1 Sofia 30 th October 2014 EIF activity key figures 2 We are the prime provider of SME financing in Europe Equity 2013 commitments EUR 14bn which ID: 550044
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Slide1
Financial Instruments for Innovative SMEs in Bulgaria
1
Sofia, 30
th
October 2014Slide2
EIF
activity
- key figures
2
“
”
We
are
the prime
provider of
SME
financing
in Europe
Equity
2013
commitments
:
EUR
1.4bn
which
mobilised
EUR 7.1bn
480
venture and
growth
funds
306
banks
, guarantee and promotional institutions27 funds-of-funds and holding funds
Guarantees & securitisation 2013 commitments:EUR 1.8bn which mobilised EUR 8.6bn
Microfinance 2013 commitmentsEUR 53.8m which mobilised EUR 201m
EUR
13.5bn
in total
outstanding
commitments
mobilise EUR 79bnSlide3
Instruments tailored at each stage
3
SME Development Stages
PRE-SEED PHASE
SEED PHASE
START-UP PHASE
EMERGING GROWTH
DEVELOPMENT
HIGHER RISK
LOWER RISK
Public Stock Markets
Business
Angels,
Technology Transfer
Microcredit
VC Seed & Early Stage
Portfolio Guarantees & Credit Enhancement
Formal VC Funds & Mezzanine FundsSlide4
EIF-managed Fund-of-Funds and Holding Funds across Europe
4
Fund-of-Fund Activity
UK FTF:
GBP 200m
ERP (DE):
EUR 1000m
LFA-EIF
(DE):
EUR
50m
Dahlia (FR):
EUR 300m
NEOTEC (SP):
EUR 183m
PVCi
(PT):
EUR
111m
iVCi
(TR):
EUR
160m
Future
initiatives
LFF
(LU):
EUR
150m
BIF (LT,LV,EE):
EUR100m
DVI
(NL):
EUR 150m
PGFF (PL
):
EUR
90m
Holding Funds Supported by Structural Funds (JEREMIE)
BULGARIA:
EUR 349m
CALABRIA
(I):
EUR 45m
CAMPANIA
(I):
EUR 90m
CYPRUS:
EUR
20m
EXTREMADURA (ES)
:
EUR
10m
GREECE:
EUR 250m
LANGUEDOC
ROUSSILLON (FR
):
EUR 30m
LITHUANIA:
EUR
67.1m
ROMANIA
:
EUR
150m
MALTA:
EUR
10m
PACA
(FR):
EUR
20m
SLOVAKIA
:
EUR 100m
SICILY (I):
EUR 60m
SICILY ESF (I):
EUR 15mSlide5
JEREMIE Equity and Debt Portfolio in Bulgaria
5
Venture Capital Fund
Co-investment
Funds
First Loss Portfolio Guarantee
Financial Instruments
Early stage
Mature stage
Private funds - investors
OP Competitiveness (JEREMIE)
21
M EUR
60 M EUR
400
M EUR
Seed funds
21 M EUR
Portfolio Risk Sharing Loans
301 M EURSlide6
JEREMIE Start-Up
Funds in Bulgaria
6
Pool of mentors
Investment
Committee
Acceleration Compartment
Seed Compartment
Acceleration and Seed Fund
Fund Manager
(1% own capital contribution)
Start-ups
Pre-seed
Seed
A dedicated facility two-compartment structure;
Due to the very high risk no private support could be expected at the facility level;
Investment limit capped at EUR 200k to allow private investor contribution in follow-on rounds
Opened to entrepreneurs from the region to create competition and collaboration across the Balkans
Key HighlightsSlide7
Acceleration and Seed Funds - Process
7
Application Window
Selection & Funding
Incubation
Graduation day
SEED Portfolio
ACCELERATION STAGE
SEED STAGE
Application process:
Fully online
Investment
:
EUR
25,000
–
50,000
Equity share
:
~
1
0
%
Stage term
:
3-12
months
Graduation Goal
:
Working prototype, beta version
Investment
:
up to EUR
200,000
(
on aggregate
)
Equity share
:
30 -
49
% (on aggregate)Stage term: 12-24 months
Goal
:
Commercialization, internationalization
External companiesSlide8
JEREMIE in Bulgaria - Creating start-up ecosystem from scratch
8
Two acceleration & seed funds were created in Bulgaria in Q4/2012 with a total budget of EUR 21m. Two years later the developments are as follows:
The Numbers
The Details
More than 4,000 applications for funding mainly from BG but also from the entire Balkans;
Investments in 146 start-up
companies for
a total of
EUR
9m;
20-30% of start-ups are set-up by non-BG;
EUR 6m invested as follow-on in 12 successful companies by BAs, VCs;
Over 300 high-paid jobs created;
More than 20 entrepreneurial conferences and workshops were held in BG for 2013 only
The majority of start-ups are in the ICT, digital, engineering and med-tech sectors;
Follow-on investors in the companies include Earlybird, TechStars, Y-
combinator
, Tim Draper;
More than 20 of the companies are already revenue-generating, with one making EUR 600k for 2013 only;
Employees are 2-4 per company on avg., with one having 20+ people on payroll;
Regional VCs are now looking onto Bulgaria much more opportunistically;Slide9
JEREMIE in Bulgaria - Creating start-up ecosystem from scratch
9
City
#
startups in 2013
London
255
Dublin
237
Sofia
92
Berlin
87
Paris
87
Brno73
Amsterdam49
Tallinn44
Barcelona42
For 2013,
Sofia is the #3 accelerator capital in Europe after only London and Dublin, slightly ahead of more
established
startup hubs like
Berlin and Paris;
There
are only three accelerators & seed funds that have invested in more startups than
Eleven in 2013 and five that have invested in more startups than LAUNCHub;
Sofia’s emerging place as start-up hotspot was not missed by reputable media like Wall Street Journal, Forbes Magazine, TechCrunch and etc;Slide10
JEREMIE Seed in Bulgaria – Success Story
10
Founded in Dec 2012 through the support of EUR 200k under JEREMIE, with 5 staff including founders;
Tech heavy company with 2 patents (EU and US) in approval process;
The application had 7m downloads and 1.2m regular users within months from inception;
Quick market adoption and start of revenue generation – EUR 600k+ for 2013;
Attracted the attention of reputable US VC investor – Tim Draper who invested USD 450k in the company as a business angel;
Scaled operations and open sales office in San Fran from Q4/2013 to service USA;
Turned down an acquisition offer from US cable operator for USD 10m (3x initial valuation) willing to buy the technology;
Staff on payroll in Bulgaria grew to more than 20 people;
Attracted the attention of big VC investors for Series A round – USD 2.5m from Earlybird, Turkish and Bulgarian business angels;
Current company valuation in excess of USD 15m
;Slide11
New Instruments for 2014-2020:
Tech Transfer Fund
11
OPIC Contribution
Private Investors
TT Facility
EUR 30-50m
Private Investors
Min 90% of funding
Up to 10% of funding
Management fee
Operational management
TT Facility
Manager
Deal sourcing
Expertise contribution
University 1
University
2..
Tech Park 1
Science Lab 2..
Industry Contacts
IP / patent experts
Test Labs
Corporates
Patents
Licenses
Spin-offs
Start-upsSlide12
Tech Transfer Facility (2)
12
Key Features:
Implement a dedicated facility to serve as a bridge between R&D / science and business, an area currently not adequately supported by public funds.
The Manager of the facility must possess a
well-rounded skillset
combining
financial, industrial and scientific
expertise as well as broad network
in
Bulgaria
and abroad.
Could be fine-tuned to support industries and sectors set by State.
Dedicated solely to commercializing technology and innovations deriving from a pool of universities, research centers and tech parks thus fostering entrepreneurship in R&D and capital intensive businesses.
Key
Benefits:
Utilize an innovative market-oriented way way of “pushing” innovations to the commercial market.
Mobilizing private funding in an area currently perceived as “too risky” to be funded by the business.Engagement and signaling effect of the corporate sector in providing expertise at very early stage usually perceived as “too early”. Strengthening the R&D capacity in universities by providing a natural “next stage” to innovations developed in-house.Slide13
New Instruments for 2014-2020:
SME Initiative
13
Private Investors
Senior risk
(
EIB, third parties
)
Mezzanine risk
(EIF, EU Funds, ESIF
)
First Loss
Piece
(ESIF, originator)
Retained by the originator
Risk tranching
EIF
guarantee
Guarantee
Rate up to 80%
Loan by Loan
SME Loans
Financial Intermediary (FI)
Beneficiaries
SME
1
SME
2
SME
n
Portfolio of SME LoansSlide14
The SME
initiative (2)
Key objectives
Better access to finance for SMEs through capital relief, loss protection and liquidity
Increased multiplier on public budget through participation of EIB/EIF and private sector
Reduction of financial markets fragmentation.
Two
risk-sharing instruments
endorsed by the European Council:
Guarantee facility
for portfolios of new SME loans;
Securitisation
instrument for portfolios of both new and existing SME loans
;
Eligible
assets:
SME Loans, leasing and guarantees
.
Restructured loans should be excluded, no refinancing permitted.
Key area of intervention
Reduction of collateral requirements for new SME loans
Reduction of risk-related interest margins;
Unlocking long-term lending – up to 10yrs
14