This new round from the European Investment Fund (EIF), which is actually the fourth for October, has enabled the fintech SME V fund to reach a size of €100 million in total commitments after its launch in September 2022. This new vehicle will have a mission of primary importance for the European Union, as it is expected to provide more than 3,000 loans to SMEs in the old continent. It is expected to reach a total of 400 million euros lent over the next two years.
And it seems to be on the right track with this new €35 million fundraising (€20 million from the EIF and €15 million from Invest-NL). It will target in particular France, Spain, Italy, the Netherlands, and Germany, in more than 15 different sectors of activity. Loan amounts are expected to range from €10,000 to €2 million, with an expected average of €130,000.
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Alternative Financing to support European SMEs
“This renewed commitment to October is a testament not only to the fund manager’s track record but also to the goals that EIF shares with its clients,” said Marjut Falkstrom. Marjut Falkstedt, Managing Director of the European Investment Fund, explains. “Overall, investments in SMEs are those that preserve and create the most jobs per euro invested, which gives the EIF an important role in the European economy. I am pleased that the EIF can once again partner with October to support small and medium-sized enterprises through alternative financing.”
In its eight years of existence, October has lent over €965 million to 3,800 European SMEs. October SME V represents the 5th generation of diversified FinTech SME debt funds, backed by a community of established European institutional investors, including the European Investment Fund, Bpifrance, CNP Assurances or the Dutch institution Invest-NL. “Fundraising, whether in equity or debt, is much more difficult than it was a year ago,” explained Patrick de Nonneville, CEO of October. “Whether it’s for startups or large companies, interest rates have gone up a lot. So for us, this raise is very important, as it allows us to continue our activity by supporting European SMEs, more than ever in need.”
63% of the European Union’s workforce is employed by SMEs
According to the European Court of Auditors, SMEs are an important vector of employment and economic growth, since they employ 63% of the EU’s workforce and generate 52% of its added value. It is therefore the entire economy of the old continent that is fed by small and medium-sized enterprises. However, their health has weakened over the last three years.
“European SMEs have had a complicated time with strikes, the pandemic, inflation, and raw material shortages,” said Patrick de Nonneville. “The markets are now under pressure, at the very moment when the PGEs (state-guaranteed loans) have to be repaid. And while companies could borrow at 2 or 3% last year, they will now have offers at 5 or 6.5%. In such a tense context, our mission, which is to facilitate access to financing for SMEs, is essential.”
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First published in Maddyness, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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