29. 12 Remaining challenges Share of CI in overall financing of IBB 15 % but underdeveloped in classic loan products Direct grants for product and content development popular but not sustainable and selective, causes subsidy mentality, market distortion and state aid issues Risk capital only for companies with potential for high growth and increase in value (“cream of the crop”, dotcom, web-based) Different attitudes towards risk and finance (rejection of external influence and exist strategies among entrepreneurs in music, fashion, design) Risk-assessment of pre-financing projects and product development without binding purchase order and investments without fixed assets Low degree of creditworthiness (perceived and real) remains main challenge, worsened by more conservative rating approach and increasing interest due to the financial crisis Lack of collateral leads to personal liability and indebtedness in case of project failure Working capital not compatible with ERDF and state aid rules (new approach at EU-level necessary)
30. 13 Outlook and ideas Diverse sector with divers needs requires diverse instruments Financial sector (including IBB) needs to improve its understanding of the nature and commercial potential of creative businesses (e.g. recruiting experts with excellent industry knowledge for realistic risk assessment) Access to formal and informal networks to reach people with information about tried and tested finance options by people they know Alternatives for grants to avoid distortion effects, e.g. project competitions and prices, focus on the combination with other finance Conditionally repayable loans to avoid putting risk on the person Introducing mezzanine instruments New imaginative concepts such as “knowledge funding” for higher risk propositions to be financed with higher reward … (to be continued)