Financial Instruments for Innovative SMEs in Bulgaria
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Transcript of Financial Instruments for Innovative SMEs in Bulgaria
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Financial Instruments for Innovative SMEs in Bulgaria
Sofia, 30th October 2014
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EIF activity - key figures
“”
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 institutions
27 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 79bn
Instruments tailored at each stage
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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 Funds
EIF-managed Fund-of-Funds and Holding Funds across Europe
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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
LANGUEDOCROUSSILLON (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 15m
JEREMIE Equity and Debt Portfolio in Bulgaria
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Venture Capital Fund
Co-investment Funds
First Loss Portfolio Guarantee
Financial Instruments
Ear
ly s
tage
Mat
ure
stag
e
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 EUR
JEREMIE Start-Up Funds in Bulgaria
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Pool of mentorsPool of mentors
Investment Committee
Acceleration Compartment
Seed Compartment
Acceleration and Seed FundFund 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 Highlights
Acceleration and Seed Funds - Process
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Application Window
Selection & Funding
Incubation
Graduation day
SEED Portfolio
AC
CE
LE
RA
TIO
N S
TAG
ES
EE
D S
TAG
E
Application process: Fully online
Investment: EUR 25,000 – 50,000
Equity share: ~10%
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 companies
JEREMIE in Bulgaria - Creating start-up ecosystem from scratch
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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;
JEREMIE in Bulgaria - Creating start-up ecosystem from scratch
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City # startups in 2013
London 255
Dublin 237
Sofia 92
Berlin 87
Paris 87
Brno 73
Amsterdam 49
Tallinn 44
Barcelona 42
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;
JEREMIE Seed in Bulgaria – Success Story
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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;
New Instruments for 2014-2020:Tech Transfer Fund
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OPIC Contribution
Private Investors
TT FacilityEUR 30-50mPrivate
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-ups
Tech Transfer Facility (2)
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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.
New Instruments for 2014-2020:SME Initiative
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Private Investors
Senior risk(EIB, third parties)
Mezzanine risk (EIF, EU Funds,
ESIF)First Loss Piece(ESIF, originator)
Ret
aine
d by
the
orig
inat
or
Risk tranching
EIFguarantee
GuaranteeRate up to 80%Loan by Loan SME Loans
Financial Intermediary (FI)
Beneficiaries
SM
E 1
SM
E 2
SM
E n
Portfolio of SME Loans
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:1. Guarantee facility for portfolios of new SME loans;
2. 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
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