Innovation Finance Advisory, European Investment Bank
Authors: Alberto Casorati, Arnold Verbeek
Supervisor: Shiva Dustdar
Contributions from Po Wen Liu, Maria Lundqvist (Project Directorate, European Investment Bank), Luuk Borg, Bjorn-Soren Gigler, Yves Paindaveine (DG Connect, European Commission)
This report was produced with funding from the European Union, through the European Investment Advisory Hub
Contact: [email protected]
Consultancy support: Gartner
Disclaimer
This Report should not be referred to as representing the views of the European Investment Bank (EIB), of the European Investment Advisory Hub (EIAH), of the European Commission (EC), or of other European Union (EU) institutions and bodies. Any views expressed herein, including interpretation(s) of regulations, reflect the current views of the author(s), which do not necessarily correspond to the views of the EIB, of the EIAH, of the EC, or of other EU institutions and bodies. Views expressed herein may differ from views set out in other documents, including similar research papers published by the EIB, the EIAH, the EC, or other EU institutions and bodies. Contents of this Report, including views expressed, are current at the date of publication set out above, and may change without notice. No representation or warranty, express or implied, is or will be made, and no liability or responsibility is or will be accepted by the EIB, the EIAH, the EC, or other EU institutions and bodies in respect of the accuracy or completeness of the information contained herein, and any such liability is expressly disclaimed. Nothing in this Report constitutes investment, legal, or tax advice, nor shall be relied upon as such advice. Specific professional advice should always be sought separately before taking any action based on this Report. Reproduction, publication, and reprint are subject to the authors’ prior written authorisation.
| Foreword |  |
The effect of the coronavirus pandemic on the European and global economies is significant. While the Digital Revolution was well under way globally, the pandemic has led to the wide recognition of the importance of digital transformation for our immediate economic recovery and future resilience. Internet of things, 5G, big data, blockchain technologies and artificial intelligence can help us achieve greater supply-chain transparency and flexibility, increase data security, strengthen remote workforces and automate manual processes. Digital technologies can also help us in our fight to reduce greenhouse gas emissions and enable Europe to be the first climate-neutral continent by 2050, as encapsulated in the objectives of the European Green Deal.
In this context, it is unfortunate that European industry currently operates below its digital potential. This is particularly true for our small and medium-sized enterprises, which, because of their high vulnerability to supply and demand shocks, have been disproportionately affected by the coronavirus pandemic. In fact, the opportunity for economic recovery and future growth through digitalisation in Europe’s largest industrial segment is significant. This is why I am particularly pleased with the timely publication of this study, which discloses the ongoing policy discussions under the InvestEU and Digital Europe programmes. These are discussed with reference to the European Union’s response to the pandemic.
The study proposes a clear path forward. Europe’s digitalisation journey can accelerate if we strengthen our current innovation and digitalisation ecosystem and empower the role of digital innovation hubs. Specifically, these digital innovation hubs should coordinate support to companies within local industrial ecosystems. They should develop central knowledge-sharing platforms and provide technical and financial advice, enhancing their cooperation with the financial community to guide European entrepreneurs throughout their financing journey.
For its part, the EIB Group, in close collaboration with the European Commission, recently launched two new pilot initiatives for financing digitalisation. The first is a guarantee facility under Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME) for the financing of digitalisation projects; the second focuses on early-stage equity investments in artificial intelligence and blockchain technologies. These two pilot initiatives are important steps forward in better matching supply with demand for the financing of digital projects. They address some of the key issues currently limiting the market supply of funding.
I would like to thank my colleagues at the European Commission for the excellent collaboration with our Advisory Services team and senior sponsorship throughout the study. The EIB is committed to mobilising our advisory and financial firepower in order to help reap the full benefit of digitalisation for European industry.
Lilyana Pavlova
Vice-President of the European Investment Bank
| Foreword |  |
Digitalisation and small and medium-sized enterprises – The role of financing in the time of a pandemic
The coronavirus pandemic has shown how essential digitisation is for a resilient economy. Highly digitised companies have found it much easier to cope with the crisis than digital laggards. Building on this lesson, it is now essential to accelerate the digital transformation and build a stronger, greener, and more resilient economy. Full digitisation requires combining established digital solutions with new and emerging technologies across all sectors, and that, in turn, depends on ensuring sufficient access to finance.
That is why I welcome the timely publication of this study with its focus on financing the digitisation of small and medium-sized enterprises. In particular, the identification of the role that digital innovation hubs can play as key enablers in emerging digital ecosystems is a valuable contribution.
The study reminds us that there are great differences in the ways in which new and emerging technologies are implemented in European companies depending on the company size or region. The European Commission is determined not to leave any European company behind. It has built a coherent package of measures to fight the economic crisis of European economies, including the liquidity problems. The most notable measure in this respect is the Next Generation EU recovery instrument.
However, beyond the immediate support to help businesses stay afloat, it is also critical to continue giving European companies the necessary instruments to invest in their digital transformation. Although this is still risky for companies, there is potentially also a large reward. Indeed, the previous crisis – the financial crisis starting in 2008 – showed that companies able to invest and re-invent themselves through innovation have better growth perspectives in the following years.
To that end, the European Commission has launched initiatives to enable companies to emerge healthier and more prepared for the future from this crisis than from the previous one.
For example, a pilot under the COSME programme together with the EIB Group provides guaranteed loans for small and medium-sized enterprises willing to invest in their digital transformation. Another pilot promotes early and growth-stage equity investments in artificial intelligence and blockchain technologies.
In another example, since 2016, the European Commission has supported digital innovation hubs, which are boosting regional digital
