Spain: EIB and Sabadell Venture Capital join forces to support startups

(Source: European Investment Bank)

  • The EU bank and Sabadell Venture Capital will provide €40 million to support Spanish SMEs affected by COVID-19.
  • The operation is being carried out under the European Guarantee Fund (EGF).

The European Investment Bank (EIB) has invested up to €20 million in a co-investment facility with Sabadell Venture Capital S.L. to support early-stage Spanish start-ups affected by COVID-19.

Sabadell Venture Capital will match the EIB co-investment with its own contribution of €20 million, resulting in a total of €40 million for venture debt operations in start-ups, entering scale stages, affected by the pandemic-induced economic crisis. Most of the investments will target Spanish small and medium-sized enterprises (SMEs) in all sectors, with a strong emphasis on tech companies.

The operation is backed by the European Guarantee Fund (EGF) venture debt, part of the European Union’s €540 billion package to address the economic impact of COVID-19. The venture debt product of the European Guarantee Fund enables the EIB to address a venture debt deficit linked to structural market failures across the European Union.

EIB Vice-President Ricardo Mourinho Félix said: “The EIB is committed to ensuring that innovation-driven Spanish businesses can access finance, expand and create jobs. The pandemic has reduced the access of these companies to equity, hampering their growth (especially for early-stage companies). The European Guarantee Fund and the experience of Sabadell Venture Capital will enable us to provide the liquidity that companies need to continue investing in their growth.”

BS Deputy General Manager and BS Capital Managing Director Raúl Rodríguez added: “This alliance between Sabadell Venture Capital and the EIB is yet another step forward in covering the financing needs of growth-stage startups, which until now were restricted to international lenders. The venture debt product is relatively new to Spain, with current providers covering amounts up to €2-3 million. The alliance with the EIB will enable Sabadell Venture Capital to offer venture debt solutions of up to €10 million, providing startups with access to less dilutive resources to finance their growth.”

Background information:

Supporting small and medium-sized enterprises (SMEs) is one of the EIB Group’s key priorities in Spain. The Bank directed €7.25 billion towards this goal in 2021, representing 57% of the EIB Group’s activity in the country.

The European Guarantee Fund (EGF) was set up by the EIB Group with contributions from Spain and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly €25 billion in guarantees, the EGF allows the EIB and the EIF to quickly make loans, guarantees, asset-backed securities, equity and other financial instruments available to mostly small and medium-sized enterprises and mid-caps. The EGF is part of the European Union’s recovery package aiming to provide a total of €540 billion to boost the parts of the EU economy that have been hit the worst.

Sabadell Venture Capital is the venture capital division of Banco Sabadell that invests in early-stage startups. Its vision is to be Spain’s premier financial investor for early-stage innovative digital and tech startups, helping them to grow with an investment of up to €10 million per company. Sabadell Venture Capital currently has over 50 companies in its portfolio financed via equity and venture debt, including Ritmo Capital, Exoticca, Redpoints and Lingokids.

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