The European Investment Bank (EIB), the European Union's long-term financing institution, is providing EUR 40 million(1) in an equity capital arrangement with MB Venture Capital Fund I N.V. to support private enterprises in Italy and other EU countries. This is the first closed-end fund drawing on Italian expertise and aimed specifically at early-stage enterprises operating in the high technology sector across Europe. To select, monitor and realise investments in dynamic high growth companies, MB Venture Capital Fund I and the other funds promoted by MB Venture Capital are assisted by Alice Ventures, a multinational team of specialists backed by extensive domestic and international relationships.
Their expertise is combined with a well-established foreign venture capitalist, Alta Berkeley Associates (ABA), and that of the leading business school in Italy (Bocconi University) and engineering university (Milan's Politecnico), thus contributing to the development of cross-disciplinary networks between the academic world and industry.
The facility will focus on early stage investment, the segment with the greatest financing needs due to limited capital availability, and will seek to address this "equity gap" in the early stage phase.
The Italian venture capital market is experiencing a period of growing interest on the part of both fund managers and investors. The total amount invested in 1998 was ITL 1,813 billion (+56%). Venture capital financing of high technology sectors in Italy, however, accounts for a mere 5% of total venture capital investments. This reflects both demand (SME sector concentrated in traditional sectors) and supply (propensity of investors to select lower risk investments in the early stages of development of the venture capital sector).
The EIB finances capital investment furthering EU integration, in particular: regional development; trans-european networks in transport, telecoms and energy; industrial competitiveness and integration; SMEs; environmental protection; and energy security. Outside the EU, the EIB operates within the framework of the EU's co-operation external policy. Owned by the Member States, the EIB raises its funds on capital markets at fine rates (AAA issuer).ASAP (Amsterdam Special Action Programme), aimed at favouring job-creation, includes a special window to provide risk capital for high-growth SMEs; new lending for education, health and urban renewal; and expansion of financing for trans-european networks and other infrastructure schemes. Following its last Board of Governors meeting (June 1999), the EIB has decided to double its funding for the European Technology Facility (ETF) managed by the European Investment Fund (EIF), from EUR 125 to 250 million, to double the reserve established to cover the risk associated with these venture capital operations (from EUR 500 million to 1 billion) and, in principle, to allocate to this reserve in due course an additional amount of EUR 1 billion for the years 2000-2003.
(1) EUR 1: ITL 1 936.27, GBP 0.647500.