Fund focuses on growing companies in high tech, medical technology and pharmacy – possibly 600 new jobs
The province of North-Brabant wants to bring together several investments to stimulate the growth of innovative SMEs. Therefore they are going to start an SME-plus facility. Fast growing businesses can go there for loans and participations from about €10 to €30 million.
The province itself wants to invest €60 million in the facility. There are advanced talks with the national government about the same contribution and with the European Investment Bank and the European Investment Fund about a doubling of the contribution of the province and kingdom from the European Fund for Strategic Investment (EFSI). These large public investments should convince private parties like banks and pension funds to invest in the business life of Brabant. Thanks to this leverage, the facility is expected to pull €600 million worth of investment from Brabant.
Too little money for growth
The proposal is partly based on research commissioned by the province. This showed that SMEs that want to grow fast have difficulty in receiving funding. Existing funds from governments provide funding up to €5 million and mainly focus on starting businesses. Private investment funds and banks can only limitedly provide in large amounts of venture capital. As a result, the growth rate and competitiveness of some very promising companies remain fall behind, including companies in high tech, medical technology and pharmacy. Two-thirds of the active fund managers on the Brabant market also indicate that a new financing opportunity is desired.
The goal is to financially help companies in building a new factory or the establishment of a large-scale production so that they can bring their product to the market sooner. 4 to 6 companies a year are expected to be eligible for funding after careful testing. It’s about innovative companies that can potentially make a big contribution to economic growth. The province hopes to attract these companies with the facility and retain them for Brabant. It is estimated that the investments can deliver 600 direct jobs per year. Most of the participating companies will grow and make a profit. The thought is that they can then pay back term loans with interest – or the fund manager sells the shares with profit. The investments will return to the fund, which will allow the capital to be invested again and again.
The European Commission launched a fund in 2015 to promote structural growth in the Member States. This European Fund for Strategic Investments aims to bring together €500 billion of investment capital. The Province of North-Brabant is working together with Invest-NL (the Dutch investment bank in formation), the European Investment bank and the European Investment fund (the managers of EFSI) on the founding of the SME-plus facility. This has to connect the capital from the fund to companies in Brabant. The scheme is expected to come into effect next year.
The province hopes to attract companies and retain them for Brabant,