Over EUR 100m already invested under the EU CIP programme

The European Investment Fund (EIF), the European Union's financial body for small and medium-sized enterprises (SMEs), has invested over EUR 100m of the European Union's Competitiveness and Innovation Framework Programme (CIP) resources in 10 venture capital funds, less than a year after being granted management of part of the facility.

The CIP, which spans from 2007 to 2013, has been put in place to boost European productivity, innovation capacity and sustainable growth, whilst simultaneously addressing complementary environmental concerns.
Within the framework of the CIP, EIF has been allocated EUR 1.1bn to be split between venture capital – with the High Growth and Innovative SME Facility (GIF) - and guarantees – with the SME Guarantee Facility (SMEG).
The GIF supports innovative SMEs throughout their life cycle and provides important leverage for the supply of equity to these companies. The GIF focuses on:

-         seed and start-up investments (GIF1), providing capital to early stage funds focusing on  specific sectors, technologies or research; and

-         expansion stage investments (GIF2), supporting development capital for growing SMEs.

The GIF also incorporates increased eco-innovation financing, an area where EIF is further developing its activities. The GIF therefore extends both the range of EIF’s investment spectrum and its scope.

Richard Pelly, EIF’s recently appointed new Chief Executive declared “thanks to the European Community’s renewed confidence through the allocation of more financial support, EIF can strengthen and further consolidate its offer to improve the financial landscape for innovative SMEs”.

John Holloway, Director Investments, at EIF said “with its emphasis on emerging teams, sectors and countries, the CIP gives EIF the opportunity to play an essential role in the setting up of new funds and in optimising the use of European Union resources which support SMEs.  It is extremely rewarding and encouraging, in the current economic context, to see venture capital funds managing to close successfully”. 

In the current difficult market conditions incurred by the credit crisis and its knock-on effect on the general economy, EIF has managed to remain a lead cornerstone investor, provide support to SMES and increase its contribution yet further to this vital sector of the European economy.

EIF’s central mission is to support Europe’s small and medium-sized businesses (SMEs) by helping them to access finance.  EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total commitments to Private Equity funds amounted to over EUR 4.5bn at end June 2008. With investments in some 284 funds, EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments.

EIF’s commitment in guarantees totalled over EUR 11.3bn in 190 operations at end June 2008, positioning it as a major European SME guarantees and securitisation actor and a leading micro-finance guarantor.

EIF’s CIP investments
BaltCap Private Equity Fund: fund focusing on expansion and development capital for SMEs based in Estonia, Latvia and Lithuania. The fund’s sector focus is retail businesses, export-oriented manufacturing companies, travel and leisure, environmental, communication, transportation and construction industries. BaltCap has completed a first close at EUR 58m, and is expected to reach final close at EUR 100m. This is the first EIF investment ever in the new Member States under the GIF2.

Capricorn Cleantech Fund: a Belgium-based pan-European early-stage fund focusing on technology based SMEs specialising in the “cleantech” / eco-innovation sector and covering a wide range of products, processes and services that harness renewable materials and energy sources, reduce the use of natural resources, cut or eliminate pollution and add economic value by significantly lowering cost and improving profitability. Capricorn recently completed its final closing at EUR 101m. This investment was made under the GIF1.

Inventure: a Helsinki-based fund focusing on innovative technology companies in Finland. The fund targets technology companies with global market potential and attractive business models and which are active in the software, electronics, semiconductors, industrial production and material technologies sectors. Inventure has completed a first close at EUR 35.4m, and is expected to reach final close at EUR 50m. This investment was made under the GIF1.

360 Capital One: a multi-country technology venture capital fund with a size of around EUR 100m. 360 Capital One will invest mainly in Italy and France and will take equity stakes in innovation-driven SME which are at seed/early stage of development. The fund’s sector focus will cover automation, financial services, internet opportunities, ICT and retail industries.  This investment was made under the GIF1.

Fountain Healthcare Partners 1: a Dublin-based early stage venture capital fund. Fountain Healthcare Partners Fund 1 is a life science fund which will invest in small and medium-sized Irish companies (SME) which concentrate on product development programmes and a clear pathway to commercialisation. The fund’s sector focus will cover specialty pharma, medical devices, biotechnology and diagnostics. Fountain completed its closing at EUR 75m and targets a final closing at around EUR 100m. This investment was made under the GIF1.

UMIP: the fund was created at the initiative of the University of Manchester in order to invest in high growth businesses emerging from its research base. It will invest in young companies, and will have both the ability and capacity to support their growth. The fund will focus primarily on proof-of-principle, seed and post-seed investments in all areas of technology (engineering sciences, physical sciences and medical and life sciences). In this landmark operation, EIF’s investment will enable the creation of a leading technology transfer operation delivering significant results in terms of wealth creation, new company formation, but also further development of technology. This investment allows EIF to address an unmet need in the field of commercialisation of intellectual property from universities. First closing was recently completed at GBP 32m with a final target at GBP 50m. This investment was made under the GIF1.

Dritte SHS Technologie GmbH & Co. KG Fund: a German venture capital fund focusing on early stage investments. It will target life science related sectors such as medical technology, diagnostics, drug development and production technology for medical technology diagnostics and drug delivery. The fund will mainly target German early stage companies with first market proof or first clinical successes for medical devices. The fund completed its first closing at EUR 40m. This investment was made under the GIF1.

Pentech II: based in Scotland, Pentech is one of the leading early stage software investors in the UK. Pentech II focuses on early stage software companies in both UK and Ireland with high growth potential, with the aim of developing them into globally successful entities. The fund has reached a second closing of over GBP 40m. This investment was made under the GIF1.

Albuquerque: a generalist private equity fund focusing on mid-market investments for small SMEs based in Portugal. The fund will invest between EUR 5m and EUR 15m in SMEs with strong development potential and high expected revenue growth. Albuquerque will focus on industries with identified growth drivers and mature, stable growing and consolidating sectors. This is the second, and largest, investment made under the GIF2.

The Chalmers Innovation Fund: a technology transfer vehicle partnering with the Chalmers Foundation, in Göteborg, Sweden. This innovative financing vehicle will invest mainly in technology transfer start-ups and projects in relation to which Chalmers Innovation acts, intends to act or has acted as a business incubator. These start-ups will originate from Chalmers University, Göteborg University, or a number of other sources (industry or individual entrepreneurs). Since its establishment, Chalmers Innovation has developed over 75 technology based ventures. This investment was made under the GIF1.