Last year, the European Investment Fund (EIF) committed some €14 billion to European SME’s. With borrowing costs still high and private capital scarce, EIF Chief Executive MARJUT FALKSTEDT, who will address FinanceMalta’s Annual Conference this November, says the Fund will step up activity in 2025, with a sharper focus on sustainability, innovation and competitiveness.
Falkstedt explains that the EIF intends to raise annual investments to €15 billion this year, a 10 per cent increase on 2024. Thanks to its intermediated financing model, working mainly through banks and investment funds, the move is expected to unlock a total of €51 billion for Europe’s SMEs.
“Our priorities are clear,” she says. “Green transformation, innovation, competitiveness and growth are themes that cut across all sectors.”
The strongest demand also comes from the riskiest areas. Policymakers are pressing the EIF to do more in fast-growing industries such as artificial intelligence, clean technologies and biotechnology.
But Falkstedt insists the Fund remains guided by its shareholders, namely the European Investment Bank and the European Commission, and by the strategic direction in reports from figures such as Mario Draghi and Enrico Letta.
“There is a clear need to close the innovation gap with the US and China, to decarbonise and to safeguard Europe’s security and strategic autonomy,” she says.
“Our task is to ensure capital flows where Europe needs it most — and to stay the course.”
Europe’s challenge is structural as much as cyclical. Its venture capital base remains far shallower than in the US or Asia, with pension funds and insurers still playing only a limited role.
“Strengthening Europe’s Capital Markets Union, now reframed as the Savings and Investments Union, is crucial,” Falkstedt stresses.
“Europe does not lack savings. There are about €10 trillion sitting in bank deposits, often at very low returns. Channel even a fraction of that into capital markets and the effect on SME finance would be transformative.”
Over the summer, the EIB Group launched TechEU, a flagship programme designed to mobilise €250 billion in investments by 2027. It aims to support 1,000 innovators each year, guiding them from idea to market with a faster, simpler process.
“It will be bigger, faster and simpler, and it will help create the ecosystem our innovators deserve,” Falkstedt says.
This balancing act between long-term goals and crisis response is something the EIF has had to master. She points to the Juncker Plan, formally the European Fund for Strategic Investments and the pandemic response as proof of agility.
“We can react rapidly to crisis-management measures,” she says. “But at the same time, we must remain focused on longer-term goals: green and digital transitions, innovation and competitiveness. The key is to maintain vision while staying flexible.”
The green transition looms particularly large.
More than half of the EIB Group’s financing already goes to climate and environmental sustainability. For 2025 alone, over €50 billion is earmarked to support the transition, from helping companies improve efficiency to backing breakthrough environmental technologies.
Local examples highlight the EIF’s reach.
In 2023, the Maltese government and the EIF launched a €16.55 million guarantee scheme under the EU’s InvestEU programme, later boosted with €30 million in EIF resources. By October that year, €10.5 million of government funds and €19.5 million from the EIF had been entrusted to Bank of Valletta, expected to trigger €60 million in investment and support more than 140 SMEs.
“The facility should be fully utilised by early 2026,” Falkstedt notes, adding that further resources may yet be allocated.
In Malta, renewables have so far been the main beneficiary, though fintech and maritime logistics are also growing in potential.
“Our intermediated model means local banks and authorities are best placed to identify underserved areas,” she explains. “One size does not fit all, but the strength of our instruments is in their versatility and adaptability to local market needs.”
That adaptability also matters when politics intrudes. Member states are eager for support in every sector deemed “strategic,” even when the risk-return balance is unfavourable. Falkstedt acknowledges the tension but insists financial discipline remains intact.
“Our essence is to support strategic priorities while managing risks carefully,” she says. “Sometimes, especially when we are in market-building mode, we accept higher risks and lower returns. That is the necessary first step in creating a thriving financial ecosystem. But reckless decisions are never an option.”
Another test comes from US and Asian funds stepping up activity in Europe. Can the EIF keep Europe’s most ambitious companies from heading abroad? Falkstedt points to the European Tech Champion Initiative, designed to help fund managers raise billion-euro funds capable of writing the large cheques Europe’s emerging tech champions require.
“We want entrepreneurs to be able to start in Europe and also to grow and prosper here,” she says firmly.
Looking ahead to 2030, Falkstedt expects the same macro themes of sustainability, innovation and competitiveness to remain central. New challenges will undoubtedly emerge, but she believes the EIF’s role will endure.
“Our mission is to make finance more accessible for European SMEs. That is the constant. The instruments may change and policy priorities may evolve, but our purpose will not.”
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