On 30th October 30, in Rabat, Caisse Centrale de Garantie (CCG), in partnership with a number of domestic and overseas institutions from the public and private sectors, launched the Innov Invest Fund (FII).
As its name suggests, this fund will specialise in financing start-ups and other newly-formed companies focusing on innovation.
In the following interview, Mr Hicham Zanati Serghini, Caisse Centrale de Garantie’s Chief Executive Officer, explains to our readers the aims of the Innov Invest Fund and why it is strategically important.
La Nouvelle Tribune:
Mr Serghini, Caisse Centrale de Garantie (CCG), of which you are the Chief Executive Officer, organised a ceremony on Monday 30th October in Rabat to launch the Innov Invest Fund, which will specialise in financing innovation. Please would you explain to our readers the process by which you will be supporting innovation and how much will be allocated to this fund?
Mr Hicham Zanati Serghini:
First, allow me to remind you that the Innov Invest Fund (FII) offers innovative financing opportunities to entrepreneurs and innovative start-ups.
In doing so, it ensures a continuum in the financing chain by providing seed capital and funding innovation.
On 30th October, Mr Mohammed Boussaïd, Minister of the Economy and Finance and Chairman of CCG’s Board of Directors, launched the main components of this Fund by approving the 6 institutions making up its ecosystem and structuring the 4 seed capital investment funds.
The approved institutions are App Editor, Solar Cluster, Impact Lab, Morocco R & D, Maroc Entreprendre Network and Start-up Morocco. These 6 institutions were selected at the end of a comprehensive selection process mainly on the basis of their ability to identify innovative entrepreneurs and ideas as well as being able to support them financially via two finance vehicles that we will be making available to them.
The first such vehicle is Innov Idea which will provide funding of up to MAD 100,000 for one young entrepreneur selected by the approved entity. This type of financial aid is intended to demonstrate the potential and feasibility of the innovative project. The maximum threshold will be doubled for projects involving two or more partners.
The second vehicle, Innov Start, is an interest-free unsecured loan, intended for entrepreneurs or newly-formed companies identified by the approved entity.
The amount provided will be capped at MAD 250,000 or MAD 500,000, depending on whether the project involves one or more candidates. These unsecured loans are intended to demonstrate the potential and the feasibility of the innovative idea.
Four new investment funds have been structured for the seed capital, early-stage and venture capital financing stages.
The funds in question are Azur Innovation, Seaf Morocco Growth Fund, Green Innov Invest and Maroc Numeric Fund II. The first two are managed by asset management companies selected by the CCG at the end of a comprehensive selection process with the aim of raising private capital within the framework of Public-Private Seed Funds.
The other two funds are initiatives by private investors which are stakeholders alongside us. These four funds have managed to raise MAD 700 million, including MAD 300 million from the Innov Invest Fund.
The launch of the Innov Invest Fund is underpinned by agreements between the promoters, the management companies and private investors. Can you explain to our readers how this mechanism for financing innovative projects has been structured?
The underlying principle in structuring the seed capital investment funds is to raise, in addition to public sector capital from the FII, additional capital from the private sector.
The total funds raised, amounting to MAD 700 million, are managed by professional asset management companies in accordance with a clearly defined investment strategy and an agreed governance framework. The aim of these management companies is not only to acquire stakes in innovative start-ups, but also to provide, among other things, strategic advice and business development support as well as bolstering the start-up’s business model.
How does an institution get to be approved? Is it sufficient that it is already an existing member of an approved eco-system such as those in the automotive or aeronautics industries?
There is a selection process to approve those entities providing support based on a set of criteria that specify all the necessary pre-requisites.
I would just like to point out that the CCG is planning to begin the process of approving the second tranche of institutions to ensure that a mature and viable ecosystem develops.
Mr Serghini, why has such a major project for financing innovation been restricted to just 4 funds and 3 institutional investors? Shouldn’t it be open to all institutions within the industry so as to maximise the impact?
Today, the current supply of private equity is largely focused on companies in the development phase and generally does not cover the initial stages of the life cycle of innovative projects.
Thanks to the FII, the 4 structured investment funds are exclusively dedicated to seed capital. An agreement was reached between the project’s stakeholders to select 4 funds, given the current size of the market and its potential.
As far as institutional investors are concerned, we must first and foremost pay tribute to them and to the staff of the management companies who managed to convince them to join us. These asset management companies have told us that other institutional investors, domestic as well as international, are interested in becoming stakeholders in this seed fund.
What role has the World Bank played in establishing the Innov Invest Fund? Similarly, what undertakings have been given by the three private sector investors, BMCE Bank, the AfDB and, in particular, the international investor, SEAF, which specialises in financing growth companies in emerging countries?
The World Bank’s involvement is in financing the FII via a USD 50 million loan to the Moroccan State. The World Bank, together with staff at the Treasury Division, the AMIC and other stakeholders, has also been involved in structuring the Innov Invest Fund.
As far as domestic and foreign private investors are concerned, they are committed, alongside the CCG via the FII, to raising capital for the four seed capital investment funds. The goal of these funds is to acquire stakes in innovative start-ups during their early phase, thereby filling the funding gap that exists for this category of company.
In this final question, please could you tell us more about the SEAF, the Small Companies Assistance Funds. Is it a member of the World Bank Group, does it already have operations in Morocco and what specific role will it play in the Innov Invest fund?
SEAF is a global investment firm that is committed to investing in the SEAF Morocco Growth Fund alongside other investors. It has a proven track record in this area and will provide a high level of added value to ensure that this Fund is successful.
SEAF is also committed, like the other investors involved in this initiative, to offering the Fund its know-how and expertise in entrepreneurship and innovation in emerging countries, among other things.
Interview conducted by Afifa Dassouli
Original article : https://lnt.ma/fonds-innov-invest-accompagner-lecosysteme-projets-innovants/