Press release 2017-12-13

Environmental technology companies need lengthier support if they are to grow

A new study from IVL Swedish Environmental Research Institute indicates that it takes more than five years for the average Swedish environmental technology company to reach the expansion phase. For the most successful companies a clear growth phase begins around the ninth year of operation. This means that today’s investment aid given to start-ups is not enough to bridge the gap from start to when the fledgling business starts to grow.

The EU regulates a special state aid designed to help start-ups to reach the expansion phase. At present, this support may only be granted during the first five years.

– Based on the results of this study, it is possible to argue that the five-year time limit is too narrow when applied to the environmental technology segment. There is a risk that initiatives with good ideas and potential may fail and this, I dare say, is especially serious when it comes to ideas about environmental technology, says Andreas Englund, business developer at IVL Swedish Environmental Research Institute.

The study published today is based on 443 companies eligible for state aid and data stretching back 30 years. Focus is on companies that have managed to grow and the pattern that emerges is clear. On average successful environmental technology companies grow from micro-enterprises to small businesses after 13 fiscal years. For most of these companies, a clear growth phase can be discerned around the ninth year of operation and growth accelerates around the 16th fiscal year.

The findings also indicate that innovative companies have a lower growth potential than conventional environmental technology companies.

– Here there is need for further analysis. Innovative companies are breaking new ground, are more unproven, which means that the road to market may be longer than for other environmental technologies. However, we need these companies. A broader breakthrough of environmental technologies and innovations can contribute to the technological transformation needed if the transition to sustainable development is to succeed, says Andreas Englund.

He believes that the Swedish government, backed up by the study, should raise the issue with EU and initiate a review of the five-year rule.

Read the report here

The study was carried out in collaboration with the Mid Sweden University and financed with research funding from the Swedish Energy Agency.

For more information, please contact:
Andreas Englund, andreas.englund@ivl.se, +46. (0)10-788 69 26