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The EU4Digital Facility is working on the design of the EaP DISC (Digital Innovation and Scale-up Initiative) Capital Venture Fund to support high-tech start-ups in the Eastern partner countries.
The EaP DISC Capital design and action plan have been initiated, based on the results of the earlier finalised EU4Digital study on “Market Assessment for Digital Innovation and Scale-up Initiative (DISC) in Eastern partner countries”. The conclusions of the study confirmed the existing financing gaps for high tech start-ups and provided high-level recommendations for setting up a financial support facility and associated support programmes in the region. The study made it clear that local start-ups and ICT entrepreneurial ecosystems need more than financing to increase their growth and development opportunities. Thus, it is envisioned that in addition to finance, the EaP DISC Capital will educate start-ups and investors to increase the quality of business ideas and minimise the risk of investment deals. This might be done by empowering local incubators and accelerators, as well as establishing the links between local start-ups and private sector players regionally and internationally.
From the legal perspective it is planned that EaP DISC Capital will operate as an asset management company with an international administration board. From the financial side, the unified venture fund should be established under asset management company umbrella. Such a fund would ensure access to capital for the whole lifecycle of a start-up by the following funding programmes: Incubation (Subsidised Debt), Acceleration (Seed Equity) and Internationalisation (Series A Equity). It is envisioned that equity investments at Seed and Series A stages might be co-invested with international and local investors (e.g. business angels, venture funds, banks, others).
Considering the fund’s regional approach, the challenge is to set up a clear criteria of business ideas and start-up’s evaluation, as well as the rules of centralised decision-making for investments. These are highly important to ensure that the benefits to be provided by the fund are equally accessible for start-ups from all six partner countries. Another important question is the selection of the centralised operational location of the fund, which is highly dependent on the venture fund’s and international investment’s frameworks of the six partner countries, as well as support of the local governments.
At the moment, the dedicated team of EU4Digital experts is working on the first draft of design and action plan for the implementation of EaP DISC Capital. After its finalisation, further discussion with selected stakeholders will proceed, and the necessary adjustments will be completed in the beginning of the upcoming year.
In parallel to EaP DISC Capital design, EU4Digital is preparing a guidebook with recommendations for ICT entrepreneurial ecosystems capacity building in the areas of access to knowledge, capital and market. The key recommendations are initially planned to be deployed under the EaP DISC Capital umbrella. Additional ones might be recommended as action plans for local capacity builders (accelerators, incubators, universities, international organisations, and others), based on each country’s priorities, implementation complexity and available resources.
The EaP DISC Capital design and ICT entrepreneurial ecosystem support guidebook are being designed in line with the proposal for the long-term policy objectives of the Eastern Partnership beyond 2020, in which the European Commission highlighted its plans to support the scaling up of highly innovative digital start-ups and scale-ups in the region through the extension of the Digital Innovation and Scale-up Initiative (DISC) to the Eastern partner countries.
Find out more:
Market Assessment for Digital Innovation and Scale-up Initiative (DISC) in Eastern partner countries
