Public funding of innovation: Exploring applications and allocations of the European SME Instrument

Abstract Financial constraints can severely limit the development of small and medium size enterprises (SMEs) are very likely to affect innovative firms. In order lower barriers firm growth, in 2014 European Commission introduced SME Instrument with specific aim support businesses high-growth potential need external finance. By exploiting availability information not only on grant awards but also applications, this is first study that examines which types firms apply scheme ones selected for two main rounds funding. The evidence suggests successful at attracting SMEs potential, – line signalling theory patenting prior venture capital funding strong predictors awards.