It is for the first time ever the European Investment Bank (EIB) Group will sponsor PODIM, and in this interview, you can find out, what kind of services EIB, the largest venture debt investor in Europe with EUR 600 million per year in long-term financing for highly innovative companies, offers.
Why is the European Investment Bank (EIB) important for innovative enterprises?
“As the EU Bank, we are committed to fostering various European Union strategic priorities: innovation and R&D, entrepreneurship, growth, and employment are crucial objectives for us.
At the same time, the European Investment Bank Group is increasingly active low-carbon development and the circular economy. We are a pioneer in green financing and the leading multilateral institution financing climate action projects. Of course, these priorities can and should co-exist!
The EIB Group can offer European SMEs and innovative companies a wide range of services. From intermediated debt-financing, risk-sharing, venture capital to numerous private equity instruments designed to improve financing conditions, the EIB Group can help companies access finance to develop their businesses.
Most of such financial resources are provided indirectly through intermediaries – such as banks or venture capital and private equity funds. Through a set of financial products covering the whole enterprise growth scale, there are concrete steps taken every day to make sure European SMEs can grow. Last year alone, as EIB we supported the investment and activities of some 300.000 SMEs and midcaps employing over 4.4 million people. This gave us an unparalleled professional experience and institutional expertise.
More details are just a click away.”
EIB’s Venture Debt Product has helped dozens of companies so far. What kind of companies are in the key focus of EIB for this financing?
“EIB Group support for companies is primarily available through our financial partners. However, thanks to the European Fund for Strategic Investments (EFSI), a EUR 500 billion investment initiative of the European Investment Bank and the European Commission under President Jean-Claude Juncker, the EIB was able to develop a unique venture debt product, that let founders keep the control of their company and doesn’t dilute the shares of the existing investors. This bespoke product supports and guides companies through their often challenging growth stage.
The EIB is the largest venture debt investor in Europe with EUR 600 million per year in long-term financing for highly innovative companies. Since 2015, we have financed more than 80 companies with EUR 1.8 billion and mobilised circa 16 billion euro in additional investments in European R&D. This support is expected to create more than 25,500 high skilled jobs.
Most recently in the region, for instance, EIB has signed a finance contract for up to 30 million euro with Rimac Automobili, an innovative producer of high-performance battery packs and powertrains for electric vehicles. They are the Europeans making the fastest electric car in the world.
They bring revolution not just in electric car manufacturing with their innovative thinking but are developing into a major employer in Croatia, with a potential to bring the country on the global automotive map as a major player. A small company based in a small town changes the way world thinks about mobility. And all that while protecting our environment.”
European Investment Fund specialises in finance for small and medium-sized businesses (SMEs) by helping them to access finance, offers equity/guarantee products.
“EIB’s activity towards SMEs and mid-caps is typically more focused on delivering financial support to established enterprises, mostly in the growth or maturity stages – financing is provided through intermediaries such as commercial banks, which on-lend to SMEs at more favourable conditions than they would otherwise receive.
The European Investment Fund (EIF), created in 1994 as part of the EIB Group, indirectly helps Europe’s micro, small and medium-sized businesses to access finance by supporting a large number of financial intermediaries (FI) across Europe, particularly private equity (PE) and venture capital (VC) funds. EIF develops both venture and growth capital, guarantees and microfinance instruments which specifically target this market segment – removing some of the risk taken by financial institutions when they lend to or invest in small businesses.
This may sound remote, but to be practical: funds supported by the EIF have helped thousands of businesses across the EU, including well-known companies such as Skype, Zalando, iZettle and Blablacar.
EIF also develops dedicated investment programmes targeting specific sectors and geographies, particularly underserved sectors like technology transfer, impact finance and early stage investing. These programmes are usually launched in partnership with national and regional development institutions in order to deliver targeted support for the local area.”
EIB has a model to work with intermediaries, like SID Banka and SEF (Slovene Enterprise Fund). What opportunities for the companies does working with intermediaries bring? What are the plans for the future?
“By working with local intermediaries, who have a strong knowledge of the local market, we can reach out to many more SMEs and mid-caps. In Slovenia, we work closely with SEF and SID Banka. They help us extend outreach of our global expertise. The scope of our partnerships is, ultimately, to ensure that the local companies find as much as possible financial support locally and when they actually need it.
Of course, it is not the panacea. Our support complements what is already available on the market. We don’t want to crowd out the existing players but add to what is already out there in terms of finance.
Two examples of how we work together with Slovenian partners are the Central Europe Fund of Funds, a EUR 97 million programme supporting equity investments in the whole region, and the Slovene Equity Growth Investment Programme (SEGIP), which makes EUR 100 million for equity investments available to Slovenian companies looking to finance their growth and capital.
The CEFoF was set up with contributions from the EIB Group and the International Investment Bank alongside national financial institutions in Czech Republic, Slovakia, Austria, Hungary and Slovenia, where SEF is investing EUR 8 million through the programme.
The fund of funds invests in late stage VC funds and PE funds focused on investing in the growth and expansion of companies in Central and Eastern Europe, particularly in the five countries. It has already provided funding to three funds, with four more coming to the market soon and a few more yet to be sourced by EIF.
On the other hand, SEGIP, with EIF and SID Banka both contributing EUR 50 million each to this programme, supports the capacity building of private equity funds established in Slovenia and also regional and pan-European private equity funds active in Slovenia, through which equity and mezzanine financing will be provided to eligible SMEs and mid-cap companies in Slovenia specifically.
Both programmes complement each other and are supported by private investors at the level of funds they invest through. We are happy to see these jointly developed initiatives helping catalyse additional private-sector investments into funds and companies.”
Why should people attending PODIM be excited about EIB coming over to the conference with such a strong delegation?
“For the first time ever the EIB Group will sponsor the event, which means we will have our own exhibition space at Podim and a strong delegation including colleagues from our Venture Debt Team and EIF operational teams.”