The EIF, the EIB Group’s SME financing subsidiary, and Axis, ICO’s wholly-owned venture capital management company, have launched a new EUR 40 million business angels fund, EAF Spain II, for financing innovative start-ups.

• EUR 40 million fund for co-investment with business angels

The European Investment Fund (EIF), the EIB Group’s SME financing subsidiary, and Axis, ICO’s wholly-owned venture capital management company, have launched a new EUR 40 million business angels fund, EAF Spain II, for financing innovative start-ups.

The fund is owned 50% by the EIF and 50% by AXIS, via Fond-ICOpyme, and forms part of the pan-European European Angels Fund (EAF) initiative.

This new fund, which will be managed by the EIF, will finance business angels that invest in early-stage Spanish tech companies with a strong innovative component. It will help to increase the investment capacity of business angels and other non-institutional players investing in SMEs.

Under this agreement, financing will be provided to ensure the continuity of EAF Spain I, a similar EUR 30 million fund launched in 2013 whose main promoters were Fondo Neotec, the EIF and AXIS. Over the course of its lifetime, EAF Spain I and its partnering business angels will jointly invest some EUR 45 million to finance around 200 Spanish firms.

The agreement constituting the new fund, EAF Spain II, was signed today by EIB Vice-President Emma Navarro and ICO’s Chairman, José Carlos García de Quevedo.

At the signing ceremony in Madrid, EIB Vice-President Navarro said: “The EIB Group is highly committed to fostering innovation in Europe, and this agreement will ensure that funding is channeled to firms that need it most – those that are investing in new ideas.  Supporting this sector is key to promoting competitiveness and economic growth in the EU. We are therefore delighted to launch, in cooperation with ICO, this business angels fund, which will play a decisive role in providing Spanish firms with an alternative source of finance to meet their needs”.

From his side, EIF Chief Executive, Pier Luigi Gilibert, said: “We are delighted to be partnering with the ICO Group to launch EAF Spain II for Spanish companies. Via this new initiative, Business Angels will be able to benefit from significant financial support for their investment activity while maintaining maximum freedom to operate. This initiative follows on from EAF Spain I with a size of EUR 30 million. Early stage financing needs targeted support and EAF II Spain will be instrumental in providing an alternative financing source for Spanish companies.”

ICO’s Chairman José Carlos García de Quevedo stressed that “this initiative represents a major commitment to mobilising business angels that nurture the development of business projects with high growth potential in the early stages of life, providing substantial amounts of capital  and adding value to management. Although AXIS aims to accompany businesses throughout their investment cycle, this initiative underlines its dedication to supporting them in the early stages”.

Once the agreement constituting the fund had been signed, it was presented to a group of business angels, followed by a debate on the role of such investors in the Spanish venture capital ecosystem.

EAF Spain II co-invests 50:50 with business angels, matching their investments with the same amount and on the same terms (pari passu). All investment, management, monitoring and divestment decisions regarding all firms are taken by the business angels.

EAF Spain II aims to sign 13 to 15 co-investment framework agreements with experienced business angels, providing them with between EUR 1 million and EUR 3 million each.

The European Angels Fund (EAF) programme has so far been launched in eight European countries, reaching a volume of some EUR 666 million. Under the initiative, agreements have been signed with more than 90 business angels, who in turn have made over 450 co-investments.

Business angels interested in participating in this programme can do so via the EIF web page: www.eif.org/eaf.