A European guarantee instrument played a major role in Invest NL’s decision to invest €7.5 million in Protix in the form of a convertible loan. What is the so-called InnovFin SME Guarantee?
One of the biggest obstacles budding entrepreneurs have to overcome is to convince potential backers that their innovative idea is a viable one.
That’s why the European Commission and the European Investment Fund (EIF) support innovation-driven SMEs small and medium-sized enterprises (SMEs) with fewer than 500 workers with the so-called InnovFin SME Guarantee.
In practice, the guarantee facility is being rolled out through financial intermediaries in the 27 EU member states, which are often local banks, leasing companies or guarantee institutions who have been selected by the EIF after a due diligence process.
European guarantee de-risks riskier loans
The EIF will cover a portion of the losses incurred by the financial intermediaries on loans, leases and guarantees between €25,000 and €7.5 million, something they provide under the InnovFin SME Guarantee Facility.
“I am delighted that we can support Protix in strengthening its top international position in the fast-growing market for insect-based ingredients,” Invest-NL chief executive officer Wouter Bos said in a press release last month.
“Another very positive aspect is the European Investment Fund’s involvement in this transaction. The InnovFin SME Guarantee that we recently agreed with the EIF enables innovative, fast-growing companies to scale up even faster with the help of European investment.”
Better financing conditions thanks to loan guarantee
Kees Aarts, co-founder and chief executive officer of Protix, called the InnovFin SME Guarantee ‘an additional proof point for investors’.
Leo Holwerda, director capital at Invest-NL, said the facility “enables Invest-NL to offer fast-growing innovative companies better financing conditions so that these companies can strengthen their position (faster).”
“With this financing round, Protix can further optimise its production capacity and prepare for further international expansion. By using the InnovFin SME guarantee, Invest-NL is able to facilitate even more innovative companies in their growth,” Holwerda said in an email.