Transcript Technopreneurship in Europe Financing innovation through a

JEREMIE
June 2006
Main Agenda
• European Investment Fund at a glance
• Why JEREMIE?
• Key elements of Choice
• Current Status & Next Steps
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European Investment Fund - at a glance
Created in 1994, part of EIB Group
Operational platform to support SME finance in Europe
Tripartite Shareholding = 61.9% by EIB, 30% by EC, 8.1% various
International Banks. Subscribed capital: EUR 2 billion
Two Primary Objectives:- The pursuit of Community objectives such as SME creation,
growth, employment, regional development, knowledgebased economy and innovation
- To generate an appropriate return on its resources
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European Investment Fund Portfolio – Year End 2005
Total portfolio in EUR
VENTURE CAPITAL
GUARANTEES
Number of intermediaries
€ 3.1bn
(€369m signed in 2005)
217
Venture Capital funds
€ 9.3bn
(€1.685 bn signed in
2005)
165
Banks/Guarantee
institutions
= EUR 12.4 billion total portfolio under management
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EIF institutional drivers
• The Lisbon Process (March 2000): transform the EU into
« the most competitive and dynamic knowledge-based
economy in the world ».
• The Barcelona EU Summit (March 2002): increase overall
spending on R&D on innovation in Europe .. with the aim of
approaching 3% of GDP by 2010 ».
• The Brussels EU Summit (March 2005): European Council
urged EIF « to diversify its activities, in particular towards the
financing of innovative SMEs through individual-investor
(business-angel) and technology-transfer networks ».
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EIF resources
European
Community (MAP)
EUR 600m
Being
increased
EUR 4 000m
EUR 450m
Being
increased
Evergreen
Dahlia SICAR S.R.
Up to EUR 1bn
Being
increased
To be committed in venture capital funds and financial
institutions in the EU and Candidate Countries
500 000 SMEs indirectly benefited from EIF
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Main Agenda
• European Investment Fund at a glance
• Why JEREMIE?
• Key elements of Choice
• Current Status & Next Steps
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Lessons from recent History
Policy Difficulties
Only a small portion of the ERDF Funds intended for SME financing
was actually utilised across period of 2001 - 2006
Possible reasons: difficulty to comply with the Commission’s
eligibility and timing requirements
Hence the need for reviewing the ERDF disbursement procedure in
order to optimize the utilization of the funds and support a greater
number of SMEs
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New Factors in Policy
EU 15
For Member States
ERDF Funds will practically
cease after 2013 deadline
2013 deadline does not
apply
Hence the need to shift
from grants to innovative
and revolving financial
instruments able to provide
finance to SMEs after the
2013 deadline
But need to create
entrepreneurial culture by
using financial engineering
to stimulate private sector
investments
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Why JEREMIE?
« JEREMIE »
stands for
Joint European Resources for Micro-to-
Medium Enterprises
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Key Factors
 JEREMIE is an initiative of the European Union (DG Regio) launched
in October 2005
 « Joint » because it combines intellectual 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
 JEREMIE is an option for each Country
Main Targets:
 Use ERDF funding for enhancing the Access to Finance to SMEs in
Regional Development areas through sustainable and « revolving »
financial instruments
 Develop the role of SMEs / Entrepreneurship in EU Regional Policy
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Status as of Today
 EC has asked the EIF to undertake evaluations as part of JEREMIE for
each country in partnership with National Development Authorities
 EIF has formed a JEREMIE team from internal and external specialists
 Some regions and countries have begun process
- Slovak Republic
- Spain (Andalucia, Extremadura, Valencia)
- Bulgaria
- Hungary
 Evaluation Phase to be completed by end of 2007
Note: Evaluations funded by DG REGIO and the EIF
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JEREMIE: Future Phases
2006
2007
-
2013
SME
SME
SME
SMEs
SMEs
SMEs
Microfinance
Providers
(MCPs)
Tech Transfer
Activities
SME
SMEs
Guarantee
schemes
SME
SMEs
Venture
Capital
Funds
DISBURSEMENT PROCESS
Transforming parts of the ERDF grants
into financial products for SME
IMPLEMENTATION OF
NATIONAL FUNDS
EVALUATION PHASE
Multiplier effect on the budget by
attracting EIB & IFIs’ lending
Preparation of
Operational Programmes
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Main Agenda
• European Investment Fund at a glance
• Why JEREMIE?
• Key elements of Choice
• Current Status & Next Steps
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The importance of Choice
The JEREMIE offers several choices to
Member States
JEREMIE is an option for Member States
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JEREMIE is an option for member states/regions
JEREMIE
ERDF funds to member
state/region
Partly allocated to Articulated across
financial instruments various schemes
Grants
Measures for
Competitiveness
Infrastructure
Member State
selects %
of Funds for
Financial
Engineering
Via
JEREMIE
Competition
Microfinance
Instruments
Venture
Capital
Funds
Guarantees
Others
SME
Financing
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Practical Implentation
Programme developed
jointly with the EIF
Choice no. 1 for Member States
Member States Choice
JEREMIE
No JEREMIE
Advantages
 Irreversible disbursements
 Greater Delegation to Local
Authorities
 Use of Market-driven revolving
instruments
 Management and administration
activities assumed by Fund
Manager
Issues
 Structural challenges
 2013 deadline
 Time delays
 No upfront payment
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Key structural benefit: funds allocated upfront to Fund
Holder at local level
EU
Level
National /or
regional Level
National/regional
/Local Level
 Up front
 Irreversible
Local holding fund:
Programming Authority
 Greater delegation to Local
Authorities
 Management/administration are
outsourced to HF Mgr.
€
Managing Authority
HF
Manager
Holding Fund (« HF »)
€
€
€
€
Financial
intermediaries
€
Regional /Local
Level
Disbursement:
European Commission
ERDF – DG Regio
SMEs
€
€
€
Microfinance
beneficiaries
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Role of the HF Manager:
 Structure investments, select
Financial Intermediaries
 Administer, monitor & report on
investments
 Attract a syndicate of investors
 Closely collaborate with
national/regional authorities
THE MANAGER IS
SELECTED BY MEMBER
STATE/REGION
Choice no. 2 for Member States
Manager Selection
Structure investments,
select Intermediaries
Administer, monitor &
report on investments
Tender Process
Attract a syndicate
of investors
Closely collaborate with
national authorities
Selecting EIF
Issues
 Lengthy process
 Commission involvement
 EIF may apply alone or as J/V
Advantages of EIF as Manager
 Proven expertise
 European centre of best practice
 Jointly developed programmes based
on evaluations
 One stop shop for multiple instruments
 Immediate disbursement
 Funds based and managed locally
 Cooperation with EIB
 Possible Leverage factor
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The cooperation with EIF in the context of JEREMIE can
occur in four main forms
EIF as sole Holding Fund manager
EIF partial Holding Fund manager
EIF
EIF
Holding Fund
VC
Guar
Holding Fund
Microf
VC
Beneficiary fin. institutions
Manager
Co-Mgr
Guar
Microf
EIF as advisor to the Holding
Fund manager
Holding Fund
VC
Guar
Beneficiary fin. institutions
EIF joint manager of Holding Fund
(e.g. in with local devt. agency)
EIF
Other Mgr
EIF
Holding Fund
Microf
VC
Beneficiary fin. institutions
Guar
Microf
Beneficiary fin. institutions
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Main Agenda
• European Investment Fund at a glance
• Why JEREMIE?
• Key elements of Choice
• Current Status & Next Steps
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Preparation 2006-2007
EVALUATION PHASE in cooperation with Local / Regional / National actors
• Gap analysis in regions / Member States of potential supply / demand of
financial engineered products in SME finance
• Identification of market driven (revolving) instruments, out of grants system, to
« fill the gaps »
• Interim reports: freely available to Regions, Programming and Managing
authorities, any interested parties (potential Holding Fund, etc…)
PROGRAMME DEVELOPMENT
in support of DG REGIO and competent National or Regional Authorities
•
•
•
Use of conclusions / recommendations made in Interim Report and (final)
Evaluation report
Diagnosis / definition of priorities and operations : ACTION PLAN
Active cooperation with stakeholders and Financial Intermediaries
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The JEREMIE Phases & Next Steps
Evaluations
1) Preparation
2006-2007
Programme Planning
2) Implementation
2007+
Selection of Fund Manager
Allocation of Funds
Selection of Intermediaries
3) SMEs receive
financing
2007
2013
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Much more can be done thanks to financial engineering
JEREMIE is the opportunity for optimising the use of ERDF
resources
• using the possibility to implement tailor-made instruments
(efficient and sustainable), selective use of grants etc…
• leveraging ERDF funding with EIB loans and EIF
expertise in support of designed specific needs
• increasing cooperation / co-investments between DG
REGIO, EIF, EIB and national / regional institutions
enhancing SMEs access to finance in regions
European Investment Fund
JEREMIE Project
43, avenue J. F. Kennedy
L-2968 Luxembourg
Tel.: (00 352) 42 66 88 212
Fax: (00 352) 42 66 88 280
[email protected]
www.eif.org