Commission and bank to set up risk-sharing facility

Commissioner Janez Potočnik signs the agreement setting up the risk-sharing finance facility.

This new fund will help to make more money available for high risk projects that cannot raise capital from traditional sources, by enabling them to be financed through debt.

The RSFF, which is part of the EU’s 7th Research Framework Programme will partially cover the financial risks assumed by the bank when making loans for technology transfer and commercialisation projects.

“Europe needs to find ways to boost investment in research, particularly from private companies,” said European Science and Research Commissioner Janez Potočnik. “The Risk Sharing Finance Facility is one of the most exciting new ideas in the EU’s 7th Research Framework Programme, and through cooperation with the [bank] will unlock billions of new investment for research, development and innovation in Europe.”

European Investment Bank President Philippe Maystadt agreed saying, “By targeting higher risk financing in support of research and innovation projects, the facility will in an efficient way complement the existing support instruments including national and EU grants as well as market debt and equity funding”.

…and on to Lisbon

The hope is that the new facility will push Europe further towards the Lisbon objective of investing 3 per cent of GDP on research, by boosting private sector investment through the financial markets.

Financial markets and financial institutions are often reluctant to back research intensive companies or research projects due to the relatively high levels of uncertainty and risk RSFF will improve access to debt financing by sharing the underlying risks between the EU and the bank.

Initially, facility is likely to benefit mostly medium and large technology companies, and large-scale research projects such as European or national research infrastructure. However, it will be open to private and public entities of any size and ownership, including SMEs, research organisations and public-private partnerships contributing to the objectives of the 7th Research Framework Programme.