EIF supports “Objective 1 area” Finnish venture capital fund

The European Investment Fund (EIF), the Luxembourg based venturecapital institution of the EU, has signed a commitment to invest up to EUR 4 million in a new Finnish fund, Growhow Rahasto I Ky, which will operate predominantly on a regional basis, focusing on start-up and early stage SMEs operating in information and communication technologies (ICT), biotechnology, environmental technology, and life science sectors. The fund will also provide equity financing to companies of the traditional Finnish industry sectors, such as forest and engineering industries.

Growhow Rahasto is headquartered in Kuopio , with offices also in Mikkeli and Joensuu. The team's operational area covers three eastern Finnish regions, which are largely included in the EU Objective 1 (less developedregions): South Savo, North Savo and North Carelia. GDP indices and unemployment rates in those targeted regions are are far from the Finnish average .

The Fund is to be managed by Teknia-Invest Oy, which itself is partly owned by SITRA, the well-known Finnish governmental pre-seed and seed financier. SITRA has often co-invested with the EIF in Finland.

This EIF operation is to be funded under the European Technology Facility (ETF) Start-up scheme, which is a specific financial instrument for the provision of venture capital to small and regional seed and early stage funds. The EIF manages ETF Start-up on behalf of the European Community.

Mr Walter Cernoia, EIF's Chief Executive underlined that regional development belongs to the core of the Community objectives that the EIF has to support and that this regional operation in Finland is therefore fully in line with the EIF's remit.

The European Investment Fund (EIF) is the European Union's specialised financial institution for venture capital and guarantees. Based in Luxembourg, the EIF was established in 1994 as a joint venture between the European Investment Bank (EIB, which has recently become its majority shareholder), the European Commission and 28 European banks and financial institutions.

EIF guarantee instruments facilitate access to debt finance for Small and Medium-sized Enterprises through the intermediation of a wide range of banks and financial institutions. The latter are allowed to allocate capital to those operations at a rate of 20% in accordance with EIF's status as a Multilateral Development Bank under the European Union Solvency Ratio Directive.

As for its venture capital activity, the EIF is a major player in the European venture capital market, having invested in some 140 funds all over the EU and in Eastern and Central Europe. Its venture capital portfolio already amounts to EUR 1.8 billion. The investment strategy of the EIF focuses essentially on the promotion of European technology through investments in venture capital funds located in the Union and the Accession Countries. The EIF manages resources from the EIB and from the European Commission, within the Multiannual Programme for Enterprise. The EIF deploys its activity in the framework of the EU initiatives aiming to make Europe the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion (conclusions of the Lisbon Summit of EU Heads of State and Government, 24 March 2000).