The European Institute of Innovation and Technology has stepped up SME funding. Answering COVId-19’s impact, the new program was launched on the 14th May. The EIT Crisis Pandemic Initiative will add €60 million to existing funds.
Last Thursday, the EIT announced an increase in start-up support. On a news conference, it stressed it would mobilize some extra €60 million. The goal is to support innovators, tackling the pandemic’s social and economic challenges. The measure comes in the context of a European response to the crisis.
As the chair of its board noted, it “will ensure entrepreneurs benefit from financial support at a critical time”. The directive, of course, goes beyond limiting COVID-19’s impact. It also aims at recovery, and its speed and green sustainability.
The funds have arrived at an important moment. The Corona crisis is impacting start-ups severely. Because they’re small, they are less able to deal with economic downturns. With less capital, losses of revenue cut deeper. Also, it’s harder for them to maintain employee wages. A recent survey notes that 41% of start-ups globally are in a “red zone”. This means that they have less of 3 months of cash runway. Also, 60% have had to lay off full-time employees.
The EIT Crisis Pandemic Initiative has two strands. The first has been named “Venture Support Instrument”. The second regards the Pandemic Response Projects. The Venture Support will focus on economic assistance to SMEs. It will do so by providing funding, technical assistance and networks. These last shouldn’t be underestimated. As “new actors” in the market, having a support network is critical for SME’s. The Pandemic Response will address the actual Corona crisis. It will do so by focusing on health problems, and the general response to the epidemic.
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