Expanding Investment Ecosystems

Expected Outcome:

Project results are expected to contribute to all of the following expected outcomes:

• Increased foreign^[1] venture investments from funds from 'strong' or 'innovation leader' innovator regions and enabling later-stage growth for expansion to these regions of local start-ups from less connected and developed innovation ecosystems ('emerging” or 'moderate' innovator regions);
• Increased foreign investors’ awareness and access to the flow of local deals from 'emerging' or 'moderate' innovator regions;
• Improved foreign investors’ knowledge on regulatory frameworks and networks/syndicates to support joint cross-border venture investment in the above characterised underserved markets.
• Improved start-ups’ knowledge from 'emerging' or 'moderate' innovator regions on market and regulatory frameworks and expectations from networks in foreign 'strong' or 'innovation leader' innovator region to support their expansion and access to funding in these regions;
• Increased available and committed venture capital in less connected innovation ecosystems, enhancing their scale, diversity, breadth, openness and potential.

Scope:

The lack of later-stage funding and partners for expansion to foreign markets is one of the most problematic aspects of business growth particularly for the startups from less developed innovation ecosystems. In order to scale to a leading business, startups need to expand to foreign markets beyond their region. At earlier stages start-ups are typically supported by local investors and partners. However, in order to expand inside the EU they would need access to the funding from actors with presence and knowledge in these new markets. The lack of partners for expansion to foreign markets beyond their region is harmful for local start-ups’ growth and investor activity and the development of regional scale-ups, even more so for women-led companies. While the limited number of established European start-up hubs attract significant money and traction, the innovation ecosystems in other areas struggle to keep pace with fewer resources, including funds and technical expertise. In the struggle for resources, many start-ups face the choice to either forego growth and ultimately close their business or move elsewhere, while foreign investors struggle to enter new markets due to insufficient information about the market, its opportunities and regulatory frameworks.

If organised and structured, investments ecosystems should be able to attract foreign investors into “emerging’ and ‘moderate’ innovation ecosystems by raising awareness of local innovation ecosystems and their start-ups, as well as the potential of the whole region, to capital providers from across Europe. Foreign investors should be interested to support startups from these ecosystems to expand to other markets and increase their connectivity to relevant partners and market knowledge.

The action supports co-designed programmes of activities, of at least two (2) years, proposed by business acceleration service providers and/or investor networks and clubs, and/or innovation hubs^[2] located in less developed innovation ecosystems (‘emerging’ and ‘moderate’) and more developed ones (‘strong innovators’ and innovation leaders’), to facilitate the entry of foreign funders from ‘strong innovators’ and innovation leaders’ regions to less developed innovation ecosystems through activities, including at least five of the examples below:

• market orientation/introduction programmes for foreign investors, including establishment of central points of information for foreign investors providing them with knowledge on the ecosystem's establishment conditions, incentives, tax and local legislation;
• market orientation/introduction programmes of developed markets for local startups and funds, including establishment of central point of information providing them with knowledge on the ecosystem's establishment conditions, incentives, tax and local legislation;
• assistance to foreign investors during the whole process of investment, from the pre-entry stage until the exit, by ensuring support in administrative, legal, linguistic and cultural issues;
• roadshow to leading innovation hubs to showcase the potential of the local ecosystem, its promising start-ups and active local investors;
• organisation of European international business forums, conferences and events to attract and connect foreign investors with local investors;
• establishing cooperation with public and private buyers of innovative solutions and with the innovative companies they are buying from; peer-matching of investors and business angles and other networking activities to encourage joint ventures;
• a repository of best practices of market entry facilitation for foreign investors;
• a repository of best practices of market entry facilitation for startups from 'emerging” or 'moderate' innovator regions to markets of foreign 'strong' or 'innovation leader' innovator regions;
• a list of recommendations for local authorities and European regulators to better address investors’ entry challenges and facilitate cross-border deals.

All of these activities should be targeted to one or several of the 5 burning challenges of the New European Innovation Agenda in order to ensure more targeted and tailored match between participants and more tailored services. The 5 burning challenges include: reducing the reliance on fossil fuels, increasing global food security, mastering the digital transformation (including cybersecurity), improving healthcare and achieving circularity.

To ensure that the impact of the action goes beyond consortium members and their respective countries, it is encouraged that the consortium works closely with innovation agencies and/or similar government organisations, supporting start-ups and development of innovation and entrepreneurship from their respective territories and beyond, and seeks synergies with relevant EU initiatives such as the Enterprise Europe Network, as well as with the other projects funded under this topic.

[1] For the purposes of this topic, foreign should be understood as from a different EU Member State or Associated Country.

[2] Innovation hubs encompass a wide range of stakeholders, including entities from both the private and public sectors, as well as incubators and accelerators.