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Business year 2011
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this helped to ensure the availability of equity to finance
young European innovative technology companies
Compared to the previous year, EIF increased its total
commitments into Venture Capital (VC) funds by almost
30% in 2011 with a total of EUR 465m commit ted into
23 funds. This catalysed a total of EUR 1.9bn of commit-
ments in these funds.
Throughout the year, in line with its equity strategy, EIF
strengthened its efforts to develop new VC products with a
view to increasing its reach to and impact on the European
VC ecosystem and attracting private sector investors. As
a result, a first pilot project – the European Angels Fund
(EAF) – was developed. Further products are in the defini-
tion or pre-launch stages and can be expected to become
operational in 2012.
2011 was also the year in which EIF made its first commit-
ment into the impact-investing segment signing a cornerstone
investment in Bridges Ventures third fund. This signature il-
lustrates EIF’s support for European social entrepreneurship
and innovation going forward. It also marks EIF’s intention
to become an important player in this emerging and innova-
tive asset class.
Growth capital
Lower mid-market: supporting established SMEs
EIF continued to deploy its lower mid-market activity offer-
ing SMEs in their growth phase access to equity finance.
EIF par ticularly suppor ted first closings managed by
emerging or f irst - t ime teams, thereby expanding the
market offering of equity finance for SMEs. The share of
investments in first-time teams and emerging teams was
higher in 2011 than in the previous year, demonstrating
EIF’s increased contribution to this segment of the market.
In 2011, EIF signed EUR 409m in 19 lower mid-market
funds
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, strongly supporting teams with significant contri-
butions at a time when interest from institutional investors
was still at very low levels. This amount catalysed a total
of EUR 2.8bn of commitment.
Additionally, EIF’s proactive involvement in this sector has
partially offset the lower interest from institutional investors
in supporting new projects, which is reflected in the sub-
stantially lower number of EIF investments where another
institutional investor acted as sponsor of the fund. EIF fur-
ther supported emerging teams gaining their independence
from their previous sponsors, thereby helping new teams
on the market.
Mezzanine: an alternative solution for long-term financing
EIF continued to play a catalytic role in the mezzanine mar-
ket segment, committing capital to mezzanine funds (hybrid
debt-equity funds) through the EIB’s EUR 1bn Mezzanine
Facility for Growth (MFG). This mezzanine instrument,
which is well adapted to long-term financing, provided al-
ternative support to more mature businesses and late stage
technology companies helping them, for instance, through
their shareholding reorganisation or expansion.
In 2011, EIF committed a total of EUR 236m in six hybrid
debt-equity funds, spreading its contribution between two
first-time teams composed of experienced professionals
and four established teams raising new funds.
Five of the funds backed by EIF in 2010 and 2009 made
further closings in 2011, demonstrating EIF’s catalytic role
in allowing first closings and in generating new investors’
interest which amounted to EUR 1.2bn.
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Plus two co-signatures with MFG.
“EIF plays a key role in building a truly European venture
capital ecosystem supporting entrepreneurship and
innovation. Early stage venture capitalists, particularly
in the ICT sector, need smart LPs like EIF to help them
increase their capacity to finance start-ups and boost
young innovative companies’ growth.”
Stéphane Richard, Chairman & CEO, France Telecom – Orange,
Maurice Levy, CEO, Publicis
“EIF’s expertise with direct lending funds and active
support were instrumental for us to hold a first closing
at a sufficiently large size to carry out our investment
strategy and deploy resources into end beneficiaries.”
Florian Lahnstein, CEO and Founding Partner, RiverRock