An agreement with the European Investment Fund to manage a new financial instrument to support startups and innovation is seen as a milestone in the government’s effort to enhance alternative financing.
Finance Minister Constantinos Petrides said his ministry has long been committed to introducing a financial instrument with equity financing.
The Cyprus Equity Fund is the first equity fund supported by public financing.
Petrides said, “our aspiration is the Cyprus Equity Fund will provide the necessary boost for the emerging and promising innovation ecosystem, which already records robust growth rates in research and innovation investments and strong international scientific collaborations”.
The Fund, according to the Finance Ministry, will also facilitate the development of the nascent venture capital market by providing the opportunity to local and international Venture Capitals to operate and invest in Cyprus.
Petrides said the government’s commitment and confidence in the project are evident by the increase of the initially approved support by €10 mln to a total of €30 mln.
The equity fund has been included in Cyprus’ National Resilience and Recovery Plan.
“This amount will be supplemented by private capital.
“We have set the bar high for the private investors’ participation in the Fund since leveraging private resources is one of the Fund’s main objectives and essential to its long-term success.”
According to Petrides, the Fund to be created follows the EIB’s European Investment Fund call process, capitalising on stakeholders’ market expertise to adequately address the equity financing gap by supporting innovative entrepreneurship with the required initial and follow-on investments.
It will benefit emerging and growing Cyprus startups and the innovation ecosystem powered traditionally by government grants, angel investors, incubators and accelerators.
The contribution of entrepreneurship and innovation to economic prosperity has grown with the shift of the global economy towards a mode of production in which knowledge has become a key input.
“The challenges of the knowledge economy are critical to growth.
“Vigorous entrepreneurship and SME development are among the most important conditions for successfully meeting the challenges of a continuously evolving global economy.
“There is a silver lining in the Covid crisis; accelerated and boosted support of the EU towards a green and digital economy, mainly expressed through the Resilience and Recovery Facility and the InvestEU Initiative.”