Export prospecting insurance
A public guarantee that advances or reimburses part of a company's costs of entering a foreign market, repaid only in proportion to the revenue it later earns in that country.
Export prospecting insurance is a public export support scheme that shares with a company the commercial risk of entering a foreign market. The company defines a prospecting budget for a region and period: market studies, travel, trade fairs, hiring, product adaptation, setup costs. The public agency covers part of it, as an advance or indemnity, then the company repays according to the revenue it later earns in the region, at an agreed rate. If prospecting fails, the company keeps the sums received beyond what it must repay, and the state bears the loss. The mechanism is thus less insurance in the strict sense than financing with conditional repayment, whose contingency is commercial success. It targets small and midsize companies first, for which the fixed cost of a first foreign venture is a disproportionate risk. It illustrates the state's role as insurer of the positive externalities of exporting, which the private market does not price because a failed prospecting effort is not a poolable contingency.
Textbook case: a 40-employee company plans 300,000 euros of spending over two years to set up in Canada. The public agency advances it 150,000 euros. If its Canadian sales remain weak, it repays only a percentage of that revenue, and the state bears the rest of the advance; if they take off, it repays the advance in full.
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