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Access to Finance in the Cultural and Creative Sectors : A Practical Approach 22 April 2013

Access to Finance in the Cultural and Creative Sectors : A Practical Approach 22 April 2013. Marija Popovic European Design Centre. Investments potential of the CCI. Which CCI sub- sectors are targeted for finance , which sub- sectors are not? Top 3: software &computer

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Access to Finance in the Cultural and Creative Sectors : A Practical Approach 22 April 2013

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  1. Access toFinance in the Cultural and Creative Sectors: A Practical Approach22 April 2013 Marija Popovic European Design Centre

  2. Investments potential ofthe CCI WhichCCI sub-sectorsaretargetedforfinance, which sub-sectorsare not? Top 3: • software &computer services (23%) • film (12%) • video games (11%) Least attractive 3: • performing arts / arts & antiques (4%) • crafts (3%) • architecture (2%)

  3. Investors’ assessment of the risks compared to return in the CCI Perceived top risks for investing in CCI businesses: • Unlikely to find exit • Business not scalable • Lack of skilled management teams • Revenue generating business models Source: C-I Factor Database

  4. Popular incentives encouraging investment into the CCI Both VCs and BAs favour guarantee funds and co-investment of public/private funds Both VCs and BAs prefer • enterprises that are internationally investment ready • a chance to invest alongside a reputable investor • BAs are more enthusiastic about incentives than were VCs. BAs also are overwhelmingly in favour of sector specific tax incentives. •

  5. Lenders‘ assessment of the risks compared to return in CCI Perceived top risks for lending to CCI businesses • Lack of skilled management teams • Solid business plans • Protectable IP • Revenue generating business models Source: C-I Factor Survey

  6. Popular incentives encouraging lending to the CCI Lenders support risk reduction through 3rd party guarantees, including a 50% guarantee. Cross-border lending Most lenders are not willing to lend outside their countries but follow existing clients to make cross-border loans in CCI.

  7. Alternative platforms‘ assessment of the risks compared to return in the CCI Perceived top risks: Investor platforms • Lack of revenue generating business models, • Lack of skilled management teams, • Lack of a likely exit. Donation platforms • Same top two as investor’s concerns • 3.) too much regulation. Lending platforms • Same top two as investor’s concerns • 3.) long periods of product development

  8. Incentives to cross-border transactionsforalternative platforms Alternative platforms show interest in: • Co-investment alongside a dedicated pan-European co-investment fund, • Raising a pan-European fund, • Lending platforms: favour tax incentives and harmonisation of tax regulations. Cross-border transactions Cross-border deals appealing when projects/businesses are internationally investment ready and/or when cooperating with mainstream investors from outside their country.

  9. Connectivity betweenfinanceresources Assessmentof Alternative Financing • ~60% of VCs surveyed see potential in crowd-funding, but only 15% have real experience with it, • 19% of BA respondents have experience in investing in businesses that received non-traditional financing, but are more negative about the alternative.

  10. Recommedations (Investors) • Provide market intelligence on CCI to investors • Online showcasing of CI entrepreneurs seeking finance • Market Intelligence as part of online pitching and showcasing (clusters, incubators etc.) • Create an online CCI investor community • Sharing intelligence and deals and creating better connectivity between finance sources • Support to Development of new CCI Co-investment Fund of Funds • Develop potential of national co-investment approaches that encourage syndication between BAs and VCs to develop specific models dedicated to CCI

  11. Recommendations (Lenders) • Support to Development and Enhancement of the new Creative Sectors Loan Guarantee Facility • Raising awareness of and obtaining commitments from banks and other institutions to support the new guarantee facility (i.e. capacity building for lenders) • Raising awareness of the changes and identifying opportunities afforded by the new CSF financial instruments for Managing Authorities (i.e. capacity building for public authorities) • Consider potential funding enhancements attributed at a regional/national level to further support CCI

  12. Recommendations (Platforms) • Support better connectivity among traditional investors and alternative platforms for CCI finance • Develop and support proliferation of alternative platforms’ networks • Acquaint investors with alternative (equity-based) platforms • Increase transparency of alternative platforms’ business models • Introduce successful (scalable) crowd-funded projects to investors for 2nd round of financing

  13. Recommendations (CCI Businesses) • Support CCI businesses seeking finance • Develop an integrated programme of finance awareness and investment readiness • Getting in early in CCI vocational training and support to entrepreneurs • Raise awareness of the availability and relevance of alternative finance resources

  14. Thanksforyour kindattention! marija@edc.nl

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