Download EIF Presentation Template - EU Strategy for the Baltic Sea Region

Graham Cope
Senior Head of Region
North Europe & CEE
European
Investment Fund
Europe’s Leading Developer of Risk Financing
for Entrepreneurship & Innovation
This presentation was prepared by EIF. The information included in this presentation is based on figures available for March 2011
Any estimates and projections contained herein involve significant elements of subjective judgment and analysis, which may or may not be correct.
EIF: Europe’s Primary Fund-of-Funds Investor
 EUR 6 billion net commitments to PE/VC funds at end
2011
 As Primary FoFs investor (over 350 funds)
 Biggest Fund-of-Funds investing in European
Venture Capital
 Repeat cornerstone investor in top quartile
teams in Europe
 Catalytic role through recognised thoroughness
of its due diligence process
 Fund Manager for MS government mandates
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Long-term Relationship with best GPs in Europe
EIF as Manager of National Funds-of-Funds
 ERP Germany (launched in 2004)
Co-investment 50/50: EIF/ERP (German Ministry BMWi)
 Size: € 1bn - € 642m committed in 20 funds
 LfA-EIF Germany
Co-investment Bavarian Ministry of Economics LfA Förderbank, Bayern EIF.
 Size € 50m - € 26m committed in 4 funds
 NEOTEC: Spanish Technology Fund-of-Funds
Tech fund in partnership with CDTI (TMT, ICT, clean-tech, bio-tech and LS)
 Size: € 183m - € 117m in 11 Funds and Co-investment Agreements
 Istanbul Venture Capital Initiative
Turkish generalist VC investment vehicle for institutional investors
 Size: € 160m - 2 funds signed for a total of € 21m
 Portuguese Venture Capital Initiative
Generalists funds, ICT, Life Sciences, Healthcare, Environmental & Energy Technology
 Size: € 111m – 2 transactions signed for a total of € 30m
 Dahlia: Pan-European Fund-of-Funds
Joint initiative between EIF and Natixis Private Equity (NPE)
 Size: € 300m - over 60% of Dahlia funding has now been committed
 UKFTF: UK technology Fund-of-Funds
Launched by the UK government and advised by EIF
 Size: £200m at first closing to be invested in Funds targeting UK start-ups and
growth businesses in the high tech sector – 3 investments signed for £28m
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Public Private Leveraging of EIF Capacity and Experience
EIF: as investor in the Baltics
 As investor in BaltCap Private Equity Fund in 2007 for EUR 10m
 As Manager of JEREMIE Holding Fund in Latvia from 2008
 Invested in Baltcap Latvia VC Fund for EUR 20m in 2009
 Invested in Imprimatur Capital Seed & Start-Up Fund for EUR 17m in 2010
 As Manager of JEREMIE Holding Fund in Lithuania from 2008
 Invested in Baltcap Lithunia VC Fund for EUR 14m in 2010
 Invested in LitCapital VC Fund for EUR 14m in 2010
 Invested in Strata/MES Co-Investment Fund for EUR 8m in 2010
 Invested in Practica Seed & Venture Capital Fund for EUR 17m in 2012
 Note: Estonia chose not to implement a JEREMIE Holding Fund
hence investment levels by EIF have been limited to date
Key role as developer of venture capital markets
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EUR 100m invested into Baltic market
Baltic Equity Investments remain comparatively low
• Very latest EVCA
data for 2011
• European average
investment level is 3-4
times greater than for
Baltic Countries
• Estonia is in weakest
position of the 3
Baltic States
Weak
position
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• Estonia is only 0.04%
of GDP, ten times
lower than in Finland
EIF’s Development of a PE/VC market - Baltics
Phase Three
Private Investment
flows dominate public
funds
25/75
Market
Maturity
Phase Two
Balanced with Private
Investment
Typically 50/50
Phase One
Careful Utilisation of
Structural Funds
Typically 70/30
• State Funds alongside IFI
investment
• Second time Fund transactions
• International investors drawn in
by market opportunities
• Deeper pool of Local expertise
• First Transactions with external help
• Set up of VC Association, adoption of EVCA standards
• First attraction of local private capital
• ‘Proof of Concept’ Phase
• Education of Entrepreneurs
• Establishment of BA networks
Continued Ecosystem Development
Legal Framework; Taxation Laws, Advisory Support Networks, etc.
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BIF - Market Needs and Opportunities
 EIF asked Baltic VC associations to help in sizing the
opportunity
 7 Fund managers in region provided detail of expected pipeline
 Data provided totals EUR 320m of investment opportunities
 Wide range of industries covered: ICT, Pharmaceuticals, Textile, E-Commerce, Electronics, Software,
Energy Efficiency, Healthcare, Industrial products etc
 Mainly later stage opportunities exploring regional expansion or
growth into export markets
 Sometimes includes follow-on investments from earlier seed and startup activities that have been publicly funded
 Strong evidence of market need and opportunity
“There is a clear need for action to support the market.
The proposed BIF amount is well-grounded by market data.”
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EIF Tool Kit for Equity investments into SMEs
SME Cash Flows
Investment Rounds
Public Stock Markets
Formal VC Funds & Mezzanine Funds
VC & Early Stage
Grants, Business Angels, Seed
Pre-seed Phase
Seed Phase
Start-up Phase
Emerging Growth Development
Trade Sale/IPO
SME Development Stages
HIGHER RISK
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LOWER RISK
EIF Tool Kit for Equity investments into SMEs
SME Cash Flows
Investment Rounds
Public Stock Markets
Formal VC Funds & Mezzanine Funds
VC & Early Stage
Grants, Business Angels, Seed
Pre-seed Phase
Seed Phase
Start-up Phase
These phases covered by
current initiatives; but must
be continued. Private
money very reluctant to
invest here so smart use of
Structural Funds is wise
Emerging Growth Development
Trade Sale/IPO
SME Development Stages
HIGHER RISK
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LOWER RISK
SME Cash Flows
Investment Rounds
Stage focus of the Baltic Innovation Fund
Public Stock Markets
These phases barely
supported but private
investors can be stimulated
to invest here
Formal VC Funds & Mezzanine Funds
VC & Early Stage
Grants, Business Angels, Seed
Pre-seed Phase
Seed Phase
Start-up Phase
Emerging Growth Development
Trade Sale/IPO
SME Development Stages
HIGHER RISK
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LOWER RISK
Baltic Innovation Fund – Basic Structure
LV
EE
EIF
LT
Baltic Innovation Fund
Institutional
Investors,
HNWIs
VC Fund A
VC Fund B
SMEs
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Baltic Region
SME Community
VC Fund C
BIF will be
managed by EIF
cooperating with
local agencies
Objectives of the Baltic Innovation Fund
 Increasing the levels of equity Investment made into Enterprises
 BIF will create greater levels of equity investment in the region than ever
before
 With the expected leverage, the amount of equity investment created
across the period will relate to a substantial increase of market activity
 Establishing a sound market-based infrastructure
 BIF will establish a platform and focus that will create a stable portfolio of
equity fund managers in the region
 The BIF structure implements a best practice Fund of Funds model never
before implemented in the Baltics
 BIF creates an infrastructural base of interest to other IFIs
 Generating positive returns to investors in the BIF
 This is not a grant mechanism, it is an investment intended to generate
positive returns
 BIF will be structured and managed to create the best opportunity for
investment returns
 BIF will adopt a certain level of diversification in the portfolio and across
years (vintages)
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Objectives of the Baltic Innovation Fund
 Creating the best entry conditions for Pension Funds
 BIF will act as a cornerstone investor applying the best practice standards
implemented by EIF and thereby giving confidence to institutional investors
 BIF’s regional approach offers the geographic diversification needed to
attract Pension Fund capital
 Attract foreign investors and investment managers to the region
 BIF will become a marketing tool for all 3 Baltic Countries
 EIF will seek to ensure foreign investment managers are fully aware that
BIF offers as a market-entry opportunity and/or co-investment potential
 The BIF concept will raise awareness of investment opportunities in the
region
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Baltic Innovation Fund – Basic Financing
EUR 60m
EE
LV
EUR 40m
EIF
LT
EIF management
cooperating with
local agencies
Baltic Innovation Fund = EUR 100m
Institutional
Investors,
HNWIs
VC Fund A
VC Fund B
VC Fund C
50% from
Private
Investors
A total of EUR 200m expected to be invested into enterprises
by selected local fund management teams
SMEs
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Baltic Region
SME Community
BIF – in action – an example portfolio
LV
€20m
EE
€20m
EIF
€40m
LT
€20m
BIF – Capital of EUR 100m
€15m
Private
leverage
maximised
eg: 2.0x
€15m
€25m
€25m €15m
VC Fund A VC Fund B PE Fund A PE Fund B
€30m
€60m
€50m
€30m
Co-Invest
ments
€30m
VC Fund A
invests into
12 SMEs
- generalist
CoInvestments
into 5-10
SMEs
VC Fund A
invests into
12 SMEs
- ICT focus
SMEs
VC Fund A
invests into
14 SMEs
- generalist
VC Fund A
invests into
12 SMEs
- generalist
Wider Baltic Region
SME Community
Over €200m invested into approx 50 high growth enterprises
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Contact
European Investment Fund
96 boulevard Konrad Adenauer
L-2968 Luxembourg
Graham Cope, [email protected] Tel: + 352 42 66 88 236
Martins Jansons, [email protected] Tel + 352 42 66 88 381
Jurate Azelionyte, [email protected] Tel + 370 5269 0104
www.eif.org
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