New financial instruments for innovation as a way to bridge the gaps of EU innovation support : final report

In recent years, the European Commission (EC) turned its attention to 'innovative financial instruments´, defined as instruments that are complementary to grants or subsidies, as part of a move towards a smarter 'funding mix´. Those instruments, in the form of loans, equity, quasi-equity and guarantees, are considered as a particularly effective way to increase the impact of EU funding, when compared to the traditional grant-based system (EC, 2015), and also to promote a more responsible, result-oriented use of European funds by companies. However, the potential of these instruments is not currently fully exploited for innovation. The present study, therefore, aims to pursue three objectives: 1) Define and map the relevant new financial instruments; 2) Assess their potential to support the scaling up of innovative SMEs by providing follow up funding, and to get more break-through, disruptive innovations to market; and 3) Formulate policy recommendations focusing on recommendations of the most valid avenue to consider.