By calling for increased innovation financing in the European Union, the EIB has taken an important step to strengthen the region’s technology leadership.

The report, published on July 24, emphasizes that removing investment barriers is a “critical need” to channel savings into key areas in the European Union market. The title of the report is “Scaling Gap: Financial Market Constraints Limiting Innovative Companies in the European Union”.

This topic reveals the importance of greater investments in companies at the scaling stage in order to maintain Europe’s technological superiority and compete globally.

The report states that investments in scaling companies should be increased in order to maintain the European Union’s leadership in the technological field and increase its competitiveness worldwide.

In this context, closing the financing gap is critical for the advancement of advanced technologies such as green technology, artificial intelligence (AI) and quantum computing. EIB states that eliminating financing gaps in these areas is an important step in Europe’s technological development.

The EIB has drawn attention to this issue before. He touched upon similar issues in his report titled “Artificial Intelligence, Blockchain and the Future of Europe” published in June 2021.

Since then, the European Union became one of the first regions to implement a comprehensive set of regulations in the AI ​​sector and began actively regulating crypto assets and blockchain under the Markets for Crypto-Assets (MiCA) regulation.

However, a report published by the European Court of Auditors in May 2024 emphasized that the European Union must “step up the pace” to compete with global leaders. This shows that there is an urgent need for the EU to maintain its competitiveness in new technologies.

The EIB notes that the limited size and depth of European capital markets pose major challenges for innovative companies, especially at the scaling stage when financing is insufficient. Lack of financing negatively affects companies’ capital accumulation, growth, productivity and employment capacity.

The report emphasizes the need to deepen Europe’s capital markets, especially the venture capital market. The EIB Group’s successful history of supporting innovative companies and scaling important technologies is also important in this context.

EIB President Nadia Calviño stated that they are ready to do more on this issue and that creating a true capital markets union is a key priority for sustainable growth and job creation.

It is stated that venture capital investments in Europe are quite low compared to the USA, and this causes European companies to experience slower capital accumulation compared to their competitors in Silicon Valley.

European scale-up companies often remain reliant on foreign investors, with many lead investors coming from outside the European Union in their financing rounds. This situation may lead to local companies being acquired by foreign companies or listed abroad.

Therefore, strengthening Europe’s capital markets and increasing domestic investment is of great importance.