EIB Venture Debt as Growth Capital Overview
Venture debt provided by the EIB serves as growth capital for high-growth SMEs and MidCaps post Series B/C equity rounds, aiming to accelerate growth. The financing terms under the European Growth Finance Facility involve quasi-equity debt instruments with a maximum co-investment of 50% of project costs. The typical financing size ranges from EUR 7.5m to EUR 50m over a tenure of 5 to 7 years. Comparisons with venture capital and bank term loans highlight the strategic advantages, limited dilution, and stable capital source offered by EIB Venture Debt.
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Contents What is EIB s venture-debt? Who is it for? What are the key terms of EIB s Growth Capital financing? Key advantages What are the key requirements for a successful application? Who has benefitted so far from it? How can one apply for it? 2
Brief introduction Venture debt: Direct financing provided by EIB where the expected return depends on the success of the underlying success of the investment program being financed Who is it for: High growth SMEs and MidCaps that have already underwent at least Series B / C equity financing rounds, looking to further accelerate growth 3
What are the key terms of EIBs venture debt financing? EIB s Venture Debt financing is typically provided under the European Growth Finance Facility ( EGFF ): Indicative Term Sheet up to 3,000 employees Borrower Quasi-equity debt Instruments To finance an investment budget Purpose Co-investment EIB finances maximum 50% of eligible project costs, co-investment with third-party sources or own resources EUR 7.5m EUR 50m Ticket Usually 5 to 7 years after drawdown Tenor Availability Up to 3 years after signature Target return commensurate to the risk, may include one or more of the following: Pricing - cash interest - compound interest (PIK) - warrants - profit participation, etc. Case-by-case basis Covenants Un/Secured Security Certain fees applicable Fees Usually between 3 and 5 months Appraisal 4
EIB Venture Debt comparison EIB Venture Debt positioning Venture Capital EIB Venture Debt Bank term loan Typical term 3-5 years 5 years bullet 5 years amortising Gradual availability up to 2-3 years Availability period Immediate disbursement 1-2 years Typical financing size EUR 1-15m EUR 7.5-50m > EUR 10-100m Performance based Performance based Fixed Cost Return structure Strong dilution <10% dilution None High growth, credible business plan, post series B/C Stable cash flows, large asset base, security, history of positive net income Key requirements High growth business plan * Some of the above figures are generalizations. Final figures are usually subject to due diligence and rating or risk/return approval 5
Key advantages Companies Founders and investors Long term strategic view Limited dilution Stable and reliable source of capital IRR enhancement we are a triple-A investor Hands-off approach with no direct Less frequent rounds - the company involvement in daily management can focus on business instead of raising financing Flexible terms Customized structure 6
What are the key requirements for a successful application? Stable and experienced management team Sustainable capital structure Sustainable business model, business plan and strategy providing credible growth perspectives Professional corporate governance and code of conduct Raised equity in the past (series B,C rounds) 7
Application process Process Steps Documents Company to submit investment memo presentation: Business description, financials Ownership and 3rd party financing Corporate governance Management, employees, etc. Investor Memo Non-Disclosure Agreement KYC checks Fee letter Approval: Stage I (1-2 months) Member State Opinion Due diligence questionnaire Draft Term Sheet Due diligence meeting Due diligence package Meeting with management and key people Consultants / Any other relevant information Approval: Stage II (1-3 months) Final Note 2nd and final Management Committee approval Term sheet to be in agreed form Detailed analysis package prepared External legal counsel to be appointed Approval: Stage III (1-2 months) Draft contract Final contract CP checks Disbursement request Monitoring & reporting Contract closing & CPs Monitoring Negot. & Closing (1-3 months) 8
Who has benefitted so far from it? EIB venture debt product launched in 2015 unique features, no market precedent First venture debt operation closed in January 2015 with Innocoll AG In November 2016, EIB moved the venture-debt program under the Junker Plan More than 2,500 financing requests reviewed since inception Current portfolio includes 60 signed operations for a total of more than EUR 1bn Team of 23 people in the front office and dedicated teams of risk, legal, technical and monitoring experts total more than 120 people 9
Quasi-equity operations page 1 Search engine Software Fiber optic networks HIV Testing Software Electronics 3D printers France The Netherlands England Sweden Finland France The Netherlands 25 million 13.5 million 25 million 10 million 15 million 12 million 10 million 23/12/2015 22/01/2016 17/12/2015 10/07/2015 11/09/2015 11/04/2016 04/07/2016 Biotech Biotech Disease diagnostics Biotech equipment Medical Equipment Biotech Food production Germany Germany Finland Portugal Finland France Greece 25 million 10 million 15 million 12 million 8 million 20 million 15 million 27/03/2015 02/12/2015 13/07/2016 27/11/2015 18/03/2016 21/12/2015 06/05/2016 Fiber optic networks Waste collection Vaccines Flexible displays Insurance software eCommerce software Photovoltaics UK Finland France Finland Ireland Finland Germany 25 million 15 million 25 million 12 million 15 million 8.5 million 20 million 08/07/2016 11/07/2015 12/07/2016 13/07/2016 22/06/2016 22/06/2016 11/09/2016 10
Quasi-equity operations page 2 Biotech Software Fibreoptics Biotechnology Software Biotechnology Ultra capacitors Austria The Netherlands Spain Ireland Greece NL/DE Estonia 25 million 7.5 million 10 million 20 million 25 million 25 million 15 million 28/08/2017 09/11/2016 21/10/2016 01/12/2016 16/12/2016 16/12/2016 10/02/2017 Database software Software Medical Technology ICT Dermatology Molecular diagnostic Grid stabilization Finland Sweden France Finland Germany Spain Italy 30 million 8 million 20 million 15 million 20 million 20 million 30 million 12/04/2017 21/06/2017 07/07/2017 12/07/2017 19/05/2017 01/06/2017 11/04/2017 ICT Medical Technology Medical Technology Photovoltaic glass Medical Technology Biotech Biotech Sweden Germany Austria France Germany France France 30 million 30 million 35 million 25 million 15 million 30 million 20 million 04/08/2017 08/08/2017 28/08/2017 05/10/2017 10/08/2017 11/09/2017 06/10/2017 11
Quasi-equity operations page 3 Data centers Scientific education Medical Technology Biotech Heat engines ICT 3D printers Sweden Portugal Germany France Germany The Netherlands Germany 10 million 10 million 25 million 40 million 30 million 7.5 million 25 million 31/10/2017 06/10/2017 08/11/2017 23/11/2017 01/12/2017 07/12/2017 09/11/2017 Fitness technology Software Cyber security ID solutions Li-ion batteries ICT Medical Technology Germany Germany Sweden Sweden France The Netherlands Germany 40 million 25 million 25 million 20 million 29 million 20 million 10 million 14/12/2017 14/12/2017 18/12/2017 18/12/2017 18/12/2017 15/12/2017 08/01/2018 12
Summary Large tickets from EUR 7.5m up to EUR 50m Longer tenors 5-year terms with availability of 2-3 years No dilution except in cases with small upside Reliable investor long-term strategic view Quality stamp detailed due diligence Hands-off approach no direct involvement in daily management 13
Thank you! 14
