The Access to Risk Finance under the European Funding Programmes WEBINAR

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1 Health Market The Access to Risk Finance under the European Funding Programmes WEBINAR 29 th of September 2014 Antonio Carbone - APRE H2020 NCP Access to risk finance, SME & ICT

2 Objective To matchmake the users need with the most appropriate financial facilities Target Innovative companies of all sizes, included those in the start-up phase, but also research centres and universities

3 Agenda of the webinar The Health to market project The Access to risk finance under H2020 The Risk Sharing Instrument - RSI The Access to risk finance under COSME The investment readiness: tips H2M Advanced services Duration: 45' + 15' Q&A 11:00 12:00 (CEST)

Health to Market identity card Consortium FP7

(Coordinating) Start: September, 1 st 2012 Duration:

Health/Life Sciences, staff of Technology Transfer

technologies Target countries: All EU Member States

of the Health-2-Market project is to equip Health

required to deploy a better and more viable IPR /

results, either through the setting up of new

4 Health to Market identity card Consortium FP7 project Coordination and support action (Coordinating) Start: September, 1 st 2012 Duration: 36 months Target groups: European researchers in Health/Life Sciences, staff of Technology Transfer Offices, EU industrial actors in Health-related technologies Target countries: All EU Member States and FP7 associated countries The overall objective of the Health-2-Market project is to equip Health researchers with the knowledge and skills portfolio required to deploy a better and more viable IPR / asset management strategy and exploit their research results, either through the setting up of new business ventures or through their more active involvement in interdisciplinary cooperation actions.

5 Access to finance: the framework

6 Access to finance: premise

Eu Financial Instruments 2014-2020 Research & Innovation Growth, Jobs and Social Cohesion

(COSME) Equity & guarantees Social Change & Innovation Micro-finance Creative Europe Guarantee

7 Eu Financial Instruments Research & Innovation Growth, Jobs and Social Cohesion Infrastructure Centrally managed by COM Horizon 2020 Equity, debt, guarantees Competitiveness & SMEs (COSME) Equity & guarantees Social Change & Innovation Micro-finance Creative Europe Guarantee Facility Erasmus for all Guarantee Facility Connecting Europe Facility (CEF) Risk-sharing (e.g. project bonds) and equity Shared management Instruments under European Structural & Investment Funds (ESIF) EU level Off-the shelf instruments Tailor-made instruments SME Finance Initiative (ESIF + COSME/H EIB/EIF)

8 Horizon 2020 Programme Excellent Science European Research Council Frontier research by the best individual teams Future and Emerging Technologies Collaborative research to open new fields of innovation Marie Skłodowska Curie actions Opportunities for training and career development Research infrastructures (including e-infrastructure) Ensuring access to world-class facilities Industrial Leadership Leadership in enabling and industrial technologies ICT, nanotechnologies, materials, biotechnology, manufacturing, space Access to risk finance Leveraging private finance and venture capital for research and innovation Innovation in SMEs Fostering all forms of innovation in all types of SMEs Societal Challenges Health, demographic change and wellbeing Food security, sustainable agriculture, marine and maritime research & the bioeconomy Secure, clean and efficient energy Smart, green and integrated transport Climate action, environment, resource efficiency and raw materials Inclusive, innovative and reflective societies Security society European Institute of Innovation and Technology (EIT) Spreading Excellence and Widening Participation Science with and for society Joint Research Center (JRC) EURATOM

9 "Access to risk finance" in HORIZON 2020 Part of the Horizon 2020 budget (3.69% of 80 billion = about 3 billion) will not be provided through grant funding but in the form of risk-sharing (for loans and guarantees) and by providing risk finance (equity) Goal: Stimulate more investment in research and innovation, notably by the private sector Leverage effect: to attract additional finance and multiply HORIZON 2020 budget resources Addressing financing gaps: Intervention only if there are financing gaps in the R&I delivery chain (e.g,due to high risk) Building a bridge from R&D to Innovation: Effective and cost-efficient way to complement grant funding under Horizon 2020 and translate R&D results to the market 9 9

10 HORIZON 2020: Dedicated "Access to risk finance" Work Programme Objectives: Facilitate access to finance for (1) RDI-driven/ innovative SMEs & small midcaps and (2) ambitious RDI projects carried out by a variety of recipients (companies, stand-alone projects etc.) Around EUR 2.9 billion in total (net of administrative costs) for market-driven financial instruments WP budget: 297, ,75 million = 645,46 million 1 Debt instrument + 1 Equity instrument + Accompanying measures At least 1/3 of the budget shall support RDI-driven SMEs and small midcaps 10 10

11 Financial instruments H2020 Access 108 to m risk 2014 finance Loans Service for R&I RSFF Medium/large midcaps: 7.5 mn to 25 mn (+ hybrid/mezzanine) Large firms, infrastructures, SPVs, etc: 25 mn to 300 mn Direct (via EIB) + indirect support (EIB/EIF via financial intermeds) SMEs & Small Midcaps R&I Loans Service RSI to 7.5 mn via EIF (via financial intermediaries) SME Finance Initiative (ESIF + COSME, H EIB, EIF) Joint Guarantee Instruments for R&I-intensive SMEs and Small Midcaps Equity Facility for R&I GIF-1 Equity investments by EIF into risk-capital funds that invest in early-stage R&I-driven SMEs and small midcaps Angels Co-investment pilot Technology Transfer Financing Facility Pilot NEW Co-financing of investments by existing TT funds and vehicles (start in 2015) (linked to Call CBBT 1) 97,50 m ,12 m ,1 m JGI 21m m m m BA ICT 30 m m 2015

12 Risk Sharing Instrument - RSI: how? EIF provides 50% (counter-) guarantee Loans of from to 7.5 million for 2 to 7 years up to 60 [80] million of guarantees per bank hence up to 120 [160] million of loans per bank guarantee fees, p.a. (counter-guarantee fees to be determined) 0.25% for loans of up to 3 million - 1% for bigger loans EU (FP7) initial budget of 120 million for first-loss taking; expected total loan volume up to 1.2 billion [ 2.5 billion] up to 1,000 final beneficiaries 12

13 RSI: who or what is eligible for a loan? Loan is for investments in R&D or innovation with significant technology or application risk or Loan is to a "fast-growing" enterprise (meaning >20% p.a. in growth or employees over last 3 years) or Loan is to an "enterprise with significant R&D or innovation potential" which means what, practically? catalogue of criteria just one must be met see next slide Look at intermediaries in your country: 13

14 "Enterprise with significant R&D or innovation potential o o o o o o o o expenditure in innovation in last balance-sheet is at least 20% of loan volume or at least 90% of loan is earmarked in business plan over next 2 years for R&D/innovation expenses or investment or firm awarded grants, loans or guarantees from EU or national R&I support schemes within last 2 years or firm awarded an innovation prize within last 2 years or firm registered a patent within last 2 years or firm has been invested in by high-tech VC fund or firm is based in science, technology or innovation park or firm received tax credits / exemptions linked to RDI investment within last 2 years 14

15 Links to other EU programmes: COSME Horizon 2020 and COSME are complementary programmes to generate growth and jobs Different focus: Horizon 2020 = innovation-driven growth COSME = support to create favourable business environment and competitiveness Closely coordinated with for instance: Complementary financial instruments (debt and equity), with facilities in both programmes serving complementary objectives Enterprise Europe Network set up under COSME, but support to SMEs for EU funding

16 Horizon 2020 & COSME financial instruments Equity instruments Equity Facility for R&I (H2020) Equity Facility for Growth of SMEs (COSME) Debt instruments SMEs & Small Midcaps Guarantee Facility for R&I (H2020) Loan Guarantee Facility for SMEs (COSME)

Budget: 2,3 billion 2014-2010 (Vs 80 billion H2020) Specific Objectives: 1) Improving access to finance (min 60%) 2) Improving access

17 Budget: 2,3 billion (Vs 80 billion H2020) Specific Objectives: 1) Improving access to finance (min 60%) 2) Improving access to markets (+/- 21,5%) 3) Improving framework conditions (+/- 11,5%) 4) Promoting entrepreneurship and entrepreneurial culture (+/- 2,5%)

18 Objective 1: Improving access to finance Streamlining set of financial instruments, developing EU-wide venture capital market, supporting cross-border lending, improving information about EU finance available for SMEs An equity facility (to invest in SMEs in expansion phase) A loan facility (to provide guarantees to cover loans for SMEs) Analytical tools (e.g. Enterprise Finance Index) Exchange of good practice (e.g. SME Finance Forum) 18

19 Bridge the gap between research and market Some initial tips to be attractive

20 Project Idea Summary (a brief description of what the project is about) Products/Technologies (outline of products and technology being proposed; clarify ownership of technology and how it will be managed; show how the project s achievement goes beyond the State of the Art)

21 Organization Profile/ Team experience (provide the organisation s profile and the team s experience in managing business development projects and in dealing with investors) How many persons are working on project? Categorize them list their strengths. Give a brief overview on the actual financial situation of your company (Current Investors, capital Raised to Date, Last Financing Round, date of Last Round of Financing, Valuation of Last Financing Round)

22 Business Potential (Vision/Goals) (show what is the attractiveness of the product/ services proposed to users/customers, what is the business potential of the idea and which possible challenges are to be surmounted) Clients/Business Model (the nature of the business model being proposed is clear and competitive) What is the cost/ product/ service being offered? Range of products/ services offered? Profit margin / transaction of products/ services offered

23 Competitors (Who are they? How much of the market is already covered? Why is this SME s offer BETTER than others? Why should the investors invest in this particular SME Is it about presenting or actually producing an output that is better than that of other companies on the market?) Partnering offer (the demand to collaborate, to license or to spin-off the technology is well defined and potentially attractive for partners) Are there any current discussions taking place? What is the partnering agreement? -Referral mechanism -Distribution rights -Equity swap etc. -Date of Profitability -Expected IPO / Exit

Investment Possibility and Sales Figures (Sales/Distribution Model) (return on investment) What are the projected sales for the next 3 years? What markets?

24 Investment Possibility and Sales Figures (Sales/Distribution Model) (return on investment) What are the projected sales for the next 3 years? What markets? What is the existing clientele? What type of investment is required (Venture Capital, M&A Advisors, Strategic / Corporate Partners )? What is the rate of return

25 H2M Advanced services (1) Access to finance Introducing the users to the Access to risk finance tools and features Matchmaking the users need with the most appropriate financial tools Better defining the amount of the equity to be acquired by the fund. Identifying the exit strategy? Understanding how can new ventures get in touch with the Fund? Mentoring the users in the use of electronic facilities Mentoring the users in filling in the template for the expected documents

H2M Advanced services (2) Further Eu funding First contact with potential clients via e-mail, phone or an appointment in our office explaining the service that APRE, as a H2M partner, offers: -

26 H2M Advanced services (2) Further Eu funding First contact with potential clients via , phone or an appointment in our office explaining the service that APRE, as a H2M partner, offers: - Analyze the idea of the client; innovation potential, concept, approach, etc. - An abstract of the proposal is asked. After this first contact, identify a topic not only within Horizon 2020, budget, etc. Once the topic is identified, it is necessary identify also their role on the project as a coordinator or as a partner + partner search services buonocore@apre.it; carbone@apre.it; mourenza@apre.it

27 Useful link HEALTH 2 MARKET Eu Access to finance A2F H2020 RSI A2F COSME EEN APRE _2015/main/h2020-wp1415-finance_en.pdf

28 And now Questions & Answers 29 September :45-12:00 (CEST)

29 Next H2M events

30 Thanks for your attention! APRE Agenzia per la Promozione della Ricerca Europea Via Cavour, Roma Tel. (+39) Fax. (+39) Antonio Carbone carbone@apre.it National Contact Point SMEs, ICT & Access to risk finance

Horizon 2020 Financial Instruments for the Private Sector, Especially SMEs An Overview

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