Discover how the European Angels Fund (EAF) is revolutionizing angel investing across Europe by fostering connections between Business Angels and innovative SMEs.
Introduction to Angel Investing
Angel investing plays a pivotal role in the startup ecosystem, providing essential early-stage funding to entrepreneurs. Business Angels not only offer capital but also bring invaluable expertise and networks to the table, accelerating the growth and success of emerging businesses.
What is the European Angels Fund (EAF)?
The European Angels Fund (EAF) is an initiative advised by the European Investment Fund (EIF) designed to enhance the investment capacity of Business Angels across Europe. With a current volume exceeding €800 million, EAF has committed over €330 million to more than 120 selected Business Angels, resulting in a portfolio of over 800 SME co-investments.
Geographic Reach
EAF operates extensively across Europe, offering dedicated national programs in:
- Austria
- Belgium (Flanders)
- Denmark
- Finland
- Germany
- Ireland
- Italy
- The Netherlands
- Spain
Additionally, EAF provides a pan-European allocation for Business Angels in other regions, promoting cross-border collaboration and establishing European Business Angels and Family Offices as attractive alternative asset classes.
How Does EAF Work?
Instead of handling investments on a deal-by-deal basis, EAF enters into long-term contractual relationships with Business Angels through Co-Investment Framework Agreements (CFAs). These agreements commit a predefined amount of equity for co-investments upfront, typically ranging between €250k and €5 million per CFA.
Key Features of EAF’s Approach
- Pari Passu Matching: EAF matches investments made by Business Angels on an equal basis, enhancing the investment power of individual Angels.
- Standardized Agreements: While CFAs are generally standardized for efficiency, they allow room for adaptation based on specific requirements such as timeframe, sector focus, and the number of investments.
- Cost Sharing: EAF shares investment-related costs on a pro-rata basis without charging management fees.
- Flexibility and Autonomy: Business Angels retain full decision-making authority and manage their investments independently, fostering a sense of ownership and responsibility.
Benefits for Business Angels
EAF offers a unique set of advantages tailored to the needs of Business Angels:
- Financial Support: Significant co-investment funding without the burden of management fees.
- Maximum Freedom: Business Angels maintain complete control over their investment decisions.
- Increased Upside: Carry payments from EAF enhance the potential returns on investments.
- Expertise and Network Access: Access to EIF’s extensive experience and network in venture capital.
Who Can Be Financed?
EAF targets innovative SMEs across all sectors and development stages, including:
- Seed Stage
- Early Stage
- Expansion Stage
Investments are primarily focused on new initiatives by Business Angels, ensuring fresh and high-potential opportunities are continuously supported.
Regulatory Compliance and Sustainability
EAF adheres to the Regulation (EU) 2019/2088 (SFDR), ensuring responsible investment practices. The fund excludes sectors that may have significant negative social, governance, or environmental impacts, aligning with EIF’s Environmental, Social, and Corporate Governance (ESG) principles.
The Future of EAF and Oriel IPO
As the UK startup ecosystem evolves, platforms like Oriel IPO are poised to complement initiatives like EAF. Launched in early 2024, Oriel IPO is an innovative online investment marketplace that connects UK startups with investors through SEIS/EIS tax incentives. By eliminating commission fees and providing educational resources, Oriel IPO aims to democratize investment opportunities and foster robust relationships between entrepreneurs and angel investors.
Conclusion
The European Angels Fund (EAF) is a cornerstone in the European angel investing landscape, providing the necessary financial support and flexibility for Business Angels to thrive. By fostering cross-border collaborations and maintaining a strong commitment to sustainability and regulatory compliance, EAF is paving the way for a vibrant and dynamic startup ecosystem across Europe.
Are you ready to take your investment journey to the next level? Join Oriel IPO today and connect with a network of innovative startups and dedicated angel investors.
