Paris France’s Minister of Finance and Economics, Bruno Le Maire, has spoken out in favor of greater independence for Europe when it comes to financing young companies in the field of future technologies. “We want European money to be invested in European start-ups,” said Le Maire on Tuesday at the “Europe 2022” conference organized by Handelsblatt, Wirtschaftswoche, Tagesspiegel and Zeit.
If non-European investors were to get involved, the question of technological sovereignty would always arise. “We don’t want our technologies to be controlled by either China or the US. We want to be an independent power,” Le Maire said.
Under Franco-German leadership, a ten billion euro umbrella fund for investments in the European tech sector is now to be set up under the title “European Tech Champions Initiative”. Ten to 20 pan-European funds are planned as part of the initiative, which should take late-stage start-ups to the next level of financing.
Berlin and Paris each intend to contribute one billion euros. Other member states and private donors should also participate.
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“The plan is that our start-ups get growth opportunities,” said Le Maire. In France, Germany and many other EU countries, young companies have good conditions in the start-up phase. “But they often don’t have the funding to grow into giants. And we want European technology giants,” said the minister.
Le Maire made the fund official late Tuesday afternoon in Paris together with Federal Finance Minister Christian Lindner (FDP) at an event of the French EU Council Presidency on Europe’s digital sovereignty.
venture capital is lacking
The Europeans are world leaders in many established industrial and technological areas, said Lindner. “But we are lagging behind when it comes to the champions of tomorrow.” Although Europe has an excellent ecosystem for start-ups, there is an “open flank” when it comes to venture capital.
The problem from the perspective of Berlin and Paris: As soon as a start-up has reached a critical size, growth can no longer be driven forward with funds from the European market. In order to be successful worldwide, the young companies would then either have to turn to large foreign funds or allow themselves to be swallowed up by an international competitor.
Central decisions often depend on the origin of the financiers in the late phase, such as the future headquarters of the company or the location of the IPO. As a result, Europe is losing those tech companies “with the highest growth potential,” said Lindner. “From an economic policy point of view, this is not acceptable.”
Le Maire called the fund of funds, which was launched with public money, a “first important step in the right direction”, but it is still not enough. In order to improve the financing environment for technology companies in the EU, “the banking union and all the necessary steps for a single European capital market” are also needed.
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The fund of funds is to be managed by the European Investment Fund (EIF) based in Luxembourg. The aim is to work out all the details of the “European Tech Champions Initiative” by September. The new financing instrument should be operational by the end of the year.
Le Maire is also concerned about Europe’s sovereignty in other areas of industrial policy. Whether hydrogen, semiconductors, biotechnology or battery factories – in all these areas there is a need for a state strategy that also gives private investors planning security.
Don’t overestimate the taxonomy conflict
Joint German-French projects are of particular importance here. “We are in the heart of Europe, we stand for the future of Europe,” said the minister at “Europe 2022”. If Berlin and Paris pull together, there could be “a sovereign Europe between the USA and China” in the 21st century.
Le Maire did not want to overestimate the conflict between the two countries over the future use of nuclear power. Paris has pushed through the inclusion of nuclear power in the EU’s green investment rules, known as the taxonomy.
The minister said he respected the German position to phase out nuclear power. “I ask German society to also respect the French position.” France has decided to rely on a mix of renewable energies and low-emission nuclear energy in the fight against climate change. This decision is also related to not wanting to be dependent on gas supplies from Russia and other countries.
Le Maire reminded that massive public investment is required for the green transformation of European economies. For this reason, an adjustment of the debt rules in the EU must be considered.
He does not see a conflict with Germany on this point, after all, the federal government recently provided 60 billion euros for investments. It is about “finding the right balance between sound public finances and investments” in the coming years, he said. In any case, the mistake of the euro crisis ten years ago, when overly ambitious budget restructuring choked off growth, should not be repeated.
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