InvestEU: what's in it for venture philanthropists and social investors? - Policy Webinar #14 - EU.com
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Policy Webinar #14 InvestEU: what's in it for venture philanthropists and social investors? Tuesday, 11th December 2018 | 15:00–16:00 CET
Bennet Barth Policy Team Support, EVPA WELCOME
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Policy & Public Affairs @ EVPA
Thought Leader Catalyst
4
Policy Webinar Series
25.06.2014 Policy Webinar #1 | EuSEF Regulation
25.09.2014 Policy Webinar #2 | Impact Measurement
05.03.2015 Policy Webinar #3 | Social Impact Bonds in the EU
17.06.2015 Policy Webinar #4 | How can VP/SI Practitioners access EU funding
23.09.2015 Policy Webinar #5 | Social enterprises and Public Procurement
16.03.2016 Policy Webinar #6 | Crowdfunding for Impact
21.06.2016 Policy Webinar #7 | Ordinary People as Social Impact Investors
23.11.2016 Policy Webinar #8 | EU Funding Update for VP/SI Practitioners
22.03.2017 Policy Webinar #9 | Foundations & Social Impact – Going beyond grant-making
14.06.2017 Policy Webinar #10 | The Sustainable Development Goals & VP/SI
12.12.2017 Policy Webinar #11 | Fostering public private collaboration to address social issues
11.04.2018 Policy Webinar #12 | How EuSEF’s recent reform can impact the VP/SI sector
20.06.2018 Policy Webinar #13 | Outcome Funds - Challenges and Opportunities
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Policy Webinar #14 Introduction
“InvestEU – What’s in it for venture
philanthropists and social investors?”
Multiannual Financial Framework: 2021 – 2027
• Long time horizon to ensure planning certainty
• EU budgets to complement national budgets
• Define instruments and strategy to deploy capital
6
Welcome to our e-Speakers!
Bernardo Urrutia Dr. Markus Freiburg
EaSI Programm Officer Financing Agency for Social
EC - Employment, Social Affairs and Inclusion Entrepreneurship
7
Programme
Time Description Speaker
Welcome to participants
15:00 – 15:15 Bennet Barth, EVPA
Introduction to the topic, agenda and speakers
Bernardo Urrutia, European
15:15– 15:30 Multiannual Financial Framework 2021 – 2027 and InvestEU
Commission
Dr. Markus Freiburg, Financing
15:30 – 15:45 InvestEU from the practitioner’s perspective Agency for Social Entrepreneurship
(FASE)
15:45 – 15:55 Q&A session (moderator and participants) All panellists
15:55 – 16:00 Summary and conclusions Bennet Barth, EVPA
8
Bernardo Urrutia
European Commission
‘Multiannual Financial Framework 2021-2027’Context
The evolution of the EU Agenda:
Social Business • Access to finance
Initiative • Visibility
• Regulatory environment
2011
Start-up and • Access to Finance
• Access to markets
Scale-up initiative • Framework conditions
• New technologies and business models
2016 • International agenda
10Context
A broad and complementary range of EU-level instruments to develop the social finance
market ecosystem
EaSI Guarantee Micro-
enterprises
EaSI Capacity Building up to € 25k
Financial Financial
instruments intermediaries Social
EFSI Equity Social Impact
enterprises
EaSI Funded (loans) up to € 500k
Actions to boost supply & demand of social finance markets
Grants Transaction cost support grant for financial intermediaries
Operating grants for EU-wide networks: Euclid, EMN, EVPA, MFC
Procurement Technical assistance for financial intermediaries
11
Under developmentContext
• The next Multiannual Financial Framework 2021-2027 will be the first for the European
Union of 27. This is a pivotal moment for the EU.
• The Commission proposes a new, modern and focused long-term budget, tightly geared
to the political priorities.
• The proposed budget combines new instruments with modernised programmes to
deliver on the European Union’s priorities 2021-2027.
12MFF 2021-2027
In billion euro, current prices
The new Multiannual Financial Framework 2021-2027
“A budget for a Union that protects, empowers, and defends”
InvestEU
ESF+
13ESF+
A new and improved European Social Fund – ESF Plus
The European Social Fund Plus will be the EU’s main financial instrument to strengthen the
EU’s social dimension, by putting the pillar into practice. It is the new and improved version of
the Existing European Social Fund.
• The financial resources will be attributed to key political priorities and citizens concerns
– ESF+ projects and programmes concentrate on challenges identified under the European
Semester
– Member States with a substantial number of young people not in employment, education or
training will have to channel > 10% to youth employment activation of young people
– Member States should at least 25% of ESF+ funding to measures fostering social inclusion and
targeting those most in need.
• ESF+ will be made with and complementary to other funds that provide support to
people, such as Erasmus, the Asylum and Migration Fund, among others.
14ESF+
A new and improved European Social Fund – ESF Plus
The European Social Fund Plus will be the EU’s main financial instrument to strengthen the
EU’s social dimension, by putting the pillar into practice. It is the new and improved version of
the Existing European Social Fund.
ESF funding is designed and
implemented in a partnership with
national and regional authorities.
This partnership also involves a
wide range of other partners.
ESF+ will be a more flexible and
simpler version of the current ESF
merging a number of existing
funds and programmes.
15InvestEU
InvestEU – a single fund to integrate all EU financial Instruments
§ EU Budgetary Guarantee supporting financial transactions
§ Suitable for projects able to generate revenues
§ Policy driven approach implemented through thematic policy windows
§ Possibility of combining EU grants and financial instruments
§ Complementarity between EU level and MS level
§ Simplification and Flexibility
16InvestEU
InvestEU – a single fund to integrate all EU financial Instruments
Capital market instruments
InvestEU supports 4 different
Credit enhancement policy areas, focussing on where
the EU can add the most value by
Equity or quasi-equity providing a budgetary guarantee to
Implementing attract private investment.
partners Guarantees and counter-
EU GUARANTEE or through
other financial guarantees
institutions 1. Sustainable Infrastructure
Loans 2. Research, Innovation and
Participation in investment
Digitization
platforms or funds 3. SMEs
4. Social Investment and Skills
Subordinated debt
17InvestEU
InvestEU – Indicative proposed budget allocation
Mobilised investment
Window Budgetary guarantee
(estimate)
Sustainable infrastructure 11 500 185 000
Research, Innovation and Digitisation 11 250 200 000
SMEs 11 250 215 000
Social investment and skills 4 000 50 000
TOTAL (EUR Million) 38 000 650 000
• Budget for InvestEU Advisory Hub, InvestEU Portal and accompanying measures is
proposed to be EUR 525m.
18InvestEU
InvestEU - Regulation support to Social Investments, in particular through:
a. microfinance, social enterprise finance and social economy;
b. demand for and supply of skills;
c. education, training and related services;
d. social infrastructure, in particular
i. education and training, including early childhood education and care, educational facilities, student housing and
digital equipment;
ii. social housing;
iii. health and long-term care, including clinics, hospitals, primary care, home services and community-based care;
e. social innovation, including innovative social solutions and schemes aiming at promoting social impacts and outcomes in
the areas referred to in this point;
f. cultural activities with a social goal;
g. integration of vulnerable people, including third country nationals;
h. innovative health solutions, including health services and new care models;
i. inclusion of and accessibility for persons with disabilities. 19InvestEU
InvestEU – Project Financing Process
20MFF 2021-2027
Multiannual Financial Framework 2021-2027: Next Steps
§ Final configuration depends on the co-legislator decision: European Parliament and Council
discussion are on-going.
§ 2019 and 2020 will require extensive preparatory work.
§ All elements need to be ready for starting operations on 1 January 2021
§ Commission’ Expert Groups will be consulted on relevant aspects (e.g. GECES working
group on social finance)
21Dr. Markus Freiburg
FASE
‘What's in it for venture philanthropists and social investors’FINANZIERUNGSAGENTUR FÜr Eine Initiative von Social Entrepreneurship INVEST EU: WHAT'S IN IT FOR VENTURE PHILANTHROPISTS AND SOCIAL INVESTORS? Presentation at EVPA Policy Webinar Dr. Markus Freiburg Brussels, December 11, 2018 23
The FASE solution: building a bridge between
social enterprises and impact investors
FINANZIERUNGSAGENTUR FÜr
Social Entrepreneurship
Social enterprises receive: Investors benefit from:
ü support in developing their business models ü access to investment opportunities in leading,
to reach investment readiness investment-ready social enterprises
ü identification of potential investors ü customized impact investing opportunities,
and recommendations for the ideal financing selected according to individual investor
mix preferences
ü comprehensive consulting and coordination ü clearly structured and transparent investment
to guide them through the transaction and transaction processes between social
processes enterprises and investors
FINANZIERUNGSAGENTUR FÜr Social Entrepreneurship 24In over 5 years, FASE has arranged EUR 20+ mn in equity
instruments raised for 40+ companies in variety of sectors
FINANZIERUNGSAGENTUR FÜr
Impact Sector Social Entrepreneurship
Transaction closed
2.Runde
Transaction > 500K
Education
2.Runde
2.Runde
Energy
Solutions 2.Runde
Health
2.Runde
Inclusion & 2.Runde
Infrastructure
Other
Mezzanine Equity Financing Model
FINANZIERUNGSAGENTUR FÜr Social Entrepreneurship 25The challenge: early-stage social enterprises don´t fit
into traditional types of funding
FINANZIERUNGSAGENTUR FÜr
Hybrid Social Entrepreneurship
• Moderate returns
• Few exit options
• Not ‘one’ financing solution
Non-Profit Commercial
• No return • Market-rate returns
• Short-term horizon • Exit options
FINANZIERUNGSAGENTUR FÜr Social Entrepreneurship 26Our mission: closing the ‘strategic financing gap’
with hybrid growth capital
FINANZIERUNGSAGENTUR FÜr
Social Entrepreneurship
Market rate
return Experimentation Strategic financing gap
Scaling
- Early stage financing -
„Too large for philanthropists,
too small (and risky) for
institutional social investors“
Start-up Early-stage growth Later-stage growth
< 50 TEUR 50 - 250 TEUR > 250 TEUR > 1 Mio. EUR
§ Equity § Multiple
§ Donations financing options
Hybrid financing
Combination
of philanthropic capital
-100 % and impact „first“ investments
(grant)
FINANZIERUNGSAGENTUR FÜr Social Entrepreneurship 27Food for thought: With InvestEU and ESF+ we should
build a Single European Market of Social Innovation
FINANZIERUNGSAGENTUR FÜr
Social Entrepreneurship
Mobilisation of capital: Leverage more private capital into the social enterprise finance
sector via de-risking of social enterprise funding (e.g. classical guarantees, equity
guarantees, first loss capital)
Capacity building: Support capacity development of social enterprises based on
outcomes of acceleration / incubation programs (e.g., capacity building linked to
Single European obtained financing volume of social enterprises)
Market of Social Transaction cost: Reduce transaction costs for financial intermediaries (e.g., direct
Innovation transaction cost support for financing rounds up to EUR 500k) and support set-up of
new financial intermediaries (e.g., provision of patient capital for new financial
intermediaries)
Impact payments: Leverage ESF+ funds to provide outcome payments for social
enterprises to increase attractiveness of their business models (e.g., direct pay-for-
results payments, outcome-based unsecured debt, redeemable impact shares)
Outcome match funds: Leverage ESF+ funds to match-fund outcome-based
commissioning of national/regional/local governments to facilitate more pay-for-success
schemes (e.g. SIBs, SIINC)
FINANZIERUNGSAGENTUR FÜr Social Entrepreneurship 28Contact
FINANZIERUNGSAGENTUR FÜr
Social Entrepreneurship
Dr. Markus Freiburg
Founder & CEO
Financing Agency for Social Entrepreneurship GmbH
Prinzregentenplatz 10
81675 Munich
Germany
Tel: +49 - 211 - 36 79 09 88
Mobil: +49 - 177 - 55 21 028
Fax: +49 - 3212 - 14 02 672
E-Mail:mfreiburg@fa-se.de
www.fa-se.de/en/
FINANZIERUNGSAGENTUR FÜr Social Entrepreneurship 29Q&A:
‘What's in it for venture philanthropists and social investors’
Bernardo Urrutia Dr. Markus Freiburg
EaSI Programm Officer FASEThank you!
RUE ROYALE 94 B-1000 BRUSSELS T +32 2 513 21 31 EVPA.EU.COM info@evpa.eu.com european-venture-philanthropy-association @_EVPA_
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