The European Commission has adopted on establishing the compatibility of public grants aimed at promoting venture capital investment in small and medium-sized entities (SMEs) with the stipulations concerning grants laid down in the EC treaty (Article 87 (⇒ Wikipedia)). The objective is to facilitate the access of SMEs to financial means during their early development phases.
Among others the guidelines determine a threshold value amounting to 1.5 million Euros annually for each SME below which a market failure is to be assumed (also called “safe harbour threshold value”). The guidelines also contain a simplified testing procedure to be applied in unequivocal situations where certain preconditions and test criteria are met such as to ensure that grants will lead to more private investment in order to avoid market failure while at the same time being proportionate. Mrs. Neelie Kroes, who is EU Commissioner for competition, is sure that the new venture capital guidelines will provide member states with the flexibility needed in order to improve the access to venture capital for SMEs. In turn this will pave the way for more competitiveness and the creation of new jobs.
The new guidelines will help member states in the well-targeted allocation of grants aimed at innovation and the creation of jobs. Guidelines on grants for research, development and innovation are to follow soon.