REPORT 2012/05 Start av regionala investeringsfonder ... - circle

SUMMARY
This is the first annual on-going evaluation report on the endeavour comprising the twelve
regional co-investment funds with nationwide coverage that are run in the form of projects
financed by the European Regional Development Fund (ERDF) and co-financed by the regions.
Behind this endeavour lies an interest of the European Commission and national and regional
actors to work on revolving financing instruments in the form of equity capital with the aim of
addressing an identified lack of capital to finance small and medium enterprises (SMEs) with
ambitions of growth. The funds were established in 2009 and their objective is to improve access
to equity capital for SMEs in Sweden. The funds are operated in project form and are accordingly
referred to as fund projects. The period of the project extends from 1 January 2009 to 31
December 2014. The project owner shall present a final report on the use of the ERDF funding in
the project not later than 31 March 2015. The ERDF funding that has not been invested in
portfolio companies at least once by 31 December 2014 must be repaid to the European
Commission. Available funding that is not required to be repaid stays in the region after the final
report. During the project period, funding can be redistributed from the fund projects to other
structural fund projects.
On-going evaluation is tied to this endeavour, meaning that there will be continuous follow-up
and evaluation of its progress, which will contribute to learning with regard to implementation
and results. In this assignment, the on-going evaluation shall answer two overall questions:
1. Can the funds act as good venture capitalists given their mission, structure and regional
conditions?
2. Can this kind of fund provide the results and effects in society expected by the EU and the
Government (through the managing agency)?
This on-going evaluation shall also contribute to a broader discussion in society concerning public
investment funds as an instrument to increase the supply of capital for SMEs. The annual reports
shall present and discuss the implementation and results of the projects and analyse relevant
questions concerning the funds’ activities. This first report focuses on the funds’ mission, design
and goal structure, how the funds have commenced with their activities and what the most
important success factors are for the funds’ work and their challenges ahead. Besides this ongoing
evaluation, the Swedish Agency for Growth Policy Analysis (Growth Analysis) is working on
behalf of the Ministry of Enterprise, Energy and Communications on a broader evaluation which
includes research surveys, international experience of venture capital investments and impact
evaluation. Together, this on-going evaluation and the evaluation conducted by Growth Analysis
will increase understanding of ERDF-financed co-investment funds as an instrument in the
Swedish context and increase understanding as to whether use of these kinds of funds in Sweden
will be suitable in the future.
International research shows that this kind of co-investment venture capital fund programme is
difficult to design and must consequently be run as an experimental activity where new solutions
are gradually developed. Moreover, the structure must be adapted to the country’s regulatory
and cultural context and the task of on-going evaluation is to get involved and generate
knowledge of how such factors affect the activities of the funds. This report is the first in a series
of reports that shall gradually increase knowledge of how all parties involved, including the
agency in charge of the programme (Swedish Agency for Economic and Regional
Growth/Tillväxtverket) works with and influences the implementation of the endeavour in
Sweden.
Gordon Murray notes in a chapter in a book from 2007 that the public sector has historically
played an important role in the development of venture capital markets in various countries.
Nearly all countries that have well-developed venture capital markets today (including the U.S.,
the UK and Israel) have made extensive public efforts directed at building them up. At the same
time, in his latest book with the illustrative title Boulevard of Broken Dreams: Why Public Efforts
to Boost Entrepreneurship and Venture Capital Have Failed - and What to Do about It, Josh
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