Commission extends I-TEC venture capital scheme
The I-TEC (Innovation and Technology Equity Capital) pilot project which encourages venture capital investment in innovative enterprises is to be extended, with additional funding of ECU 3.5 million. Announcing the extension, Mrs. Edith Cresson, Commissioner responsible for research and innovation, welcomed the success of the first phase of the project since its launch in July 1997. With an initial budget of just ECU 7.5 million in EU funding, I-TEC has attracted a total of thirteen venture capital fund managers to pledge ECU 250 million for early stage investment in technologically innovative SMEs. The extension, I-TEC 2, will be run by the Commission under the INNOVATION programme, in collaboration with the European Investment Fund (EIF), with the aim of increasing efforts to tackle one of the main barriers to innovation in Europe - the lack of private capital investment. Venture capitalists who join I-TEC receive EU funding of up to ECU 300,000, on condition that they dedicate at least 25% of their capital to early stage investments in technologically innovative SMEs. EU funding then contributes to the costs of appraising companies for their investment potential, and the costs of the management attention which venture capitalists need to give to such companies. Under I-TEC 2, venture capital funds specialising in new companies, funds with a regional focus, funds with a specific technological focus and funds associated with science parks and research centres will all be eligible to participate. Proposals from funds approved by the EIF for the new Growth and Employment initiative will be given precedence under I-TEC 2. The maximum EU contribution per fund may be increased for projects which undertake to invest at least one third of their new capital through syndication with an independent, unrelated fund from another eligible country. Precedence will also be given to proposals which extend the existing geographic coverage of the funds already participating in I-TEC.