1. Financial Instruments
for Research and Innovation
- HORIZON 2020 -
Martin KOCH
Policy Officer
European Commission - DG Research and Innovation
RTD C-03 – Financial Engineering Unit
EU – Israel Seminar on Technology Transfer
Tel Aviv, 25/26 November 2012
Not legally binding

2. What are EU Financial Instruments?
Equity/risk capital/ loans: e.g. venture capital to SMEs with
high growth potential, risk capital to infrastructure projects and
risk-sharing loans for R&D and innovation investments
Guarantees to financial intermediaries that provide lending to
e.g. infrastructure projects, SMEs, persons at risk of social
exclusion
Other risk-sharing arrangements with financial
intermediaries in order to increase the leverage capacity of the
EU funds (e.g. Project bonds)
or a combination of the above with other forms of EU financial
assistance
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Not legally binding

3. EU Financial Instruments: Why
and when?
Rationale and guiding principles:
1. Addressing clearly identified funding gaps: Market
dysfunction due to general economic uncertainty, high
business/innovation risk (transfer of R&D to innovation and the
market; innovative SMEs; introduction of new technologies),
high transaction costs, asymmetric information
2. Ensuring EU value added:
• Effective targeting of EU policy goals
• Catalytic effect on existing similar MS schemes or private
investment, no crowding out
1. Leverage effect: Using the EU budget for leveraging additional
funding through risk-sharing and attraction of private capital
Not legally binding

4. HORIZON 2020: Budget proposal for
Financial Instruments
•HORIZON 2020 budget proposed: EUR 80 billion for the period
2014-2020
•Approximately 4.5% provided not via grants but through
Financial Instruments (various facilities)
•H2020 (SP "Industrial Leadership") – “Access to risk finance”
•€ 3,768 million in current prices (net of administrative costs)
for financial facilities supporting all sizes of companies and types
of entity (demand driven) + additional budget possible for policy
targets (topping-up possibility)
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Not legally binding

5. HORIZON 2020: Proposed Financial
Instruments (FI)
Two Financial Instruments: One for debt, one for
equity
oDebt Financial Instrument: Two facilities
o Loans and guarantees for investments in Research &
Innovation (demand-driven; target groups midcaps and
larger companies, research bodies and stand-alone projects)
o Guarantee facility for research-intensive and innovative SMEs
& small midcaps (loan guarantees)
oEquity Financial Instrument – focus on early-stage finance
o Early stage finance for innovative SMEs and small midcaps
(seed and start-up companies)
o Growth-stage finance also possible
o Implementation in co-operation with the COSME programme
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of the EU (in particular growth-stage)
Not legally binding

6. HORIZON 2020 Equity Financial
Instrument
Provision of early-stage (seed and start-up) finance for
research- and innovation-driven SMEs and small midcaps
through different means:
•Formal VC (Funds-of-Funds; funds)
•Informal VC (Business Angels & their networks)
•Technology Transfer funding ?
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Not legally binding

7. Technology Transfer funding under
HORIZON 2020: Examination of options
• Current state-of-play: Concept of TT funding at
European level under discussion (Commission
services, JRC, TTOs, EIF)
• Clarification of added value to address TT funding
needs at European level (TT funding landscape in
Europe very divers)
• Survey of "best practices" and successful models on
its way (EU Member States and other countries
including Israel)
• Budget: No budget foreseen so far in HORIZON
2020 for dedicated Technology Transfer funding;
but principal option to include TT funding in the 7
Equity facility Not legally binding

8. Technology Transfer funding under
HORIZON 2020: Examination of options
• Next step: Building the case for a convincing
justification for TT funding at EU level
• Key elements in this context:
• Addressing a clear funding gap (Proof of concept
stage, pre-seed and seed phase)
• TT funding through equity at various stages
• Leverage of EU funding through additional, notably
private capital
• Sustainability, if possible (probably difficult in view of
the high-risk profile of TT)
• Achieving critical mass (no small-scale EU TT fund)
• Governance and implementation costs
• Ex-ante Impact Assessment for TT funding foreseen in
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early 2013
Not legally binding

9. Thank you very much for your
attention!
Not legally binding

10. Thank you very much for your
attention!
Not legally binding