Innovative Financial Instruments and Advisory Services · 19/4/2016 Innovation Finance Advisory | European Investment Bank 1 European Investment Bank Innovative Financial Instruments

1 19/4/2016 Innovation Finance Advisory | European Investment Bank

European Investment Bank

Innovative Financial Instruments and

Advisory Services

Shiva Dustdar

EIB RDI Advisory Services

Berlin, 1 July 2014

Access to Finance for RTOs: preliminary results of EIB

study

Arnold Verbeek

Senior Adviser, Innovation Finance Advisory

9th Plenary Meeting

of the European TTO Circle


Content

InnovFin Advisory

Access-to-finance for RTOs and their partners

Insights and financing models

Way forward

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Innovation Finance Advisory

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Enable maximum access to finance for innovative projects

Innovation Finance Advisory- What do we do?

Synergies between Project Advisory and Horizontal Activities

Improve framework conditions for

financing

Develop “business case” for new

financing mechanisms in RDI

sectors

Prepare studies on increasing

effectiveness of financial

instruments to address specific

sector/RDI policy objectives

Horizontal Activities Improve bankability/investment

readiness

Enable earlier/ faster access to

finance

Light Project Advisory (LPA)

Project Advisory

Projects Advisory

Transfer of Lessons Learned

Horizontal Activities

Pipeline Development

InnovFin Advisory

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Agri-Food Digital

Economy

Road Transport

Innovative Life

Science

Snapshot of Horizontal Activities portfolio Current portfolio of Horizontal Activities

Bio economy

SET

LPA Circular economy

Financing Pan-EU RI

Web-tool

RTOs IDFF KETs

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Content

InnovFin Advisory



Way forward

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Background

EARTO/EIB high-level lunch (EARTO President M. Khorsand, EARTO VP Frank Treppe and EIB Senior Delegation chaired by VP A. Fayolle) and workshop with representation of RTOs and EIB/EIF operational staff.

Following the workshop, the EARTO President asked the EIB and DG R&I for a dedicated InnovFin Advisory mandate to develop new funding models for RTOs, also in the context of the EFSI.

This new horizontal activity was approved by the InnovFin Advisory Steering Committee and the advisory mandate kick-started in Q3/2015, in close collaboration with EARTO

April 2015

June 2015

September 2015

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Implementation plan and status

Mid-2016

Summer 2015 and official kick-

off on 23rd September 2015

Bilateral C

on

sultatio

ns w

ith R

TOs Current stage

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Research institutions

Start-ups

Established companies of different size

Universities

1 2

4 3 RTOs

Broader ecosystem

Open ‘ecosystem’ perspective

Spin-outs

Funding agencies

Direct ecosystem Service companies

Suppliers

Governments

InnovFin Advisory

• Assess funding gaps

• Develop funding models

• Finance more open

innovation activities

X

X

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Content

InnovFin Advisory



Way forward

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Potential funding to support RTOs’ investments

Potential EIB

Support

Direct funding for RTO specific investments and operations

Debt allowed?

Typically used to address liquidity and working capital

considerations

Cannot replace grants in terms of funding of large RDI

investments

Except: Securing other sizable and sustainable income streams (long term rental agreements, longer term license

fees, contract research for several years, training income, off take agreements, etc.)

Y

‘New’ revenue streams require the rethinking of existing and development of

new business models

Contingent loans (repayable under conditions) could be

possible

Joint investments (e.g. through SPVs)

N

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Case: Joint- financing based on long-term rental

agreements

Project promotor: Association of RTOs, local university, … (SPV).

Foreseen investments: Building and development of specialised R&D, testing and demonstration facilities (to be used for industry driven R&D and innovation programs).

Underlying business model: Provide access and knowledge (through the RTOs) to state of the art R&D, testing and demonstration facilities to the industrial partners of the RTOs and university involved.

Cash flow generation: Mainly renting of infrastructure and facilities, contractually guaranteed for a period of 20 years (providing comfort and debt capacity).

Funding mix: app. 50% equity by the partners, 20% public funding (local, EU), 30% bank loan (debt capacity created through long term rental agreement).

InnovFin Advisory to assist project promoter to develop the financing model and prepare for potential due diligence.

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Technology transfer, IP valorisation

Potential EIF

Support

EIF, as part of the InnovFin Advisory mandate, is currently exploring how the funding ecosystem for IP valorisation and technology transfer of RTOs can be strengthened…

Technology transfer, IP valorisation

Need for equity funding for technology transfer (spin-off,

start-up creation)

Less of a funding gap with existing large or medium-sized clients (except in case of larger investments, multipartner, off-balance which require special

solutions)

Development of appropriate equity funding solutions for IP

valorisation (common RTO requirement)

RTOs to utilize knowledge and expertise and become part of the investment assessment process

Knowledge gap with potential investors (on technology/market

potential)

- Educate/train financial market participants- Develop technology/market assessment tools- «Finance gateway »

Use of facilities to further develop ‘proof-of-

concept’

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Preliminary findings from our Advisory Mandate todate….

• Debt and equity (by private investors) not prominent in the RTO ‘funding mix’: grants are, but they are also under pressure (more short-term and more competitive). Need to look at new business models and new financing strategies.

Clear need for equity funding to spin-offs, tech transfers and start-ups: broad mobilisation/

integration of knowledge and capital.

• (Contingent) Loans can partially replace grants if new sizable and sustainable income

streams are secured. Legal framework has to be conducive.

1. RTO funding sources

• The partners of the RTOs can play an important role (as ‘off-takers’). Smaller companies and start-ups (equity funding) face specific challenges. Large or medium-sized clients seem to face less problems (except for high investment volumes and need for special constructions).

2. RTOs and their partners

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Preliminary Findings from our Advisory Mandate todate…

3. RTOs can act as ‘financing catalysts’ as they could: 1) Educate/train financial market participants about technologies

2) Support the development of technology risk assessment methodologies

3) Add credibility to projects/technologies/start-ups

4) Could become a “hub” combining technological/market/financial knowledge in

support of the development and financing of projects or companies

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Content

InnovFin Advisory



Way forward

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Way forward

1. Continue the bilateral discussions between the EIB/EIF and the RTOs (through

the Working Group with EARTO but also directly)

2. Continue providing bilateral advisory support to selective RTOs with concrete investment plans

3. Further develop potential financing types/strategies, in view of the current EIB instruments, including the possibilities EFSI

4. Consolidation of findings, conclusions, recommendations and reporting

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Shiva Dustdar

Head of Innovation Finance Advisory

Advisory Services Department

Phone: (+352) 4379 87316

eMail: [email protected]


3, rue Jean Monnet

L-2180 Luxembourg

Arnold Verbeek

Senior Adviser



Phone: (+352) 4379 82029

Fax: (+352) 4379 52029



3, rue Jean Monnet

L-2180 Luxembourg

Paulina Brzezicka

Junior Advisor



Phone: (+352) 4379 82176

Fax: (+352) 4379 62650



3, rue Jean Monnet

L-2180 Luxembourg

Laura Busato

Advisor



Phone: (+352) 4379 82319

Fax: (+352) 4379 52319



3, rue Jean Monnet

L-2180 Luxembourg

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Documents

Innovative Financial Instruments and Advisory Services · 19/4/2016 Innovation Finance Advisory | European Investment Bank 1 European Investment Bank Innovative Financial Instruments