ECIA - Presentation by Edgar Garcia Casellas (Barcelona 6 juny 2013)

1

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC

This initiative is financed under the Competitiveness and Innovation Framework Programme (CIP) which aims to encourage the competitiveness of European enterprises.

ECIA Policy Learning Platform

Barcelona, 6th of June 2013

Edgar Garcia,

ECIA coordinator of the WP on Access to Finance

Catalan Institute for the Cultural Companies (ICEC)

2

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


First results from ECIA’s WG on Access to Finance thematic paper

3

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


ECIA’s WG on Access to Finance members

Edgar Garcia Casellas – Coordinator of the WG (ICEC)

Michela Michilli – Concrete Action FAME (FILAS)

Marija Popovic - Concrete Action CI-Factor (EDC)

Miguel Rivas – CLAND, Audiovisual and Digital Cluster Andalucía

Jenny Kornmacher - Hamburg Kreativ Gesellschaft Gmbh

Ragnar Siil –Estonia Ministry of Culture

Henri Monceau – Cabinet of the Minister for Economy, Wallonia

Thierry Baujard – Media Deals

Johanna Bolhoven – Creative England

4

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Current framework

• The on-going financial and economic crisis has an important impact on the

adoption of public funding initiatives for the CCIs .

• Growing acknowledgement of the economic performance of the cultural and

creative sectors.

• The cultural and creative sector can become the basis for economic

recovery and potential growth in Europe.

• The sector’s role as an upcoming attraction for private funding should be

equally supported and enforced.

• The digital shift places the creative sector in the need to reassess business

models.

5

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Key issues and challenges on Access to Finance

Creative sector’s main challenge

• To find innovative business models, which would allow them

to achieve investment readiness within the new digital

environment.

6

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC



• There is a need of a new understanding of the creative sector itself.

• NOT a separate entity from other business sectors!

• Existing financial tools for SMEs can and should come into use for the

support of creative industries.

• And tailor-made solutions should come up only if inadequacy of existing

schemes is diagnosed!

7

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC



• There is a a need for private initiatives offering a better access to finance

to the sector.

• Investments in the CCIs should be encouraged in a three-fold way:

– to train CCIs to be more investment-ready

– to raise awareness on the profits of intangible assets among investors

– to improve IP valuation

8

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC



• There is a a need to integrate innovation and multiply the impact of a

relatively low public funding.

• Public sector should take into consideration new emerging trends of financing

small creative industries, especially at an early stage. – microcredit instruments

– P2P (peer to peer) lending

– crowdfunding

• Cooperation of public bodies with crowdfunding platforms could be

achieved through a regulatory framework promoting such initiatives from

short-term project-based to long-term business-based.

• Introduction of financial engineering instruments: matching public grants

with privately raised funds in order to ensure the financial sustainability of CCIs.

9

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC



• There is a a need for internationalization of the creative sector.

• Although many SMEs are already international, the lack and difficulty of

accessing international investors limit success of cross border strategies.

• Investment models involving neighboring countries should be developed.

CA FAME is doing a technical analysis on the viability of a Pan-European VC fund.

10

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Assessment of current policies and policy initiatives

Examples of policies and initiatives Cross-sectoral

Invest. Awareness

Alternative financing

LeverageCross-border Level

Score (1-5)

MEDIA Production Guarantee FundPan European Guarantee for film production

x xx

EU 4*

Belgian Tax shelter for filmsKey finance instrument for film finance

x xx

Nat. 4*

OSEO GuaranteeOffer risk mitigation to innovative SME

x x Nat. 3

Film London PFM (Production Finance Market) http://filmlondon.org.uk/PFMKey finance market supported by MEDIA

x xx

EU 4*

EASY Early stage investors www.earlystageinvestors.org/Pilot project for cross border investment

x x xx

EU 2

FILAS VC Fund http://www.filasinternational.eu/Regional fund for CI

x X Reg. 3

11

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


CIM VenturePan European CI Investment Fund

x xx

EU 1

Caisse des Depots VC fund „Heritage and Creation“Development fund for established CI

x Nat. 3

VC Fonds Kreativwirtschaft Berlin http://www.ibb-bet.de/vc_fonds_kreativ.0.html?&L=1Public private fund focussing on CI

x x Reg. 4*

European Regional Development Fund (ERDF)Key regional fund

x x EU 3

How to grow platformCI Online platform

x xx

EU 3

European Angels Fund (EAF)http://www.eif.org/what_we_do/equity/eaf/index.htmEIF co angel fund

x x x EU 1

Enterprise Investment Scheme (EIS http://www.hmrc.gov.uk/eis/Key UK scheme to support innovation

x x x Nat. 4*

Seed4Start www.seed4start.orgPilot project on cross border investment

x x xx

EU 2

12

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Nordic Game Program http://nordicgameprogram.org/Key programme for Video Game

xx

Nat. 4*

INTERREGKey interregional funding

x x x EU 3

JEREMIEhttp://www.eif.org/what_we_do/jeremie/index.htmCo investment scheme

x x x EU 2

European Progress Microfinance Facility http://ec.europa.eu/social/main.jsp?catId=836&langId=enPan European Micro loan

x x x x x EU 2

CIP Microcredit Guarantee Window http://www.eif.org/what_we_do/microfinance/microcredit_guarantees/index.htmPan European Micro credit guarantee

x x x x x EU 2

Entrepreneurship and Innovation Programme (EIP) http://ec.europa.eu/cip/eip/index_en.htmSupport programme for innovative SME

x x x EU 2

SME Guarantee Facilityhttp://ec.europa.eu/enterprise/policies/finance/cip-financial-instruments/index_en.htm

x x Nat 2

13

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


First steps towards a benchmarking: the best rated practices and policy initiatives

Detection of already undertaken policies and upcoming policy initiatives in the field of

access to finance for CCIs, which have been be reviewed according to their effectiveness

in replying to one or more of the key issues identified.

To explore and analyze key schemes through:

their goals, results and context

the role of the private and public sector

their cross sector/spill over character

their replication potential

the success or failure factors

14

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


First steps towards a benchmarking: the best rated practices and policy initiatives

draft list of policy examples

MEDIA Production Guarantee Fund (EU)

OSEO Guarantee (FR)

Cultur-Ondernemen Guarantee Fund (NL)

FILAS VC Fund (IT)

Caisse des Depots VC Fund “Heritage and Creation” (FR)

VC Fonds Kreativwirtschaft (Berlin)

Nordic Game programme (Nordic countries) Production Finance market (London Film Festival / UK)

Belgian Tax shelter for audiovisual production (BE)

Nordstarter – Hamburg Kreativ Gesellschaft (GE)

Repayable Grants – ICEC (CAT)

CIM Venture (FI)

15

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Case study 1: VC KreativWirtschaft Berlin Fund

For Berlin based creative industries companies

Investments areas: film, radio, TV, publishing, music, entertainment, advertising,

fashion, design, architecture, multimedia, games, software, art and culture.

Fund volume: 30M EUR

50% of the funds by the Investitionsbank Berlin, and 50% by the EU Regional

Development Fund (ERDF)

The VC fund only provides co-financing if private investors cover at least 50% of

the respective financing round.

Amount invested per round: average 1.5M EUR

Maximum of 3M EUR per company over multiple rounds

The VC fund only holds minority shares in the portfolio companies

Particularly supporting start-ups

Deal flow in arts and culture identified as lower than in multimedia, games, software,

music and TV

16

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Case study 2: Production Finance market (London)

two-day annual event at the BFI London Film Festival

connects international producers and financiers to encourage new film financing

relationships

Financiers: mature and leading financiers (UK and internat.) and public funding bodies

Producers: producers (UK and international) with a significant production track

record or with a highly promising project aimed at the international theatrical market,

with a budget above €1M (not a ‘micro-budget’ film market)

The uniqueness of the PFM lies in the focus on the financing and not the co-

production part, involving real financiers.

The 2012 market attracted almost €305M of production value, and leading equity,

hedge fund, tax, banking, and public and broadcaster financiers

To date, some 50 or more films and companies have benefited directly from the PFM

The 2013 edition will bring more than 100 producers, financiers and new forms of

investment together

17

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Following study on role of banks in the film industry

Once film projects are financed, there is a need to cash flow the pre sales and subsidies

contracts (bridge financing)

2 specialized public film guarantors (France and Spain) have been awarded 8M EUR for a

pilot project till end 2013

Results till now: 28 bank loans have benefited from this guarantee, representing a total

loan amount of over EUR 38 M, for the production of 21 films in 9 different countries.

The MPGF has provided guarantees and therefore facilitated loans in many European

countries that until now could not access bridge financing.

The difficulties encountered are:

Lack of expertise from banks in the sector of film finance

Banks are very local and do not look at projects outside region or country

Size of loans is often too small making the deal commercially not interesting for banks

leading to a limited investment of resource in the sector

Project lending VS company lending makes it difficult for credit committee to assess risk.

Case study 3: MEDIA Production Guarantee Fund (MPGF)

18

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


First steps towards a benchmarking: a methodology

Impact Assessment – starting 3 June

Online survey + telephone follow up

Two target groups:

The Initiator of each funding scheme

At least two beneficiaries of each funding scheme

19

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Impact Assessment Quantitative survey: estimation of number of projects supported, amounts invested

Qualitative:

Sector transversality

Aim > assess the support of creative industries in generic schemes

Key success factors

Aim > compare the perception of “success” and “fail” for initiators and beneficiaries and suggest areas

of improvement

Replication potential

Aim > distinguish the geographical/ sectorial specificities from the factors allowing to multiply the

scheme in other regions/ creative sectors

Other areas of assessment:

• Improvement of public policy;

• Mobilization of private finance;

• Long term impact;

• Social or environmental impact

20

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Conclusions of the assessment

• A fragmentation between initiatives specialised in CCIs and policies with a

larger scope is observed.

• Many of the not sector-specific existing tools have proven very effective in

all fields of application, and CCI stakeholders should be encouraged to make

good use of them.

• Investment readiness and awareness-raising schemes, as well as financial

leverage instruments to support risk mitigation and exchange of expertise,

have been already largely implemented in all levels (EU, national and regional).

• However, policy-makers are aware of the need to introduce and further support

such initiatives.

• In the context of such existing initiatives, the spotlight should be henceforth put on

IP assets valuation.

21

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Other relevant conclusions related to Access to Finance

• Despite the fact that the creative sector brings together a wide variety of different

sub-sectors, the sector faces common needs… and common solutions are as

much required as sector-specific solutions.

• The most needed generic solutions to be undertaken for all creative sub-sectors

are:– the shifting from project to business finance

– and the shifting from grants/subsidies/(credit) to equity finance

• There is a special need for cross-sectoral networking.

• Clustering and network activities are expected to bring specific expertise by

building bridges between various stakeholders: related industries, CCIs, public

bodies, investors, producers, services providers, educational and research

institutions, financial institutions and other private and government institutions.

22

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC



• There is a need to identify the creative sub-sectors that actually dispose the

most or least advanced market intelligence and that consequently are the most

or least attractive for investors.

• A crucial point is the bond between new CCI business models and an

innovative use of ICT services.

23

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC



Conclusions of the “Investor’s Survey” (Taking the Pulse of Investors, traditional

and alternative Finance Sources in Financing the CI) resulting from the CI-Factor

work ended in February 2013.

• 82% of the investors invest in ICT-based companies

• Thus, a thorough ICT understanding across the creative sector, is expected to

attract more investors to all creative sub-sectors.

• A challenge: to transfer knowledge through synergies between highly

innovative and less ICT-aware creative industries.

• The creative-sectors the least targeted for finance are: the performing

arts, architecture and crafts.

• Thus, its professionalization by the involvement of experienced and specialized

M&A consultants is crucial in order for cultural organizations to emerge with

new competitive and innovative business models .

24

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC



Conclusions of the “Investor’s Survey” (Taking the Pulse of Investors, traditional

and alternative Finance Sources in Financing the CI) resulting from the CI-Factor

work ended in February 2013.

• Investors show special interest for the following sub-sectors: Software,

Games, Advertising, Film/TV programming and Publishing.

• Investors find more interest in investing in start-ups.

• Conclusion: there is a particular need to encourage these companies to

become investment-ready from an early-stage.

25

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


Briefing on key issues and challenges on Access to Finance

• Opening generic financial schemes to Creative Industries SME and...

• More private initiatives offering a better access to finance to the

sector (awareness and training)

• Integrate innovation and multiply the impact of a relatively low

public funding (leverage effect)

• Internationalization of the creative sector (increase revenues

potential)

26

DES

EN

VO

LU

PA

MEN

T

EM

PR

ES

AR

IAL

ICEC


More information about ECIA’s WG on A2F:

Edgar Garcia (WP A2F Coordinator)

[email protected]

Laia Sanahuja (Project Coordinator)

[email protected]

Àlex Pi (ICEC’s Finance expert)

[email protected]

ECIA - Presentation by Edgar Garcia Casellas (Barcelona 6 juny 2013)

Economy & Finance