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Innova- FI : available the Policy booklet

  • 22 June 2020

Innova-FI seeks to improve the design and implementation of Financial Instruments as a delivery mode of European Structural and Investments funds (ESIF, so that they best meet and serve the financing needs of innovative and RTDI-driven businesses in all the stages of their start-up and growth. Innova-FI project has been focussing on identifying good practices and exchanging knowledge on financial instruments. Within this topic, we address the three main pillars: equity, debt and guarantees in order to produce and share insights on the way different partners have implemented these instruments across Europe and how well they performed in terms of reaching the intended goals.

This booklet, emphasizes the role of guarantees, a financial instrument aimed at providing state collateral to reduce the level of risk associated with more innovative investments and hence making it feasible to access normal equity and/or debt instruments, as well as impacting on the reduction of the associated price. The good combination of these instruments can be fundamental to set an adequate funding framework to companies and accelerating the dynamics of innovation across Europe. In complement, guarantees, beyond its significant multiplier effect on funding and ability to attract private resources, can also be an important tool to facilitate the synergies among instruments.

Friuli Venezia Giulia case focus on the new Venture capital guarantee fund. The purpose of the Guarantee Fund is to support the interventions of venture capitalists, meaning those financial intermediaries or holding companies, who participate in funding rounds in early stages or growth phases of startups, acquiring a significant minority in the share capital. Those financial intermediaries and holding companies should have a proven track record, considering the high risk that the fund is bearing by providing guarantees to them. The Guarantee Fund does not carry out direct venture capital interventions but provides guarantees for such operations free of charges for the final beneficiaries. This instrument offers venture capitalists the opportunity to reduce the risk associated with the investments in share capital and loans in the form of subordinated and unsecured debt. The fund guarantees a majority share of the investment with consequent coverage of a substantial part of losses occurred in case the investment does not result in a successful exit. The objectives were reached thanks to the work done at the local level with the stakeholders, the intense exchange of opinions and the profitable exchange, also with the partners, during the EOEs.

This instrument represents a first attempt of the regional administration to support the regional VC market and to meet the financing needs of companies in the early stage. The fund will target operations for a value of up to 1 million Euro per startup and aims at using all the allocated resources. Therefore, a minimum of five operations conducted with the support of the fund is envisaged.

Venture capital is largely accepted as a key contributor to the financing of RTDI-driven businesses. Venture capitalists are well-equipped to evaluate the risk-return potential of RTDI- driven businesses and may be actively involved in the operations of their investments. The Italian Venture Capital industry is still lagging behind many other European counties. However, a change of pace is occurring in the latest months showing that the Italian VC market is scaling-up.

In this context, public interventions in the market may be very helpful to drive the Italian VC market to a more mature stage. The guarantee mechanism designed and implemented in FVG region represents, therefore, an interesting example of how policymakers at a regional level can show a commitment to boost the VC market leveraging on public funds.


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