Europe is home to many promising emerging tech companies in the fields of smart cities, automation, cybersecurity, language, and machine learning – all of which increasingly rely on AI and distributed ledger technologies. As the Internal Market Commissioner, Thierry Breton said: “Europe needs more investments in highly innovative digital companies. I welcome the collaboration with the EIF which resulted in the first EU-wide investment fund to support the incubation and scale-up of highly innovative AI and blockchain technologies.”
In the last week of October 2020, the EU Commission and the European Investment Fund (EIF) announced the first agreements for investments made in six venture capital funds under the InnovFin Artificial Intelligence and Blockchain pilot. It is expected that the beneficiary funds from Austria, Finland, Germany, Luxembourg, and the Netherlands will bring €700m to AI and blockchain companies across Europe. The six funds – 42CAP III, Dawn Capital IV SCSp, Fly Ventures Fund II, HenQ 4 Fund Cooperatief, Open Ocean Fund 2020, and Speedinvest III EuVECA, will use the finance to support early and growth-stage companies.
How will the funds be allocated and who will be eligible?
The initiative of the European Investment Fund (EIF) and the European Commission makes additional resources, under the European Fund for Strategic Investments (EFSI) and the new InnovFin AI and Blockchain pilot, available. Private equity and venture capital fund managers, as well as business angels, will have the opportunity to use the funds to undertake investments in companies specializing in B2B software, data/analytics, IoT, Smart Cities, automation, language and machine learning, Saas, Fintech, cybersecurity, and the future of work. The allocation of resources will be decided on a first-come-first-assess basis depending on the merits of the investment proposal.
Due to the strong market demand for capital investments, most of the initially allocated €100m risk-sharing resource under the InnovFin AI/BT project has already been committed. The next investment pipeline is expected to set out by the end of 2020 or at the beginning of 2021.
The impact on the Bulgarian blockchain ecosystem
“It is great the European Union realizes that AI and blockchain are the technologies of tomorrow with the greatest potential to bring disruption across many industries. With such a big investment of €700m, we expect positive developments both in the local and in the wider regional ecosystem,” highlights Vladislav Dramaliev, founder and director of BitHope Foundation – the first bitcoin crowdfunding platform in Europe. According to him, the importance of the InnovFin pilot comes from the fact that it specifically targets the development of AI and blockchain technologies, unlike previous EU initiatives and funds that have supported technological development in the wider sense. “So far, there have been many programs in support of innovations but they have had a broad spectrum of focus, while now the EU is focusing concretely to boost ledger and AI technologies,” adds Dramaliev.
Regarding the trends of funding in the Bulgarian blockchain ecosystem, he explains that local companies rely mostly on receiving investments from foreign VCs with a specific focus on funding blockchain solutions as well as from cryptocurrency crowdfunding platforms. “In all cases, the fact that regional funds will have access to more EU money instead of having to raise capital themselves, means that VCs will be more generous in allocating funds for AI and blockchain innovations,” concludes Dramaliev.