Exploring the Cyprus Equity Fund’s role in supporting startups

George Panteli, Permanent Secretary of the Ministry of Finance, talks about the upcoming launch of the Cyprus Equity Fund and the important role it is anticipated to play in championing the island’s startup ecosystem.

What led to the Government’s decision to launch the Cyprus Equity Fund (CEF).

The Ministry of Finance had identified early on the need to support the startup ecosystem of Cyprus, which is powered traditionally by government grants, angel investors, incubators and accelerators, and so its Recovery and Resilience Plan included the establishment of an Equity Fund in the country, the first to be supported by public resources. The project capitalises on stakeholders’ market expertise to grow the market, with the Government vested with the role of establishing a steering committee to monitor the implementation of the investment strategy. With the aim of making risk finance accessible to companies that seek to grow their business ideas and projects through pre-seed and seed capital, the Ministry signed a Funding Agreement with the European Investment Fund (EIF) in April 2022, entrusting it with the management of a total amount of €30 million for the CEF, combining resources from the Recovery and Resilience Fund and the national budget.

At what stage is the process of finding a fund manager?

The relevant call for the selection of financial intermediaries (the fund manager(s) of the CEF) was published in May 2022. The market reacted in a very positive way and 10 applications were submitted to the EIF. Using its internal evaluation and selection procedures implemented all over Europe, the EIF selected one fund management team for the CEF. As of now, the EIF and the selected team are concluding negotiations on their underlying agreement, which is expected to be signed early in the second quarter of 2023.

How will the CEF help take the Cyprus startup ecosystem to the next level?

The CEF aspires to finance innovative Cypriot companies with significant growth potential and to support research results coming out of Cypriot universities and research centres with the commercialisation potential to create a vibrant ecosystem for equity and venture capital investments in Cyprus. It is worth mentioning that the Fund is expected to crowd in private investments both at the CEF, as well as by co-investing in prospective companies with other private investors and funds. The CEF is only one of the initiatives supported by the Ministry of Finance aimed at addressing the market’s financing gaps and facilitating the transition to a knowledge-based growth model for our economy. Others include the Strategy for Attracting Business and Talent and the establishment of a National Promotional Agency.

This interview first appeared in the April issue of GOLD magazine. Click here to view it.