SME market financing: Is there more to it?

Small and medium-sized enterprises (SMEs) – in particular those that are young, innovative and have risky projects – face minimal financing opportunities. In recent years, several initiatives (e.g. junior stock markets, SME Growth Markets, crowdfunding, and the Capital Markets Union) have been introduced to close this funding gap and promote the development of capital markets for these companies. Yet the financing mix of European SMEs has barely changed: it is still heavily tilted towards bank loans and internal funds. More recently, in an effort to further support SMEs to raise capital in public markets, the newly elected Commission President von der Leyen has proposed the creation of a private-public fund specialising in Initial Public Offerings (IPOs).

Apostolos Thomadakis, Ph.D., is a Researcher at ECMI and CEPS.