The European Commission has recently published the Fund Investment Guidelines for the EIC Accelerator Fund.
The fund – established through a groundbreaking initiative by the European Commission with the support of the EIB – will manage the equity investment component provided under the EIC Accelerator (formerly the SME Instrument). It should be noted that the EIC Accelerator offers innovative companies the opportunity to request, in addition to a grant (between €0.5 and €2.5 million), an equity investment of up to a maximum of €15 million (for a total of up to €17.5 million in combined grants and equity investment) to achieve rapid and effective growth.
The investment guidelines are a valuable tool for clarifying the various guiding principles behind the EIC Fund and its operational procedures at all stages of the process. These include, for example:
- size of equity stake: the EIC Fund will generally aim to obtain minority stakes (between 10% and 25%). In specific cases – identified by the European Commission as being of strategic interest to the EU – the EIC Fund may aim to reach a blocking minority.
- various investment/co-investment scenarios: following its assessment, the EIC Fund will classify equity proposals into four different scenarios, based on the market's current or potential future interest in that specific innovation. These scenarios involve varying degrees of involvement from co-investors within the EIC Fund's investor community ecosystem.
- possible forms of financial instruments used: the instruments used to finance company growth may be equity or quasi-equity. In particular, the guidelines refer to 4 categories: -ordinary shares -preference shares -convertible instruments (e.g. convertible loans) -other instruments
- investment duration: the investment return horizon will be medium to long-term (from 7 to 10 years), with a maximum of 15 years.
- exit strategies: given the specific nature of each situation, these will be defined on a case-by-case basis. Examples of potential strategies include: stock market listing, management buyout, secondary sale, and liquidation.
The guidelines can be downloaded directly from the attachment.
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