More private sector investment essential for creating innovative SMEs, claims ANVAR
The French national agency for innovation (ANVAR) has stressed the need for the public sector to encourage increased private sector spending on innovation. The call came as ANVAR presented the current capital investment figures for small and medium sized enterprises (SMEs) in France in January. According to ANVAR, innovative enterprises abandoned 39.5 per cent of projects during the period 1997 to 1999 due to high innovation costs. At the beginning of 2000, the sagging global economy caused the situation to deteriorate further as financial centres were more reluctant to invest in new innovation technology companies. As a result the creation of new enterprises dropped to nearly 20 per cent in the first half of 2002, claims ANVAR. The summary presented by ANVAR suggests that it is unlikely that 2003 will see a sufficient increase in capital risk investment. Despite the availability of public funds, they can only partially resolve the situation: 'The need for start up capital is essential for setting up enterprises.' ANVAR notes that a similar lack of investment in innovative projects by SMEs is prevalent throughout Europe. In fact, France has maintained an acceptable level of capital investment in relation to its European neighbours. In 2001, France was ranked third for capital investment and was in second position for its investment in enterprises. However, there has been a significant decrease of 36 per cent in capital investment since 2000, when only 1,926 enterprises received investment compared to 2,994 the previous year. The figures for the first quarter of 2002, whether they be European or French, show a decrease in capital investment, which is not expected to improve by 2003, suggests ANVAR. The first to be affected by a decrease in capital investment are young entrepreneurs as they represent too high a risk to capital investors. Europe invests only 0.4 per cent of GDP in activities carried out by young entrepreneurs, compared to 1.2 per cent in the US. Within this context, ANVAR expects that the public sector can play a crucial role in turning the tables on innovation investment. It is hoped that the bill on innovation presented in December 2002 by Nicole Fontaine, French Minister for Industry, and her colleague Claudie Haigneré, Minister for Research and New Technologies, will help create a more favourable environment for innovation activities in France.
Countries
France