Sustained investment is required to turn research and development into innovation. Investing in research is a priority for the EU and the Investment Plan for Europe has been instrumental in supporting research-related projects across Europe. On average, around a quarter of Investment Plan projects have been in RDI.
The European Fund for Strategic Investments (EFSI) is the central pillar of the Investment Plan, the so-called Juncker Plan. It provides a first loss guarantee, allowing the EIB to invest in more, often riskier, projects. Through the EFSI, the Investment Plan for Europe helps to finance Research, Development and Innovation (RDI) activities across a wide range of sectors, such as key enabling technologies, bio-economy, circular economy, health and well-being, new transport energy technologies; it also helps innovative SMEs to access finance and research infrastructures to fill their investment gaps. The Plan can also support education through upgrading and modernisation of educational infrastructure, student loan schemes, and the financing of the "knowledge triangle": Innovation, Business and Higher Education.
Taken together with other EU programmes, the EFSI represents an opportunity to scale up private and leverage public spending, build a pipeline of quality projects and remove the barriers to investment in RDI. The Commission's objective is to ensure that European innovations can be brought to the market by successful new companies using the right financial instruments. Financial instruments such as loans, equity and guarantees have a greater leverage effect than grants because the European Investment Bank (EIB) can borrow against the money, rather than the money going directly to the end-recipient. The EU guarantee allows the EIB to borrow around three times as much, and then finance the final recipient, rather than the money being given directly as grants.
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Investment platforms
The Investment Plan for Europe promotes the creation of dedicated and sector-specific investment platforms, vehicles which pool smaller projects by location or sector, which can be backed by EFSI and utilised to unlock financing for individual RDI projects which may not necessarily need large loans.
EFSI in combination with other EU funds
The EFSI is just one of many EU financing tools available to project promoters in the RDI sector. Projects and companies suitable for financing in the RDI sector under the EFSI could also take advantage of the support of the InnovFin – EU Finance for Innovators products, which will mobilise a total of €63bn of investments for the period 2014-20. This funding source may finance part of the project (in the form of a loan or through equity financing), while an EFSI-backed loan may cover the remaining costs of the project. Also, the EU Framework Programme for Research and Innovation, Horizon 2020, proposes a raft of calls for proposals through which RDI-intensive companies and other entities can receive grant support.
Technical support and visibility for projects
The Investment Plan, or so-called Juncker Plan, encompasses far more than the provision of a guarantee to unlock additional investments through the EFSI. The RDI sector can also benefit from the other elements of the Plan.
As for all sectors, project promoters in the RDI sector can seek technical assistance through the European Investment Advisory Hub (EIAH). The Hub offers a single access point for advisory and technical assistance services to allow promoters get their projects off the ground.
The European Investment Project Portal – the #InvestEU Portal – is a platform to boost the visibility of investment opportunities, including those in the RDI sector, across Europe. The aim of the Portal is to bring together project promoters seeking investment with investors seeking projects.
Examples of EFSI projects in the RDI sector
Terma – aerospace manufacturer, Denmark
The EIB is providing a €28 million loan to Terma to invest in research, development and innovation (RDI) for the development of high-tech products for civilian space applications, such as components for commercial satellites, radar technology for harbour, coastal, airport and air traffic control, as well as airborne self-protection systems.
Skeleton Technologies, Estonia and Germany
The EIB is providing €15 million of ‘quasi equity’ financing to Skeleton Technologies, Europe’s leading producer of ultracapacitors. Ultracapacitors are an emerging technology used for fast energy storage. The loan will enable Skeleton to invest in RDI and bring energy savings from its technology to transportation and power grids. The company will also be able to increase its staff numbers.
The EIB is lending €35 million to German medical device company MagForce to support the development of a new approach to treating the most aggressive type of brain cancer – glioblastoma. This new approach makes it possible to combat the tumour from within, while sparing surrounding healthy tissue. Patients are already being treated successfully in Germany, and the new loan will enable MagForce to offer the treatment EU-wide.