Croatia's first venture capital fund to be set up

Finance Minister Boris Lalovac and the head of the World Bank's Croatia office, Carlos Pinerua, on Wednesday signed a EUR 20 million loan contract for an innovation and enterprise capital project whereby the first Croatian venture capital fund will be established.

Pinerua and representatives of the Croatian Agency for SMEs, Innovation and Investments (HAMAG-BICRO) also signed a contract on the project, which is aimed at strengthening risky capital financing for small and medium sized enterprises in Croatia, and at strengthening the private sector, its productivity and competitiveness.

The World Bank's Board of Executive Directors approved the loan, denominated in euros, yesterday, for a period of ten years, with four years' grace.

Entrepreneurship Minister Gordan Maras said the government had recognised the big potential of innovative enterprises and wanted to enable them to access capital in the simplest way possible. He thanked the World Bank for recognising this project, which he said would enable enterprises to obtain financing and develop their ideas in Croatia.

Maras said the venture capital fund would be registered as a closed-end and be under the supervision of the HANFA regulator.

After ten years, the fund can be extended for another two. Financing will be public and private in accordance with European Union rules on state aid, namely at least 40% in private capital. The fund will be managed by a private fund management company chosen in an international tender.

The net investment amount from the venture capital fund will be 12 million euros in public funds and at least eight million in private funds.

The fund is expected to make about 20 investments and the maximum investment is 10% of the fund's value, Maras said.

Pinerua said encouraging enterprises which were capable of creating new product was the key to step up economic growth in Croatia. Such companies generate growth in most countries and the biggest problem such companies face is financing, so this project is aimed at dealing with it, he added.

As part of the project, a fund will be set up to encourage investment in capital at an early stage. It will secure smaller amounts for risky capital financing together with investors on the market such as business angels and incubators. This fund will be managed by HAMAG-BICRO.



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