AECM: “General Assembly & Seminar” 19th June 2015. Berlin, Germany

Panel: “Global benchmarking and cross learning”

1

Alessandro Bozzo T.

Manager FOGAPE

Santiago, Chile

Presentation: “Experiences concerning the financing of innovative SMEs in Chile”

SANTIAGO

CHILE

¿ CHILE ?

South

America

FOGAPE

FOGAPE

3

Financial Institutions

supervised by SBIF

Credit Unions(*)

Reciprocal Guarantee Societes

SGRs (2007)

INSTITUTIONS THAT CAN

PARTICIPATE IN THE TENDERS

(*) Supervised by SBIF or those who compliance with Decoop Supervision ( Ministry of Economy).

NEW BUSINESS MODEL WITH

PARTICIPATION OF SGRs & FIs

FIs

FUND of Guarantees and Reinsurances

Guarantee

Rights

MSMEs

Elegibiles

Rigths of

Guarantees

Counter-Guarantees Financing covered directly by

FOGAPE

Financing secured by SGRs and

Reinsured by FOGAPE

SGRs

FIs and Others

Creditors

Reinsurance

(possible)

Rights of

Reinsurances

Tender

* SGRs are privates

companies.

Problem or “failure of market” it is

intended to resolve or mitigate:

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•There are institutions that support the development of entrepreneurship, the creation of

new enterprises and innovation, but in general in the countries does not constitute a real

support network, coordinated and comprehensive entrepreneurship and the creation of

new companies.

•Banking funding is practically non-existent for new companies or without history.

•Lack of access to capital and funding for the creation of new enterprises, especially to

people who have good ideas or projects and have the capacity to carry them out. (power

of the entrepreneur level)

•The evolution of markets, greater complexity and dynamics, requires that companies and

innovative ideas require special supports to be able to sustainably.

Proyect Presented to the Ministry

• Proposal:

Establishment a "network to support the creation of new enterprises

(innovative)“

Objetives:

Support the development of enterprises that allow:

the creation of companies that provide value-added, innovative

(technology, processes, model of business, etc.),

with growth potential, that have business visionaries, but realistic.

Thereby contributing to bring it to the national economy, to improve the

distribution of wealth and,

consequently, to create a society with more opportunities, more jobs

and more participation. 7

Proposed Plan

• Invite private and public actors to form a

network of support to entrepreneurship

and perform a pilot project

• SGRs, FI, Angels investors network, INAPI

(Patent Office), ABIF, FOGAPE, Ministry

of economy.

• All were represented in the network

• It formed a Committee of network

• Opened a competition for 50 companies

backed by Incubators 8

Network

9

INNOVATIVE and

dynamic

entrepreneurs

GUARANTE

-SGRs

-CORFO

-FOGAPE

FINANCE

-banks

-- investors –

- other

SPONSORS

- incubators - Org.

Guilds - universities

REINSURANCE

-FOGAPE

RESERCH

CENTERS

- MENTORING &

I+D+i centers

SUBSIDIES -

Corfo - Sercotec

- other

SELECTION -

Committee

multidisciplinary

network

OTHERS

PARTICIPANTS

Pilot Prject: 50 selected Applicants

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•Legal person. •Level of annual turnover from zero up to the $ 100,000.- •Capital required Max. $100.000 USD. •Rely on the patronage of an incubator or angel investor network. •Having a dynamic characteristics business plan *

* Dynamic entrepreneurship: point to generate sales by U$ 100,000.-in its first year and keep growth of approx. 35% rates over the next 5 years.

•Legal person. •Count on more than one year in existence in sales (turnover). •Annual turnover between $ 100,000-$ 1,000,000.- •Capital required Max. $150.000 USD. • Rely on the patronage of an incubator or angel investor network. •Having a dynamic characteristics business plan *. •Plan of escalation with clear opportunities to materialize.

CATEGORY 2:

STRENGTHENING OF DYNAMIC COMPANIES

CATEGORY 1: CREATION OF INNOVATIVE

ENTERPRISES

Below are a scheme with the categories of applicants was developed in Chile: selected by the sponsors presented their project to the Committee networks and can already obtain financing and/or the possibility of finding a partner who provides not only capital, but also valuable experience and networking.

General process of the program

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Bank

SGR

Commitee Greed

Commitee CGG

Ministry

Ministry

Committee's evaluation phase 2: Elevator Pitch and selection

Process of investment (investment forum)

Credits

Registration of companies or projects

Pool of innovative business creation projects

Pool of companies in early stage in need of scaling

Day 60

investments

Day 0

Evaluation and selection criteria

Eligibility requirements and obligations of applicants

Call in incubators and networks of angel investors

The requested credit pre-approval

Options

Financial and credit risk evaluation

Closure of registration and eligibility

Financial Evaluation

Committee's evaluation phase 1: risk analysis

Elaboration of the financial profile of the project

Result and Conclusions

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1.- Presented 50 enterprises through

incubators

2.- 25 of them qualified for financing and

investment after the enterprise presented

the project to the committee.

3.- In very short time the enterprise know

the result of the application

4.- The credit were 100% covered by

SGRs

Lessons Learned and result

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The project was privatized (University, others)

The interes Rate is Tasa PYME ??

The Program was transformed in different public and

privated initiatives