The European Commission has adopted revised Guidelines on State aid to promote risky financial investments (Guidelines on Risk Finance).

The revised guidelines will apply from 1 January 2022. They simplify and interpret the rules under which Member States may assist and facilitate access to finance for European start-ups, small and medium-sized enterprises (SMEs) and mid-caps, and on an equal footing. single market.
Risk finance aid is an important instrument that Member States can use to support innovative start-ups focused on growth, SMEs and certain types of mid-caps in the early stages of development. Despite their business potential, it can be difficult for these companies to obtain financing. To address such market failures, the Risk Finance Guidelines allow Member States to address the lack of funding under certain conditions and with well-designed financial instruments and fiscal measures, and to attract private investment in start-ups, SMEs and mid-range companies through state aid. capitalizations that meet these conditions.
The Commission has adopted revised Guidelines on Risk Finance since 2019, as part of a review of the adequacy of state aid, it carried out an evaluation of existing rules and extensive consultation with all stakeholders on the proposed revised text of the Guidelines. Member States, regional and local authorities, business associations and stakeholders were involved.
The evaluation and consultation confirmed that the Risk Funding Guidelines are useful, but that some targeted adjustments are needed, including clarification of some concepts and further simplification, to make the existing rules simpler and easier to apply.

Therefore, the revised Risk Finance Guidelines specifically:
• The requirement to conduct a shortfall analysis is limited to the largest risk finance programs and further explains how the aid is justified. The evaluation showed and the consultation confirmed that Member States are finding it difficult to quantify the funding gap. Therefore, the revised Guidelines only require an analysis of the funding gap for the largest support measures for risk finance, ie for those that allow investments of more than EUR 15 million per beneficiary. Experience shows that this simplification will apply to the vast majority of new measures. Furthermore, the revised Guidelines explain how to demonstrate the existence of a particular market failure or other relevant barriers to accessing finance, in line with existing practice.
• Introduces simplified requirements for the evaluation of programs aimed exclusively at start-ups and SMEs that have not yet made their first commercial sale. This will apply in particular to the amount of evidence that Member States have to provide as part of an ex ante evaluation, which they must submit to show why the aid is necessary, appropriate and proportionate. Given the more serious market failures that such companies typically face, the Commission may consider that a limited amount of evidence is sufficient to demonstrate the existence of market failures that justify the granting of aid to these companies.
• align certain definitions in the Guidelines with those in the General Block Exemption Regulation to ensure consistency. In particular, the definition of "innovative mid-cap companies" in the Guidelines is aligned with the definition of "innovative companies" in the General Block Exemption Regulation in order to eliminate the existing inconsistency between these acts as to which companies are considered "innovative". In addition, the definition has been expanded to include mid-cap companies that have participated in or received investment from selected EU initiatives, such as the CASSINI Space Enterprise Initiative and the European Innovation Council and its fund.

Further information can be found in the Guidelines on State aid to promote risky financial investments (europa.eu)