State capital risk provision in the National Innovation Council (NIC)

There seems to have been a “spontaneous” tendency for public innovation funding organizations to drift into funding in later stages in the innovation process – instead of concentrating on the early stages, where innovating companies do not yet have any sales. The provision of this funding did compete with private providers of capital, which may be partly explained by the fact that it was often required that public risk capital providers should co-invest with private investors. Hence, the additionality condition was not fulfilled for most of the public risk capital invested.

This issue was discussed at the first meeting of NIC in February 2015. There was a general agreement that additionality (market supplementation) shall be assured. The Minister of Enterprise and Innovation (Mikael Damberg) appointed an investigation immediately after that meeting. The investigator presented his results already by June 15, 2015. It was discussed again at the NIC in September 2015. It was then sent out for a wide review and the Ministry presented a bill to Parliament in February 2016. This bill was discussed in Parliament in June 2016 and a decision was taken, completely following the proposals in the bill (which indicates agreement among the political parties). Already very soon (in early August 2016) after the decision in Parliament, the Minister of Enterprise and Innovation crated a new public risk capital company called Saminvest with a capital of five billion Swedish crowns.

To complete this process from discussion in the council to a decision in Parliament and the creation of the public risk capital company in 17 months is enormously rapid. I believe that the fact that it was discussed in NIC, created by the PM, is a partial explanation to the speed of action. In other words the mere existence of the NIC was important. Actually, the existence of NIC has given the innovation policy issues a much higher status and degree of importance within the government (as such) and within the government agencies, i.e. in the whole state apparatus. The swift action of the Ministry of Enterprise and Innovation is the second part of the explanation of the rapid action.

The bill to parliament on risk capital can be found at:–struktur-for-finansiering-av-innovation-och-hallbar-tillvaxt-prop-2015_16_110.pdf

This issue is dealt with in Charles’ paper entitled: “The Swedish National Innovation Council – Governance to replace linearity with holism in innovation policy?” to be presented at the SPRU 50 Year’s Conference, September 7- 9, at Sussex University, Brighton, UK.