The Technology Performance Financing (TPF) Pilot Project
The Technology Performance Financing pilot project was launched in March 1991 by DG Enterprise/D of the European Commission and involved nine major European commercial banks. Its objectives were to:
Increase the involvement of commercial banks in technology financing by encouraging them to experiment with Technology Performance Financing as a new product in their portfolio;
Enable the participating banks to share experience and good practices in financing technology projects
Help innovative SMEs, in particular NTBFs, to make their first reference sales;
Promote the adoption of new technologies by SMEs.
The participating commercial banks agreed to test the extension of the technique of Third Party Financing, used widely in the energy sector, to other sectors and technologies.
The Technology Performance Financing technique allows the financing of a new technology based on its performance. The European Commission provided a partial guarantee to cover the technology risk of the financier, as well as a contribution to the set-up costs of the system. The financing of technology projects originated from the participating bank's own resources.
Although the TPF pilot project and the Community support to the participating commercial banks ended in 1997, most of the participating banks continue to finance technology projects and have proven to be open to such opportunities. Innovative SMEs can contact directly these financial intermediaries, or they can first seek guidance on innovation financing sources and how to prepare for them from the
. Contact details can be found in the
List of Banks having participated in the TPF Scheme
Examples of projects financed through the TPF mechanism
The financing of a portable electronic invoicing system and its installation in 110 consumer goods delivery trucks (Greece).
The equipment was installed according to the delivery programme and has operated above the 80% minimum level of the performance clause. Performance measurements were performed on a weekly basis and the final assessment of performance showed a level of 89.95% of the guaranteed contractual provision. According to terms of this TPF pilot project, a reduction of the final value of the equipment by 15% ensued, with a call on the Community guarantee to offset partially the loss of the financier.
Delivery of a new electronic resistor microchip using SMD (surface mounted devices) technology for use in customers' products (Germany).
According to the manufacturer, the TPF scheme was a very helpful instrument to acquire various orders from different industrial firms. Due to these orders, its reputation on the market for micro-chips improved substantially. As a result of these successful developments, the manufacturer encouraged a venture capital firm to participate in the company in order to finance the proposed sales growth of the new chip sequence.
Installation of an automated shoe production line (Spain)
The operation was concluded successfully, all instalments having been paid and the equipment performing to the satisfaction of all parties.