EIF at a glance 1994 EU specialised financial institution for SMEs, acting through: Venture Capital (fund of funds) and Guarantees for SME portfolios AAA Subscribed capital of EUR 2 billion : - 62 %: European Investment Bank - 30 %: EC for the EU - 8 %: 20 financial institutions PPP Art 2 : « pursuit of Community objectives » such as growth, employment, knowledge-based economy, innovation, regional development, Lisbon Art 24 : « generate an appropriate return on its resources »
Biggest European early-stage investor (with a 15% market share)
Respected investor (even in the crowded lower mid-market)
EIF : mainly a manager of external resources (mandates) EUR 600m EUR 4 000m EUR 800m To be committed in venture capital funds and financial institutions in the EU and Candidate Countries European Community Revolving over 500 000 SMEs indirectly benefited from EIF support BMWA - ERP Etc… Up to EUR 1bn Dahlia SICAR S.R.
Continue to develop EIF existing markets (Early stage, Expansion, Small BO)
In parallel, promote new niches
With the aim to:
increase the availability of risk capital in Europe
stimulate the development of a high growth market in Europe
improve the investment environment
benchmark best practices in Europe
EIF’s focus Later-stage Buy-out IPOs Tech Transfer Incubators Business Angels Expansion / Dev.Capital Early Stage Pre-Seed Seed SME LIFE CYCLE « VENTURE CAPITAL » « PRIVATE EQUITY » New policy areas European Investment Fund CIP COVERAGE CURRENT MANDATES COVERAGE GAP
“ There is considerable weakness of early stage ventures in Europe … due to structural differences in the transfer of technology from labs to industry (compared to US)” . ECFIN paper for the EFC – March 2005
US University Revenues (€m) Columbia University 115.4 University of California 65.3 Stanford University 50.0 University of New York 49.9 Sloan Kettering Institute for Cancer Research 43.3 University of Rochester 33.5 Europe University Revenues (€m) Pasteur 32.6 Edinburgh University 4.5 Utrecht* 4.0 Cambridge 3.1 INRIA* 3.0 VIB* 2.7
Technology Transfer R&D Tech transfer / proof-of-concept Marketable product «Licensing» Special Protection Vehicles Virtual LAB Created by leading R&D Centres Potential exits for the SPV projects Licensing to corporation Sale to corporation Purchase / investment by other investors IPO Investment focus of TTA «Technology» Intellectual Property «Prototype» Intellectual Property Looking for new funds from EU to stimulate tech transfer «Spin-off» Special Protection Vehicles «Hybrid» Special Protection Vehicles Funding gap Funding: FP7 Funding: CIP
JEREMIE is an initiative of the Commission (DG Regio) launched in October 2005
Joint” because it combines resources from EC, National Public Authorities, EIF, EIB and/or other International Financial Institutions (IFIs)
JEREMIE is not an organisation, but a series of coherent actions
Optimising use of ERDF funding for enhancing the access to finance for SMEs through sustainable and « revolving » financial instruments
Leveraging ERDF funding with EIB loans as well as EIF expertise in creating tailor-made instruments
Develop the role of Entrepreneurship in EU
JEREMIE: Phases Venture Capital Funds Preparation of Operational Programmes EVALUATION PHASE 2006 2007 - 2013 IMPLEMENTATION OF NATIONAL FUNDS DISBURSEMENT PROCESS Microfinance Providers (MCPs) Tech Transfer Activities Guarantee schemes Transforming parts of the ERDF grants into financial products for SME Multiplier effect on the budget by attracting EIB & IFIs’ lending SME SMEs SME SMEs SME SMEs SME SMEs SME SMEs
“ It is easier to pick a good wine if one starts with a list of the vintage years.
As in wine-making venture capital has its good years and of course its bad years.
Sometimes the quality of the year is not apparent until some maturation has taken place, but in many cases the indicators are apparent from the environment and maturation merely serves to confirm what everybody feared in the first place [..].
Quality brands will always stand out.”
Chris Smart, General Partner at IDGVE, 2002.
Conclusion Private equity as winemaking?
Thank you for your attention European Investment Fund tel.: (+352) 42 66 88 1 fax: (+352) 42 66 88 200 Bruno Robino [email_address] For more info: www.eif.org [email_address]