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Assessing the Investment Potential of Smes Emerging from Phase 1 and Phase 2 of the SME Instrument

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Assessing the Investment Potential of Smes Emerging from Phase 1 and Phase 2 of the SME Instrument Assessing the Investment Potential of SMEs Emerging from Phase 1 and Phase 2 of the SME Instrument Independent Investment Expert Group Final Report EN EUROPEAN COMMISSION Directorate-General for Research and Innovation Directorate B — Open Innovation and Open Science Unit B.3 — SMEs, Financial Instruments and State Aids Contact: Ignacio Puente González Contributors: Marita Kayamanidou Sandro Maccaglia E-mail: [email protected] European Commission B-1049 Brussels EUROPEAN COMMISSION Assessing the Investment Potential of SMEs Emerging from Phase 1 and Phase 2 of the SME Instrument Independent Investment Expert Group Final Report Steering Group Members Luca Mion (Chair) Arun Harish (Rapporteur) Dimitris Deniozos Katharina Fellnhofer Geraldine Quetin Elena Rico Jose Zurstrassen Directorate-General for Research and Innovation EUROPE DIRECT is a service to help you find answers to your questions about the European Union Freephone number (*): 00 800 6 7 8 9 10 11 (*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls may be billed LEGAL NOTICE Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use which might be made of the following information. The views expressed in this publication are the sole responsibility of the author and do not necessarily reflect the views of the European Commission. More information on the European Union is available on the Internet (http://europa.eu). © European Union, 2015 Reproduction is authorised provided the source is acknowledged. Contents 1. EXECUTIVE SUMMARY .......................................................................................................................................... 5 2. ASSESSMENT OF THE INVESTMENT POTENTIAL OF SMES ................................................................... 8 2.1. Investment readiness context ............................................................................................................. 8 2.2. Methodological approach ..................................................................................................................10 2.3. The SMEs participating in Action 9 ................................................................................................14 2.4. The investment readiness analysis of SMEs................................................................................16 2.4.1. Initial analysis and general characteristics ............................................................16 2.4.2. Investment readiness analysis by call topic ..........................................................19 2.4.2.1. Seas and oceans (Blue growth) ..................................................................................19 2.4.2.2. Biotechnology-based industrial processes (BIOTEC) ........................................22 2.4.2.3. Urban critical infrastructure (DRS) ............................................................................27 2.4.2.4. High risk ICT innovation (ODI) ....................................................................................31 2.4.2.5. Greener and more integrated transport (IT) .........................................................39 2.4.2.6. Nanotech, tech for manufacturing and materials (NMP) ................................44 2.4.2.7. Diagnostics devices and biomarkers (PHC) ..........................................................50 2.4.2.8. Eco-innovation and sustainable raw material supply (SC5) ...........................54 2.4.2.9. Sustainable food production and processing (SFS) ..........................................63 2.4.2.10. Low carbon energy systems (SIE) ..............................................................................69 2.4.2.11. Space research and development (Space) ............................................................74 2.4.3. Investment readiness analysis by other dimensions .........................................76 2.4.4. Historical type of finance ..............................................................................................82 2.4.5. Financial strategies and required future external finance ..............................89 2.5. Capacitation plans analysis ................................................................................................................93 2.6. Recommendations to boost the investment readiness of SMEs .......................................97 2.7. Limitations of the study ......................................................................................................................98 3. ANALYSIS OF THE SME INSTRUMENT DESIGN ..................................................................................... 100 3.1. The SME Instrument scheme ......................................................................................................... 100 3.2. Potential areas of improvement for the SME Instrument .................................................. 102 3.3. Recommendations to enhance the SME Instrument ........................................................... 104 List of Annexes Annex 1: Alternative sources of Finance and recommendations to enhance the investment ecosystem Annex 2: Workshops, events and InvestHorizon fast-track approach List of Tables Table 1 - Key parameters evaluated by Series A investor. ................................................................................. 9 Table 2 - Topics, sectors, and the innovation cycle classification used in Action 9. ..............................11 Table 3 - Information asymmetries between investors and SMEs. ...............................................................12 Table 4 - Topic distribution of SME Instrument beneficiaries participating in Action 9. .....................14 Table 5 - Geographical distribution of SME Instrument beneficiaries participating in Action 9......14 Table 6 - Allocation of the projects by topic and IRL for Phase 1 and Phase 2. .....................................16 Table 7 - IRLs assessed by experts for different topics. .....................................................................................16 Table 8 - Average IRL Level per Country. ................................................................................................................17 Table 9 - Number of positive answers from SMEs to questions related to financial needs. .............18 Table 10 - IRLs assessed by experts for different innovation cycles. ...........................................................76 Table 11 - Assessed IRL dimensions for different innovation cycles. ..........................................................77 Table 12 - Assessed IRL dimensions for ready SMEs and other SMEs. .......................................................77 Table 13 - Average IRLs per innovation cycles according to experts and SMEs. ....................................77 Table 14 - Number of projects for TRL, innovation cycle and investment readiness (Phase 1). ......78 Table 15 - Number of projects for TRL, innovation cycle and investment readiness (Phase 2). ......78 Table 16 - Investment readiness level vs year of establishment (Phase 1)................................................80 Table 17 - Investment readiness level vs year of establishment (Phase 2)................................................80 Table 18 - Investment readiness level vs FTEs (Phase 1). ..................................................................................80 Table 19 - Investment readiness level vs FTEs (Phase 2). ..................................................................................81 Table 20 - Investment readiness level vs Revenues (Phase 1). .......................................................................81 Table 21 - Investment readiness level vs Revenues (Phase 2). .......................................................................81 Table 22 - Average revenues for different IRL and growth rate in revenues and FTEs. .......................81 Table 23 - Number of SMEs analysed by historical type of finance (includes Phase 1 and 2). ........82 Table 24 - SME averages owners' capital by age – values in k€. ...................................................................82 Table 25 - SME owners' capital (averages) by age and investment readiness level – values in k€. 83 Table 26 - FF investment by age and per year – values in k€. ........................................................................83 Table 27 - SME averages FF finance by age and investment readiness – values in k€. .......................84 Table 28 - Averages of BA investment, by age of SME and per year – values in k€. ............................84 Table 29 - Averages of BA investment by age and by investment readiness – values in k€. ............85 Table 30 - Averages of VC funding, by age of SME and per year – values in k€. ...................................85 Table 31 - Averages of VC funding, by age and by Investment readiness - values in k€. ..................85 Table 32 - Averages of Bank Debt, by age of SME and per year - values in k€. .....................................86 Table 33 - Averages of Bank Debt, by age and by Investment readiness - values in k€. ....................86 Table 34 - Averages of grants, by age of SME and per year - values in k€. .............................................87 Table 35 - Averages of grants, by age and by Investment readiness - values in k€. ............................87 Table 36 – Average type of finance by age and per year - values
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