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September 29, 2016
Region:
Analyst:
Ensuring sufficient funding for European start-ups forms an integral part of the emerging European Capital Markets Union (CMU). Cost-efficient solutions are necessary to reverse the 40% decline in small IPOs in recent years. To strengthen bank lending to start-ups, reviving the securitisation market and potentially establishing an SME-covered bond market is crucial. Venture capital investments are also subdued – most recently, they were only one tenth of the level in the US. To increase them, institutional investors should be granted more flexibility in their portfolio allocations. Finally, the EU hosts more than 500 crowd funding platforms. A common legal and regulatory approach could stir consolidation and thereby reduce search costs for investors and borrowers alike. [more]