Financing for Research & Development
14th December 2006, Brussels
EIF at a glance
Established 1994
Operational platform acting through Venture
Capital,
Guarantees for SME portfolios and financial
engineering
• AAA Rating
• Shareholders
Standard & Poor’s: AAA
Moody’s:
Aaa
Fitch:
AAA
EIB, EU, Financial
institutions
• Portfolio
• MDB status 0% weighting
EUR 14bn (600 000 SMEs)
Specialised European institution for SMEs
2
Resources and objectives
BMWA ERP
EUR 600m
+ Capital increase
European
Community
EUR 450m
(MAP)
EUR 1.1bn (CIP)
EUR 4bn
Revolving
Dahlia SICAR S.R.
Up to EUR 1bn
To be committed to venture capital funds and
financial institutions (eg: guarantees)
SMEs
3
EIF assets under
management
(at 30/09/06)
Total
commitments
VENTURE
CAPITAL
GUARANTE
ES
TOTAL
New commitments
(1 January 2006-30 September 2006)
Vehicles
EUR 450m
240
funds
EUR 10.3bn
EUR 490m
180
banks/
guarante
e
institutio
ns
EUR 14bn
EUR 940m
EUR 3.7bn
4
Venture capital: portfolio of EUR
3.7bn
(at 30/09/06)
•
•
•
•
Balance portfolio between
expansion capital and
start-up / early stage
Portfolio biased towards
technology
(65% in ICT & life
sciences)
Around 30% of portfolio in
multi-country funds
Track record in backing
new teams in Central
and Eastern Europe
Central and Eastern
Europe
Geographic spread
Multi-country
Italy
Germany
7%
8%
Spain
29%
7%
France
Rest Western Europe
United
Kingdom
14%
15%
5%
Key investor in major markets
Niche opportunity player in smaller markets
5
15%
Private Equity Stage Distribution by %
of Amount Invested
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2001
Buyout
2002
Replacement Capital
2003
Expansion
2004
Start-up
2005
Seed
2005 European Private Equity Survey
Conducted by Thomson Financial and PricewaterhouseCoopers on behalf of EVCA
6
EIF’s experience as a fund-of-VC funds
• High risk; very qualified management teams needed with all
relevant skills (Investment , monitoring and exit)
• Critical mass requirements
• Good VC fund governance
(independence of managers vs. investors, transparency, etc.)
• Balance public/ private investors? Optimise the use of public
funding, fight for efficiency and quality
• Proximity of “technological clusters” (Heidelberg, Cambridge,
Finland, etc…) very important esp for seed-early stage
• Focus on market gaps
more than money !
7
Inefficiency in Tech Transfer is a major
issue for the seed funding gap
1. Mixed results of tech transfer initiatives
• Many universities struggling - technology transfer
not their mission
• Most universities do not have the means to hire professionals with
industry background having the right skill set
• Incubators have a mixed record at best
• Many initiatives are sub-scale
2. Venture often more suited to grow business rather than seed
them
• Larger deals more attractive
• Milestone driven approach vs. need for flexibility
• Fixed life time of funds
8
Competitiveness & Innovation Framework Programme
(CIP)
EIF responsible for the financial instruments
of the Entrepreneurship and Innovation Programme:
•
High Growth Innovative Companies Scheme
o Early and expansion stage VC funds
o Co-investments in side-funds with business angels
o Eco-Tech equity window
•
SME Guarantee Facility
o SME loan guarantees
o Micro-credit guarantees
o Mezzanine guarantees
o SME loan securitisation
•
Capacity Building Scheme (Seed Capital Action and
partnership with international finance institutions)
Budgetary envelope: EUR 1.1bn (2007-2013)
9
JEREMIE draws lessons from the past …
• Under utilisation of financial engineering
instruments in Cohesion Policy
• Grant approach ≠ revolving character
• Difficulties in implementation
(regulation, time frame, procedures, expertise)
10
JEREMIE: The System
2006
2007
-
2015
SME
SME
SME
SMEs
SMEs
SMEs
Microfinance
Providers
(MCPs)
Tech Transfer
Activities
SME
SMEs
Guarantee
schemes
SME
SMEs
Venture
Capital
Funds
DISBURSEMENT PROCESS
Transforming parts of the ERDF grants
into financial products for SME
IMPLEMENTATION OF
HOLDING FUNDS
EVALUATION PHASE
(Lending of national contribution by EIB
possible)
Preparation of
Operational
Programmes
11
JEREMIE or not JEREMIE?
SME Access to Finance
JEREMIE
No JEREMIE
•
•
•
•
•
•
•
•
•
Interim Payment
Delegation Expertise
Use of Market-driven revolving
instruments/flexibility, (after
2015!)
Management and administration
assumed by Fund Manager
Lisbon earmarking
Portfolio approach
12
Time delays
Less flexibility
Fragmentation/case by
case approach
= Less impact in the
regions
European Investment Fund
EIF
43, avenue J. F. Kennedy
L-2968 Luxembourg
Tel.: (00 352) 42 66 88 1
info@eif.org
www.eif.org