Ramon Tremosa i Balcells MEP
“To connect companies with capital, we need to fill the existing gaps in the funding ladder”
Foreword by Ramon Tremosa i Balcells MEP, ALDE Coordinator, Economic and Monetary Affairs Committee, European Parliament
London Stock Exchange Group’s 1000 Companies to Inspire Europe report is excellent at mapping out high-growth companies throughout the EU. From my native Catalonia to Finland, and from Ireland to Cyprus, highly innovative and successful companies are creating the new jobs that Europe needs. As Members of the European Parliament’s Economic and Monetary Affairs Committee, our duty is to support companies to grow as much, and as fast, as possible. This is why we are creating the framework for a Capital Markets Union, an ambitious initiative to widen access to finance, so that companies can accelerate their growth and create new and higher-paid jobs across the EU.
Working alongside the European Commission, the European Council, industries and regulators, we have already managed to make important progress. However, more needs to be done to overcome some of the key remaining challenges, including an existing lack of knowledge by most European entrepreneurs on the different funding options available to them to support their long-term growth strategies. This lack of knowledge reduces the efficiency by which capital is allocated to growing firms, meaning that high-growth potential firms sometimes struggle to obtain the right finance that they need to scaleup.
Another key challenge is an existing overdependency on banking finance, as European business culture is far more familiar with debt finance than equity. Many high-growth companies are skilled in accounting but not in finance management or attracting investment.
There is an urgent need to make it easier and cheaper for companies to access patient capital, therefore enabling smaller businesses to grow into large businesses, impacting EU productivity positively through the diffusion of innovation into the economy. By not seizing this opportunity to connect patient capital with entrepreneurs, EU growth prospects and job creation will be limited.
To connect companies with capital, we need to fill the existing gaps in the funding ladder. To do this, companies, investors, markets, legislators and regulators must keep pulling in the same direction and create the connected funding ecosystem able to support high-growth businesses from early stage through to listing on a public market.