On February 26th EURADA’s representatives attended a workshop on the topic of financial instruments for sustainable corporate growth and regional innovation in Valencia, organised by the Valencian Institute of Enterprise Competitiveness (IVACE). During the discussion, several interesting ideas for regional development practitioners were suggested. Participants agreed that RDAs should assume higher degrees of investment failing than private creditors and finance activities whose results may be untraceable but have a positive impact on the territory (e.g. when you ask for a study about the plastic industry).
It is essential to properly assess the viability of projects to count on experts and not rely exclusively on economists. Some regions might need to cooperate with other regions due to the lack of critical mass to specialise in a certain topic. Concerning this, one of the participants talked about an instrument that consists in putting money in capital risk funds that not only operates in the region but in the whole European continent, but under the condition of invest on at least double of that money in the region. The financial aid they offer also grows as the companies are more innovative.
Regional development experts should try to leave the comfort zone and finance projects that are not only justifiable and meet what they are required to provide, but what is more productive for the resilience territory in the 21st-century economy. It is crucial to create financial instruments that meet market gaps. It could be interesting to adapt financial instruments combining subsidies together with investments, credits and guarantees. This can be done in the first stages of innovative companies or in those projects that do not initially generate profitability. RDAs could also have a disintermediating role between banks and companies because the “smart money” they inject in companies is much more sustainable and leveraging.