The European Investment Fund (EIF)
The European Investment Fund is a public-private partnership established in 1994 with a capital of 2 bn Euro and owned by the
European Investment Bank
, the European Commission and the banking sector. The EIF's main business is in issuing long term guarantees for the financing of major infrastructure and SME investments.
In 1996, the EIF launched a 75 MEuro equity programme, through which it takes equity participations in venture capital funds aimed at investment in technologically innovative SMEs. The EIF does not invest directly in individual companies but provides funds to intermediary structures acting on the venture capital market. In doing so, the EIF pursues two distinct objectives:
Contribute to the development of European SMEs with a high growth and employment potential;
Add value to the equity interventions of the private sector financial institutions on the venture capital market.
In order to enhance the impact of its equity operations on investment in early stage, technologically innovative SMEs, the EIF is collaborating closely with DG Enterprise/D of the European Commission in the
Innovation and Technology Equity Capital pilot project
A key element of the
European Investment Bank
's new action launched in June 2000, the
Innovation 2000 Initiative
, is the expansion of activity in support of venture capital financing for SMEs. This entails the reform of the European Investment Fund with a view to turning this institution into the EIB Group's specialist venture capital arm. While maintaining the tripartite nature of the Fund (whose capital is jointly owned by the EIB, the European Commission and some 70 commercial banks), the aim of this reform is to make the EIB the majority shareholder, with a stake of over 50%, and operator of the institution. Concentrating all the EIB Group's venture capital activities (EUR 1.2 billion committed) in the hands of the EIF will substantially enhance the Fund's financial and operational capacity and make it possible to target operations in this highly specialised field more effectively. Innovative SMEs willing to benefit from the EIF's programmes will have to contact directly the financial intermediaries which are selected by the EIF.
Funds in which the EIF invests, must be located in the European Union and conduct the bulk of their activity in the EU. The key principles of the EIF's investment policy are:
To act as a catalyst for private and institutional investors to get involved in venture capital funds;
To concentrate on those intermediary structures supporting innovative companies from the early stages of their development;
To ensure that an experienced team of professional venture capital managers is in place;
To invest only in funds that have a sufficient size to support such a strong managerial capacity;
To seek financial performance from its investments;
To establish a permanent and two-way information flow with beneficiary funds.
The EIF takes minority stakes, on average 10 to 15%, in intermediary structures with a clear definition of their investment and exit strategies. Most participation amount to between Euro 1 and 3 million.
Direct enquiries to the EIF are welcome from venture capital fund promoters but in order to consider an investment opportunity, the EIF needs a detailed business plan or placement memorandum describing:
- The size and characteristics of the proposed or existing fund
- The involvement of other investors
- The investment and exit strategies
- The management team and their track record
- The legal structure
- The nature of reporting to shareholders/investors.
After analysis of such documents, the EIF reserves the right to undertake further due diligence on the investment proposals.
Apart from its own operations, the EIF manages since 1997 on behalf of the European Investment Bank the
European Technology Facility
(ETF). This facility is a venture capital programme with a budget of 125 MEuro and is part of the EIB's "
Amsterdam Special Action Programme
On behalf of the European Commission, the EIF manages since 1998 the
SME Guarantee Facility
venture capital programme, two facilities under the Growth & Employment Initiative; as well as since 1997 a guarantee programme called the Growth & Environment pilot scheme.
Innovative SMEs willing to benefit from the EIF's programmes will have to contact directly the financial intermediaries which are selected by the EIF, or they can first seek guidance on innovation financing sources and how to prepare for them from the
List of Venture Capital funds participating in the EIF's equity operations and in the ETF Facility
List of Venture Capital funds participating in the ETF Start-up Facility
List of Venture Capital funds participating in the I-TEC pilot project
List of Financial Institutions participating in the SME Guarantee Programme
List of Financial Institutions participating in the Growth & Environment Scheme
List of Financial Institutions shareholders of the EIF