EIF Presentation Template

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Baltic Sea Strategy Working Meeting
Graham Cope Head of Region, Northern Europe
European Investment Fund Europes 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 October 2010Any
estimates and projections contained herein
involve significant elements of subjective
judgment and analysis, which may or may not be
correct.
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EIFs Core Business is Financial Engineering

• EIF is the EUs specialist institution in
  Financial Engineering Instruments (FEIs)
• EIF manages portfolio of over EUR 16bn of
  commitments via 500 Financial Intermediaries
• Equity Instruments Over EUR 4.5bn through 300
  Funds
• Debt Instruments Over EUR 11.5bn through 200
  Banks
• EIF manages multiple mandates from EU, EIB,
  Member States Regions to create FEI portfolios
• EIF works closely with EIB on many of these
  aspects to deliver additional added value

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Baltic Sea Region is a coremarket for EIF

• Over EUR 500m invested into over 60 equity funds
  across the region in last few years
• Pioneering marketplace some examples

• Technology Transfer transactions with Chalmers
  Innovation Seed Fund and the Karolinksa Institute
  in Sweden
• Business Angel Co-investment Fund with Strata in
  Lithuania
• EIF strongly supports EUBSSR process but we can
  only focus on Priority Area 8 Strategic Project
  7.2

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The problem is becoming critical

• Nordic Innovation Center Study, May 2010
  Enhancing cooperation in the Nordic Seed Capital
  Market
• the challenges in the early stages include lack
  of private financing in the seed stage,
  difficulties for venture capital funds to secure
  new funding for the expansion stage, lack of
  patience and focus as well as scattered resources
  in publicly funded investment operations.
• Nordic Innovation Center Pre-Study, November 2009
  Nordic Baltic Investment Fund
• Presently, financing for VC funds has become
  most difficult to obtain. If action is not taken
  today, there is a risk of a substantial setback
  in the development of the Nordic/Baltic risk
  capital market. A well functioning VC market
  needs, in the long term, to be attractive to the
  private sector and particularly to institutional
  investors worldwide.

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Financial Engineering is vital but not simple

• Financial Engineering Instruments are proven to
  be the best way to maximise financing of SMEs
• Creates quality investment process, maximises
  leverage and improves long term sustainability
• Skill is to combine public with private financing
  that creates sustainable critical mass of
  investment into SMEs
• BUT
• We must understand how Financial Intemediaries
  think
• And what Private Investors find attractive (or
  not)
• Without them it will fail

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Baltic Sea Macro-Regional Approach is what the
market wants

• Cross-border approach is the only way forward
• Marketplace wants this solution

• SMEs increasingly operate cross-border
• Financial Intermediaries all operate cross-border
• Insitutional Investment managers need
  geographical diversification
• A fragmented sub-regional approach is not the way
  forward and we would not recommend it

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Basic Concept under development
EIF contribution via RCM mandate One Third
Baltic Sea Region National contributions Through
agreed percentages or via opt-in basis Two
thirds
Baltic Sea Innovation Fund (Possibly up to 375m
but may start at lower level eg 250m)
Could be sector focussed eg Life Sciences
Mobile Cleantech
VC Fund of Funds Window 180m
Business Angel Co-investment facility 50m
Technology Transfer Accelerator 20m
High growth potential SME Community across the
Baltic Sea Region
Possible involvement of national agencies
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Call to Action

• EIF proposes the set up of dedicated Project Team
• Involving Skane Region, MoF SWE, NIC and National
  Agencies
• Project team will focus on creating
• Workable Model Governance Structures
• Financing Plan with committed contributors
• Launch Timetable Resourcing plan
• This can work it is time to make it work

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Contact Details

• Graham Cope
• Head of Region Northern Europe
• European Investment Fund
• 96 boulevard Konrad Adenauer
• L-2968 Luxembourg
• cope_at_eif.org
• Tel. [phone]
• Fax [phone]
• www.eif.org