novel approaches on how to fill existing financing gaps ... · development stages, and later...

1 Innovation Finance Advisory | European Investment Bank

European Investment Bank Group 1

Novel Approaches on How to Fill Existing

Financing Gaps –

Thematic Investment Platforms:

The Circular Bioeconomy example

Shiva Dustdar

Head of Innovation Finance Advisory Division, EIB Innovative Enterprise Conference

Vienna, 22 November 2018



Improve framework conditions for financing (e.g. through involvement in multi-stakeholder forums)

Knowledge sharing & capacity building (e.g. in dedicated conferences)

Prepare studies to identify market barriers and funding gaps (e.g. access-to-finance studies for CE, Bio-based Industries)

Market Consultations Support in CE project pipeline development

Review projects, identification of gaps/ weaknesses, advise on improvements

Advise on other critical business areas (e.g. RDI governance & strategy, etc)

Advise on financing options within and outside the EIB Group

Facilitate contacts to relevant market actors

Project Advisory

Pipeline

Development

/ Project

Advisory

Support to

Finance the

Circular

Bioeconomy

Improve Project Soundness/ Bankability

Leverage market consultations to identify funding gaps

Where necessary, recommend internal EIB-managed instruments and/or Investment Platforms (IP)

Structure/ implement IP that mobilise public/ private investors

Develop Financial Instruments

Knowledge

developme

nt / sharing

Transfer of

Lessons

Learned

Investment Platform for

the Circular Bioeconomy

Innovation Finance Advisory:

A multi-dimensional approach to filling the Circular Bioeconomy funding gaps

Circular Bioeconomy

Investment Platform

Call for tender to select investment manager launched in Oct-18

Funding Gap Analysis

Access to Finance studies for:

Bio-based Industries and the Blue Economy (Jun-2017)

Circular Economy (Dec-2015)

EUR 40m to a highly innovative Irish midcap

focusing on antibiotics-free feeding to animal farms.



Our consultations lead to the creation of new financial products, while serving as effective outreach and sourcing tools

IFA Market Consultations on Access-to-Finance Issues

across Innovative Sectors

InnovFin Infectious Diseases Finance Facility

Targeting developers of innovative vaccines, drugs, medical and diagnostic devices or novel research infrastructures

New financial product to address identified thematic funding gaps

Ongoing

Digital

Economy

Space

Agri-Food Renewable

energy

5G

Access-to-

finance for

Gender

European

Innovation

Council

EARTO Life Sciences

KETs I & II

Transport

Digital Economy II Published

Circular and Bio-economy Circular Bioeconomy

Investment Platform

Targeting innovative bioeconomy projects, with a priority (but not exclusivity) for innovative circular bioeconomy projects

Call for tender to select investment manager launched in Oct-18



IFA Market Consultations: Common traits of sectors in focus

1 High capital intensity: significant investments required to fund prototyping efforts at early-to-mid

development stages, and later medium-to-high volume production capabilities

2 Long development lead-time: multi-year R&D lead-times to bring a technology from lab-concept to

working prototype, taking into account on-going technological evolutions

3 High technology risk: high uncertainty on the applicability of the technology to address a given

objective/market need

4 High market risk: uncertainty on the ability to monetize the given technology due to the risk of

substitutes, the threat of faster competitors bringing a workable solution to market

Lower attractiveness of investment characteristics

Less favourable risk/reward balance compared to innovation and business propositions based on ICT technology (such as platforms and applications)

Our studies cover a wide range of sectors experiencing access-to-finance issues. Despite their diversity, we have identified certain common characteristics:



Key Findings

Access-to-Finance Conditions in Bio-Based Industries and the Blue Economy

BBI and BE projects face issues accessing private capital.

Regulation, market and demand framework conditions are important (i) drivers and (ii) risks for BBI and BE PP and FMP to invest in the Bioeconomy. Main funding gaps exist in (i) BBI and BE projects scaling up from pilot to demonstration projects and (ii) particularly in BBI, moving from demonstration to flagship/first-of-a-kind (FOAK) and industrial-scale projects. Financial Market Participants are attracted by the growth potential of the Bioeconomy, but due to its high perceived risks and information asymmetries, identify two unaddressed funding gaps. Existing Public Financial Instruments are utilised but their catalytic impact could be further enhanced. Policy actions and new dedicated Public Financial Instruments could de-risk BBI and BE investments and catalyse (crowd-in) private capital.

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Key Recommendations

Access-to-Finance Conditions in Bio-Based Industries and the Blue Economy

An effective, stable and supportive regulatory framework for the Bioeconomy is essential.

Reinforce awareness of existing risk-sharing financial instruments that can match the funding needs of certain Bioeconomy projects.

Develop a new EU risk-sharing financial instrument dedicated to the Bioeconomy, possibly taking the form of a thematic investment platform, that can meet the funding needs of projects and mobilise private financing, subject to agreement between the European Commission (EC) and other parties involved.

Explore together with EC services the set up of an EU-wide contact, information exchange and knowledge sharing portal dedicated to Bioeconomy or combined with a potential future Circular Economy portal.

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Set-up of a Circular Bioeconomy Investment Platform



Investment

fund (layered fund

structure

possible)

Fund Manager

(to be recruited)

Investment strategy (being

agreed with EC)

Management fee

Performance fee

Co-financing

a portfolio of projects (equity & quasi-equity, etc.)

Eligible

Projects co-financed by

other sources (at

least 50%), which

would create

additional

leverage on EU

contribution

Sources of funding:

• EIB, with 100% EC

guarantee under

InnovFin

• Possibly Private

investors

• Possibly other public

investors (e.g. NPB)

Funding

Eligible projects would

be selected by the Fund

Manager, in accordance with

the Investment Strategy

Objective: To provide access to finance to innovative bioeconomy projects, with a priority (but not exclusivity) for innovative circular bioeconomy projects

Product: (Venture) debt, quasi-equity and equity to address early- and late stage funding gaps (ticket size TBC)

Sectors: Bioeconomy and circular bioeconomy (application of the concept of CE to biological resources, products and materials). Projects focusing exclusively or mainly on renewable energy generation (fuels, heat or power) are not eligible.

Circular Bioeconomy Investment Platform (CBIP)

Envisaged structure and key characteristics



Study Publication Launch of

Call for Tender

Launched @ Innovative Enterprise Malta 2017

Market Consultation

6th December 2017 Financing the Circular Bioeconomy: Structuring

an Investment Platform to Improve Access to Finance in

Europe Identification of 2 key

funding gaps, in projects moving from pilot to demonstration

phases and from demonstration to

commercial phases

150-participant workshop and bilateral consultations provided

key market inputs on design, structure and features of the TIP –

reflected in documentation

Call for tender published Application deadline:

26/11/2018 https://etendering.ted.euro

pa.eu/cft/cft-display.html?cftId=4096

Publication of Terms of Reference

and the Call for Tender

European Commission and EIB actively managing the process of setting up the CBIP

- Fund manager selection

- Contract negotiations

- Platform set-up/launch

Target first closing

Current Status

Q4 2017 H1 2018 H2 2018 2019 Q3 2017

Circular Bioeconomy

From market consultation to financial instrument

https://etendering.ted.europa.eu/cft/cft-display.html?cftId=4096






Contact

Shiva Dustdar

Head of Innovation Finance Advisory

Advisory Services Division

Phone: (+352) 4379 87316

Fax: (+352) 4379 57316

E-Mail: [email protected]

European Investment Bank

100, boulevard Konrad Adenauer

L-2950 Luxembourg

Thank you

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