Western Balkan Technology Fund (WBTF) Initiative
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Western Balkan Technology Fund (WBTF) Initiative
Ljiljana Kundakovic, Viktor Nedovic, Goran Radosavljevic Ministry of Science and Technological Development
Republic of Serbia
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Objectives
• Stimulate long-term economic growth prospect and competitiveness of Western Balkan (WB) economies
• Further engage International Financial Institutions (IFI) in private sector development in WB
• Increase the ability of innovative SMEs to access and efficiently use equity-based investments
• Create €100M equity investment fund focused on technology
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Status of the Initiative
• WBTF supported by all beneficiaries
• WBTF initiative has been presented to high representatives of EC, EIB, EIF, WB and EBRD
• Preliminary analysis of supply and demand of equity finance for SME in WB, conducted by the European Investment Fund (EIF)
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Competitiveness and Innovation
On a cost basis Western Balkans businesses are competitive today
“To sustain competitiveness, the Western Balkans needs to move up the value chain: first, by differentiating through value-added services and innovation; and second, by further leveraging the region’s proximity to the EU market”
OECD: RECOMMENDATION FOR A REGIONAL INVESTMNENT STRATEGY, 2008
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Financial Markets in WB are Underdeveloped
• The supply of equity capital in seed, early and expansion stages of development of enterprises is either completely absent or is at the embryonic stage
• Access to and the cost of finance are a significant constraint on investment. On average, companies in the manufacturing sector need collateral of 177%, with an interest rate of 11%.
Public intervention in creating a supply of equity finance available to SMEs is needed
OECD: RECOMMENDATION FOR A REGIONAL INVESTMNENT STRATEGY, 2008EIF: WB Venture Capital Assessment . 2010
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WBTF Structure and FinancingPhase I Phase II
IPA 2011 and 2012 (multibeneficiary)/WBIF 25M
IFI/Donor Community 50M
WB BeneficiariesParticipation 10M
Albania 0.7
Bosnia and Herzegovina 1.1
Croatia 4.2
Macedonia 0.6
Montenegro 0.3
Serbia 3.1
Private Sector 15M
Total 35M 65M
Phase I (€25-25M)IPA multi beneficiary funds
IFI through WBIFWB Beneficiaries
Phase II (up to €65M)IFI/Donor Community
Private sector
Phase I Evaluation
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WBTF Management
European Investment Fund Evaluation of investment proposals
Collaboration and coordination with local offices/agencies in all beneficiaries
Establishing a network of VC funds and business angels for co-investment
Local Offices
Management
BeneficiariesIdentification and preparation of investment proposals
Negotiation and closingFollow up of investments through active participation in
companies’ management
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Staged Approach to Establishing WBTF
Capacity building (supported by multi-beneficiary IPA)•Training and capacity building of beneficiaries• Assistance in establishing the WBTF
Developing and financing a pipeline of investment projects
•Technical support to detailed preparation of projects at the beneficiary level•Assessment of individual investment projects
Development of full investment portfolio•Significant participation of IFIs and private
sector
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Investment Strategy
• Generalist with strong technology and innovation component• Equity financing with standard terms with respect to protective
provisions, Board representation and right to participate in subsequent issuance of equity securities
• Convertible debt financing
Main Investment Criteria:• High growth potential and proven business models• Competitive innovative product or services• Technologies with potential to access international markets• Leadership capable of sustaining growth
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Link with EP and WB EU Agenda• EUROPE 2020 : A strategy for smart, sustainable and inclusive growth
• Priority: Smart growth - developing an economy based on knowledge and innovation
• Innovation Union – EU 2020 flagship initiative • to improve framework conditions and access to finance for research
and innovation so as to ensure that innovative ideas can be turned into products and services that create growth and jobs.
• The 2007 EU Enlargement Strategy:• The need to raise competitiveness and further stimulate investments
and SME growth through improved access to finance • Implementation of Small Business Act :
• Recommends that The EU and Member States should facilitate SMEs’ access to finance, in particular to risk capital, micro-credit and mezzanine finance
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Thank you!
Ministry of Science and Technological Development
Republic of [email protected]
Improved access to finance