Dynamic SMEs need financing

Commentary by Sirpa Pietikäinen MEP, Member, Economic and Monetary Affairs Committee, European Parliament, EPP

Sirpa Pietkainen MEP The world has always been undergoing constant change, but the pace of that change is accelerating. We are faced with a world full of disruptive challenges, ranging from climate change to resource scarcity, from increasing digitalisation to rapid population growth.

What we need are companies that take up those challenges and come up with solutions that provide us human beings with the same or better standards of living, consumer choices and experiences but using a fraction of current resources. We need highly innovative people, solutions and companies that can think out of the box and who – once they get from idea to product – are able to secure financing for those ideas.

We have a lot of that potential here in Europe. What we need is to help those good ideas and the companies behind them grow and prosper, and give investors investing in these companies a chance to benefit from this growth and prosperity. Bank financing is not enough – and often not a suitable source of support – for these highly innovative and new companies. The gap in funding for small and growing businesses within the EU is still an obstacle that needs addressing.

SMEs provide the backbone of the whole European economy and are an invaluable source of new ideas and solutions to challenges faced by our societies today. Their employment potential is significant, and with proper financing and other support mechanisms, our innovative European SMEs can provide Europe with exponential growth rates both in terms of employment and in terms of revenue.

Multiple sources of financing are needed, among them equity financing. This is why 1000 Companies to Inspire Europe is such an important initiative: it rewards these innovative companies for their efforts and – as the name suggests – inspires not only other companies, but also investors, to see the value of broadening the finance base.
In terms of well-functioning and transparent markets, it is also important that we encourage and help our companies with listing to the regulated markets already at their infancy.