Utilisation of New Financial Instruments
If, for the development of your company, you need more financial resources than your friends or banks can offer, or if you have not received any subsidies from structural funds, there are other possibilities for financing your idea.
Within the Operational Programme Enterprise and Innovation, new activities are currently being prepared that are focused on the use of new non-subsidy financial instruments to support the innovative projects of companies in the start-up and growth phases of business associated with a higher level of risk during implementation. These instruments will not take the form of credit or subsidies, but will concern the entry of investors’ capital into a given enterprise with the aim of its further development.
New financial instruments for the support of innovative projects
CzechEkoSystem is focused primarily on effective development of activities undertaken by SMEs (applicants) in the course of conducting innovative business through favourably priced consulting services with the systematic participation of a coach. Participation in the project allows applicants to gain practical experience in commercialisation of their products, practical implementation of their business plans and enhancement of their marketing and management skills in order to increase their ability to overcome initial problems when starting their operation, thus supporting the attractiveness of the applicants’ business projects for venture capital (primarily seed capital).
The objective of the project is to provide, in a coordinated manner, necessary information to applicants in the form of specialised consulting. Such consulting for the innovative business environment will be directed by a competent person, i.e. a coach, in order to maximise the effectiveness of the process of developing the applicants’ companies from the perspective of costs and the necessary time with the goal of supporting the establishment and survival of promising innovative firms.
More information on CzechEkoSystem (only in Czech).
The Seed Fond is a project within the Operational Programme Enterprise and Innovation that offers businesses a completely new instrument of support in the form of venture-capital investments. The project’s objective is to develop a venture-capital market in the area of investments in both start-ups and long-established firms with innovation potential. This primarily involves investments that are of almost no interest to either banks due to the associated level of risk or to the majority of traditional venture-capital funds due to the small scope of such investments. Start-up firms in particular frequently have strong potential to become competitive and penetrate foreign markets, not only in fields such as IT and biotechnology, nanotechnology and advanced materials.
The Seed Fund is an instrument of financial engineering via which public and private funding will be jointly invested as capital in promising firms with strong growth potential. Besides financial resources, the Seed Fund will provide the necessary know-how for further development and company management in a similar manner as funds that have long been in existence abroad.
More information on Seed Funds (only in Czech).
The principle of a fund is based on the entry of an investor (fund) into a selected enterprise by increasing its basic capital, whereby the enterprise obtains needed resources. Following a pre-determined period, the fund’s capital share is sold and the investment is returned to the fund. The main goal of these funds is for their investments to appreciate, and then to sell and invest in other opportunities. More information on venture-capital funds.
One of the possibilities for implementation of this area is the utilisation of financial instruments within the Jeremie joint initiative. This concerns an instrument of the European Commission and European Investment Fund for the support of venture capital, micro-loans and guarantees for small and medium-sized enterprises. It is currently in the preparation phase, including mapping of the situation in the Czech Republic with the aim of determining the needs of small and medium-sized enterprises in this area.
Business angels are investors (individuals), who are sufficiently capable of investing their own assets into enterprises and projects that they find interesting. They are not looking for only greater income and minimum risk, but primarily for areas in which they can actively engage and use their experience and contacts to support the growth of the company in which they have invested. More information on business angels.
Business angels can be associated in networks which are support within the Prosperity Programme.