Encouraging researchers to start up their own businesses: Commission answers parliamentary question

May 19, 2003

Strasbourg, 16 May 2003

Verbatim report of proceedings, 15 May 2003, Part A

Question no 49 by Brian Crowley (H-0237/03)
Subject: EU and promoting researchers capable of starting up their own businesses

Researchers starting-up their own businesses closely combine skills including scientific excellence and innovation capabilities to produce, manage and exploit new knowledge, therefore reinforcing economic growth and employment potential in Europe. The Commission has for long recognised that Europe needs more entrepreneurs. Increasing entrepreneurship and removing obstacles that prevent researchers and other entrepreneurs to fulfil their dreams has been an issue that the Commission has addressed in the Risk Capital Action Plan of 1998, The Growth and Employment Scheme of 1998, the Multiannual Programme for Enterprises and Entrepreneurship (2001-2005), the Green Paper on Entrepreneurship of 2003, and the Commission Communication "Investing in research: an action plan for Europe" of 30 April 2003.

Securing early-stage finance is often difficult for researchers and others who try to set up an enterprise. The European Technology Facility (ETF) Start-up Facility of the Multiannual Programme for Enterprises and Entrepreneurship (2001- 2005) aims to facilitate the provision of risk capital to innovative start-up businesses with growth potential.

The Lisbon summit requested that the European Investment Bank (EIB) should participate in financing start-up firms, and the EIB has given this task to the European Investment Fund (EIF), its risk capital arm. The EIF is already one of the largest suppliers of early-stage finance in Europe using funds from the EIB mandate, its own funds, and funds it manages for the Commission under the Multiannual Programme for Enterprises and Entrepreneurship.

Further research funds are available to small enterprises under the Sixth Framework Programme of Research, Technological Development and Innovation. Technology-intensive small and medium-sized enterprises (SMEs) and researchers running their own businesses benefit from increased support to SMEs under this programme. With 15% of the budget of the priority thematic areas allocated to SMEs, the sixth framework programme contributes to promoting the cooperation of SMEs with many participants in large research projects and networks throughout Europe.

To encourage the spread of best practices throughout the EU, the Commission has published a report on the management of incubators and has set up the Gate2Growth network helping innovative start-up businesses to find financing. In particular the peripheral areas of the Union benefit from the reorientation of the regional funds towards more risk financing. To this end the Commission has published a Guide to Risk Capital Financing in Regional Policy that lists good practices from many Member States.

The dramatic decline of risk capital activity since 2000 makes it particularly difficult for young research-intensive SMEs and business-start-ups to grow or even survive in current conditions. Considering the market failure to raise adequate funding for seed and early stage capital, there is a strong case for public initiatives in this area at regional, national and European levels. To this end, the Communication from the Commission "Investing in research: an action plan for Europe" proposes specific measures regarding risk capital, for example to strengthen and broaden EIF risk capital activities to better address current equity gaps and to extend to public research organisations its advisory services on the setting up of new funds. Overall, this action plan aims at building a momentum, ensuring that the necessary initiatives at European and national levels are sustained, mutually consistent and commensurate with the challenge of bringing radical improvements to the European system of research and technological innovation. It marks the start of a process which has the potential to boost Europe's attractiveness for entrepreneurs and investment in Research and Development.

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