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Czech Republic and EIF launch €55 million fund of funds for digital technologies backed by Recovery and Resilience Facility

    Date: 09 March 2023
  • Agreement to support investments in three early-stage venture capital funds focused on strategic digital technologies.
  • RRF Czech Republic Fund of Funds will support the digital transformation of the country’s economy and the growth of the Czech venture capital market.

The Czech Republic has mandated the European Investment Fund (EIF) to manage a fund of funds focused on equity financing for early-stage Czech start-ups and spin-offs developing digital technologies. The €55 million mandate agreement was signed in Prague today by Jozef Síkela, Czech Minister of Industry and Trade, and Marjut Falkstedt, Chief Executive of the EIF.

The RRF Czech Republic Fund of Funds will be managed by the EIF and funded under the Czech Republic’s national Recovery and Resilience Plan. It will invest in three venture capital funds with specialised strategies: a pre-seed co-investment fund, a fintech fund focused on applications of distributed ledger technologies benefitting from a new regulatory sandbox, and a technology transfer fund commercialising research from leading Czech universities in the field of artificial intelligence. All funds will be managed by independent, private investment teams selected by the EIF, using its standard investment process, through which it has committed almost €300 million to 15 Czech equity funds to date.

The overarching focus of these funds is on digital technologies, which are viewed as strategically important to the Czech Republic. The planned funds are pilots that may be followed up in the future with additional funding for such strategies once they have proven successful. Altogether, the RRF Czech Republic Fund of Funds will support the digital transformation of the national economy and the development of the increasingly lively Czech venture capital market.

The Czech Republic is expected to receive €7 billion in grants from the EU Recovery and Resilience Facility, and 22% of the Czech Recovery and Resilience Plan aims to foster digital transition. The three planned funds under the RRF Czech Republic Fund of Funds will be complemented by other innovation-focused measures, such as “Rise-Up” programmes, demonstration of 5G applications in the context of smart cities and industry 4.0, new regulatory sandboxes for artificial intelligence and fintech, and quantum communication infrastructure.

The new equity programme announced today follows a previous successful collaboration between the Czech Ministry of Industry and Trade and the EIF, which already manages a €40 million European Structural and Investment Funds allocation entrusted to it by the ministry from the Operational Programme Enterprise and Innovation for Competitiveness 2014-2020. The EIF invested this allocation in two accelerator and seed capital funds that are now among the most active venture capital investors on the Czech market. In addition, the Czech Republic, through the ministry and the Czech Republic’s National Development Bank (NRB), has also invested in the regional €97 million Central Europe Fund of Funds (CEFoF), alongside Slovakia, Hungary, Austria and Slovenia. The CEFoF has made commitments to nine funds investing primarily in growth-stage companies, of which the largest group to date is Czech. The RRF Czech Republic Fund of Funds represents an evolution from these initiatives, moving from a broader, generalist strategy to specialised sectors.

Czech Minister of Industry and Trade Jozef Síkela said: "The priority of the Ministry of Industry and Trade is to support small and medium-sized enterprises, which are the backbone of our economy. That also applies to the field of promising, fast-growing companies - start-ups. It is crucial for the competitiveness of the Czech Republic that we support new projects with high added value and keep pace with other countries. Therefore, together with the European Investment Fund, we will launch three pilot funds that will help start-ups with financing in their beginnings," adding: "The projects will be financed from the National Recovery Plan. The goal is now to support selected areas with great potential, where the market needs help for various reasons, for example in the transfer of technologies from cutting-edge research to practice. In the future, we want to focus on strategic technologies for the entire European Union, such as renewable energy sources, biotechnology, microelectronics and other sectors."

“We are excited to be expanding our successful cooperation with the ministry today by signing the new fund of funds using the country’s resources under the Recovery and Resilience Facility. The new specialised programme to support investments in strategic digital technologies reflects the priorities of the European Union — and those of the new EIF, which is increasingly moving into specific investment niches,” commented EIF Chief Executive Marjut Falkstedt. She added: “With our longstanding presence in the Czech equity market and investment know-how, we stand ready to provide fresh support to early-stage digital start-ups and spin-offs and to further advance the Czech venture capital ecosystem by backing new types of investment vehicles.”

Background information

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute to EU policy goals. The Bank finances projects in four priority areas — infrastructure, innovation, climate and environment, and small and medium-sized enterprises (SMEs). In 2021 and 2022, the EIB Group provided €2.9 billion in financing to projects in the Czech Republic.

The European Investment Fund is part of the European Investment Bank Group. Its core mission is to foster access to finance across Europe. The EIF supports financial intermediaries with a broad range of financial products — and thus encourages banks to lend, funds to invest and private investment to crowd in, creating a sustainable financing ecosystem for Europe. Whether for microenterprises, small and medium-sized companies, mid-caps, individuals or infrastructure projects, the EIF provides a wide range of solutions that also advance key EU policy objectives including competitiveness & growth, innovation, social impact, skills & human capital, sustainability & green transformation and more.

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Website: www.eib.org/press — Press Office: +352 4379 21000 — press@eib.org  

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