Venture debt is provided by the EIB to fill the scale-up financing market gap faced by high-growth, innovation-focused companies in the EU. It’s an important tool to assist firms heavily involved in research to continue to invest in research and development and market expansion. The EIB has utilised venture debt to support select investments in biotech, new technologies and strategic technology development in areas like drug development and green energy. These research-focused companies have limited access to standard debt financing due to a low asset base and not yet having reached profitability.
This report provides a quantitative analysis of the impact of the EIB venture debt instrument on beneficiary firms. It addresses the following question: what is the impact of EIB venture debt on beneficiaries’ performance and how well do EIB beneficiaries do compared to similar firms that do not receive any form of venture debt, but may still receive other forms of finance.
The impact of EIB venture debt financing is estimated empirically using data for the treated EIB venture debt beneficiaries and the control group before and after receiving venture debt. The findings are that relative to their peers—innovative firms that received venture capital and are similar in age and financial circumstances, but that did not receive any venture debt loan—EIB venture debt beneficiaries show higher growth of assets and productivity and are able to attract additional financing from the market.