western balkan technology fund (wbtf) initiative ljiljana kundakovic, viktor nedovic, goran...
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Western Balkan Technology Fund (WBTF) Initiative
Ljiljana Kundakovic, Viktor Nedovic, Goran Radosavljevic Ministry of Science and Technological Development
Republic of Serbia
Objectives
• Stimulate long-term economic growth prospect and competitiveness of Western Balkan (WB) economies
• Further engage International Financial Institutions (IFI) in private sector development in WB
• Increase the ability of innovative SMEs to access and efficiently use equity-based investments
• Create €100M equity investment fund focused on technology
Status of the Initiative
• WBTF supported by all beneficiaries
• WBTF initiative has been presented to high representatives of EC, EIB, EIF, WB and EBRD
• Preliminary analysis of supply and demand of equity finance for SME in WB, conducted by the European Investment Fund (EIF)
Competitiveness and Innovation
On a cost basis Western Balkans businesses are competitive today
“To sustain competitiveness, the Western Balkans needs to move up the value chain: first, by differentiating through value-added services and innovation; and second, by further leveraging the region’s proximity to the EU market”
OECD: RECOMMENDATION FOR A REGIONAL INVESTMNENT STRATEGY, 2008
Financial Markets in WB are Underdeveloped
• The supply of equity capital in seed, early and expansion stages of development of enterprises is either completely absent or is at the embryonic stage
• Access to and the cost of finance are a significant constraint on investment. On average, companies in the manufacturing sector need collateral of 177%, with an interest rate of 11%.
Public intervention in creating a supply of equity finance available to SMEs is needed
OECD: RECOMMENDATION FOR A REGIONAL INVESTMNENT STRATEGY, 2008EIF: WB Venture Capital Assessment . 2010
WBTF Structure and FinancingPhase I Phase II
IPA 2011 and 2012 (multibeneficiary)/WBIF 25M
IFI/Donor Community 50M
WB BeneficiariesParticipation 10M
Albania 0.7
Bosnia and Herzegovina 1.1
Croatia 4.2
Macedonia 0.6
Montenegro 0.3
Serbia 3.1
Private Sector 15M
Total 35M 65M
Phase I (€25-25M)IPA multi beneficiary funds
IFI through WBIFWB Beneficiaries
Phase II (up to €65M)IFI/Donor Community
Private sector
Phase I Evaluation
WBTF Management
European Investment Fund Evaluation of investment proposals
Collaboration and coordination with local offices/agencies in all beneficiaries
Establishing a network of VC funds and business angels for co-investment
Local Offices
Management
BeneficiariesIdentification and preparation of investment proposals
Negotiation and closingFollow up of investments through active participation in
companies’ management
Staged Approach to Establishing WBTF
Capacity building (supported by multi-beneficiary IPA)•Training and capacity building of beneficiaries• Assistance in establishing the WBTF
Capacity building (supported by multi-beneficiary IPA)•Training and capacity building of beneficiaries• Assistance in establishing the WBTF
Developing and financing a pipeline of investment projects
•Technical support to detailed preparation of projects at the beneficiary level•Assessment of individual investment projects
Developing and financing a pipeline of investment projects
•Technical support to detailed preparation of projects at the beneficiary level•Assessment of individual investment projects
Development of full investment portfolio•Significant participation of IFIs and private
sector
Development of full investment portfolio•Significant participation of IFIs and private
sector
Investment Strategy
• Generalist with strong technology and innovation component• Equity financing with standard terms with respect to protective
provisions, Board representation and right to participate in subsequent issuance of equity securities
• Convertible debt financing
Main Investment Criteria:
• High growth potential and proven business models
• Competitive innovative product or services
• Technologies with potential to access international markets
• Leadership capable of sustaining growth
Link with EP and WB EU Agenda• EUROPE 2020 : A strategy for smart, sustainable and inclusive growth
• Priority: Smart growth - developing an economy based on knowledge and innovation
• Innovation Union – EU 2020 flagship initiative • to improve framework conditions and access to finance for
research and innovation so as to ensure that innovative ideas can be turned into products and services that create growth and jobs.
• The 2007 EU Enlargement Strategy:• The need to raise competitiveness and further stimulate
investments and SME growth through improved access to finance • Implementation of Small Business Act :
• Recommends that The EU and Member States should facilitate SMEs’ access to finance, in particular to risk capital, micro-credit and mezzanine finance
Thank you!
Ministry of Science and Technological Development
Republic of [email protected]
Improved access to finance
Improved access to finance