The Ministry of Finance has long been committed to introducing a financial instrument to support startups and innovative companies with equity financing, Finance Minister Constantinos Petrides has said, adding the agreement with the European Investment Fund to manage this new financial instrument is of paramount importance and a significant milestone in the government's efforts to enhance alternative financing.
In an address at an event to present the Cyprus Equity Fund, the first equity fund in Cyprus to be supported by public funds, which was delivered by the Ministry's Permanent Secretary George Panteli, Petrides said “our aspiration is that the Cyprus Equity Fund will provide the necessary boost for Cyprus' emerging and promising innovation ecosystem, which, in the last few years, has already recorded robust growth rates in research and innovation investments and strong international scientific collaborations”.
...there is “a silver lining in the Covid crisis, which is this is the accelerated and boosted support of the EU towards a green and digital economy... -Petrides
The Fund, he added, according to a press release issued by the Ministry, will also facilitate the further development of the nascent venture capital market by providing the opportunity to local and international Venture Capitals to operate and invest in Cyprus.
He said the government's commitment and confidence in the project are evident by the increase of its initially approved support of €10m, to now a total of €30m. Furthermore, according to Petrides, 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 participation of private investors in the Fund since leveraging private resources is one of the Fund's main objectives and an essential element to its long-term success,” he added.
According to Petrides, the Fund, which will be created, following the EIB’s European Investment Fund call process, will capitalize 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.
Furthermore, the Minister stressed that 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,” he added.
Finally, Petrides said there is “a silver lining in the Covid crisis, which is this is the 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.”