schemes include business advice, management support and in one case, 
networking activities. The Promotion Entrepreneurship Fund (L + G + O) offers business 
advice and consulting, support for the preparation of business plans and training. 

Table 35: OP key figures on FIs for enterprise support in Lithuania in the 2007-
2013 period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 173 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Economic Growth' 26265.8265.825.10.0265.8236.188.85,573 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.13 

Case Study OP Economic Growth  

Implementation of financial instruments (FIs) in Lithuania was largely determined by the 
economic  crisis  that  struck  the  country  in  2008.  Another  important  stimulus  was  the 
arrival of a new government that opted to use FIs extensively as the principal means of 
stimulating economic recovery.  

Before  the  crisis,  the  market  gaps  and  corresponding  intervention  through  FIs  could  be 
considered  marginal.  The  crisis  increased  the  market  gaps  and  FIs  have  been  at  the 
forefront in addressing the demands of small and medium-sized enterprises (SMEs) that 
were  unable  to  access  external  financing.  In  contrast  to  the  Theory  of  Change  (ToC), 
innovation did not play a key role in FI implementation under the Operational Programme 
(OP)  Economic  Growth.  Instead,  FIs  have  been  increasingly  used  by  SMEs  for  dealing 
with the lack of working capital, rather than for investment. 

This  case  study  highlights  the  relevance  of  the  financial  market  assessment  in  the 
definition of the ToC and the evaluation of FI implementation. Specific characteristics of 
financial systems, such as system stability, or the variability of credit conditions and the 
cost of credit, should also be considered in market gap assessments. 

The state agency, INVEGA (Investicijų ir verslo garantijos, Holding Fund (HF) manager), 
played  an  increasingly  important  role  in  the  implementation  of  FIs.  JEREMIE  (Joint 
European Resources for Micro to Medium Enterprises), the other HF, was managed by the 
European Investment Fund (EIF). 

The FI under scrutiny 

The  OP  Economic  Growth is  the largest  Lithuanian  OP  from  the  2007–2013  period,  with 
an  allocation  of  EUR  3.08  billion.  This  OP  finances  investments  in  research  and 
technological  development,  development  of  the  information  society  and  economic  and 
transport  infrastructure.  FIs  for  enterprises  are  supported  under  Priority  Axis  (PA)  2 
‘Increasing  business  productivity  and  improving  the  business  environment’.  In  total,  24 
FIs  (HF  not  included)  have  been  implemented,  grouped  into  nine  schemes.  Support 
through  FIs  is  predominantly  in  the  form  of  loans  (15  products),  with  guarantees  (4 
products) and venture capital (VC) (5 products). This variety of schemes has many banks 
broadly involved, which in turn makes the FIs  accessible to more SMEs. FIs are not the 
only  form  of  finance  under  Priority  Axis  2.  Non–repayable  assistance  (grants)  for 
enterprises are provided, for example, for investment in equipment and technology, new 
IT management solutions and activities to boost exports. 

Goals and ToC of implemented FIs 

The  FIs  were  designed  to  address  the  lack  of  external  financing  for  SMEs.  Having 
financial  resources  available  for  business  investment  was  expected  to  also  contribute  to 
the  broad  policy  objectives  of  long–term  economic  growth  and  an  increase  in  labour 
productivity.  In  a  2007  EIF  study,  a  market  gap  was  identified:  loans,  guarantees  and 
equity. However, the study could not anticipate the increased demand for working capital 
due  to  the  economic  crisis.  Different  reactions  to  this  change  were  key  factors  in  the 
implementation of FIs during the 2007–2013 period. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

While all FIs in the OP Economic Growth are aimed at increasing SME access to finance, 
different  FIs  address  different  problems.  The  large  variety  of  FI  products  has  ensured 
widespread use of the schemes.  

Despite  the  variety  and  differentiation  of  FIs,  the  documented  ToC  is  very  simple  and 
incomplete.  All  FIs  are  aimed  at  SMEs,  which  correspond  to  the  expected  short  term 
result  expressed  in  the  ToC  (improvement  in  SME  access  to  financing  sources).  Start–
ups, innovation–oriented enterprises and SMEs in underdeveloped regions are mentioned 
in programme documents as the recipients in greatest need of support. However, neither 
the  selection  criteria  for  final  recipients  nor  the  monitoring  indicators  reported  to  the 
Managing  Authority  (MA)  distinguish  particular  groups  of  SMEs.  There  is  an  overlap 
between  loan  and  guarantee  schemes  since  they  provide  very  similar  products  to  final 
recipients.  Only  a  few  products  make  unique  offers.  For  example,  Practica  Seed  Capital 
KUB  is  the  only  risk  capital  fund  investing  exclusively  in  seed  and  start-up  capital.  This 
indicates  a  weak  ToC.  Additionally,  meaningful  intermediate  results  for  the  FI  target 
group are missing. FIs mainly target national macro-economic development goals, rather 
than regional or sectoral ones. 

The  clearest  inconsistency  between  the  ToC  and  FI  implementation  was  SME  use  of  FI 
funds.  The  programme  documentation  identified  the  need  for  investment  in  modern 
technology and equipment. However, the crisis caused a shift in the purpose and form of 
FIs, which were often used to help SMEs survive difficult economic conditions. 

Management and implementation 

The  overall  governance  structure  is  adequately  developed  and  stable.  FIs  under  the  OP 
Economic Growth are implemented through two HFs (INVEGA and JEREMIE HF) and one 
fund without a HF (Guarantee Fund). INVEGA HF and the Guarantee  Fund are managed 
by  the  INVEGA  public  agency,  while  the  JEREMIE  HF  is  managed  by  the  EIF.  HF 
managers  are  responsible  for  selecting  financial  intermediaries  through  tenders,  as  well 
as  for  implementing  the  investment  strategy  and  financial  engineering  schemes.  The 
Ministry of Finance is the MA and the Ministry of Economy is the Intermediate Body. The 
MA  

(a) Participates  in  the  selection  of  HF  and  specific  fund  (Guarantee  Fund)  managers 

(together with the Intermediate Body); 

(b) supervises HF activities and 
(c) reimburses payment applications submitted by the Intermediate Body. 

The Intermediate Body: 

(a) oversees the implementation of financial engineering measures; 
(b) approves specific schemes and 
(c) participates in the selection and supervision of the HF and fund managers.  

Fund  managers  (financial  intermediaries)  are  responsible  for  implementation  of  the  24 
FIs.  There  are  16  different  fund  managers  in  Lithuania;  most  of  them  are  private 
companies  (banks).  Management  costs  and  fees  are  very  different  depending  on  the 
nature of the FI and the operating body. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

The  overall  financial  performance  of  the  FIs  is  good  (with  the  exception  of  risk  capital 
funds, which at the end of 2013 were in the middle of their investment period). Up to the 
end  of  2013,  EUR  278  million  of  ERDF  funds  had  been  paid  to  FIs,  equalling  the  total 
ERDF allocation to FIs under OP Economic Growth. 

Co-investment plays an important part in the implementation of a range of FI schemes. 
Considerable  private  money  was  attracted  to  the  Guarantee  Funds  (leverage  500%).  In 
loan  and  VC  funds  there  was  only  minimal  private  money  (around  150%).  In  absolute 
numbers,  by  the  end  of  2013,  EUR  274  million  of  private  money  had  been  co-invested 
(72% of OP target) and nearly equals the European Union (EU) funds. 

An  indication  for  revolving  funds  is  given  in  four  FIs  (“Small  loans  to  SMEs  –  Stage  2” 
implemented by four different fund managers). In total EUR 23.7 million had revolved by 
the  end  of  2013.  However,  in  most  FIs  the  ratio  between  the  funds  invested  in  final 
recipients and the original fund size was below 100%. 

One of the main implementation issues that the HF manager and the Intermediate Body 
stress is the fact that there are still unclear regulations regarding the combination of FIs 
and  grants.  Some  FI  schemes  were  unattractive  for  financial intermediaries  due  to  very 
detailed  implementation  rules.  However,  final  recipients  did  not  encounter  difficult 
administrative procedures when applying for FI support.  

The  cost-efficiency  of  FIs  and  grants  was  evaluated  in  2014.  However,  there  were  no 
clear  conclusions  as  the  instruments  are  too  different.  FIs  were  more  attractive  to  final 
recipients  than  grants.  Enterprises  that  benefited  from  grants  had  to  dedicate  three  to 
four  times  more  time  to  project  preparation  and implementation  than  enterprises  which 
used FIs. 

The  large  number  of  ERDF–financed  FIs  of  different  size  on  offer  in  Lithuania  is 
considered best practice from the point of accessibility since SMEs can mix different FIs 
for  maximum  benefit.  The  scale  of  an  FI  is  a  poor  predictor  of  its  performance.  The 
Lithuanian experience shows that small FIs can be very effective in filling a market gap. 

Monitoring and Evaluation of FIs 

Key indicators reported by HF managers are the number of SMEs supported and private 
investment  attracted.  These  are  OP–level  indicators  and  their  accuracy  can  be  checked 
by  the  steering  committee,  especially  if  there  are  inconsistencies  in  the  data.  INVEGA 
also  publishes  profitability,  liquidity  and  other  indicators  in  its  performance  report. 
Although  these  are  reported  per  institution,  as  opposed  to  the  separate  funds  run  by 
INVEGA, they are significant because almost all INVEGA activities are ERDF-financed FIs. 
Some important information on final recipients has not been reported. 

Outcomes of FI implementation 

FIs  clearly  contributed  to  financing  for  around  7%  of  SMEs  in  Lithuania.  Accordingly  an 
important OP objective ´Increase SME access to finance´ was achieved. 

Up  to  the  end  of  2013,  4,720  SMEs  benefited  from  FIs  (83%  of  target  and  7.2%  of  all 
SMEs  in  Lithuania).  Loans  and  guarantees  provided  by  FIs  (both  EU  and  private  funds) 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

made up 7.2% of the business loans from Lithuanian banks at the end of 2013. Based on 
European  Commission  (EC)  summary  data,  38%  of  final  recipients  were  micro–
enterprises.  This  is  a  high  percentage,  considering  that  micro–enterprises  were  not 
targeted  in  programme  documentation.  In  addition,  micro–enterprises  also  benefited 
from  the  Entrepreneurship  Promotion  Fund  that  was  co-financed  by  the  European 
Structural Fund (ESF). FIs financed under OP Economic Growth attracted EUR 274 million 
of private investment (72% of target). It is also worth noting that targets for both these 
indicators  were  increased  during  the  programme  period  due  to  the  good  results.  These 
new targets should be reached or almost reached by the end of 2015. 

Despite the delayed uptake of ERDF funds the boost to equity products in Lithuania is a 
major  achievement.  The  main  added  value  of  ERDF  VC  funds  as  compared  to  private 
funds is their orientation to early stage investments (seed and start–up). There is some 
data  on  the  performance  of  final  recipients  of  equity  funds.  Total  turnover  increased  by 
43% and the number of employees by 12%, while losses fell by 71%.  

In general, effects on turnover, job creation, innovation capacity and competitiveness of 
final  recipients  have  not  been  systematically  measured  due  to  gaps  in  the  intervention 
logic of the FIs. Although some enterprises were able to improve technology and upgrade 
their business processes, FIs were extensively used for financing working capital. 

During  the  crisis,  targeted  selection  of  final  recipients  for  FI  support  was  abandoned  in 
favour  of  a  broad  approach  to  help  enterprises  survive.  Overall,  only  a  minor  share  of 
investments  was  made  in  innovative  enterprises.  FIs  were  extensively  used  to  finance 
working capital. 

A  2014  evaluation  of  the  impact  of  EU  structural  assistance  on  SMEs  was  the  first  to 
assess the impact of FIs in Lithuania. According to the counterfactual impact evaluation, 
only one of the two schemes analysed (‘investment credits provided under small loans to 
SMEs’ – Stage 2) significantly increased the number of employees and annual turnover of 
final  recipients.  However,  working  capital  credits  provided  under  the  same  scheme  did 
not have the same effect. 

Broader  policy  goals  also  have  not  been  as  successful.  In  2013,  investment  in  fixed 
capital formation was 18% of GDP (61% of target) a decrease compared to 23% in 2005, 
three years before the crisis. 

As  a  percentage  of  the  EU15  average,  labour  productivity  improved  in  the  2007–2013 
programme  period,  from  53%  of  the  EU15  average  in  2007  to  65%  in  2012  which  was 
101% of the target.  However, there has been no impact evaluation assessing the effect 
of FIs on labour productivity. The effect of the economic and financial crisis on wages was 
probably more important than intervention through FIs.  

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6.10.14 

Poland 

In Poland the first FIs supporting SMEs were loan and guarantee funds established in the 
1990’s.  These  were  mostly  regional  or  local  with  active  involvement  from  regional  and 
local public authorities and socio-economic partners. Foreign financial aid and know-how 
transfer  from  Western  European  countries,  the  USA,  Canada  and  the  World  Bank 
facilitated government programmes supporting FIs in different regions.  

EU  support  in  the  pre-accession  period  (i.e.  PHARE  2000-2003)  further  increased  the 
capacity  of  loan  and  guarantee  funds  and  facilitated  development  of  a  country-wide 
network. Under the ERDF financed “Increase of Enterprises’ Competitiveness” national OP 
of 2004-2006 the loan and guarantee funds were additionally capitalised. During both of 
those  periods,  the  FI  managers  could  be  accredited  by  the  Polish  Agency  for  Enterprise 
Development (PAED) to participate in the National System of Services for SMEs. 

In  2007-2013  ERDF  support  to  SME-targeted  FIs  was  shared  between  the  national  and 
regional  OPs.  All  programmes  offering  support  to  SMEs  use  FIs.  The  Cohesion  Policy 
2007-2013  management  system  in  Poland  is  centrally  coordinated  by  the  Ministry  of 
Infrastructure and Development (MID) (formerly the Ministry of Regional Development), 
which  is  responsible  for  programming  and  supervising  implementation  of  the  National 
Strategic Reference Framework (NSRF) and the national OPs. There are 2 ERDF financed 
national  OPs  supporting  SME-targeted  FIs,  “Innovative  Economy”  (IE)  and  “Eastern 
Poland  Development”  (EPD).  Their  managing  authorities  are  based  in  the  MID  and 
intermediate bodies are in line Ministries and central government units. There are also 16 
Regional  OPs  (ROP)  programmed  and  managed  by  regional  governments,  such  as  the 
Regional Management  Boards led by  Marshalls, and the managing authorities are based 
in the Marshall Offices. 

The  number  of  FIs  supported  in  2007-2013  in  Poland  is  very  high  (211)  compared  to 
Member States with similar size, economic growth, population, level of entrepreneurship 
development,  and  decentralised  territorial  structure  (many  regional  and  local  funds). 
Interestingly, some of the ROP financed FIs have received additional allocations from the 
managing  authorities  for  implementation  of  further  editions  of  the  same  FIs  within  the 
current programming period.    

The  most  typical  forms  of  support  in  Poland  include  loans  and  guarantees,  with  only  a 
few equity schemes. 

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Table 36: OP key figures on FIs for enterprise support in Poland in the 2007-
2013 period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 179 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Innovative economy'1293.879.81.30.093.828.730.6144OP 'Development of Eastern Poland'   2049.142.77.80.049.140.783.02,346OP 'Lower Silesia'   2299.399.336.40.099.3109.5110.34,764OP 'Kujawsko-Pomorskie'   1841.041.023.80.040.937.892.41,127OP 'Lubelskie'   638.335.914.90.038.133.287.11,841OP 'Lubuskie'   79.39.39.30.09.38.389.2427OP 'Łódzkie'   1444.829.112.80.044.845.4101.4539OP 'Lesser Poland'   1442.836.313.30.038.628.774.31,671OP 'Mazovia'   1430.022.76.10.030.033.1110.21,148OP 'Opolskie'   325.025.016.20.025.023.192.4617OP 'Podkarpackie'   930.926.210.80.030.925.181.32,698OP 'Podlaskie'   631.331.318.60.031.330.998.7833OP 'Pomerania'   2178.458.826.52.078.498.6125.74,175OP 'Zachodniopomorskie'   1667.350.421.5-67.386.3128.4-OP 'Greater Poland'   17121.891.331.40.0121.8193.8159.16,791OP 'Świętokrzyskie'   735.429.117.20.035.431.187.7795OP 'Silesia'   420.416.65.33.820.412.058.9336OP 'Warminsko-Mazurskie'   230.530.513.10.029.830.3101.71,141 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.15 

Case Study Małopolska Regional OP  

The FIs under scrutiny 

The  OP  Małopolska  (MROP)  2007-2013  has  a  total  budget  of  EUR  1.87  billion  of  which 
EUR  1.36  billion  is  from  the  ERDF.  It  is  the  key  operational  instrument  for 
implementation  of  the  region's  development  policy.  The  strategic  objective  of  the 
programme is to facilitate economic growth and employment. 

Support  for  entrepreneurship  is  covered  by  Priority  Axis  (PA)  2:  ‘Regional  Opportunity 
Economy’, with a total budget of EUR 385 million (ERDF: EUR 164 million), which is 21% 
of  the  total  OP  and  12%  of  the  ERDF  allocation.  The  PA’s  operational  objective  was  to 
increase enterprise competitiveness. 

The overall ERDF allocation to FIs of EUR 35 million (21% of the PA and 2.6% of the OP 
ERDF allocation) is implemented under measure 2.1.D. The specific objective for the FIs 
is  to  provide  small  and  medium-sized  enterprises  (SMEs)  with  external,  alternative 
sources of finance. Additionally, selected financial instruments are targeted to SMEs who 
have  suffered  from  natural  disasters,  i.e.  floods.  These  FIs  are  intended  to  assist  these 
SMEs to reduce their risk of losing market position.  

Since 2009, 14 FIs were established under the MROP for loans (7 funds), guarantees (3 
funds)  and loans  to  SMEs  affected  by  natural  disasters  (4  funds).  There  were  no  equity 
funds.  Fund  volumes  ranged  from  EUR  1.4  to  EUR  4.9  million,  with  one  regional 
guarantee fund of EUR 13.6 million being the only exception.  

All  of  the  allocated  capital  had  been  disbursed  by  the  end  of  2014  and  loan  funds’ 
resources  started  to  revolve  (at  different  speeds).  One  exception  is  the  MARR  fund  for 
those affected by natural disasters, which has only disbursed 25% of its resources.  

The  guarantee  funds  generally  show  a  much  lower  level  of  performance.  Disbursement 
from  the  OP  to  the  funds  was  slightly  under  50%  and  investment  in  final  recipients 
ranged between 37% and 71% (at end 2014). 

Goals and theory of change (ToC) of FIs 

The  specific  objectives  of  the  FIs  were  to  provide  SMEs  with  external  finance  and  to 
strengthen institutional capacity within the region. Furthermore, SMEs affected by floods 
were  supported  to  restore  their  market  position.  Providing  additional  financing  for  SME 
development  addresses  elements  of  the  OP  diagnosis  and  SWOT  analysis,  especially 
weak  SMEs,  low  level  of  SME  investment  and  a  financial  market  not  adjusted  to  SME 
needs.  Since  the  financial  gap  assessment  was  not  compulsory,  the  Managing  Authority 
(MA)  relied  on  knowledge  and  experience  from  fund  managers  prior  to  the  2007-2013 
period,  which  identified  entrepreneurs’  needs  for  financial  support.  Some  1,100 
enterprises  should  be  supported  with  loans  and  guarantees,  with  a  strong  focus  on 
micro-enterprises (740 projects targeted). 

The division of labour between the FIs is based on the territorial deployment of resources 
to fund managers in all the sub-regions of Małopolska, making those resources available 
to final recipients locally. All the FIs offer support at all stages of enterprise development, 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

targeting  all  sectors  and  enterprises  from  the  entire  region.  All SMEs  can  be  supported, 
but  most  funds  target  micro-enterprises  and  a  few  schemes  concentrated  on  particular 
sectors or territories, e.g. tourism, rural areas and small towns. 

The MA’s motivation to introduce ERDF co-financed FIs was to support SME activities that 
would  not  be  eligible  for  grants  due  to  State  aid  non-compliance.  Furthermore,  the 
revolving  character  of  the  funds,  remaining  within  the  regional  business  support 
institutions was another strong incentive. 

Fund  managers  do  not  offer  FI  support  alongside  non-repayable  support  yet  they 
combine  it  frequently  with  non-financial  support  like  advice  and  in  some  cases  with 
grants  from  other  OPs,  e.g.  Human  Capital.  In  general  the  fund  managers  increase  or 
invest their own capital, which often originates from revolved money (legacy funds). 

Management and implementation of FIs 

The  MA  chose  direct  implementation  for  FI  delivery,  and  delegated  this  to  the 
Intermediate  Body  (IB),  MCP.  All  fund  managers  were  recruited  from  the  region  in  a 
competitive, transparent procedure of calls for applications. All fund managers are public 
and have previous experience of managing EU-funded FIs. The FI set-up process was not 
regarded as costly or time-consuming. The resources were usually made available to final 
recipients within three months of fund manager selection. 

By the end of 2014, the entire FI-dedicated OP allocation had been committed to the FIs. 
The OP contributions were completely paid to all the funds. On average, the FIs invested 
84%  of  the  initial  OP  contributions  in  final  recipients.  All  of  the  loan  funds  were  100% 
invested  and  resources  started  revolving.  At  the  end  of  April  2015,  those  funds  had 
generated from 130% to 315% of their initial OP payments in investments.  

Loan funds for SMEs affected by disasters had disbursed around 80% by the end of 2014. 
Three out of four funds invested 100% of their initial OP payments in final recipients, but 
one  fund  only  invested  around  21%.  Some  fund  managers  started  revolving  resources 
and at the end of April 2015, from 107% to 120% of their initial OP payments had been 
invested. 

The  guarantee  funds  did  not  generally  perform  as  well  with  an  average  at  the  end  of 
2014 of slightly below 50% of the investment rate. None of them reached 100%.  

The FI portfolios are generally healthy. None  of the FIs have  recorded losses. The most 
serious  implementation  challenges  were  related  to  the  eligibility  of  expenditure  and  low 
market  demand  for  guarantees.  Management  costs  in  all  the  cases  remain  within  the 
limits.  

There  are  no  performance  incentives  for  the  fund  managers  beyond  the  management 
fee. They are mainly motivated by the increased capitalisation of the fund itself. 

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Monitoring and evaluation of FIs 

The  monitoring  and  reporting  system 
focused  on  performance  and 
implementation  ensuring  compliance  with  the  regulatory  and  control  framework,  so  not 
all data on achievements of OP strategic goals are available.  

is  mostly 

The MROP reporting system includes three result indicators relevant for FIs, the value of 
loans or guarantees granted, the number of enterprises supported and jobs created. The 
latter only has data since 2012 and thus very likely underestimates the real job creation. 

There are no indicators which relate to the sectors of the final recipients, to  investments 
induced  or  to  SME  turnover,  which  may  impede  assessment  of  the  competitiveness 
outcomes of FI support. 

An evaluation study conducted in 2012 analysed the system and the main features of the 
individual instruments. However, this did not look into the effects of the FIs in relation to 
the strategic goals of MROP.  

Outcomes of FI implementation 

The FI system displays a differentiated picture of financial sustainability. The loan funds 
are revolving to a high degree whereas this is not the case for guarantee funds. However 
the entire allocation for all the FIs should be disbursed at least once by the end of 2015.  

All  the  FIs  demonstrated  a  leverage  effect  averaging  1.25  and  attracted  at  least  EUR 
2.29  million  of  private  investment  by  the  end  of  2014.  However,  these  figures  do  not 
contain  significant  additional  amounts  of  private  funds  such  as  the  final  recipients’  own 
contribution  to  their  projects,  which  could  be  up  to  20%.  Only  a  few  fund  managers 
contributed their own resources and then in low volumes.  

The  establishment  of  14  FIs  directly  from  the  MROP,  some  of  them  new,  some 
recapitalised, was the main output and far above the target of four. The specific goal of 
developing  the  institutional  potential  of  Malopolska-based  entities  was  therefore 
achieved.  

Most  of  the  support  (77%)  was  directed  at  micro-enterprises  and  was  predominantly 
investment capital (91% of the loans and guarantees). The rest included working capital 
for enterprise development. Despite the lack of data, support was estimated as being for:  

  manufacturing, 50%; followed by  

 

trade and basic services, 30%; and  

  other services, 20%.  

Knowledge  about  the  type  of  enterprises  and/or  investment  projects  supported  is  very 
limited  so  there  is  no  assessment  of  achievement  of  the  goal  –  increasing 
competitiveness and innovativeness. 

The  FIs  provided  external  finance  for  287  SMEs  up  to  the  end  of  2014,  and  1,915  are 
expected by the end of 2015, which is 75% above the OP target. FI support led to loans 
and guarantees for SMEs of at least  EUR 7.1 million. This is above the OP target of EUR 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

5.5 million. By the end of 2015, this value is expected to increase up to 8 times to EUR 
48.9 million.  

By the end of 2014, 162 jobs had been created, which is around 20% of the target for all 
PA2 and matches the ERDF allocation to FIs of 21%. However, monitoring of jobs created 
by  FI  final  recipients  started  only  in  2012;  therefore  the  reported  value  may 
underestimate  the  actual  achievement.  Measuring  cost-effectiveness  of  different  FIs  is 
greatly  distorted  by  shortcomings  in  reporting  (underestimating  jobs  created,  no 
turnover or Gross Value Added figures). The cost of  one additional job varies within the 
loan  instruments  between  EUR  45,000  and  300,000,  with  an  average  of  over  EUR 
100,000,  which  is  twice  as  much  as  the  cost  of  an  additional  job  in  non-repayable 
support for SME investment (EUR 41,000). 

The size of each individual fund does not seem to determine its effectiveness or its cost-
efficiency. Although the 11 loan instruments (total fund size EUR 18.75 million) appear to 
be  very  small  on  average  (below  EUR  2  million  each)  they  do  not  show  a  positive 
correlation between fund size and management cost or fund size and job creation. 

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6.10.16 

Portugal 

FIs  have  been  used  in  Portugal  for  delivering  ERDF  investments  since  the  1994-1999 
programming  period.  Responsibility  for  OP  programming  lies  principally  at  the  national 
level.  In  the  2007-2013  programming  period,  of  the  nine  Portuguese  ERDF  OPs,  five 
contain  FIs.  The  Government  decided  not  to  offer  FIs  within  OPs  for  the  three 
in  Mainland  Portugal  (Norte,  Centro  and  Alentejo).  The 
Convergence  Regions 
beneficiaries 
the  Thematic  Factors  of 
Competitiveness OP. None of the  ESF  OPs  contain FIs. Venture  capital and equity is the 
most important form of support in the five OPs, followed by guarantees. Venture capital 
and equity funds offer non-repayable support in the form of advice, management support 
and networking. No support is offered for guarantee funds. 

these  Regions  are  covered  by 

from 

Table 37: OP key figures on FIs for enterprise support in Portugal in the 2007-
2013 period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 184 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Thematic Factors of Competitiveness'  28599.0367.110.3176.3271.4280.4103.36,988OP 'Algarve'   445.814.015.110.133.112.838.6146OP 'Azores'   727.323.58.1-16.22.414.72OP 'Lisbon'   940.416.811.412.620.025.7128.51,012OP 'Madeira'   38.67.38.80.03.65.0140.61,420 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.17 

Case Study OP COMPETE  

In 2007, a favourable socioeconomic context prevailed in Portugal. However, this rapidly 
changed  with  the  2008  economic  crisis  that  had  a  deep  impact  on  the  Portuguese 
economy.  Companies  found  themselves  facing  liquidity  issues  at  the  same  time  as 
funding  constraints  were  being  imposed  by  the  banking  system.  Credit  was  scarce  and 
expensive. From 2009 to 2012, the amount of credit available to companies fell by nearly 
20% and interest rates more than doubled. 

It  was  under  this  changing  background  that  the  COMPETE  -  Competitiveness  Factors 
Operational  Programme  –  of  the  National  Strategic  Reference  Framework  (QREN)  was 
developed  and  implemented.  There  was  an  evident  need  for  new  financial  schemes 
related  to  risk  capital  and  Business  Angels  which  would  promote  investment  in 
technology  and  start-up  companies  as  well  as  facilitate  access  to  credit  for  small-  and 
medium-sized  enterprises  (SMEs),  including  those  managed  by  women  and  young 
people.  

This  motivated  public  intervention  through  COMPETE,  which  led  a  centralised  financing 
process to improve efficiency in SME financing. 

COMPETE is an OP with an ERDF allocation of EUR 3.2 billion and a total volume of EUR 
5.6  billion.  Its  broad  array  of  objectives  aims  to  improve  the  overall  competitiveness  of 
the Portuguese economy in all of Portugal’s convergence regions. 

The FIs under scrutiny 

One  of  the  five  support  schemes  under  this  OP,  SAFPRI,  deals  with  FIs  and  has 
approximately  EUR  367  million  in  ERDF  allocation.  In  total,  EUR  600  million  has  been 
committed  to  the  FI.  The  main  objective  of  PA  3  is  to  ensure  that  the  financial 
environment provides conditions for companies to be established, to grow, to consolidate 
and internationalise. 

There are the six specific VC schemes, two finance lines for Business Angels (FLBA) and 
two  funds  offering  loans  and  guarantees.  The  VC  instruments  were  assigned  to  23 
different funds. 

These  27  FIs  within  COMPETE  include  instruments  for  SME  equity  and  SME  debt 
reinforcement.  For  own-equity  reinforcement,  the  VC  funds  were  divided  into  six 
categories: 

 

Innovation and Internationalisation (10 funds); 

  Corporate (2 funds); 

  Early Stage (4 funds); 

  Pre-Seed (3 funds); 

  Revive (3 funds); and 

  Audiovisual (1 fund). 

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Finance  Lines  for  Business  Angels  (FLBA)  was  managed  through  51  Business  Angels 
vehicle  entities.  For  debt,  there  were  two  credit  lines:  Finance  Line  for  Investe  QREN; 
and PME Investe I and II.  

With the exception of Investe QREN, all other 26 FIs implemented within COMPETE were 
under the HF FINOVA.  

Only half of the ERDF money allocated to FI was disbursed by the end of 2014. However, 
approximately two thirds of the specific fund money was invested in final recipients. The 
credit  line  funds  and  FLBA  performed  well,  with  nearly  all  the  money  allocated  and 
around three quarters invested in final recipients. 

Goals and theory of change (ToC) 

The  rationale  for  introducing  FIs  was  the  low  level  of  entrepreneurship  in  Portugal  and 
the  ‘credit  crunch’  that  hit  the  country  and  in  particular  SMEs  in  the  aftermath  of  the 
financial crises of 2008. The FIs developed within COMPETE were designed to overcome 
the limitations of SME financing in Portugal. 

The implicit ToC assumes that  

(a)  a  centralised  strategy  with  strong  coordination  of  support  efforts  through  one 

HF will deliver a quantitatively satisfactory output;  

(b)  widening  the  spread  of  specific  FIs  will  help  cover  the  needs  for  sectoral  and 
development  stage  support,  including  an  increase  in  the  start-up  rate  for 
technology based SMEs; and  

(c) 

the SMEs will show increasing interest in the new FIs, leading to a sustainably 
improved supply in the financial market.  

It was expected that 5,000 SMEs would be supported by 2015, 33% in an initial stage of 
maturity; and 30% in growth potential sectors.  

The  FIs  had  clearly  different  profiles,  minimising  the  risk  of  overlapping  activities. 
Portugal  was  one  of  the  Member  States  fostering  synergies  between  FIs  and  other 
instruments  such  as  grants.  The  loan  and  guarantee  scheme  INVESTE  systematically 
combined  credit  lines  with  non-repayable  grants.  In  addition,  subsidised  loans  are 
frequently combined with guarantees. 

Management and implementation of FIs 

COMPETE  is  the  Managing  Authority  (MA)  under  which  SAFPRI  and  FINOVA  HF  are 
implemented.  The  FINOVA  HF  is  managed  by  PME  Investimentos  that  manages  the  six 
VC fund categories, FLBA and the PME Investe I and II credit lines.  

The  23  VCF  are  managed  by  thirteen  different  fund  managers,  selected  by  public 
procurement  procedure.  Most  managers  operate  only  one  of  the  funds;  some  manage 
multiple  FIs,  such  as  Portugal  Ventures  S.A.,  a  publicly  owned  VC  company  managing 

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seven funds. PME  Investe I and II management was directly assigned to IAPMEI (Public 
Agency for Competitiveness and Innovation) and Turismo de Portugal.  

There  is  a  strong  mix  of  managers,  reflecting  private/public  ownership  and  different 
professional backgrounds. 

The  selection  process  involved  11  tender  notices  from  2008  to  2013.  The  first  VCF  was 
set-up at the end of 2010 and the latest in August 2013 (VCF Revive), three years after 
the launch of the respective tender. 

There does not seem to be a difference between the management of VCFs run by private 
or public managers. FI activities are governed in both cases by the same specifications of 
the  scheme.  This  also  applies  to  success  factors  and  performance  linked  incentives. 
Incentives  are  linked  to  performance,  using  management  fee  reduction  for  low 
performance and later on (for Revive) index remuneration to the number of applications 
to  the  VCF.  According  to  COMPETE,  management  fees  were  generally  around  1.8%, 
below the target maximum of 2.5% (for 2015).  

Of  the  123  projects  in  which  the  VCFs  invested,  approximately  10  have  already  been 
closed. No precise picture of closed deals, prognosis of future exits or future performance 
of individual VCFs can be provided at this time. The end date for all VCFs is set for 2020. 

One of the main implementation challenges, however, was the temporary discontinuation 
of  funding  from  the  EC  due  to  a  lack  of  guaranteed  adequate  management  checks  on 
expenditure. This also caused some delays. 

Monitoring and evaluation of FIs 

Performance of the FI is monitored with four indicators, measuring (a) the quality of VC, 
(b) the extent of financing oriented toward sectors with growth potential, (c) guarantees 
to  SMEs  and  (d)  management  cost.  Achievements  have  exceeded  targets  for  all  the 
indicators except for ‘guarantees to SMEs’.  

Reporting  to  fund  managers  and  COMPETE  appears  to  be  well  designed.  It  varies 
according  to  the  type  of  instrument  and  is  monthly,  quarterly  or  semi-annual.  For 
example,  most  VCFs  provided  quarterly  reports,  while  the  VCFs  under  Revive,  due  to 
their complexity, provided monthly reports.  

One evaluation was carried out in 2013 for the COMPETE OP in which the FIs received a 
positive rating, although some had not fully started operating at the time. 

Outcomes of FI implementation 

Attracting  private  money  to  supplement  ERDF  funding  was  a  key  element  for  fund 
managers.  The  total  private  contribution  in  the  various  FIs  was  approximately  EUR  232 
million, more than half of the committed resources from the OP. In comparison to other 
MS’  OPs  leverage  has  been  modest,  in  particular  for  VC.  This  may  be  due  to  a  lack  of 
information  of  co-investment  at  the  level  of  the  final  recipient.  The  data  only  refers  to 
money coming from the EU and national sources covered by the OP. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

No revolving effect has been seen or reported up to now. Sustainability of the funds can 
only  be  assessed  after  all  the  VCFs  and  Business  Angels  have  exited  from  their 
investments. 

Three of the four PA 3 performance indicators were achieved. This includes the ‘Quality of 
VC’ indicator, where EUR 163 million was invested in nearly 250 SMEs, 65% being in an 
initial stage.  

About  half  of  the  funding  was  for  SMEs  in  growth  potential  sectors,  achieving  the 
indicator target. Furthermore, the guarantees to SMEs indicator shows over 3,300 SMEs 
supported through credit lines. 

SMEs  that  received  support  were  in  different  phases  of  their  development  cycle,  and 
operating across 13 different sectors such as business services, paper and publications or 
education, health and culture. 

The  second  policy  objective  related  to  facilitating  access  to  credit  for  SMEs,  particularly 
those  managed  by  women  and  young  people.  A  significant  number  of  SMEs  were 
supported. However, there was a lack of investment in these by some VC funds. There is 
also incomplete information on support to female and young entrepreneurs.  

Consistency  of  implementation  was  mainly  ensured  by  conditions  in  the  funding 
agreements  for  each  FI  and  respective  fund  manager.  These  conditions  included 
comprehensive,  time-related  reporting  obligations.  However,  some  of  the  operational 
objectives  were  not  covered  by  the  monitoring  system,  such  as  support  for  female  or 
young entrepreneurs.  

The  number  of  VCFs  (as  compared  to  other  Member  States)  seems  high,  yet  appears 
adequate  considering  that  diversity  of  FIs  was  an  explicit  objective.  The  reason  for 
splitting  these  instruments  into  23  funds,  with  some  VCFs  being  as  small  as  EUR  1.5 
million,  raises  the  question  of  optimal  size.  Since  the  smaller  funds  did  not  exhibit  a 
higher  proportional  management  cost,  the  scale  may  not  be  a  cost  issue,  but  rather  a 
problem  of  reaching  the  right  recipients.  In  addition,  it  should  also  be  considered  that 
some managers operated several different FIs. 

A total of 621 jobs were created during implementation within PA 3. 

The FIs provided funds to SMEs in different stages and with different projects, some with 
high risk, which private equity entities may have been unwilling support. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.18 

Spain 

Spain  does  not  have  a  long  tradition  of  using  ERDF  FIs,  as  grants  have  been  the  main 
way to support SME’s under the OP. Since 2007, and directly related to the financial and 
banking  crisis,  lack  of  access  to  finance  for  micro  and  SMEs,  as  well  as  operating 
advantages  (frontloaded  certification  of  investments  and  public  deficit  recording) 
encouraged  some  authorities  to  plan  and  develop  a  limited  number  of  FIs.  In  spite  of 
this,  regional  authorities  and  central  government  have  used  FIs  in  guarantee  funds, 
venture capital and private equity funds, and loan funds. These are mostly managed by 
regional  development  agencies  and  funded  from  the  regular  government  budget. 
Therefore  the  use  of  ERDF  for  FIs  was  very  limited  in  the  2007-2013  period.  Most 
schemes use loans and guarantees. Two OPs use loans, guarantees and venture capital. 
Both  venture  capital  schemes  support  seed  and  expansion  stages  of  company 
development.  There  is  little  combination  with  grants.  Non-financial  support  is  also  not 
generally  provided.  Only  JEREMIE  Barcelona  offers  networking  support  for  its  targeted 
recipients.  Despite  this,  some  FI  support  is  provided  for  firms  which  are  taking  part  in 
other  supporting  schemes,  like  technological  parks.  In  such  cases,  the  FI  is  linked  to  a 
general strategy of SME development in the region. 

Table 38: OP key figures on FIs for enterprise support in Spain in the 2007-2013 
period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 
Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 189 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Extremadura'   218.915.112.30.024.613.856.10OP 'Andalusia'   3379.8304.061.40.0378.8130.334.463OP 'Catalonia'   150.025.011.60.050.021.242.33OP 'Canary Islands'   240.034.059.70.040.01.23.02OP 'Research, Development and Innovation for and by Enterprises - Technology Fund'   3527.0411.028.30.0527.0123.923.5860 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.19 

Case Study OP Technological Fund  

The Technological Fund Operational Programme (OP) provides extra funding for research, 
technological  development  and  innovation  (RTD&I).  The  current  budget  has  been 
decreased to less than EUR 3 billion. 

The  Specific  Objectives  (SOs)  of  the  Technological  Fund  OP  were  matched  with  the 
National Science and Technology Strategy  of  2007 through SO.1 ‘to  promote innovative 
business  behaviour’  and  SO.3  ‘to  support  R&D  in  companies’,  for  technological 
development. These  objectives were considered essential for both  ‘competitiveness’ and 
‘convergence’ regions, especially the latter, due to growing regional disparities.  

Although  it  was  not  compulsory,  the  Spanish  government  distributed  70%  of  funds  to 
Convergence regions, which account for only 27% of enterprises.  

Financial  Instruments  (FIs)  were  not  considered  at  the  beginning  in  the  OP  but  were 
added only subsequently. After reprogramming during the implementation phase, 18% of 
the  OP  allocation  (EUR  411  million)  should  be  delivered  through  the  FIs  managed  by 
Centre  for  the  Development  of  Industrial  Technology  (Centro  para  el  Desarrollo 
Tecnológico Industrial) (CDTI) and Instituto de Crédito Oficial (ICO): 

 

 

 

the small volume ICO Guarantee Fund 

the medium volume CDTI Loan Fund and 

the large volume ICO Loan Fund. 

All  of  them  are  under  Priority  Theme  7  (PT-7),  ‘Investment  in  firms  directly  linked  to 
research  and  innovation’.  The  total  allocation  under  PT-7  (national  funding  +  ERDF)  is 
EUR  527  million  of  which  100%  is  under  FI  management.  Both  ICO88  and  CDTI89 
previously  addressed  project  investment  needs  and  had  experience  with  ERDF  co-
financed operations. 

Neither the OP documents nor the Intermediate Body officials (Ministry of Finance, CDTI) 
indicated  a  clear  need  to  implement  FIs  at  the  beginning.  In  addition,  there  was  no 
intervention logic specifically for FIs.  

However,  there  was  a  market  gap  as  a  result  of  the  financial  crisis.  The  contraction  of 
bank  credit  to  Spanish  companies  was  at  its  worst  in  2012  and  2013.  Furthermore, 
‘public policy worries’ increased in relation to R&D&I investment and small and medium-
sized  enterprise  (SME)  development.  Strengthening  the  policies  of  corporate  R&D 
investment was considered essential during the crisis. From 2007 to 2013, the number of 
technologically  innovative  companies  decreased  by  more  than  50%.  The  OP  logically 
changed and included FIs. 

88 Instituto de Crédito Oficial is a state-owned bank, attached to the Ministry of Economic Affairs and 

Competitiveness. 

89 CDTI is a public business entity, answering to the Ministry of Economy and Competitiveness, which 

encourages technological development and innovation in Spanish companies. It is the entity that channels 
the funding and support applications for national and international R&D&I projects of Spanish companies. 

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There is a clear distinction between the FIs, with each having different target groups and 
projects.  Product  differentiation  between  fund  managers  helps,  with  each  FI  having 
different objectives, roles and responsibilities.  

  The  ICO  Guarantee  Fund  focuses  on  long-term  R&TD  activities,  mainly  through 

collaborative projects. 

  The CDTI Loan Fund focuses on short-term acquisition and implementation of new 

technologies and technological innovation by companies. 

  The  ICO  Loan  Fund  focuses  on  supporting  innovative  enterprises  with  difficulties 

accessing credit to develop projects. 

However,  geographical  segmentation  of  funding  was  identified  as  a  problem  from  the 
start,  since  there  was  a  high  concentration  of  resources  in  Convergence  regions  where 
there are fewer innovative companies and many similar funds (mainly non-repayable aid) 
are  funnelled  through  regional  OPs.  Another  concern  was  uncertainty  over  European 
Regional Development Fund (ERDF) regulation. This was not adequately reviewed at  the 
beginning,  and  led  to  uncertainty  over  the  definition  and  over  how  the  funding 
agreement was to be implemented.  

In  addition,  it  is  worth  remembering  that  most  traditional  banks  do  not  usually  finance 
investment  projects  related  to  R&D.  These  projects  can  have  greater  risk,  often  with  a 
very  long  payback  period.  It  is  important  to  understand  that  public  intermediaries  were 
selected  as  fund  managers  because  no  financial  institution  was  interested  in  offering 
these kinds of guarantees. 

A  strong  motivation  to  include  FIs  was  also  related  to  absorption  problems  at  the 
beginning  of  the  OP  implementation.  Almost  all  Annual  Implementation  Reports  (AIRs) 
reported concerns about application of the ‘N+2 de-commitment rule’90 during 2012 and 
2013. Thanks to FIs, the de-commitment rule was not implemented in 2012. 

By  the  end  of  2014,  the  small-volume  ICO  Guarantee  Fund  had  a  disbursement  rate  of 
more  than  312%,  almost  reaching  the  multiplier  ratio  of  3.5  defined  in  the  funding 
agreement.  The  medium-volume  CDTI  Loan  Fund  disbursed  almost  35%  of  allocated 
funds. The large-volume ICO Loan Fund was established at the end of 2013 but only 1%, 
or EUR 4.29 million, had been disbursed by the end of 2014.  

The Technological Fund OP has always struggled with absorption rates due to: 

  a high concentration of funding in convergence regions; 

  difficulties in finding final recipients for R&D corporate investment in Convergence 

regions; 

 

competition  between  national  and  regional  OPs  to  find  suitable  beneficiaries  for 
R&D projects; 

  economic slowdown; 

90 “The European Commission shall automatically decommit any part of a commitment which has not been 

settled by the payment on account or for which it has not received an acceptable payment application by 
the end of the second year following the year of commitment 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

  budgetary problems in Spanish public administrations. 

FI  implementation  required  many  meetings  between  each  fund  managers  and  the 
Managing Authority (MA) to understand the requirements and procedures. In addition, it 
took around six months to adapt software to a monitoring and management system that 
would  meet  FI  needs,  which  were  very  different  from  other  ERDF  or  national 
requirements. Clear economies of scale applied to FI set-up and management since each 
fund  manager  managed  individual  FIs  based  on  existing  capabilities.  Furthermore,  this 
case study found that public bodies tend to reduce management costs when possible. 

The lack of a specific FI monitoring system within the OP is considered a big gap. There is 
no defined framework and no targets, so outcomes have been difficult to assess. The MA 
does not follow guidance from the Committee of the Coordination of Funds (COCOF), so 
information in AIRs is not as useful as it could be. However, all the FIs reported that 756 
projects were implemented and more than EUR 310 million of public investment (ERDF + 
public  funds)  has  been  committed  with  EUR  272  million  already  disbursed.  Additionally, 
each FI developed with different degrees of success.  

  The  ICO  Guarantee  Fund  started  supporting  operations  in  2010  and  since  then 
692  projects  have  benefited.  Final  recipients  were  mainly  manufacturing 
companies, professional services (primarily engineering) and ICT companies. This 
is in line with R&D investment at European Union level. 

  The  CDTI  Loan  Fund  has  approved  157  projects,  of  which  53  have  already 
received support. In this case, the main recipients have been manufacturers. 

  The ICO Loan Fund has only supported 11 companies. Paper companies and other 
manufacturing  industries,  wholesale  trade,  ICT,  professional  organisations, 
scientific and technical sectors benefited the most. 

Most of the companies were SMEs, although 20% were big companies. During the crisis, 
only strong institutions were able to carry out R&D investment. CDTI focuses on industry, 
which explains its beneficiaries. 

The OP’s strategic objectives that were linked to all FIs seem in line with real intervention 
logic.  However  action  cannot  be  linked  to  changes.  A  context  analysis  of  science  and 
technology  development  shows  that  almost  all  the  indicators  have  worsened  since  the 
beginning  of  the  period.  However,  there  are  several  fields  that  have  had  slower 
deterioration.  

There  are  indications  (but  no  evidence)  that  the  ICO  Guarantee  Fund  and  CDTI  Loan 
Fund will be able to achieve some of their specific and strategic objectives. These two FIs 
seem to have worked consistently in relation to their intervention logic. 

It is unlikely that the ICO Loan Fund will meet its objectives. 

The MA has stated that since the 2007-2013 period has not yet finished, the current FIs 
cannot  be  considered  successful  until  the  winding-up  is  completed.  Additionally,  exits 
from existing investments are very uncertain. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

An  important  motivation  for  setting  up  FIs  is  to  attract  private  resources.  However, 
estimates show that only minimal private money was attracted to FIs. There is a lack of 
reliable data in particular for the ICO Guarantee Fund. It seems the leverage effect is far 
below expectations. Internalisation of the CDTI Loan Fund based on an existing financial 
product  has  shown  a  clear  decline  in  private  participation.  The  ICO  Loan  Fund  was  only 
recently  established  and  has  not  grown  quickly.  Data  from  the  11  projects  that  have 
already been financed shows that co-investment reached 135%. 

The only evidence for revolving public money comes from the ICO Guarantee Fund. Here 
the ratio between funds available for investment and original fund volume is 3.1 (below 
the target of 3.5). The other two FIs only started recently, so repayments are limited. 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.20 

United Kingdom  

The  UK  has  co-financed  financial  instruments  in  ERDF  programmes  since  the  1994-99 
programme period and has a lengthy tradition of using FIs within domestic SME support 
policy. All of the UK’s ERDF OPs, except Gibraltar, offer support through FIs.   

The  programming  and  management  of  OPs  is  carried  out  by  separate  ERDF  managing 
authorities  for  each  of  the  UK’s  constituent  countries,  so  there  are  different  managing 
authorities  for  England,  Scotland,  Wales,  Northern  Ireland  and  Gibraltar.  Different 
approaches  are  taken  to  funding  priorities  and  implementation  arrangements  within 
each. There are  21 funds under  seven co-financed  Holding Funds for enterprise support 
in  the  UK,  with  varying  numbers  of  funds  underneath  each.  There  are  about  25  other 
specific funds offering support for enterprises that are not under Holding Funds. Most of 
the  FIs  in  the  UK’s  Devolved  Administrations  of  Scotland,  Wales  and  Northern  Ireland 
cover the entire country. There are also funds restricted to the territory of a regional OP 
within  the  Devolved  Administration  (e.g.  the  Highland  Business  Growth  Fund,  Highlands 
and Islands ERDF OP). The FIs co-financed under the English ERDF OPs are all regional.   

FIs  co-financed  by  UK  ERDF  OPs  offer  loans,  including  micro-finance,  and  equity. 
Guarantees are not used (but there is a longstanding domestic SME guarantee scheme). 
Equity schemes offer broad coverage with support for early/ seed/ start-up phases; and 
a  number  are  flexible  enough  to  cover  all  stages  and  offer  different  forms  of  support 
(loans, equity, quasi equity or mezzanine financing) based on requirements. State aid is 
generally  covered  under  the  General  Block  Exemption Regulation,  particularly  for  equity 
instruments, with several instances of notified aid. 

The  provision  of  non-financial  support  alongside  the  FI  is  more  common  for  equity  FIs. 
These  offer  conventional  advice,  management  support  and  seminars,  as  well  as  a 
number  of  innovative  measures,  such  as  matching  young  entrepreneurs  with  more 
experienced  mentors  (Venture  Capital  Fund,  North  West  England  ERDF  OP),  or  the 
provision of incubator premises (Mercia Venture Capital Fund, West Midlands ERDF OP). 

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Table 39: OP key figures on FIs for enterprise support in UK in the 2007-2013 
period (end 2014) (€m) 

Source: European Commission (2015) Summary Report on Financial Instruments, own calculation 

Legend: 

Number of FIs in the OP 

 
  OP contributions committed to the fund (HF or specific fund) [27] 
ERDF amounts committed to the fund (HF or specific fund) [28b] 
 
The  importance  OPs  give  to  FI  as  a  form  of  enterprise  support  presented  as  %  of  total  ERDF 
 
committed for enterprise (28b/total ERDF allocation per OP)  
The  attraction  of  private  resources  (though  limited  to  the  OP  level)  presented  through  the  national 
private co-financing committed to the fund [30] 
The progress made from commitments in the OP to disbursements to FI presented as OP contributions 
paid to the fund (HF or specific fund) [7]   
The  progress  to  disburse  funds  to  the  end-user  (=  final  recipient)  presented  as  OP  contributions 
invested in final recipients [17]  

 

 

 

  % of OP contributions paid to the fund invested in final recipients (17/7) 
 

Number  of  transactions  at  end-user  level  presented  as  Total  #  of  financial  products  offered  to  final 
recipients [12] 

page 195 

OP nameNumber of FIsOP contributions committed (HF or specific fund)OP contributions committed: ERDF amountsFIs as % of total ERDF committed for enterprise supportOP contributions committed: National private co-financingOP contributions paid to FI (HF or specific fund)OP contributions  invested in final recipients% of OP contri-butions  paid to the fund invested in final recipientsTotal # of financial products offered to final recipientsOP 'Highlands and Islands of Scotland'  312.75.17.50.010.79.589.035OP 'West Wales and the Valleys'2104.952.513.952.5104.995.490.9332OP 'Cornwall and the Isles of Scilly'  25.13.81.60.05.17.5145.9121OP 'Lowlands and Uplands of Scotland'  5299.789.535.882.5218.6116.953.51,035OP 'South-East of England'  14.42.215.2-4.41.023.724OP 'Northern-Ireland'  116.08.04.68.016.016.0100.036OP 'East of England'  224.824.828.60.024.816.265.330OP 'North East of England'  9167.964.630.771.3167.9144.786.2771OP 'London'  222.911.412.47.921.416.175.530OP 'West Midlands'  679.828.712.641.567.656.884.0241OP 'North West England'13206.9103.421.599.2206.9148.071.5591OP 'Yorkshire and The Humber'  7203.484.426.795.0156.6151.496.71,750OP 'East Midlands'  15.52.20.90.04.82.449.824OP 'South West England'  38.54.34.50.08.510.1118.4336OP 'East Wales'  265.520.848.428.365.561.994.5242 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

6.10.21 

Case Study OP North East England 

The  North-East region has long been one  of the weakest  regions of the UK in economic 
terms.  In  large  measure  this  is  the  legacy  of  past  dominance  then  decline  of  heavy 
industry – especially shipbuilding, coal and steel. In addition, the physical make-up of the 
region  means  that  it  is  relatively  isolated  from  other  major  population  centres  (such  as 
the agglomerations surrounding Leeds in Yorkshire & Humberside and Manchester in the 
North-West, both of which are much larger in population and economic terms and which 
have significantly more developed local financial markets).  The population of the North-
East is just 2.5 million, most of which live in urban areas although the geography of the 
region  is  such  that  much  of  it  is  rural  and  some  of  it  remote.  At  the  start  of  the  2007-
2013 programme period regional GVA was around 80% of the UK average and the North-
East  had  the  highest  proportion  of  workless  households  in  the  UK  –  23%,  compared  to 
the  UK  average  of  17%.  The  North-East  has  a  longstanding  enterprise  deficit  –  the  OP 
noted  that  the  region  had  266  businesses  per  10,000  population,  compared  with  the 
English average of 394; this means that some 29,500 extra businesses would be needed 
to bring the North-East to this level.  

Against this background, the North-East OP was driven by two priorities: enhancing and 
exploiting  innovation  (with  a  provisional  allocation  of  EUR  402  million  –  including  both 
ERDF and national resources); and business growth and enterprise (provisional allocation 
EUR 327 million). Importantly, the volume of ERDF funding was small compared to those 
under  the  domestic  Regional  Economic  Strategy  (RES)  and  this  was  an  important 
consideration  in  the  use  of  financial instruments  to  help  deliver  the  programme  –  there 
was a desire to make the most of limited funds and to create a legacy for re-investment 
in the region.  

The  OP  SWOT  identified  the  business  financial  services  market  as  a  weakness  in  the 
region and improving access to finance was seen as making an important contribution to 
the headline targets in the Regional Economic Strategy, which included creating 18,500-
22,000 new businesses. The  OP was aligned with domestic strategy but sought ways to 
add value and provide a ‘transformative effect’.  

Financial  instruments  were  an  important  part  of  this  strategy  in  the  2007-2013 
programme  –  they  account  for  over  20%  of  ERDF  allocations  in  the  OP.  The  overall 
purpose  was  to  stimulate  the  establishment  and  expansion  of  businesses  with  growth 
potential,  to  stimulate  the  demand  for  business  finance  and  to  provide  related  business 
support to improve the survival of supported businesses. 

In practical terms, this was implemented through a EUR 136 million (£125 million) ‘fund 
of funds’, Finance for Business North East (FBNE), comprising a suite of seven individual 
‘product  funds’.  FBNE  was  structured  to  support  all  development  phases  of  SMEs,  i.e. 
proof of concept (PoC), start-up and spin-out activity; early stage growth; and expansion 
and  growth.  Although  relevant  to  SMEs  in  most  sectors,  there  was  specific  targeting  of 
resources  to  meet  the  OP’s  strong  focus  on  innovative  and  technology-oriented  SMEs; 
and  to  a lesser  extent,  start  ups  and  existing SMEs  in  disadvantaged  areas.  A  one-year 
extension  to  the  end  of  2015  brought  additional  resources,  bringing  the  total  FBNE 
volume  to  EUR  154.47  million  (£142.5  million).  In  addition  to  this  suite  of  funds  under 
FBNE,  the  Creative  Content  Fund  (CCF)  was  established  as  a  pilot  fund  of  EUR  5.22 

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Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

million (£4.8 million), to test a model for private investment in the commercial creative 
sector on a pari-passu basis. 

By the end of 2014, 92% of the OP allocation had been committed to FBNE and invested 
in firms. The CCF had invested all its available funds by end of 2012. 

In  looking  at  recent  experience  with  FIs  in  the  North-East,  it  is  important  to  note  that 
North East England had prior experience, through both EU and domestic funding sources, 
in implementing  a  series  of  individual  funds  from  proof  of  ion  counts  each  concept  (the 
first  non-grant  based  PoC  fund  in  the  UK)  to  co-investment  and  microloans.  This 
experience  was  actively  used  in  the  design  of  instruments  for  2007-2013.  With  the 
introduction  of  a  holding  fund  model,  FBNE  was  intended  to  achieve  better  integration 
and  a  more  strategic  approach,  as  well  as  ensure  the  EIB  financial  contribution  to  the 
fund (the EIB loan was for EUR 68 million (£62.5 million)). North East Finance (NEF) was 
created as the Holding Fund Manager, drawing experienced individuals from previous FIs 
in the region. The seven ‘product funds’ were designed to provide a continuum of finance 
for SMEs and to attract more private investors to the region, with some overlap in fund 
objectives to generate competition among the Fund Managers (FMs) and to provide SMEs 
with an element of choice.  

The MA of the OP directly appointed NEF as the HF manager of FBNE, and Northern Film 
and Media (NFM HoldCo) as the HF manager for the Creative Content Fund.  

Five fund managers were selected to manage the seven FBNE product funds and the CCF 
by public procurement procedures. All fund managers are private companies experienced 
in financial management. Two of the selected fund managers were new to the region. 

Management  fees  for  running  the  funds  range  from  1.85%  to  4.95%  per  annum, 
resulting  in  a  rather  high  proportion  of  OP  contributions  for  management  costs  of  the 
total  OP  contribution.  Fund  managers  and  the  HF  Manager  claimed  that  the 
administrative burden associated with FBNE is far in excess of traditional grant schemes 
and also more than not co-financed instruments. 

A  number  of  areas  of  good  practice  in  management  and  implementation  can  be 
identified.  In  particular,  FMs  are  given  clear  parameters  for  the  operation  of  the  funds; 
guidelines  within  Fund  Management  Agreements  provide  a  set  of  mandatory  (input  and 
output)  targets  as  well  as  a  set  of  target  economic  development  indicators.  The  Fund 
Managers  are  given  flexibility  within  the  product  funds  to  select  the  appropriate  mix  of 
loan,  quasi-equity  and  equity  on  a  case-by-case  basis.  The  Holding  Fund  Manager 
produces comprehensive quarterly and annual reports, providing a transparent overview 
of performance to the Board and stakeholders (including the MA). 

During  the  programme  period,  external  events  changed  the  economic  and  operational 
context for the Funds. First, the financial crisis and economic recession had implications 
both for the supply of finance (e.g. banks reduced lending considerably, private investors 
were more cautious about co-investing) and the demand for finance from firms (attention 
focused on survival rather than growth).  

Second,  the  change  of  UK  Government  in  2010  led  to  the  abolition  of  the  Regional 

page 197 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Development Agencies in England (the RDAs had delegated MA powers for management 
and implementation of the regional ERDF programmes in England for the first part of the 
2007-2013  period)  and  the  closure  of  key  business  support  agencies  such  as  Business 
Link.  During  the  latter  part  of  the  programme  period,  a  new  economic  development 
architecture  was  gradually  put  in  place,  with  the  introduction  of  two  Local  Enterprise 
Partnerships in North East England, bringing new strategic drivers to the implementation 
of  ERDF  (notably  a  focus  on  the  geographical  distribution  of  funds),  as  well  as  the 
introduction of new domestic instruments at the national and regional levels. 

A  series  of  market  reviews,  as  well  as  a  comprehensive  JEREMIE  review  in  2013,  re-
assessed  the  positioning  and  fit  of  FBNE  within  the  context  of  the  market  and  other 
interventions.  The  2013  review  found  that  the  Fund  was  performing  well  and  had  been 
able  to  adapt  to  the  changes  that  had  taken  place;  thus  no  major  revisions  to  the 
operation of FIs were recommended.  

The achievements of the FBNE model are reflected in: 

  a  governance  and  management  system  that  is  perceived  to  function  well,  and 

high levels of expertise; 

 

 

 

continued high levels of applications to the FBNE funds (with an overall conversion 
rate of applications to investments of 6:1); 

the number of SMEs assisted and average investment volume, which are both on 
target; 

the financial health of the portfolio (defaults, returns etc), which is broadly in line 
with the planned profile; 

  and  economic 

indicators  (c.3,800 

jobs  created/safeguarded,  £138  million 

leverage) which are also broadly on target.  

In addition, once the EIB loan has been fully repaid (scheduled for 31 December 2016), 
all further returns will form the basis of a Legacy Fund - after all loans, fees and costs are 
paid, the net legacy pot is expected to be in the region of EUR 110 million (£100 million), 
70% of the overall OP investment and close to 100% of ERDF plus public match. 

The main challenges for FBNE have been: 

  how  to  maintain  EIB  loan  repayment  targets  for  those  funds  which  have  mainly 
invested  in  the  form  of  equity  –  targets  have  been  maintained,  but  there  is 
evidence  that  the  timing  of  some  exits  has  been  sub-optimal  and  driven  by  the 
requirement  to  supply  funds  to  meet  EIB  repayments,  rather  than  investment 
considerations; 

  how  to  overcome  the  challenge  of  a  new  spatial  focus  as  the  region  was 
effectively  split  into  two  LEP  areas,  highlighting  geographical  disparities  in  the 
distribution of funds; 

  how to adjust to the reduction in private investment availability; 

  how  to  reposition  funds  in  the  light  of  new  national  initiatives  that  affected  the 

competitiveness of FIs under the regional OP. 

In  practice,  the  assessment  of  FIs  in  this  case  study  suggests  that  there  has  been 

page 198 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

sufficient  flexibility  and  experience  to  respond  to  these  challenges.  The  holding  fund 
structure  facilitated  the  ability  to  ‘right  size’  funds  based  on  performance  and  market 
conditions  and  adjustments  to  targets  or  the  involvement  of  private  investors  enabled 
the  FIs  to  respond  to  changing  market  conditions.  At  the  same  time,  however,  the 
relatively  large  number  of  funds  within  the  holding  fund  has  incurred  additional 
management costs; this seems likely to lead to a rationalisation of FIs in 2014-20.  

Additional  data,  beyond  the  main  performance  indicators  required  by  the  OP,  has  been 
collected to monitor the performance of the funds. The performance is good in relation to 
creation  of  new  start-ups,  survival  rates,  outcomes  in  disadvantaged  areas  and  for 
women.  However,  a  wider  set  of  indicators  could  better  demonstrate  the  economic 
impacts of the funds.  

While no formal ‘Theory of Change’ was elaborated for FIs when the OP was written, the 
enhanced intervention logic which can be developed retrospectively appears sound. It is 
also important to recognise that FIs under the North East England OP were not developed 
in  a  vacuum,  but  drew  on  considerable  experience  and  lessons  learned  in  the  previous 
period and from domestic policy. Overall, FBNE has contributed well to the objectives of 
the  OP.  It  has  fulfilled  a  key  objective  of  the  OP  (as  well  as  the  domestic  Regional 
in  building  a 
Economic  Strategy  and  associated  Access  to  Finance  Strategy) 
comprehensive  regional  revolving 
investment 
community  and  capacity  of  the  North  East.  Its  focus  on  supporting  technology  and 
innovation tied in with Priority 1 objectives, while other funds covered the broad business 
stock, enabling start-ups and growth in non-priority sectors. 

fund,  and  developing  the  private 

The Creative Content Fund has been less successful, with poor returns and a high failure 
rate.  However,  the  CCF  was  launched  as  a  two-year  pilot  fund  precisely  to  trial  an 
innovative  approach  –  offering  a  co-investment  model  in  the  creative  sector.  Indeed, 
Fund Managers argue that, given more time, the CCF would have improved performance. 
Nevertheless, the pilot was not renewed and there are no plans for further co-funded FIs 
for  this  sector  in  2014-2020.  Indeed,  some  commercial  creative  projects  have  been 
funded under the FBNE.  

Roughly EUR 150 million have been secured at deal level from public and private sources, 
leading  to  an  overall  leverage  ratio  of  4.95  which  is  relatively  evenly  distributed  across 
the  different  funds.  Even  the  Microloan  Fund  had  a  leverage  factor  of  3.1  (according  to 
EC definition). The major part of these financial means levered in is private. 

Output  performance  is  measured  in  terms  of  SMEs  receiving  financial  assistance  and 
average investment volume per SME. The first indicator is broadly met by most product 
funds  except  for  the  microloan  fund  (55%  of  the  target  achieved  to  end  2014).  The 
average  investment  volume  amounts  to  EUR  136,000  and  is  somewhat  below  the  set 
profile, in particular concerning the Technology Fund and the Accelerator Fund. 

With 1,953 new jobs created and 2,803 jobs safeguarded, the employment effect of the 
FIs is significant in the region – and to three quarters located in disadvantages areas. 

Based  on  the  volume  of  applications,  the  conversion  of  applications  to  approvals,  the 
pace  of  approvals  and  the  anticipated  timely  exhaustion  of  funds  at  the  end  of  2015,  it 
can  be  concluded  that  the  scale  of  the  FBNE  was  appropriate.  Arguments  can  be  made 

page 199 

 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

for  a  rationalisation  of  product  funds,  e.g.  simplification  of  offer,  avoiding  driving  down 
the  value  generated  by  investments  (by  limiting  overlap  between  funds),  generating 
more  competition  between  fund  managers  with  respect  to  fee  rates  at  the  procurement 
stage. 

Without ERDF, access to finance instruments could have been developed only at a greatly 
reduced  level.  There  would  have  been  a  loss  of  the  ability  to  provide  a  continuum  of 
finance across the funding lifecycle. Leverage of private money into the region could not 
have been achieved at the targeted level without ERDF. 

Plans are underway for an ERDF co-funded Fund of Funds in the 2014-2020 period in the 
North  East,  although  it  will  not  be  launched  directly  after  FBNE  1  completes  its 
implementation  period  at  the  end  of  2015.  It  is  hoped  to  continue  the  HF  model,  which 
has worked well in this period. To save administration costs, a smaller number of funds 
are foreseen, and it is likely that there will be no specific sectoral funds. 

6.11  Management costs and fees by FI in the case study OPs  

page 200 

 
 
 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

CZ 
CZ 
DE 
DE 
DE 
DE 
ES 
ES 
ES 

FR 

FR 

LT 
LT 
LT 

LT 

LT 

LT 
LT 
LT 
LT 
LT 
LT 
LT 
LT 
LT 
LT 
LT 
LT 

Credit Fund E 2007, Praha 
Guarantee Fund E 2007, Praha 
BayBG Bayerische Beteiligungsgesellschaft mbH, München 
Clusterfonds EFRE Bayern GmbH & Co. KG, Landshut 
LfA Förderbank Bayern, München 
S-Refit EFRE Fonds Bayern GmbH, Regensburg 
CDTI-INNOVA 
ICO-CDTI-GARANTÍAS 
ICO INNOVACIÓN-FONDO TECNOLÓGICO 
 FONDS DE PARTICIPATION JEREMIE LANGUEDOC-ROUSSILLON 
/ FRANCE 
 Prêt d'honneur - Capital-risque - Garantie en Languedoc-
Roussillon 
Guarantee fund, Lithuania, Vilnius 
INVEGA FUND, VILNIUS 
First Loss Portfolio Guarantee (AB Siauliu bankas, Lithuania) 
First Loss Portfolio Guarantee for Leasing (SIA Unicredit Leasing 
Lithuanian Branch Vilnius) 
First Loss Portfolio Guarantee (Nordea Bank Finland Plc, 
Lithuania) 
Funded Risk Sharing Product (AB SEB bankas) 
Funded Risk Sharing Product (AB Siauliu bankas) 
Funded Risk Sharing Product (AB Swedbank) 
Open Credit Fund (AB bank Citadele, Vilnius) 
Open Credit Fund (AB bank FINASTA, Vilnius) 
Open Credit Fund (AB DnB Bank, Vilnius) 
Open Credit Fund (AB Šiaulių bank, Šiauliai) 
Open Credit Fund (AS UniCredit Bank Lietuvos branch) 
Open Credit Fund (BAB bank SNORAS, Vilnius) 
Open Credit Fund (BAB Ūkio bank, Kaunas) 
Open Credit Fund (UAB Medicinos bank, Vilnius) 
Small loans to SMEs (AB bank Citadele, Vilnius) 

2007CZ161PO004 
2007CZ161PO004 
2007DE162PO001 
2007DE162PO001 
2007DE162PO001 
2007DE162PO001 
2007ES16UPO001 
2007ES16UPO001 
2007ES16UPO001 

2007FR162PO013 

2007FR162PO013 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 

2007LT161PO002 

2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 

0.00 
0.00 
1.22 
0.73 
0.11 
1.75 
0.00 
0.13 
0.00 

1.16 

2.14 
0.99 
0.12 
0.00 

0.00 

0.00 
0.57 
0.89 
0.71 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 

loans 
mixed 
vc 
vc 
loans 
vc 
Mixed 
guarantees 
loans 

HF 

Mixed 
guarantees 
HF 
guarantees 

guarantees 

guarantees 
loans 
loans 
loans 
loans 
loans 
loans 
loans 
loans 
loans 
Loans 
loans 
loans 

page 201 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

LT 
LT 
LT 
LT 
LT 
LT 
LT 
LT 
LT 
HU 
HU 
HU 
HU 

HU 

HU 

HU 
HU 
HU 

HU 

HU 

HU 
HU 

HU 

HU 

HU 

HU 

Small loans to SMEs (AB Šiaulių bank, Šiauliai) 
Small loans to SMEs (BAB Ūkio bank, Kaunas) 
Small loans to SMEs (UAB Medicinos bank, Vilnius) 
JER 004 JEREMIE HOLDING FUND, LITHUANIA 
Business Angels Co-investment Fund I KUB Vilnius, Lithuania 
LitCapital I KUB Vilnius, Lithuania 
Lithuanian SME Fund KUB, Vilnius, Lithuania 
Practica Seed Capital KUB, Vilnius Lithuania 
Practica Venture Capital KUB, Vilnius Lithuania 
VENTURE FINANCE HUNGARY PLC (MV ZRT.), BUDAPEST 
Abaúj Takarék Takarékszövetkezet, Forró 
AGRIA Bélapátfalva Takarékszövetkezet, Bélapátfalva 
Aktív Hitel, Nyírmeggyes 
Alapítvány a Vidék Kis- és Középvállalkozásainak Fejlesztésére 
Baranya Megyei Vállalkozói Központ, Pécs 
Alföld-Faktoring Pénzügyi Szolgáltató Zártkörűen Működö 
Részvénytársaság, Szeged 
Alliance Jura-Hongrie Kockázati Tőkealap kezelő Zrt. 
Alsónémedi és Vidéke Takarékszövetkezet, Alsónémedi 
Arteus Credit Zrt., Budapest 
AXON Pénzügyi és Lízing Zártkörűen Működő Részvénytársaság, 
Szolnok 

Bács-Kiskun Megyei Vállalkozásfejlesztési Alapítvány, Kecskemét 
Bak és Vidéke Takarékszövetkezet, Bak 
Balmazújváros és Vidéke Takarékszövetkezet, Balmazújváros 
Békés Megyéért Vállalkozásfejlesztési Közhasznú Közalapítvány, 
Békéscsaba 
BG Finance Zártkörűen Működö Részvénytársaság, Budapest 
Bohemian Financing Zártkörűen Működő Részvénytársaság, 
Budapest 
Bóly és Vidéke Takarékszövetkezet, Bóly 

2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007LT161PO002 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

0.00 
0.00 
0.00 
2.37 
3.89 
3.84 
3.50 
3.55 
2.85 
0.23 
0.00 
0.00 
0.00 

0.00 

0.00 
0.00 
0.00 
0.00 

0.00 

0.00 
0.00 
0.00 

0.00 
0.00 

0.00 
0.00 

loans 
Loans 
loans 
HF 
vc 
vc 
vc 
vc 
vc 
HF 
guarantees 
guarantees 
loans 

loans 

loans 
vc 
loans 
loans 

loans 

loans 
loans 
guarantees 

loans 
loans 

loans 
mixed 

page 202 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

HU 
HU 

HU 

HU 

HU 

HU 

HU 

HU 

HU 
HU 
HU 

HU 

HU 

HU 

HU 
HU 
HU 
HU 
HU 
HU 

HU 

HU 

HU 
HU 

Bonitás Kockázati Tőkealap, Budapest 
Budapest Bank Zrt., Budapest 

2007HU161PO001 
2007HU161PO001 

Buda Regionális Bank Zártkörűen Működő Részvénytársaság, Bi. 

2007HU161PO001 

Capital Hitelház Zártkörűen Működő Részvénytársaság, Budapest 
Carion Ingatlanfinanszírozási Centrum Zrt., Budapest 
Central-Fund Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
CIB Bank Zrt., Budapest 
City-Faktor Pénzügyi Szolgáltató Zártkörűen Működö 
Részvénytársaság, Budapest 
Commerzbank Zrt., Budapest 
Core Venture Zrt., Budapest 
CORRIGIA Pénzügyi Szolgáltató Zrt., Pécs 
CREDITIME Pénzügyi Szolgáltató Zártkörűen Működö 
Részvénytársaság, Budapest 
DBH Investment Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
DEBT-INVEST Pénzügyi Szolgáltató és Befektetési  Zártkörűen 
Működö Részvénytársaság, Budapest 
Dél-Dunántúli Takarék Szövetkezeti Hitelintézet, Kaposvár 
Dinamo Ventures Kockázati Tőkealap, Budapest 
DRB Dél-Dunántúli Regionális Bank Zrt., Siklós 
Dunapataj és Vidéke Takarékszövetkezet, Dunapataj 

Duna Takarék Bank Zártkörűen Működő Részvénytársaság, Győr 
Eger és Környéke Takarékszövetkezet, Eger 
Első Egerszegi Hitel Pénzügyi Szolgáltató Zártkörűen Működő 
Részvénytársaság, Zalaegerszeg 
Első Hitelkapu Pénzügyi Zártkörűen Múködő Részvénytársaság, 
Budapest 
Első Magyar KTK Zrt., Budapest 
Endrőd és Vidéke Takarékszövetkezet, Gyomaendrőd 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

0.00 
0.00 

0.00 

0.00 
0.00 

0.00 
0.00 

0.00 
0.00 
0.00 
0.00 

0.00 

0.00 

0.00 
0.00 
0.00 
0.00 
0.00 

0.00 
0.00 

0.00 

0.00 
0.00 
0.00 

vc 
mixed 

Loans 

Loans 
loans 

vc 
loans 

loans 
loans 
vc 
loans 

loans 

vc 

loans 
loans 
vc 
guarantees 
guarantees 

mixed 
mixed 

loans 

loans 
vc 
mixed 

page 203 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

HU 
HU 
HU 

HU 

HU 

HU 

HU 

HU 

HU 

HU 
HU 
HU 
HU 
HU 
HU 
HU 

HU 

HU 
HU 
HU 
HU 

HU 

HU 
HU 
HU 

ÉRB Észak-magyarországi Regionális Bank Zrt., Tokaj 
Erste Bank Hungary Nyrt., Budapest 
Észak Tolna Megyei Takarékszövetkezet, Iregszemcse 
Eurotrade Capital Pénzügyi Szolgáltató Zártkörűen Működő 
Részvénytársaság, Kisigmánd 
Felsőzsolca és Vidéke Takarékszövetkezet, Felsőzsolca 
FHB Kereskedelmi Bank Zártkörűen Működő Részvénytársaság, 
Budapest 
FINATECH Capital Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
FINEXT STARUP Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
Fix Hitel Pénzügyi Szolgáltató Zártkörűen Működő 
Részvénytársaság, Budapest 
Fókusz Takarékszövetkezet, Jászszentlászló 
Főnix Takarékszövetkezet, Debrecen 
Fontana Credit Takarékszövetkezet, Szeged 
Forrás Takarékszövetkezet, Veszprém 
Gádoros és Vidéke Takarékszövetkezet, Gádoros 
Garangold Investment Befektető Zrt., Budapest 
Garantiqa Hitelgarancia Zrt., Budapest 
GB & Partners Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
GRÁNIT Bank Zártkören Működő Részvénytársaság, Budapest 
Gran Private Equity Zrt., Budapest 
Green Credit Finance Zrt., Budapest 
Gyöngyös-Mátra Takarékszövetkezet, Gyöngyös 

Hajdú-Bihar Megyei Vállalkozásfejlesztési Alapítvány, Debrecen 
Hajdú Takarék Takarékszövetkezet, Debrecen 
Hatvan és Vidéke Takarékszövetkezet, Hatvan 
Hemisphere Kockázati Tőkealap, Budapest 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

0.00 
0.00 
0.00 

0.00 
0.00 

0.00 

0.00 

0.00 

0.00 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 

0.00 
0.00 
0.00 
0.00 
0.00 

0.00 
0.00 
0.00 
0.00 

Mixed 
loans 
loans 

loans 
loans 

loans 

VC 

vc 

loans 
mixed 
loans 
mixed 
guarantees 
loans 
vc 
guarantees 

VC 
mixed 
vc 
loans 
guarantees 

loans 
mixed 
mixed 
vc 

page 204 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

HU 

HU 

HU 

HU 

HU 

HU 

HU 
HU 

HU 

HU 
HU 

HU 

HU 
HU 
HU 

HU 

HU 
HU 
HU 
HU 

HU 

HU 

HU 

HU 

Heves Megyei Vállakozás -és Területfejlesztési Alapítvány, Eger 
Hévíz és Vidéke Takarékszövetkezet, Hévíz 
Hitelpont Pénzügyi Szolgáltató Zártkörűen Működö 
Részvénytársaság, Budapest 
Hungária Takarék, Bonyhád 

InHold Pénzügyi Zártkörűen Működö Részvénytársaság, Budapest 
Jász-Nagykun-Szolnok Megyei Vállalkozásfejlesztési Alapítvány, 
Szolnok 
Jász Takarékszövetkezet, Jászberény 
Kaerous Kockázati Tőkealap-kezelő Zrt. (Magvető), Budapest 

Kaerous Kockázati Tőkealap-kezelő Zrt. (Növekedési), Budapest 
KA-VOSZ Vállalkozásfejlesztési Zrt., Budapest 
KDB Bank (Magyarország) Zrt., Budapest 
Kereskedelmi és Hitelbank Zártkörűen Működő 
Részvénytársaság, Budapest 
Kéthely és Vidéke Takarékszövetkezet/Bank, Marcali 
Kinizsi Bank Zártkörűen Működő Részvénytársaság, Veszprém 
Kisalföldi Vállalkozásfejlesztési Alapítvány, Győr 
Kiskun Takarék (Kiskunfélegyházi Takarékszövetkezet), 
Kiskunfélegyháza 
Kis-Rába menti Takarékszövetkezet, Beled 
Komplex Faktor Követeléskezelő Zrt., Budapest 
Körmend és Vidéke Takarékszövetkezet, Körmend 
Környe-Bokod Takarékszövetkezet, Környe 

Kunszentmárton és Vidéke Takarékszövetkezet, Kunszentmárton 
LMGL-INVEST FACTORING Pénzügyi Zártkörűen Működő 
Részvénytársaság, Budapest 
Lövő és Vidéke Takarékszövetkezet, Lövő 
Magnetissimo Pénzügyi Zártkörűen Működő Részvénytársaság, 
Budapest 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

0.00 
0.00 

0.00 
0.00 

0.00 

0.00 
0.00 
0.00 

0.00 
0.00 
0.00 

0.00 
0.00 
0.00 
0.00 

0.00 
0.00 
0.00 
0.00 
0.00 

0.00 

0.00 
0.00 

0.00 

loans 
mixed 

loans 
mixed 

loans 

loans 
mixed 
vc 

vc 
loans 
loans 

mixed 
loans 
mixed 
loans 

loans 
mixed 
loans 
mixed 
loans 

guarantees 

loans 
mixed 

Loans 

page 205 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

HU 

HU 

HU 

HU 

HU 
HU 

HU 

HU 
HU 

HU 

HU 

HU 
HU 

HU 

HU 

HU 

HU 

HU 

HU 

HU 

HU 

MagNet Magyar Közösségi Bank Zártkörűen Működő 
Részvénytársaság, Budapest 
Magyar Fejlesztési Bank Zrt., Budapest 
Magyar Hitel Központ Pénzügyi Zártkörűen Működő 
Részvénytársaság, Budapest 
Magyar-Mikrohitelező Központ Pénzügyi Szolgáltató Zártkörűen 
Működö Részvénytársaság, Budapest 
Magyar Takarékszövetkezeti Bank Zrt., Budapest 
Magyar Vidék Hitelszövetkezet, Pécs 
Magyar Záloghitel Faktoráló és Pénzügyi Szolgáltató Zrt., 
Budapest 
Mecsek Takarék, Mecseknádasd 
Merkantil Váltó- és Vagyonbefektető Bank Zrt., Budapest 
Mikrofinanszírozó Pénzügyi Szolgáltató Zártkörűen Működö 
Részvénytársaság, Budapest 
MIKROHITEL Gazdaságfejlesztő Pénzügyi Zártkörűen Működő 
Részvénytársaság, Budapest 
MKB Bank Zrt., Budapest 
Mohácsi Takarék Bank Zrt., Mohács 
Morando Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
MVG Magyar Gazdaság- és Vállalkozásfejlesztő Zártkörűen 
Működő Részvénytársaság, Budapest 
Nagykáta és Vidéke Takarékszövetkezet, Nagykáta 
NHB Növekedési Hitel Bank Zártkörűen Működő 
Részvénytársaság, Budapest 
Nógrád Megyei Regionális Vállalkozásfejlesztési Alapítvány, 
Salgótarján 
OTP Bank Nyilvánosan Működő Részvénytársaság, Budapest 
Pannon 2005 Faktor és Hitel Zártkörűen Működö 
Részvénytársaság, Budapest 
Pannon Finance Pénzügyi Szolgáltató Zártkörűen Működő 
Részvénytársaság, Budapest 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 

0.00 
0.00 

0.00 

0.00 
0.00 
0.00 

0.00 
0.00 
0.00 

0.00 

0.00 
0.00 
0.00 

0.00 

0.00 
0.00 

0.00 

0.00 
0.00 

0.00 

0.00 

loans 
guarantees 

loans 

loans 
mixed 
loans 

loans 
loans 
guarantees 

loans 

loans 
mixed 
guarantees 

vc 

loans 
mixed 

Loans 

loans 
mixed 

loans 

Loans 

page 206 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

HU 

HU 

HU 
HU 
HU 
HU 
HU 
HU 

HU 

HU 

HU 

HU 

HU 

HU 

HU 

HU 
HU 
HU 

HU 

HU 

HU 

HU 
HU 
HU 
HU 

Pannonhalma és Vidéke Takarékszövetkezet, Pannonhalma 
Pannon Hitel Pénzügyi Zártkörűen Működő Részvénytársaság, 
Budapest 
Pannon Takarék Bank Zrt., Komárom 
PARTISCUM XI Takarékszövetkezet, Szeged 
PÁTRIA Takarékszövetkezet, Gyömrő 
PBG FMC Tőkealap-kezelő Zrt., Budapest 
PERION Kockázati Tőkealap-kezelő Zrt., Budapest 
Pest Megyei Vállalkozásfejlesztési Alapítvány, Gödöllő 
PLATINIUM Pénzügyi Szolgáltató Zártkörűen Működő 
Részvénytársaság, Budapest 
Polgári Bank Zrt., Polgár 
PortfoLion Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
Primom Szabolcs-Szatmár Bereg Megyei Vállalkozásélénkítő 
Alapítvány, Nyíregyháza 
Primus Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
Rábaközi Takarékszövetkezet, Csorna 

Raiffeisen Bank Zártkören Működő Részvénytársaság, Budapest 
Rajka és Vidéke Takarékszövetkezet, Rajka 
Rakamaz és Vidéke Körzeti Takarékszövetkezet, Rakamaz 
Régió Finansz Pénzügyi Zrt., Salgótarján 
Regionális Fejlesztési Finanszírozó Zártkörűen Működő 
Részvénytársaság, Budapest 
Rétköz Takarékszövetkezet, Kisvárda 
River Factoring Pénzügyi Szolgáltató Zártkörűen Működö 
Részvénytársaság, Budapest 
Rónasági Takarékszövetkezet, Fülöpszállás 
Sajóvölgye Takarékszövetkezet, Kazincbarcika 
Sárbogárd és Vidéke Takarékszövetkezet, Sárbogárd 
Savaria Takarékszövetkezet, Szombathely 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

0.00 

0.00 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 

0.00 
0.00 

0.00 

0.00 

0.00 
0.00 

0.00 
0.00 
0.00 
0.00 

0.00 
0.00 

0.00 
0.00 
0.00 
0.00 
0.00 

guarantees 

loans 
loans 
mixed 
mixed 
vc 
vc 
loans 

loans 
mixed 

vc 

loans 

vc 
mixed 

loans 
mixed 
mixed 
loans 

mixed 
mixed 

loans 
guarantees 
mixed 
guarantees 
mixed 

page 207 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

HU 

HU 
HU 

HU 

HU 
HU 
HU 
HU 

HU 

HU 
HU 
HU 
HU 

HU 

HU 
HU 
HU 
HU 
HU 
HU 
HU 

HU 

HU 

HU 

HU 

Sberbank Magyarország Zártkörűen Működő Részvénytársaság, 
Budapest 
Somogy Megyei Vállakozói Központ Közalapítvány, Kaposvár 
Somogy Takarék Szövetkezet, Nagyatád 
Sopron Bank Burgenland Zártkören Működő Részvénytársaság, 
Sopron 
SZABOLCS Takarékszövetkezet, Nyíregyháza 
Szatmár-Beregi Takarékszövetkezet, Fehérgyarmat 
Széchenyi István Hitelszövetkezet, Zalaegerszeg 
Széchenyi Kereskedelmi Bank Zrt., Budapest 
Székesfehérvári Regionális Vállalkozásfejlesztési Alapítvány, 
Székesfehérvár 
Szentesi Hitelszövetkezet, Szentes 
Szentgál és Vidéke Takarékszövetkezet, Szentgál 
Szentlőrinc-Ormánság Takarékszövetkezet, Szentlőrinc 
Szigetvári Takarékszövetkezet, Pécs 
Terra Credit Pénzügyi Szolgáltató Zártkörűen Működő 
Részvénytársaság, Budapest 
Tiszafüred és Vidéke Takarékszövetkezet, Tiszafüred 
Tiszántúli Első Hitelszövetkezet, Debrecen 
Tisza Takarékszövetkezet, Tiszaföldvár 
Tőkepartner Kockázati Tőkealap-Kelező Zrt., Budapest 
Tolna Megyei Vállalkozásfejlesztési Alapítvány, Szekszárd 
UniCredit Bank Hungary Zrt., Budapest 
Valor Capital Kockázati Tőkealap-kezelő Zrt., Budapest 

Vas Megye és Szombathely Város Regionális 
Vállalkozásfejlesztési Alapítvány, Vállalkozói Központ, 
Szombathely 
Venturio Kockázati Tőkealap-kezelő Zártkörűen Működő 
Részvénytársaság, Budapest 
Veszprém Megyei Vállalkozásfejlesztési Alapítvány, Veszprém 
VirPay Financial Group Zártkörűen Működő Részvénytársaság, 
Mosonmagyaróvár 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

2007HU161PO001 
2007HU161PO001 

2007HU161PO001 

0.00 
0.00 
0.00 

0.00 
0.00 
0.00 
0.00 
0.00 

0.00 
0.00 
0.00 
0.00 
0.00 

0.00 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 
0.00 

0.00 

0.00 
0.00 

0.00 

mixed 
loans 
loans 

mixed 
loans 
mixed 
guarantees 
mixed 

loans 
mixed 
mixed 
loans 
mixed 

loans 
mixed 
mixed 
loans 
vc 
loans 
mixed 
vc 

loans 

vc 
loans 

Loans 

page 208 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

HU 
HU 
HU 
HU 

PL 

PL 

PL 

PL 

PL 

PL 

PL 

PL 

PL 

PL 

PL 

PL 

PL 

X-Ventures Alpha Kockázati Tőkealap-kezelő Zrt., Budapest 
X-Ventures Béta Kockázati Tőkealap-kezelő, Budapest 
Zala Megyei Vállalkozásfejlesztési Alapítvány, Zalaegerszeg 
Zirci Takarékszövetkezet, Zirc 
Fundusz poręczeniowy "Galicja" dla przedsiębiorców z sektora 
MŚP, Nowy Sącz 

Fundusz Poręczeń Kredytowych "Małopolskie Inwestycje" Tarnów 
Fundusz Pożyczkowy Agencji Rozwoju Małopolski Zachodniej S.A. 
prowadzony przez ARMZ S.A. w Chrzanowie 

Fundusz Pożyczkowy dla przedsiębiorców poszkodowanych w 
wyniku klęsk żywiołowych działający w ramach Tarnowskiej 
Agencji Rozwoju Regionalnego S.A. w Tarnowie 
Fundusz Pożyczkowy Fundacji Rozwoju Regionu Rabka "Nowe 
inwestycje w Małopolsce", Rabka Zdrój 
Fundusz Pożyczkowy Fundacji Rozwoju Regionu Rabka "Rozwój 
Turystyki w Małopolsce", Rabka-Zdrój 
Fundusz Pożyczkowy Janosik Fundacji na rzecz Rozwoju 
Polskiego Rolnictwa w Warszawie 
Fundusz Pożyczkowy "Klęski Żywiołowe", Rabka Zdrój 

Fundusz Pożyczkowy "Odbudowa" Stowarzyszenia "Samorządowe 
Centrum Przedsiębiorczości i Rozwoju" w Suchej Beskidzkiej 

Fundusz Pożyczkowy "Skawa" - Stowarzyszenia "Samorządowe 
Centrum Przedsiębiorczości i Rozwoju" w Suchej Beskidzkiej 

Małopolski Fundusz Pożyczkowy dla mikro, małych i średnich 
przedsiębiorców dotkniętych klęskami żywiołowymi lub innymi 
zdarzeniami nadzwyczajnymi Małopolskiej Agencji Rozwoju 
Regionalnego S.A. w Krakowie 

Małopolski Fundusz Pożyczkowy dla pożyczek udzielanych w 
ramach funduszu dofinansowanego z Małopolskiego Regionalnego 
Programu Operacyjnego, Kraków 
Małopolski Regionalny Fundusz Poręczeniowy dla poręczeń 
udzielanych w ramach MRPO, Kraków 

2007HU161PO001 
2007HU161PO001 
2007HU161PO001 
2007HU161PO001 

2007PL161PO010 

2007PL161PO010 

2007PL161PO010 

2007PL161PO010 

2007PL161PO010 

2007PL161PO010 

2007PL161PO010 
2007PL161PO010 

2007PL161PO010 

2007PL161PO010 

0.00 
0.00 
0.00 
0.00 

0.77 

0.71 

0.79 

1.37 

2.62 

2.29 

1.00 
1.47 

1.31 

1.28 

2007PL161PO010 

0.89 

2007PL161PO010 

2007PL161PO010 

1.22 

0.38 

VC 
VC 
loans 
guarantees 

guarantees 

guarantees 

loans 

loans 

loans 

loans 

loans 
loans 

loans 

loans 

loans 

loans 

guarantees 

page 209 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

PL 

PT 

PT 
PT 
PT 
PT 

PT 

PT 
PT 
PT 

PT 

PT 
PT 
PT 
PT 
PT 
PT 
PT 

PT 

PT 

PT 

PT 
PT 
PT 
PT 

PT 

Mikro Fundusz Pożyczkowy Centrum Biznesu Małopolski 
Zachodniej Sp. z o.o. w Oświęcimiu 
FINOVA - FUNDO DE APOIO AO FINANCIAMENTO À INOVAÇÃO - 
PORTO 
16132 - FCR Portugal Ventures Internacionalização - Lisboa 
16133 - FCR Beta Ciências da Vida - Maia 
16134 - FCR ASK Celta - Lisboa 
16135 - FCR Capital Criativo I - Lisboa 

16136 - FCR ES Ventures Inovação e Internacionalização - Lisboa 
16137 - FCR Portugal Ventures Indústrias Criativas - Lisboa 
16140 - FCR Portugal Ventures Early Stages - Lisboa 
16141 - FCR Minho e Internacionalização - Braga 
16142 - FCR Novabase Capital Inovação & Internacionalização - 
Lisboa 
16143 - FCR Patris Capital Partners - Lisboa 
16144 - FCR PME Turismo Inovação - Lisboa 
16145 - FCR PME/BES - Lisboa 
16146 - FCR Critical Ventures I - Coimbra 
16147 - FCR Portugal Ventures Biocant - Lisboa 
16149 - FCR ASK Capital - Lisboa 
16152 - FCR Portugal Ventures Universitas - Lisboa 
16154 - FCR Portugal Ventures Acelerador de Comercialização de 
Tecnologia II - Lisboa 
16155 - FCR Istart I - Lisboa 
16156 - Linha de financiamento a investidores em capital de 
risco (Business Angels) 
16159 - FCR Fast Change II - Porto 
32822 - FCR REVITALIZAR NORTE - Lisboa 
32823 - FCR REVITALIZAR CENTRO - Lisboa 
32824 - FCR REVITALIZAR ALENTEJO - Lisboa 
40764 - LINHA DE FINANCIAMENTO A OPERAÇÕES 
DESENVOLVIDAS POR BUSINESS ANGELS 

2007PL161PO010 

2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 

2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 

2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 

2007PT161PO001 
2007PT161PO001 

2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 
2007PT161PO001 

2007PT161PO001 

2.54 

0.37 
0.23 
0.59 
0.41 
0.31 

0.11 
0.49 
0.67 
0.08 

0.48 
0.72 
0.15 
0.34 
0.62 
0.69 
0.46 
0.80 

2.82 
0.24 

0.00 
0.56 
1.18 
0.28 
0.69 

0.00 

loans 

HF 
vc 
vc 
vc 
vc 

vc 
vc 
vc 
vc 

vc 
vc 
VC 
vc 
vc 
vc 
vc 
vc 

vc 
vc 

vc 
vc 
vc 
vc 
vc 

vc 

page 210 

 
 
 
Ex-post evaluation Financial Instruments for enterprise support (WP 3) 

Operational 
Programme(s) 

Management costs 
and fees (annual %) 

Type of financial 
product 

4574 - Linhas de Crédito PME Investe I e II 
5734 - Fundo Especial de Investimento - FICA - Lisboa 
Linha de Crédito Investe QREN, Porto 

2007PT161PO001 
2007PT161PO001 
2007PT161PO001 

0.00 
0.00 
0.00 

PT 
PT 
PT 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

FINANCE FOR BUSINESS NORTH EAST (UK), NORTH EAST 
FINANCE (HOLDCO) LTD, 1 ST JAMES GATE, NEWCASTLE UPON 
TYNE, NE1 4AD, UK 

NE Accelerator Fund, Northstar Equity Investors Limited (t/a 
Northstar Ventures), 5th Floor, Maybrook House, 27-35 Grainger 
Street, Newcastle upon Tyne, NE1 5JE 
NE Angel Fund, Rivers Capital Partners Limited, 34 Moor 
Crescent, Gosforth, Newcastle upon Tyne, NE3 4AP 
NE Growth Fund, NEL Fund Managers Limited, Akenside Studios, 
3 Akenside Hill, Newcastle upon Tyne, NE1 3UF 
NE Growth Plus Fund, FW Capital Limited, Oakleigh House, 14-16 
Park Place, Cardiff, CF10 3DQ 

NE Micro Loan Fund, Tyne & Wear Enterprise Trust Ltd (t/a 
Entrust), Portman House, Portland Road, Newcastle upon Tyne, 
NE2 1AQ 

North East Proof of Concept Fund, Northstar Equity Investors 
Limited (t/a Northstar Ventures), 5th Floor, Maybrook House, 27-
35 Grainger Street, Newcastle upon Tyne, NE1 5JE 
North East Technology Fund, IP Group Plc, 24 Cornhill London 
EC3V 3ND 
North East Creative Content Fund, Level 10, Baltic Place West, 
South Shore Road, Gateshead, NE8 3AE 

mixed 
vc 
Mixed 

HF 

vc 

vc 

vc 

vc 

2007UK162PO005 

3.05 

2007UK162PO005 

2007UK162PO005 

2007UK162PO005 

2007UK162PO005 

3.12 

3.99 

2.34 

1.99 

2007UK162PO005 

5.93 

loans 

2007UK162PO005 

2007UK162PO005 

2007UK162PO005 

3.95 

3.27 

0.00 

vc 

vc 

mixed 

Source: 2015 Summary report data ; own calculation 

Note: In order to calculate the annual average management costs and fees on basis of the 2015 Summary Report the total management costs and 
fees paid to the fund are divided by OP contributions to the relevant FIs, then divided by the lifetime of the relevant FIs. 

page 211 

 
 
 
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  doi: 10.2776/259268