1 / 43

The European venture capital landscape Bruno Robino European Investment Fund Athens, 28 June 2006

The European venture capital landscape Bruno Robino European Investment Fund Athens, 28 June 2006. Agenda. Private equity in Europe: 2005 a record year EIF venture capital in Europe Vision for the future Conclusion. Private equity in Europe: 2005 a record year.

carnig
Download Presentation

The European venture capital landscape Bruno Robino European Investment Fund Athens, 28 June 2006

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The European venture capital landscape Bruno Robino European Investment Fund Athens, 28 June 2006

  2. Agenda • Private equity in Europe: 2005 a record year • EIF venture capital in Europe • Vision for the future • Conclusion

  3. Private equity in Europe: 2005 a record year

  4. * Source: EVCA / Thomson Financial Venture Economics / PricewaterhouseCoopers

  5. Divestments at cost € 29.8bn

  6. Key points • Fundraising: • more than double over 2004 reaching € 72bn • 80% of funds expected to be allocated to buyouts • Investments: • reached a record at € 47bn, a 27% increase over 2004 • buyouts represent 68% by amount invested • venture investments +23% over 2004, representing 27% by amount invested • and 75% by number of investments • Divestments: • at cost up to 52% at € 30bn • Write-offs decreased at around 5% of total amount divested

  7. Key points • Investments benchmarks 2005: • Long term net return since 1980: 10.3% • Top quarter return 22.9% • Increased distributions, with realisations above 2000 record level • Strong performance compared to other asset classes

  8. EIF venture capital in Europe

  9. EIF at a glance 1994 EU specialised financial institution for SMEs, acting through: Venture Capital (fund of funds) and Guarantees for SME portfolios AAA Subscribed capital of EUR 2 billion : - 62 %: European Investment Bank - 30 %: EC for the EU - 8 %: 20 financial institutions • PPP • Art 2 : « pursuit of Community objectives » such as growth, employment, knowledge-based economy, innovation, regional development, Lisbon • Art 24 : « generate an appropriate return on its resources  »

  10. Venture Capital activities • Acting as a Fund-of-funds • Public Private Partnership, selecting funds • Eligible to EU Objectives • Able to generate risk-commensurate returns • Biggest European early-stage investor (with a 15% market share) • Respected investor (even in the crowded lower mid-market)

  11. EIF : mainly a manager of external resources (mandates) BMWA - ERP European Community Dahlia SICAR S.R. EUR 600m Etc… EUR 4 000m EUR 800m Up to EUR 1bn Revolving To be committed in venture capital funds and financial institutions in the EU and Candidate Countries over 500 000SMEs indirectly benefited from EIF support

  12. European fund-of-funds market

  13. EIF: Venture Capital • EUR 3.2 bn have been committed in about 220 funds • Disbursements represent 60% of the amounts committed • Young age of the portfolio • EUR 1.8bn still available for future investments • 2 944 companies in the underlying portfolio • Total invested by portfolio funds in these companies EUR 7.5bn

  14. Credentials • Venture Capital commitments of EUR 3.2bn (as at end 2005) • Key investor in major markets • Niche opportunity seeker in smaller markets

  15. EIF vs the European Venture Capital market EIF portfolio stage distributionby % of amount invested European PE/VC market stage distributionby % of amount invested * Source: EVCA / Thomson Financial Venture Economics / PricewaterhouseCoopers • EIF: tendency towards early stage investments (49%) • EIF: investments biased towards tech (56% in ICT and LS) • EU: tendency towards later stage buyouts (57%)

  16. EIF’s investment focus • 49% of portfolio are early stage investments- EU average 12% between 2000-2004 (source: EVCA). • 57% are tech-related, primarily ICT and life sciences, • balanced by buyout, development and generalist (30%). • EIF always operates alongside private sector investors. • Diversified geographical investment focus provides good opportunities outside main areas. • Aims to attract more private sector funding to VC space.

  17. A unique positioning and mix of expertise • The largest VC portfolio in Europe (about 220 funds) with most of the current top quartile teams (core) and the emerging ones (satellite) • A repeat investor in top funds • Ability to construct portfolio that meets specific risk profile – proprietary system • Ability to structure transactions that meet the risk appetite of most potential investors – financial engineering, guarantees More complex products for more demanding clients

  18. EIF’s Value-added • Long-term, committed and pro-active investor • Recognised know-how • Rigourous selection and due diligence procedures • Pari-passu cornerstone investor • Active monitoring; regular presence • Widespread network in European venture capital industry • Looking also at the more difficult segments (seed, first time teams) “More than money”

  19. EIF’s vision for the future

  20. EIF’s strategy • Continue to develop EIF existing markets (Early stage, Expansion, Small BO) • In parallel, promote new niches With the aim to: • increase the availability of risk capital in Europe • stimulate the development of a high growth market in Europe • improve the investment environment • benchmark best practices in Europe

  21. EIF’s focus European Investment Fund « VENTURE CAPITAL » « PRIVATE EQUITY » Tech Transfer Incubators Business Angels Pre-Seed Seed Early Stage Expansion / Dev.Capital Later-stage Buy-out IPOs New policy areas GAP CURRENT MANDATES COVERAGE CIP COVERAGE SME LIFE CYCLE

  22. The innovation cycle covered by EIF • New investment focus • Business Angels • Side Funds • Tech transfer • Incubators • Pre-Seed Fundraising underway in these new areas CIP TTA JEREMIE • Existing markets • Early Stage • Expansion • Development Capital New fundraising in our existing markets

  23. CIP: Competitiveness & Innovation Framework Programme • Successor programme for MAP for period 2007–2013 • European Commission proposal was adopted on 6 April 2005 • Co-decision procedure by European Council & Parliament • Objectives • Generate economic growth and create more jobs • Boost the productivity, competitiveness and innovation capacity

  24. CIP – the proposed instruments • High Growth Innovative Companies Scheme (VC) (EUR 518m) GIF1: Early stage (ex ETF Start-Up) GIF2: Later stage (job creation, generation change…) • SME Guarantee Facility (EUR 468m) SME loans, Microcredit, Equity and mezzanine SME loan securitisation risk-sharing scheme • Capacity Building (EUR 60m)

  25. Tech Transfer • “There is considerable weakness of early stage ventures in Europe … due to structural differences in the transfer of technology from labs to industry (compared to US)” . ECFIN paper for the EFC – March 2005 US University Revenues (€m) Columbia University 115.4 University of California 65.3 Stanford University 50.0 University of New York 49.9 Sloan Kettering Institute for Cancer Research 43.3 University of Rochester 33.5 Europe University Revenues (€m) Pasteur 32.6 Edinburgh University 4.5 Utrecht* 4.0 Cambridge 3.1 INRIA* 3.0 VIB* 2.7

  26. Technology Transfer Looking for new funds from EU to stimulate tech transfer R&D Tech transfer / proof-of-concept Marketable product Funding: FP7 Funding: CIP Funding gap «Technology» Intellectual Property «Prototype» Intellectual Property Potential exits for the SPV projects Licensing to corporation Sale to corporation Purchase / investment by other investors IPO Virtual LAB Created by leading R&D Centres «Licensing» Special Protection Vehicles «Spin-off» Special Protection Vehicles «Hybrid» Special Protection Vehicles Investment focus of TTA

  27. JEREMIE JEREMIE is an initiative of the Commission (DG Regio) launched in October 2005 Joint” because it combines resources from EC, National Public Authorities, EIF, EIB and/or other International Financial Institutions (IFIs) JEREMIE is not an organisation, but a series of coherent actions Main Targets: Optimising use of ERDF funding for enhancing the access to finance for SMEs through sustainable and « revolving » financial instruments Leveraging ERDF funding with EIB loans as well as EIF expertise in creating tailor-made instruments Develop the role of Entrepreneurship in EU

  28. JEREMIE: Phases 2006 2007 - 2013 SME SME SME SME SME SMEs SMEs SMEs SMEs SMEs Microfinance Providers (MCPs) Tech Transfer Activities Guarantee schemes Venture Capital Funds DISBURSEMENT PROCESS Transforming parts of the ERDF grants into financial products for SME Multiplier effect on the budget by attracting EIB & IFIs’ lending IMPLEMENTATION OF NATIONAL FUNDS EVALUATION PHASE Preparation of Operational Programmes

  29. Conclusion Private equity as winemaking? • “It is easier to pick a good wine if one starts with a list of the vintage years. • As in wine-making venture capital has its good years and of course its bad years. • Sometimes the quality of the year is not apparent until some maturation has taken place, but in many cases the indicators are apparent from the environment and maturation merely serves to confirm what everybody feared in the first place [..]. • Quality brands will always stand out.” • Chris Smart, General Partner at IDGVE, 2002.

  30. Thank you for your attention European Investment Fund tel.: (+352) 42 66 88 1 fax: (+352) 42 66 88 200 Bruno Robino b.robino@eif.org For more info: www.eif.org info@eif.org

More Related