access to finance in the cultural and creative sectors a practical approach 22 april 2013 n.
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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

Access toFinance in the Cultural and Creative Sectors: A Practical Approach22 April 2013

Marija Popovic

European Design Centre

slide3

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%)
slide4

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

popular incentives encouraging investment into the cci
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.

lenders assessment of the risks compared to return in cci
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

popular incentives encouraging lending to the cci
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.

alternative platforms assessment of the risks compared to return in the cci
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
i ncentives to cross border transactions for alternative platforms
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.

connectivity between finance resources
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.
recommedations investors
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
recommendations lenders
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
recommendations platforms
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
recommendations cci businesses
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
slide15

Thanksforyour

kindattention!

marija@edc.nl