THE ESTORIL DECLARATION

1、THE ESTORIL DECLARATIONPrinciples and Good Practice Policies on the Financing Innovation Value ChainCONTENTS1THE ESTORIL DECLARATION52Forum “Financing Innovation From Ideas to Market”123Financing of Innovative Young Firms: Summary Discussion14INTRODUCTIONFinancing Innovation requires getting from id

2、eas to markets, making investment readiness, having the right environment and the availability of savings for growth i.e a value chainThe European vision of a successful knowledge-based economy, where high potential enterprises can emerge, growth, create employment and improve innovative capabilitie

3、s, has among other priority issues, a major challenge: - to overcome the imperfect nature of the financial markets.This huge challenge requires a holist view of the financial system, spanning the equity-debt spectrum from both formal and informal risk capital markets, to the bank intermediation proc

4、ess, in order to reinforce the availability of a range of appropriate financing solutions for Small and Medium-sized Enterprises (SMEs) throughout their development life-cycle. The goal requires the active participation of the entire entrepreneurial infrastructure, including the owners and managers

5、of target businesses, the financial services industry, government policy makers, academia and the media.The Estoril Declaration summarises the principles and good practice policies that should be followed to achieve a more effective integration of the four pillars identified of the financial innovat

6、ion value chain: - From Ideas to Market; Investment Readiness; The Right Environment; and Savings for Growth.The full range of measures that are available to stimulate entrepreneurship and innovation should be well known and celebrated at all levels of society, and a stimulus among policymakers to d

7、evelop suitable policies.To that end, the Estoril Declaration will be used as the framework for the “Estoril Observatorium of Good Practice Policies on Financing Innovation and Entrepreneurship” to scan and distinguish, under the Commissions guidance, the best cases and experiences in this important

8、 field.1 THE ESTORIL DECLARATIONRECOGNISING that the European Union needs to continue to develop a world-class environment supporting innovative and high growth Small and Medium-sized Enterprises (SMEs) and in which competitive markets work efficiently both within and across borders to allocate a ra

9、nge of appropriate forms of finance and related services, from professional and well informed providers to similarly competent entrepreneurs and their businesses at all stages of the enterprise life-cycle, From Ideas to MarketIT IS RECOMMENDED:I. That successful entrepreneurial economies have a can

10、do attitude to transforming interesting and novel ideas and discoveries into new products and services to both existing and new customers. The full realisation of Europes innovative resources and their delivery to world markets requires the catalyst of a strong entrepreneurial culture to be supporte

11、d by efficient financial marketsTherefore, it is necessary:§ To promote an entrepreneurial culture and new business formation as an attractive and feasible career choice, to be widely fostered amongst politicians, business persons, academics, students, and those teaching and advising current an

12、d future generations of European citizens;§ To encourage the spin-out activity, commercialising intellectual property from universities and the research community via academic-private funding arrangements that recognise the demanding requirements of professionally-run and commercially attractiv

13、e fund structures. Effective structures are likely to require cross-institutional collaboration, co-financing and risk sharing schemes;§ To assure that Europes financial services community supports the identification and industry adoption of practicable means by which intangible assets, such as

14、 intellectual property, can be pragmatically valued in order to attract additional debt finance and other resources, especially for innovative and technology-based start-ups;§ To recognize the recognition of the peculiar demands of young and growing SMEs, by enterprise support infrastructures,

15、as well as specialist and expert services, and the considerable scale and scope of benefits stemming from the active concentration of new enterprise activity into dense and mutually-supportive local and regional clusters; § A full spectrum of SMEs life-cycle financial and support services provi

16、ders, from seed stage incubators through business angels and debt providers, to corporate venturing and institutional venture capital funds, to be available to attractive growth enterprises;Investment ReadinessIT IS RECOMMENDED:II. That new and growing enterprises have access to the right resources

17、allocated by a free and competitive market. They have to earn investors interest and commitment by the greater attractiveness of their businesses profile compared to other available investment opportunitiesIn order to achieve that, it should be:§ Emphasized the need to improve and reinforce the

18、 enterprises internal capabilities to attract investors, namely supplying sufficient, timely and accurate information to financial providers in order to get appropriate financial resources and other related services at competitive conditions. In particular, entrepreneurs, their commercial partners a

19、nd their advisers will need to recognise that Basel II requirements for transparency will impose a greater effort on all parties to reduce information asymmetries;§ Given high relevance to professional mentoring and other advisory support services specially designed to meet the needs of attract

20、ive but often inexperienced young businesses seeking external sources of finance; § Note that, as enterprises assume the responsibility of adopting appropriately rigorous standards of governance and disclosure, the financial infrastructure may provide the full spectrum of finance and support to

21、 the specific needs of early growth, development and the transfer or buy-out of established businesses;§ Given priority to benchmarking tools to enhance the reputation of the best-performing enterprises, improving their market position and negotial capabilities among their finance sources, indi

22、vidually or as a reference group;§ Given priority to recognising and exploiting the critical role of business angels/informal investors as the largest potential source of knowledge and of stable, early-stage, informal risk capital to young enterprises;The Right EnvironmentIT IS RECOMMENDED:III.

23、 That Governments ensure that entrepreneurial environments in which young firms are created, developed and traded are favourable to entrepreneurs and investors, avoiding inappropriate and costly solutions related to legislative, fiscal or regulatory systems. Thus, policy makers should actively striv

24、e to remove existing barriers and promote new business formation and the growth of existing SMEs. Governments have a key mission in supporting enterprise, but should seek to ensure a subsidiary role compatible with free market activityMeasures should be taken to support:§ Competitive legal, fis

25、cal and administrative policy frameworks that directly encourage risk-taking by entrepreneurs and external investors, such as business angels and venture capitalists, also encouraging the entrance of new market players and professionals; § Growing levels of cross-border investment with the goal

26、 of creating a single pan-European market in venture capital and private equity, for which further legal and fiscal harmonisation between member states is needed;§ Efficient and cost effective transfer of businesses to new ownership/management in order to ensure the continuation and growth of e

27、xisting viable enterprises. Such transfer systems should also expedite the timely removal of unsuccessful business ventures from the market, thereby assisting the efficient reallocation of existing resources; Savings for GrowthIT IS RECOMMENDED:IV. To channel savings and to enhance the mobilization

28、of long term investment in SME assets, through structured finance instruments, supported by public risk sharing schemes whenever needed, to encourage private investment into market failure areas where it would be otherwise particularly difficulty to attract a sufficient stock of funding due to the w

29、ell known information asymmetries and the high transaction costs incurredIt should be acknowledged:§ The valuable role of banks supported by mutual or public loan guarantee schemes and related initiatives to securitise SME debt, increasing the liquidity within the financial market and the capac

30、ity for renewed banking exposures on SME finance;§ The importance of risk capital sources for entrepreneurial growth firms, as direct leverage to access debt financing. Particularly, special importance should be given to encouraging greater supplies of early-stage risk capital available to inno

31、vative pre-seed (proof of concept), seed and start-up enterprises in Europe;§ The practical relevance of later stage venture capital, by strengthening the links between business angel groups and the investors from the formal sector, in order to facilitate the continued flow of financing for ent

32、erprise growth, simultaneously providing opportunities for early stage investor exits;§ The attractiveness of venture capital and private equity as an asset class for long-term institutional investors, such as pension funds and insurance companies;§ The need for public recognition, identif

33、ication and support for a single pan-European stock market of sufficient economic scale, liquidity, technical expertise and specialism in high growth/high potential, new knowledge-based firms across the member states;§ The importance of active regional stock markets trading in growing and high-

34、potential companies and acting as an exit channel for later stage investors;§ The growing need for alternative and novel financing instruments, including micro-finance, mezzanine and stock options, focused specifically on the growth needs of young innovative SMEs. Estoril, 9th of October 20072

35、Forum “Financing Innovation From Ideas to Market”The Portuguese EU Presidency and the European Commission have underlined the importance of entrepreneurship in innovative areas by organizing the Forum “Financing Innovation From Ideas to Market”, held at Estoril, Portugal, on the 8th and 9th of Octob

36、er 2007. The purpose of the Forum was to promote the implementation of newly-established policy solutions in the area of European enterprise and innovation, by direct reference to world-class examples in both financial practice and complementary government support. Real-life cases were cited from bo

37、th within and beyond European borders, with particular reference to catalysing pragmatic and effective action in alternative forms of innovation financing in SMEs.The Forum was organised around a series of plenary sessions and delegate/expert workshops. The four themes of the Forum, articulated in t

38、he Estoril Declaration, are best seen as a set of related policy frameworks that need to be put in place in order to realise and sustain a vibrant SME marketplace with easy access to financial support systems throughout their life-cycles. I. From Ideas to MarketII. Investment ReadinessIII. The Right

39、 EnvironmentIV. Savings for GrowthThe Forum provided an excellent platform to enable Member States, the European Commission, Financial Institutions and members of the SME and Innovation/Technology communities, to discuss the realisation of relevant policies and practices from both a European and glo

40、bal perspective. While issues of SME finance were central to the discussions, the agenda recognised that effective innovation activity is a complex mechanism of which access to adequate and appropriate sources of finance from a diversity of providers remains but one important issue.Add one page grap

41、hic summarising the four themes of the Estoril Declaration Financing Innovation Value Chain3 Financing of Innovative Young Firms: Summary Discussion The Estoril Declaration focuses on the need to craft national and pan-European SME policies that are both comprehensive and work in concert with each o

42、ther. Finance and Innovation related policies also must acknowledge and reflect the changing needs of SME clients as the firms grow and evolve over time. Thus, while national policy responses are necessary, they are not sufficient in a globalising world. In order to set the four themes of the Estori

43、l Declaration in this wider context, the following discussion focuses on a number of financing issues that still need further policy resolution In order to keep this document to a manageable length, further detailed reading and references are added as footnotes.A Changing and Global Context The curr

44、ent dynamics of global economic integration, resulting in rapid and highly significant changes to market structures, has brought strong competitive pressure to bear on the wider European economy. Member countries of the European Union will not be able to compete effectively with the emerging behemot

45、hs of the BRIC (Brazil Russia India & China) and other resource or labour-rich nations if they rely solely on natural factor endowments. Europe has little choice but to exploit its long and established traditions of innovation and creativity if it is to compete successfully on world markets and

46、to ensure acceptable living standards for its present and future citizens. In 2006, the European Commission launched a revised agenda COM(2006) 349 final, 29.6.2006 , Brussels. focusing on knowledge, technology and innovation as key factors for the sustainable growth of the European economy, in acco

47、rdance with the priorities originally established by the Lisbon Strategy (2000) and subsequently refined in the light of experience. With 23 million SMEs registered in Europe, entrepreneurship was recognised an essential component of any credible programme to stimulate innovation and to address the

48、challenges of globalisation. The best SMEs are well versed in the skills of flexibility and adaptability required to both survive and flourish. The continuous adoption of new processes, improved organisational methods, the creation of new and attractive goods and services for existing and new custom

49、ers are now no longer exceptional behaviour but the norm if a business is to be successful in the longer term.The Continued Importance of SMEsSmall and medium sized enterprises (SMEs) play a very important role in the global economy. Representing the vast majority of all business entities, they are

50、the dominant form of commerce at local, regional and national levels regardless of country. In aggregate, it is small businesses not giant global corporations that represent the majority of wealth and jobs creation worldwide in many sectors of the economy. Large corporations are not removed from the

51、 SME domain. They, in turn, are dependent both directly and indirectly on a solid foundation of flourishing SMEs acting as suppliers, manufacturers, distributors and customers. A healthy economy facilitates this inter-dependence.This continuing importance of SMEs to the future success of the Europea

52、n Union as engines of both employment and growth is recognised in a formal set of policies focusing on improving the environment, and thus the performance, of SMEs in its member states. The continued centrality of SME policy to the future success of the Europe has been recently reiterated by Gü

53、nther Verheugen in his role as Vice-President of the European Union. See Commission Press Release IP/06/893 “Initiative to boost growth of SMEs: EU wants to triple early-stage capital investments” 30th June 2006, and Vice-president Verheugen speaking at the Conference on the European Charter for Sma

54、ll Enterprises, Berlin 4-5 June, 2007. Innovation is similarly recognised as an essential component of the economic growth process “Putting knowledge into practice: A broad-based innovation strategy for the EU. COM (2006) 502, 13.09.2006, Brussels. European Commission (2006), Creating an Innovative

55、Europe: Report of the Independent Expert Group on R&D and Innovation, p.25, Brussels. As the worlds trading economies become more integrated and interdependent, the ability of companies to seize upon evolving global business opportunities - by commercialising new products and processes faster an

56、d more effectively than their competitors - will be critical for their growth and for their long run survival. This competitive reality informs the inter-related goals of the European Commissions Lisbon Strategy for Growth and Jobs “Implementing the Community Lisbon Programme: Financing SME Growth A

57、dding European Value”, COM(2006) 349 final, 29.6.2006, Brussels. and the promotion of European innovation. “Putting knowledge into practice: A broad-based innovation strategy for the EU”- COM(2006) 502 final 13.9.2006, Brussels. Innovation and SME policies meet in the shape of new knowledge-based en

58、terprises spawned from the regions infrastructure of universities, research laboratories and existing high-tech firms.Increasingly, access to advantage technological skills and processes is not an insurmountable barrier to SMEs. New technology-based firms (NTBFs) working at the frontiers of applied

59、sciences, while inevitably a minority of SMEs, are widely recognised as a key source of entrepreneurial vigour and innovation in a modern, technocratic economy Siegel, D. S., Wessner, C., Binks, M., Lockett, A. 2003. Policies promoting innovation in small firms: Evidence from the US and UK, Small Business Economics. 20(2). 121-127. These high-tech young firms, acting as catalysts f