Government launches Next Tech Fund, which will mobilise up to 4 billion euros of public-private investment to boost companies’ growth
19 julio 2021
- This fund will promote the development of high-impact digital projects and investment in scale-ups by supporting public financing instruments, attracting international funds and boosting venture capital.
- The new mechanism will favour public-private partnerships and the development of venture capital, with a state share in funds and companies of up to 49%, which will increase the potential for investment in technology companies and projects.
- The fund will invest mainly in funds and companies developing digital projects such as artificial intelligence, internet of things, cloud computing or green algorithms.
Through the Ministry of Economic Affairs and Digital Transformation, the Government is launching the Next Tech Fund aimed at boosting the growth of digital companies and investment in high-impact technology projects.
Next Tech aims to mobilise 4 billion euros in joint public-private partnership resources (half public funds and half private investment) over an initial period of four years, with benchmark contributions over this period of around 2 billion euros in joint resources between ICO-AXIS and SEDIA, depending on the absorption capacity and annual materialisation of investments in the private sector.
The launch of the fund will boost digital entrepreneurship and digital enabling technologies, as well as consolidate the growth of highly innovative technology-based companies. In doing so, it will promote competitiveness, innovation, investment from international funds and the attraction and retention of talent.
Next Tech is set up as a fund of venture capital funds, for the financing of high-tech scale-ups, either directly or through venture capital funds, corporate funds or other investment vehicles.
The new mechanism will favour public-private partnerships and the development of venture capital, with a state share in funds and companies of up to 49%, which will increase the potential for investment in technology companies and projects.
With this aim, Next Tech will invest in funds and companies that operate in the digital field, promoting projects related to artificial intelligence, the internet of things, mass data processing technologies, cloud computing, blockchain, natural language processing, cybersecurity, biometrics and digital identity and green algorithms, among others.
Investments will primarily be aimed at bringing companies to the scale-up stage, between the size of the target companies of growth funds and the target companies of venture capital, incubation and technology transfer funds.
The minimum investment ticket will be 3 million euros, although the Fund may also invest in start-ups with investment tickets of around 1 million euros, only through funds and vehicles, as long as these companies focus on technological development projects in Deep Tech technologies (high-impact innovative technology) such as artificial intelligence, cybersecurity, big data, machine learning or computing, among others.
Promote the recovery and transformation of the production fabric
Promoting entrepreneurship and the scalability of projects in new digitalisation technologies is essential to boost the recovery and transformation of the Spanish production model, making it more competitive and capable of generating employment.
In this sense, the Spanish Government aims to promote entrepreneurship and to position the country as an entrepreneurial nation. Moreover, digital entrepreneurship is one of the main lines of action included in the Digital Spain 2025 strategy and in the Recovery, Transformation and Resilience Plan, with one of the main objectives being to modernise the public financial architecture to support entrepreneurship.
Launching this fund will make possible to respond to financing needs that are currently not covered by existing mechanisms, both by company life cycle and by sector. In fact, according to data from the Entrepreneurship Map 2020, Spain is more prone than the rest of Europe to financing through family and friends and, in fact, self-funding is still the main tool (46%) and only 5% use public resources to finance. In addition, there is an uneven distribution of venture capital between companies at different stages: in Spain, most venture capital (60%) is used to support “seed” companies. This is followed by "intermediate" companies (32%) and lastly "scaling" companies (8%).
These financing difficulties are coupled with the maturity of the entrepreneurial ecosystem in Spain, with start-ups that are already 2.5 years old and where scale-ups (start-ups in the most advanced stage of development) already account for 15% of the total in Spain.
For all these reasons, it is important to implement complementary public measures financing mechanisms for start-ups, encouraging the development in Spain of private equity funds with the capacity to finance large-scale operations, boosting business growth, competitiveness and innovation in the Spanish economy, as well as attracting and retaining talent.