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Western Balkan Technology Fund (WBTF) Initiative

Western Balkan Technology Fund (WBTF) Initiative. Ljiljana Kundakovic , Viktor Nedovic, Goran Radosavljevic Ministry of Science and Technological Development Republic of Serbia. Objectives. Stimulate long-term economic growth prospect and competitiveness of Western Balkan (WB) e c onomies

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Western Balkan Technology Fund (WBTF) Initiative

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  1. Western Balkan Technology Fund (WBTF) Initiative LjiljanaKundakovic, Viktor Nedovic, Goran Radosavljevic Ministry of Science and Technological Development Republic of Serbia

  2. Objectives • Stimulate long-term economic growth prospect and competitiveness of Western Balkan (WB) economies • Further engage International Financial Institutions (IFI) in private sector development in WB • Increase the ability of innovative SMEs to access and efficiently use equity-based investments • Create €100M equity investment fund focused on technology

  3. Status of the Initiative • WBTF supported by all beneficiaries • WBTF initiative has been presented to high representatives of EC, EIB, EIF, WB and EBRD • Preliminary analysis of supply and demand of equity finance for SME in WB, conducted by the European Investment Fund (EIF)

  4. Competitiveness and Innovation On a cost basis Western Balkans businesses are competitive today “To sustain competitiveness, the Western Balkans needs to move up the value chain: first, by differentiating through value-added services and innovation; and second, by further leveraging the region’s proximity to the EU market” OECD: RECOMMENDATION FOR A REGIONAL INVESTMNENT STRATEGY, 2008

  5. Financial Markets in WB are Underdeveloped • The supply of equity capital in seed, early and expansion stages of development of enterprises is either completely absent or is at the embryonic stage • Access to and the cost of finance are a significant constraint on investment. On average, companies in the manufacturing sector need collateral of 177%, with an interest rate of 11%. Public intervention in creating a supply of equity finance available to SMEs is needed OECD: RECOMMENDATION FOR A REGIONAL INVESTMNENT STRATEGY, 2008 EIF: WB Venture Capital Assessment . 2010

  6. WBTF Structure and Financing Phase I (€25-25M) IPA multi beneficiary funds IFI through WBIF WB Beneficiaries Phase I Evaluation Phase II (up to €65M) IFI/Donor Community Private sector

  7. WBTF Management European Investment Fund Evaluation of investment proposals Collaboration and coordination with local offices/agencies in all beneficiaries Establishing a network of VC funds and business angels for co-investment Beneficiaries Identification and preparation of investment proposals Negotiation and closing Follow up of investments through active participation in companies’ management Management Local Offices

  8. Staged Approach to Establishing WBTF • Development of full investment portfolio • Significant participation of IFIs and private sector >2015 • Developing and financing a pipeline of investment projects • Technical support to detailed preparation of projects at the beneficiary level • Assessment of individual investment projects 2012-2014 • Capacity building (supported by multi-beneficiary IPA) • Training and capacity building of beneficiaries • Assistance in establishing the WBTF 2012

  9. Investment Strategy • Generalist with strong technology and innovation component • Equity financing with standard terms with respect to protective provisions, Board representation and right to participate in subsequent issuance of equity securities • Convertible debt financing • Main Investment Criteria: • High growth potential and proven business models • Competitive innovative product or services • Technologies with potential to access international markets • Leadership capable of sustaining growth

  10. Link with EP and WB EU Agenda • EUROPE 2020 : A strategy for smart, sustainable and inclusive growth • Priority: Smart growth - developing an economy based on knowledge and innovation • Innovation Union – EU 2020 flagship initiative • to improve framework conditions and access to finance for research and innovation so as to ensure that innovative ideas can be turned into products and services that create growth and jobs. • The 2007 EU Enlargement Strategy: • The need to raise competitiveness and further stimulate investments and SME growth through improved access to finance • Implementation of Small Business Act : • Recommends that The EU and Member States should facilitate SMEs’ access to finance, in particular to risk capital, micro-credit and mezzanine finance

  11. Thank you!Ministry of Science and Technological DevelopmentRepublic of Serbialjiljana.kundakovic@nauka.gov.rs Improved access to finance

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