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Reform Support
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Supporting reforms to develop well-regulated, stable and competitive financial markets

Funding Programme
Technical Support Instrument (TSI)
Year
2021

Boost for start-ups and innovation in Malta

The Commission is supporting Malta in plugging the gap in funding for start-ups and innovative businesses in Malta by assisting the Malta Development Bank (MDB) in designing two new financial instruments – an equity-based financial instrument for small and medium enterprises (SMEs) and a financial instrument to support start-ups.

Context

Malta’s business landscape is uniquely characterised by an above-average presence of micro enterprises. As Malta’s only promotional bank, the MDB is mandated to address significant and pressing market failures and sub-optimal investment situations. In this respect, the need to boost equity investment in Malta’s research and innovation framework has been frequently emphasized by the European Commission and the European Investment Advisory Hub (EIAH). The reluctance of commercial banks to borrow money for investment in innovation and start-ups and the lack of organized venture capital facilities, were the main factors behind low R&D investment ratios in Malta. The COVID-19 pandemic intensified the urgency of a renewed, concerted effort to boost investment with the creation of an equity-based financial instrument dedicated to SMEs as well as a new financial instrument dedicated to start-ups.

Support delivered

Experts first carried out a gap analysis involving extensive desktop research and interviews with 23 stakeholders, as well as a review of six existing financial instruments across Europe to gain a better understanding of what works where and why. This was followed by a dedicated event to obtain feedback from key Maltese stakeholders. Then, experts delivered technical recommendations and assistance for the design and implementation of the new financial instruments based on MDB’s preferences.

The project resulted in the detailed design of two new equity financial instruments, being the “Accelerator and Seed financial instrument” targeted at supporting start-ups at their initial phase of development. The “SME Equity financial instrument” is a co-investment instrument aimed at increasing liquidity in the Maltese equity market.

Results to be achieved

With the finalization of this project and the distribution of two new financial instruments, the MDB will be in a better position to improve its support to the Maltese enterprises' growth from the proof-of-concept stage to expansion and growth stages. These two financial instruments will be key factors in contributing to new smart investments in Malta, from start-ups to more mature enterprises.

More about the project

You can read the final report here: