European Investment Fund Backs Croatian Innovation with CVCi 2 Funding

European Investment Fund Backs Croatian Innovation with CVCi 2 Funding

(IN BRIEF) The European Investment Fund (EIF) and the Ministry of Regional Development and EU Funds of Croatia have announced a funding agreement for the Croatian Venture Capital Initiative 2 (CVCi 2). This program builds on the success of the previous CVCi fund and is set to receive €80 million for investments in early-stage Croatian companies. It encourages fund managers to support business ideas from inception to growth stages and prioritizes investments contributing to climate action and environmental sustainability. Additionally, CVCi 2 aims to attract foreign innovators and may reinvest in previously supported companies.

(PRESS RELEASE) LUXEMBOURG, 19-Sep-2023 — /EuropaWire/ —  The European Investment Fund (EIF), part of the European Investment Bank Group and established to support Europe’s micro, small and medium-sized enterprises (SMEs), a part of the EIB Group, and the Ministry of Regional Development and EU Funds of the Republic of Croatia have entered into a new funding agreement to establish the Croatian Venture Capital Initiative 2 (CVCi 2). This initiative builds upon the success of the previous €35 million CVCi fund launched in 2018, which has been invested in approximately 140 early-stage startups in Croatia.

CVCi 2 will receive €60 million from the ERDF-funded Programme Competitiveness and Cohesion 2021-2027, along with an additional €20 million from expected returns from CVCi 1. This €80 million will be available for investments in Croatian early-stage companies with high growth potential. Additionally, approximately €20 million in private capital is expected to be invested in the new venture capital funds by market investors.

“By supporting emerging technologies and innovative ideas, and making them grow, venture capital can play an important role in bringing about the green and digital transitions.”  commented EIB Group Vice-President Teresa Czerwińska. “As the EU’s climate bank, the EIB Group wants to support initiatives that positively impact both our environment and support business, thus bringing about a just transition for all EU citizens.”

“This new initiative will build on the experience of its predecessor, supporting investments in innovative Croatian SMEs with high growth potential through accelerators and venture capital funds.”  added EIF Chief Executive Marjut Falkstedt. “By adopting an approach focused on crowding-in third party investments, we expect that the total positive impact on the Croatian economy can amount to €100 million over the coming years, contributing to the continued development of the Croatian venture capital and innovation ecosystem.”

Šime Erlić, Minister of Regional Development and EU Funds, added: “CVCi 1 achieved above average success, resulting in 31 million euros deployed through more than 140 different investments. Now, in the new programming period, we plan to implement a further 8 financial instruments aimed at SMEs, which are expected to enable significant additional investments in the Croatian economy.”

CVCi 2’s priorities include selecting multiple fund managers to support business ideas from inception to commercialization and early growth stages. The EIF will also encourage fund managers to allocate funds towards climate action and environmental sustainability projects as part of the EIB Group’s climate focus.

Unlike its predecessor, CVCi 2 will explicitly support innovators in developing their business ideas within Croatia and allocate funds for investments in foreign businesses establishing operations in the country. Some of the funding may also be used to invest alongside private investors in successful companies previously supported under CVCi to aid in their further growth.

Background information

The European Investment Fund is part of the European Investment Bank Group. Its main goal is to support microenterprises and small businesses by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments that specifically target this market segment. In this role, the EIF contributes to the pursuit of key EU policy objectives such as competitiveness and growth, innovation and digitalisation, social impact, skills and human capital, climate action and environmental sustainability.

The EIF has cultivated fruitful relationships to support start-ups and scale-ups with both the Ministry of Regional Development and EU Funds and the Croatian Bank for Reconstruction and Development (HBOR). With complementary programmes focusing on different stages of business development between the Ministry and HBOR, the aggregate amount of financing made available through equity investment partnerships between the EIF and its Croatian partners is nearly €300 million since 2018.

Press contacts

EIF: Tim Smit, +352 691 28 64 23, t.smit@eib.org

Ministry: Nataša Pavić; +385 99 3598 840, natasa.pavic@mrrfeu.hr

SOURCE: European Investment Fund