Working Group on Financing for Innovation
May 20, 2020
The Vienna Initiative Steering Committee endorsed a report of the Working Group on Financing for Innovation in Central, Eastern and South-Eastern Europe.
The working group was established in 2018 and it has been co-led by the EIB Group and EBRD, with substantial contribution from the World Bank, commercial banks, venture capital firms, venture capital associations and national authorities. The group held three workshops.
The motivation behind establishing the group stemmed from the fact that the economic convergence process in many CESEE countries has slowed down after the crisis, and to relaunch productivity growth a strong focus is necessary on home-grown innovation and enablers to scale this to regional and global markets. In this context, the presence of a diverse set of capital providers that are able to finance and support innovative firms and their activities with relevant financial instruments across the lifecycle is of key importance. We note that the report was written in normal times so it does not reflect COVID-19 related issues.
The report brings tangible conclusions in terms of risk finance, bank lending and framework conditions – all aimed at supporting innovation in CESEE. The key policy directions of the report are centered on these recommendations:
- Increase the availability and access to growth risk capital, particularly at mid-stage;
- Develop capital markets and alternative funding sources for innovative companies, addressing demand and supply constraints;
- Introduce new debt products targeting later-stage innovative companies;
- Strengthen framework conditions.
The working group is a good example of potential new areas of activity of the Vienna Initiative, addressing emerging economic problems in the CESEE region. The working group succeeded in bringing new players to the table with hands-on experience in financing innovation in the region, i.e. stakeholders from venture capital funds, venture capital associations, business angels, business accelerators, fintech, and crowdfunding institutions.