The Fund of Funds (FoF) is actively seeking managers for three equity investment funds. Candidates interested in overseeing 100 million euros across the three funds are invited to apply until February. With additional co-financing expected from private investors, the total sum is anticipated to reach at least 130 million euros. The "Entrepreneurship Fund" financial instrument is backed by funds from the "Competitiveness and Innovation Program for Enterprises" 2021-2027 (CIP), co-financed by the European Regional Development Fund, and aims to support startups at various stages of development – from ideation to product development and growth. This was highlighted by Victoria Hristova, Executive Director of the Fund of Funds, during the "Business Start" program, hosted by Hristo Nikolov.
One pivotal aspect is the expanded eligibility of end beneficiaries, no longer restricted to financing solely small and medium enterprises but now also including those with medium capitalization. Previously, the criteria were tied to companies with up to 250 employees, and now the limit has been increased to 499 and even 3000 employees. Another crucial element pertains to territorial distribution, mandating that over 50% of the resources must be invested outside the Southwest region. This represents a significant broadening compared to the previous concentration mainly within the Sofia region.
The fund managers themselves will develop their portfolios within specified criteria, with no sectoral restrictions except for prohibited sectors. The selection process for financial intermediaries is competitive, featuring negotiation elements. The criteria are clearly measurable and known in advance, allowing candidates to assess their suitability for a specific fund.
The appointment of new fund managers will be done through public procurement, and the Fund of Funds has endeavored to minimize the time required for the procedure. Realistically, the expected start date for the new funds is the beginning of 2025, provided there are no significant delays due to appeals of the procedure.
In the event of an appeal for one fund, the other two procedures can proceed independently, reassured Hristova. A minimum private resource of 30% is expected to be attracted and distributed across several stages. Independent resources are anticipated to come from the fund managers themselves (3%-7%), at the fund level with co-investors up to a minimum of 10%, and at the recipient level up to 30%.
Having previously focused on quantity and meeting requirements to finance 300 companies in the program period (with 390 already financed), the current focus of the Fund of Funds is on quality, as stated by Hristova.
"We must ensure, together with the fund managers, that this portfolio will continue to develop successfully. Not coincidentally, we are launching this instrument to provide a similar type of support for companies with potential for development."
In addition to equity investments, the Fund of Funds will also support businesses with debt instruments in 2024.
"In terms of equity investments, the Technology Transfer Fund and the Innovation Fund are yet to be implemented. Both together will represent around 100 million euros. Talking about debt instruments - 100 million euros will be invested in circular economy and resource efficiency, which is currently in process. We are finalizing market tests in collaboration with all banks in the market. It is crucial that the new elements are clarified for all participants who will then apply them. They mainly concern the combination of financial instrument with grants, which is news for everyone. We expect the procedure for selecting financial intermediaries to be announced very soon."
For more information on new funds and the participation of Bulgarian companies in international forums, you can check out the video: "New 130 million euros for entrepreneurs from 2025, more than 50% will be invested outside Sofia - Bloomberg (bloombergtv.bg)"
