The I-TEC pilot project is an initiative to encourage early stage investments in technologically innovative SMEs. It was launched in July 1997. I-TEC is supported by the European Commission under its INNOVATION/SMEs Programme, and implemented in collaboration with the European Investment Fund.
I-TEC aspires to help build, within Venture Capital operators, a lasting capability to appraise and manage those early stage projects, in technologically innovative SMEs, which, in spite of their economic viability and inherent quality, would otherwise not be taken into account.
I-TEC will benefit European innovative SMEs, active in the European Union and in the Associated States (i.e. Iceland, Israel, Liechtenstein, Norway), which should directly approach the selected I-TEC Venture Capital operators.
Thanks to the I-TEC pilot project, innovative SMEs can access a network of 28 capable Venture Capital investors, interested in business projects with a high degree of innovation in technology, product, service or process and which exhibit a potential for high growth and new job creation.
The Venture Capital operators which are taking part in the I-TEC pilot project have agreed to devote at least 25% of their funds to early stage investment in technologically innovative SMEs over the next three years.
Before contacting any Venture Capital operator, innovative SMEs should inform themselves of the precise nature of Venture Capital.
Within the Gate2Growth Initiative, the Commission services support guidance and matching services to help entrepreneurs identify and approach suitable investors
To qualify for I-TEC, investment projects must:
- Be made with the specific aim to support early stage investments in technologically innovative SMEs, active in the European Union and the Associated States (i.e. Iceland, Israel, Liechtenstein, Norway),
- Be made in SMEs (as defined in the Recommendation of 3 April 1996; O.J. No L107 of 30.04.1996, p.4),
- Provide long term equity or quasi-equity capital (subordinated or participative loans, convertible bonds,...). Whatever form they take, the investments must be available freely, in full and in money to investee companies,
- Not serve to replace the obligations, commitments and engagements of existing long term financiers of the SME, or to merely refinance the company's debts,
- Lead to the incorporation of a company, and must be initiated during a period beginning 12 months prior to the date of incorporation and ending 36 months after this date,
- Pertain to an extension of the existing operations, the development of new activities or the introduction of new methods or systems of production, based on innovative technology or products. To qualify as innovative technology projects, investments made under this action should comply with at least one of the following criteria:
The I-TEC contribution per selected Venture Capital operator will be as follows:
- The European Commission can contribute up to 50% of the costs related to initial appraisal and hands-on management.
- The total I-TEC contribution per Venture Capital fund will not exceed 5% of the investments effectively made, with a maximum of 500,000 Euro.
The I-TEC contribution will be made available only after actual investments have been made.
I-TEC benefits can be awarded to those Venture Capital operators that:
Have organised a fund-raising effort to mobilise new capital;
Have submitted an investment proposal to the European Investment Fund that has subsequently been validated by the European Investment Fund, according to its investment guidelines and after an economic evaluation;
Undertake to devote at least 25% of the new capital raised to early stage investments in technologically innovative SMEs, in particular to those resulting from Community funded research or in the less favoured regions of the European Union. Investments must be made in at least five different companies.
Venture Capital operators, which have built a certain capability in this type of investments, will be required to increase the overall amount invested in such projects by a factor of 1.5.