EIF wins German mandate

High tech venture capital funds investing in Germany will get an extra €500m over the next five years thanks to an agreement between the European Investment Fund (EIF) and the German Federal Ministry of Economics and Labour (BMWA). EIF will be responsible for investing the money, which is being provided on a 50:50 basis by the EIF and the European Recovery Program (ERP), which is administered by BMWA. The aim of the programme is to help lift German VCs out of the fund raising doldrums and mobilise a total of €1.7bn for investment in innovative companies.

The facility will focus specifically on two types of funds: seed and early stage funds with a strong technology transfer emphasis, such as funds that have access to or co-operate closely with public and private research centres. A strong emphasis will be on the establishment of new funds in this area. Also funds that target follow-on financings of technology companies looking to raise second, and subsequent, round financings. Over the next five year EIF hopes to develop a diversified portfolio of commercially viable fund investments and expects industry-typical financial returns.

The EIF, which also provides guarantee facilities to institutions that lend to SMEs, already has five VC investment mandates on behalf of the European Investment Bank (EIB) and the European Commission. Like the new mandate, these investment programmes focus particularly on early stages and technology-oriented funds. The investments help towards the EU’s objectives for growth and R&D, which include increasing European research spending to 3% of GDP by 2010. Since 1997 the EIF has channelled €2.5bn into 184 European venture capital funds but this is the group’s first third party mandate.

Francis Carpenter, who was appointed chief executive officer of the EIF a year ago, said: “This is a natural extension of EIF’s present mandates, all ultimately at the service of European technology and innovation, through venture capital. The fact that it has been awarded to EIF, in a country as important as Germany, is witness that the EIF is a strong reference on the European VC market. It is a perfect example of partnership and I hope we can strike other mandates with public or private investors in other countries.”

Through the mandate the EIF aims to consolidate and strengthen its role in Germany, where it has already committed €315m to 22 venture capital funds.

EIF-backed German Funds

EIB Group resources: EIF & EIB resources for venture capital

Sector Fund

Generalist Allied Capital Germany Fund LLCV

Tech BayTech Venture Capital GmbH & Co. KG

Tech BC Ventures

Tech Brockhaus Private Equity GmbH & Co. KG

Tech DVCG Deutsche Venture Capital Gesellschaft mbH & Co. Fonds II KG

Tech Enabling Technology Limited Partnership

Tech Heidelberg Innovation BioScience Venture II

Regional Innovationsfonds Hessen GmbH & Co KG Unternehmensbeteiligungsgesellschaft

Tech Innovationsfonds Schleswhol. & Hamburg GmbH

Tech Mediport Venture Fund II GmbH

Tech Polytechnos Ventures Fund II

Regional Sachsen LB V.C. GmbH & Co. KG

Tech Strategic European Technologies N.V.

Regional Technofonds Bayern II

Tech Technostart

Tech Technostart Ventures II

EC resources: ETF Start-up Tech EquiNet Early Stage Fonds Nr. 1 GmbH & Co. KG

Tech Wellington Partners

Source: EIF