The European Commission adopted, on Monday 6 December, revised Guidelines on State aid to promote risk finance investments (‘Risk Finance Guidelines’).
The revised Guidelines, which will apply from the 1 January 2022, clarify and simplify the rules under which Member States can support and facilitate access to finance for European start-ups, small and medium-sized enterprises (SMEs) and companies with a medium capitalisation (‘mid-caps’) while ensuring a level playing field in the Single Market.
Margrethe Vestager, Executive Vice-President in charge of competition policy, said the changes will enable Member States to give financial incentives for “European start-ups and small and medium-sized enterprises to attract investments when the market does not deliver on its own”.
Risk finance aid is an important instrument that Member States can use to support, in particular, innovative and growth-oriented start-ups, SMEs and certain types of mid-caps in the early stages of their development.
These companies may face difficulties in gaining access to finance, despite their business potential.
The Risk Finance Guidelines enable Member States, subject to certain conditions, to address this funding gap by attracting, through the provision of State aid, additional private investments into the eligible start-ups, SMEs and mid-caps, through well-designed financial instruments and fiscal measures.
The revised Guidelines, in particular:
- limit the requirement to provide a funding gap analysis to the largest risk financing schemes and further clarify the evidence needed to justify the aid. To address this point, the revised Guidelines only require a funding gap analysis for the largest risk finance aid measures, namely those that allow for investment amounts above €15 million per individual beneficiary;
- introduce simplified requirements for the assessment of schemes targeting exclusively start-ups and SMEs that have not yet made their first commercial sale. This will concern in particular the amount of evidence that Member States have to provide, as part of the ex ante assessment that they have to submit to demonstrate why the aid is necessary, appropriate and proportionate;
- align certain definitions included in the Guidelines with those in the General Block Exemption Regulation (GBER) to ensure consistency. The definition of ‘innovative mid-caps’ under the Guidelines is aligned with the definition of ‘innovative enterprises’ under the GBER. The definition has been expanded to also include mid-caps that have participated in or received an investment from selected EU initiatives, namely the CASSINI Space Entrepreneurship Initiative and the European Innovation Council and its Fund.
Link to the revised Guidelines: https://bit.ly/301rpuC (Original version in French by Lionel Changeur)