Seen on Bulgaria OnAir: Bulgaria leads Europe by seed investments in 2014
NEVEQ II is a venture capital fund which manages EUR 20 million. 70% of the funds come from EU's JEREMIE program, with the European Investment Fund (EIF) acts as limited partner. Private investors subscribed the remaining 30%. The fund structure is a regulated Luxembourg company, allowing private investors to access 100% of the Fund's profits, after all investors have received distribution of the entire capital commitment, plus a hurdle rate. The investment mandate of the second fund managed by NEVEQ Capital Partners requires either 50% of the revenue to be generated in Bulgaria or 50% of the assets to be based locally. This is good for the Bulgarian market but may limit the return on investment for investors, according to Pavel Ezekiev. Such investment mandate may have have become an obstacle but with the support of EIF, NEVEQ's investment team identified and applied to its investments a holding structure, which allowed the Fund to back entrepreneurs globally and co-invest with other funds. Together, NEVEQ and its investors are now able to target investment returns which are not limited by addressing only the domestic demand.
Private investors have challenging requirements for their return on investment. In general, capital markets offer a return of 10-12% while top performing venture capital funds deliver above 25% in annualized return. Bulgaria was the leading country in terms of number of seed investments in Europe for 2014 and this volume now attracts interest of from new private investors and co-investors. Point Nine Capital, Earlybird and 3TS are present with direct investments, while Summit Partners made a spectacular $265m exit in 2014. Index Ventures and BlueRun Ventures backed local startups in the past. In 2014, NEVEQ raised a round from Lufthansa for Vayant, a travel distribution player.
Among NEVEQ's second fund investments is EnduroSat, a next generation nano satellites provider, offering low orbit surveillance services and enabling satellite service for new clients without the unbearable conventional satellite costs. According to Ezekiev, all NEVEQ investments already generate IP assets and local employment and can give a boost to the Bulgarian economy.
Natural resources and labor qualifications add to Bulgaria's “jewel” assets that could improve the competitiveness of the Bulgarian economy. Another bold idea of NEVEQ is an investment in cutting edge life science and medical technology businesses, such as medication based on medical cannabis and 3D printing based prosthetic solutions for leg amputees, addressing the global health care market. Tests have proved the medical properties of the product while Bulgarian legislation does not limit its quantity use either: for instance, growing, production of seeds, import and export of plants and seeds of cannabis containing less than 0,2 per cent of tetrahydrocannabinol.
There are favorable climate conditions for the product and group of scientists are elaborating the product, with support from Israeli partners. This idea strengthens Government's ability to promote the country’s competitive advantages and its potential to be a leading exporter in a given high value-added category. Ezekiev believes that such technology innovation would allow Bulgaria to single itself out in global markets.
Pavel Ezekiev also commented upon EU investment programs in the light of the “Junckerplan” and cash inflows by the ECB towards financial institutions. What is of importance to him is that the first projects should be suitable to generate success stories and that these funds should be used in a targeted manner.