Cyprus and EIB’s EIF launch island's first-ever Equity Fund

The Cypriot government and the EIB’s European Investment Fund (EIF) have announced the establishment of Cyprus' first-ever Equity Fund, aspiring to cover the financing gap observed in the sector of innovative small enterprises and start-ups on the island.

The government will provide €27.5 million to the Fund’s budget, the majority of which will come from the EU Recovery and Resilience Facility, whereas an additional €10 million will be raised by the Fund’s manager 33 East Venture Capital, which has been selected by the EIF as the Fund Manager.

Speaking during a 6 November press conference, both EIB President Werner Hoyer, Kyriakos Kakouris, the first-ever Cypriot EIB Vice President, as well as Giorgos Panteli, the Finance Ministry Permanent Secretary, highlighted the importance for innovative SMEs and start-ups to have access to financing due to the risk profile.

“The aim of the Cyprus equity fund is to facilitate access for financing for innovative SME’s and start-ups,” Hoyer said, noting that innovation is going to be the “next big challenge not only in Europe but in the world.”

“Most innovations are being born in small companies it is particularly important we have a look at what we can do for SMEs in Cyprus who want to pursue innovative business model and/or product,” he added.

On his part, Panteli said that despite the significant steps made in the field of innovation, start-ups and innovative companies still face challenges in accessing financing due to the high-risk nature of their activities.

“The equity fund comes and aims to fill this financing gap and we are very excited with the agreement that was recently signed between the EIF and the Fund Manager,” he said.

Kyriakos Kakouris, a former Finance Ministry Director, and recently selected as one of the EIB Vice Presidents underlined the support provided by the EIB and its President to Cyprus, especially since the 2013 financial crisis.

He noted that he will be focusing on projects associated with climate change and green transition which is considered as a priority for the EIB. Kakouris added that initially he was sceptical over the operation of the Equity Fund in Cyprus but noted that he is very glad that the fund is operational.

Nicolas Panayiotopoulos, the EIF’s Secretary-General said that the Cyprus Equity Fund is an initiative that reflects two of the EIF main objectives, namely to support innovative entrepreneurs and build up regional venture capital ecosystems.

“From small ideas comes big success,” he said, recalling the investments made by the EIF in innovative businesses both at the core of the EU as well as the periphery.

Demetris Zoppos, partner at the 33 East VC said the Fund Manager’s aim is to commercialise technologies in high growth categories who want to address large international markets.

He noted apart from the €27.5 million provided by the government to the Fund’s budget, they will raise about €10 million of capital both from individual and institutional investors who are interest in Cyprus.

Zoppos said that he along with his partner, Yiannis Eftychiou, have already “looked at about 100 or so opportunities in about six months.”

“There is a lot of interest here but for funds like us the typical ratio is for every investment we are lookin from 50 to 75 companies,” he said.

Concluding, Zoppos stated that “our thesis is that Cyprus has a lot of potential to transform itself into a technology hub.”

(Source: CNA)