Romania’s First Regional Investment Fund for Business Acceleration, Ready for Launch

Romania’s first regional investment fund for business acceleration, an initiative of the West Regional Development Agency (WRDA / ADR Vest), is set to begin. The first stage of selecting the manager for the financial instrument dedicated to accelerating businesses has been initiated. The financing is provided through the West Regional Program 2021-2027.

The investment fund will support early-stage companies from the West part of Romania, through financing, technical and business mentorship, and access to technology and markets. The region of four counties around Timisoara has a thriving business environment, rich in corporates and a growing number of startup initiatives. To fuel further growth, ADR Vest has budgeted €14m over 5 years for three key stages: incubation, acceleration, and seed investments. Out of this, 11 million euros will be invested in early-stage companies, while up to 2.8 million euros will go to the fund administrator as a management fee.

The Fund Manager will be selected through a competitive negotiation procedure and will ensure the management of the fund. They will also contribute with own funds (minimum 2% on top of the ADR Vest-financed Fund) and attract third-party independent investors (minimum 9% on top).

“This is a very important moment for the entire West Region of Romania, because one of the pillars of our regional development policy in the current financial cycle is to finance and invest in early-stage companies that have a technological component. We are talking about the well-known business accelerators that have a ‘seed money’ component, and secondly, we are talking about venture capital funds. Our target is to have a unicorn in our region by 2027. To achieve this, we are planting seeds now, which we will nurture and grow in the coming years. This type of investment does exactly that – it helps the development of companies that have ideas and knowledge but lack resources, and this is where we step in to help them grow,” said Sorin Maxim, General Director of ADR Vest.

The financial instrument will be implemented in three stages:

1. Pre-acceleration stage, where the Fund Administrator will provide training, mentorship and support to individuals with innovative and feasible business ideas, aiming to develop these ideas at least to the MVP level (Minimum Viable Product). The goal is to develop a portfolio of SMEs that will enter the acceleration and development process.
2. Acceleration stage, which provides a combined support package including guidance, training, mentorship, and counseling, as well as financing through venture capital for the SMEs that have new business ideas in innovative, technology-driven sectors, with potential for development and international exposure.
3. Seed funding stage, which offers financing to SMEs that have already received initial funding in the acceleration stage and to other companies with rapid market development prospects, regardless of their previous acceleration entity.

By the end of 2029, ADR Vest aims for the Fund to support at least: 100 MVPs in the pre-acceleration stage, 40 SMEs in the acceleration stage, and 10 SMEs in the seed funding stage.

“There is a significant difference between the calls for SMEs launched in previous funding cycles and the one we are developing now. Firstly, we are not centering the financing on a company’s current capacity but on the business idea, on its market development potential, and, of course, on the technological component the idea brings or deploys. Moreover, it is very important that, besides the financing, they will get this mentorship package that the team managing the accelerator will provide to the company. Essentially, from the moment the process is initiated, they will receive assistance for marketing, technology, and financial development of the company —services that companies would otherwise have to purchase from the market,” added Sorin Maxim.

The selection of the Fund Manager is international, and the procedure has been published in the Official Journal of the European Union, here. The process will have two stages, and the deadline for submitting applications is September 16, 2024, at 15:00 EET / 14:00 CET.

More details can be accessed here.

Technical information about the program, its objectives, and the public procurement procedure can be found here.