TechCapMarkets is a grassroots initiative whose purpose is to create a knowledge base and explore new ways to help innovative SMEs access capital and secure their growth. It is the product of a consortium composed of the consultancy Europe Unlimited (Brussels), the IESE Business School (University of Navarra) and the association PMEfinance (Paris), and is funded by the European Commission’s Horizon 2020 initiative.
TechCapMarkets aims in particular to improve the supply of alternative finance, including venture capital & angel investments by improving the exit opportunities for shareholders in privately held innovative SMEs. Market experts will be consulted to provide recommendations to address market challenges and encourage the development, and adoption of new market based solutions.
TechCapMarkets runs for 18 months from April 2018 to September 2019. It has two main outputs:
- A report, based on expert practitioner interviews, containing recommendations to policy makers and stock market operators across Europe ;
- A practical capacity building programme to deliver best practice knowledge to tech companies, and their investors, on the use of public and private market places for raising capital.
The project runs in four phases.
On September 25th, 2018, The High Level Advisory Group (HLAG), together with the project partners, met for an intense day of discussion at the IESE campus in Barcelona. There was a wide ranging discussion to identify the specific market challenges the fast-growth tech companies in Europe face in accessing public markets. Some of the major differences with the US market were explored such as: the lack of research coverage, market fragmentation and the underlying public market investor base.
These are, of course, not new issues. The group discussed how markets in general have changed over the last decade, and in particular changes in how large institutions allocate capital such as passive investment strategies in the public markets, and increased liquidity in the private markets – leading, particularly in the US – to companies going public at a much later stage in their life cycle. The rise of cross-over funds, investing in later-stage tech companies at “pre-IPO” with a view to holding their position when the company is public, was one market development that all the group agreed should be further explored and encouraged. The next stage will be to dive deeper through expert interviews.
European firms secured US$4.9bn in venture capital funding in Q3, far behind the US with US$28bn. But the European market could soon rebound.
The European venture capital (VC) funding market has dropped by 14 per cent in Q3 2018 compare to the previous quarter and is still lagging far behind North America and Asia, according to the MoneyTree report published by PwC and CB Insights in early October.
The report, which highlights the latest trends in VC funding globally, shows that Europe completed 638 deals and raised a total of US$4.9bn in Q3 this year. In comparison, North America closed 1308 deals for a total of US$28bn, while Asia completed 1359 deals and raised US$19.bn. Read more
The reduced banking lending facilities and the difficult access to private funding have led SMEs to increasingly look at alternative solutions to access capital in recent years; Initial Coin Offerings (ICOs) are one of them.
But even though money continues to flood in the ICO market with US$1.12 billion raised in Europe in Q2 this year, according to data from ICORating, the number of SMEs reaching their fundraising target has dropped significantly in recent months.
Thus, 50 per cent of the ICO projects announced worldwide in Q2 2018 were not able to attract more than US$100,000. In comparison, only 13 per cent of the projects could not go above this amount in Q1-Q2 2017.
For Clément Jeanneau, co-founder of Blockchain Partner, a consulting firm based in Paris, this drop has to do with the quality of projects. Read more
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 792306