Feedback obtained during the European Commission's consultation on the Entrepreneurship Green Paper confirms that the crucial role of business angels in innovation financing is widely recognised across Europe, said EU Enterprise and Information Society Commissioner Erkki Liikanen in Milan on 13 November. Business angels are individual investors who finance and advise start-up companies. Mr Liikanen told the fourth EBAN (European Business Angels Network) congress that, although business angel networks are mostly local and regional, a more pan-European approach is desirable in equity finance. 'Very few countries have domestic resources to finance, for example, medical or biotechnology companies beyond the first financing round,' explained Mr Liikanen. 'Investor cooperation is needed [...] I urge you to continue to explore co-investment schemes and public-private partnerships to this end.' In a follow-up to its early pilot action in support of business angel networks, the Commission will establish a Europe-wide business angel panel in 2004 to survey current trends in the business angel community and to collect opinions from members of that community. While encouraging more pan-European cooperation, Mr Liikanen also recognised that business angel networks only work if they take the differences between Member States into account. 'The business models should be flexible and tailored to the specific circumstances of each country and region,' he said. A European Commission report published in March 2003 stated that start-ups rely more and more on business angels for early stage financing as venture capital companies are cutting back on small scale investments, and banks are moving away from this sector on account of high overhead costs. The Commission's consultation on the Entrepreneurship Green paper, conducted during 2003, confirmed that enterprises often have difficulty in securing sufficient early stage risk finance. The situation called for well-defined and limited state intervention, according to Mr Liikanen, in order 'to share the [financial] risks between the public and private sector.' However, public support should focus solely on the gap in early stage financing, the Commissioner argued: 'We must make sure that we do not crowd out private investors by expanding to more profitable later stages where the gap is not evident.' Concluding on an optimistic note, Mr Liikanen said that the Commission will be presenting its Action Plan on Entrepreneurship to the Spring Summit of 2004 in the context of a slowly but steadily improving macroeconomic environment: 'Structural reforms, low inflation, low commodity prices, and stronger stock markets form a solid base for economic growth. This means new opportunities for entrepreneurs and new opportunities for business angels.'
Policy making and guidelines
25 November 2003