Artificial intelligence (AI) has become an important key to drive economic development as it can bring solutions to many societal challenges, from treating diseases to minimising the environmental impact of farming.
In a recent development, at the Web Summit 2020, the European Investment Bank Group (EIB Group) launched a new financing instrument of €150M, to support artificial intelligence companies across Europe.
The Co-Investment Facility will allow the EIB Group to invest alongside funds backed by the European Investment Fund (EIF) in companies that are active in the artificial intelligence (AI) sector and in technologies that directly complement AI, such as blockchain, the Internet of Things, and robotics.
Aim of this new AI Co-Investment Facility
Europe’s AI sector has shown potential over the past years; however, a substantial funding gap still remains. Therefore, the AI Co-Investment Facility aims to contribute to filling this gap.
The aim of this facility, deployed over a period of four years, is to:
- support the European ecosystem of excellence and trust in AI and the European Digital Strategy of the European Commission
- target the “second equity gap” that companies face when they move into the growth phase of their life cycle
Speaking about the development, EIB Vice-President Teresa Czerwińska, responsible for innovation and digitalisation, says, “The potential of AI is enormous. If Europe wants to stay competitive and shape the conditions of AI development and use, while ensuring European values are respected, it needs to embrace AI and lead its development. By using our resources and combining the expertise and market access of the EIB and the EIF, we are pioneering new ways of financing AI, and helping to encourage more investment in this important sector.”
The new instrument is part of a larger initiative of the EIB Group and the European Commission to support the development of Europe’s digital future in areas such as high-performance computing, quantum technologies, and cybersecurity, among others.
How does the AI Co-Investment Facility work?
The facility’s new funds will be available in the European Union and in Horizon 2020 associated countries and are expected to be deployed during the next four years.
The EIB Group will collaborate with private investors in order to support about 20-30 small and medium-sized companies. The focus will be on early and growth-stage companies investing in the development of breakthrough AI applications.
The resource allocation to co-investments in companies will be considered on a first-come, first assessed basis, and on the merits of the proposal. By assisting fund managers in investing individual tickets of over €1M in high-growth European companies, the new instrument will complement the EIF’s existing fund activities.
Pre-defined eligibility criteria for the target companies
EIF’s Chief Executive Alain Godard says, “AI is a key component in a technological revolution that we are already witnessing. There is a strong market demand for co-investments in this sector. The EIB’s expertise in assessing individual equity-type investments and the EIF’s market reach and ability to leverage strongly on the fund managers in our portfolio active in the AI domain will ensure that the facility is deployed efficiently.”
The eligibility criteria for the target company is that it must:
- be active in the field of Artificial Intelligence
- be an SME, small midcap, large midcap, or corporate
- posses the majority of its R&D Full-time equivalents in EU-27 and Horizon2020 associated countries
- demonstrate strong growth potential