State aid

State aid

The two most relevant state aid frameworks are the General Block Exemption Regulation (GBER) and the Risk Finance Guidelines. The GBER exempts risk finance measures of up to €15 million per SME from prior scrutiny by the European Commission. Meanwhile, the Risk Finance Guidelines, aimed at SMEs and mid-caps with high growth potential, establish state aid conditions for amounts above €15 million.

These frameworks - along with the Temporary State Aid Exemption framework, have been particularly relevant to determine whether or not private equity backed firms could access public support during the Covid-19 pandemic. 

Revised Risk Finance Guidelines have been published on 6 December 2021 - the main change of relevance from a venture capital perspective is the increased flexibility for businesses of a certain age to remain eligible to risk finance aid. The GBER should be revised by mid-2022.  

How does it affect private equity?

Around 85% of the companies in which private equity invests are small and medium-sized enterprises ("SMEs"). Private equity cares deeply about creating the right environment for European companies to flourish. Creating a competitive and investment-friendly ecosystem, including a robust state aid framework is an important cornerstone in this regard.