1. Financial Instruments for Innovative SMEs in Bulgaria 1 Sofia, 30 th October 2014

2. EIF activity - key figures 2 “ ” We are the prime provider of SME financing in Europe Equity 2013 commitments: EUR 1.4bn which mobilised EUR 7.1bn 480 venture and growth funds 306 banks, guarantee and promotional institutions 27 funds-of-funds and holding funds Guarantees & securitisation 2013 commitments: EUR 1.8bn which mobilised EUR 8.6bn Microfinance 2013 commitments EUR 53.8m which mobilised EUR 201m EUR 13.5bn in total outstanding commitments mobilise EUR 79bn

3. Instruments tailored at each stage 3 SME Development Stages PRE-SEED PHASESEED PHASESTART-UP PHASEEMERGING GROWTHDEVELOPMENT HIGHER RISKLOWER RISK Public Stock Markets Business Angels, Technology Transfer MicrocreditVC Seed & Early Stage Portfolio Guarantees & Credit Enhancement Formal VC Funds & Mezzanine Funds

4. EIF-managed Fund-of-Funds and Holding Funds across Europe 4 Fund-of-Fund Activity UK FTF: GBP 200m ERP (DE): EUR 1000m LFA-EIF (DE): EUR 50m Dahlia (FR): EUR 300m NEOTEC (SP): EUR 183m PVCi (PT): EUR 111m iVCi (TR): EUR 160m Future initiatives LFF (LU): EUR 150m BIF (LT,LV,EE): EUR100m DVI (NL): EUR 150m PGFF (PL): EUR 90m Holding Funds Supported by Structural Funds (JEREMIE) BULGARIA: EUR 349m CALABRIA (I): EUR 45m CAMPANIA (I): EUR 90m CYPRUS: EUR 20m EXTREMADURA (ES) : EUR 10m GREECE: EUR 250m LANGUEDOC ROUSSILLON (FR): EUR 30m LITHUANIA: EUR 67.1m ROMANIA: EUR 150m MALTA: EUR 10m PACA (FR): EUR 20m SLOVAKIA: EUR 100m SICILY (I): EUR 60m SICILY ESF (I): EUR 15m

5. JEREMIE Equity and Debt Portfolio in Bulgaria 5 Venture Capital Fund Co- investment Funds First Loss Portfolio Guarantee Financial Instruments Early stage Mature stage Private funds - investors OP Competitiveness (JEREMIE) 21 M EUR 60 M EUR 400 M EUR Seed funds 21 M EUR Portfolio Risk Sharing Loans 301 M EUR

6. JEREMIE Start-Up Funds in Bulgaria 6 Pool of mentors Investment Committee Acceleration Compartment Seed Compartment Acceleration and Seed Fund Fund Manager (1% own capital contribution) Start-ups Pre-seed Seed A dedicated facility two-compartment structure; Due to the very high risk no private support could be expected at the facility level; Investment limit capped at EUR 200k to allow private investor contribution in follow-on rounds Opened to entrepreneurs from the region to create competition and collaboration across the Balkans Key Highlights

7. Acceleration and Seed Funds - Process 7 Application Window Selection & Funding Incubation Graduation day SEED Portfolio ACCELERATION STAGE SEED STAGE  Application process: Fully online  Investment: EUR 25,000 – 50,000  Equity share: ~10%  Stage term: 3-12 months  Graduation Goal: Working prototype, beta version  Investment: up to EUR 200,000 (on aggregate)  Equity share: 30 - 49% (on aggregate)  Stage term: 12-24 months  Goal: Commercialization, internationalization External companies

8. JEREMIE in Bulgaria - Creating start-up ecosystem from scratch 8 Two acceleration & seed funds were created in Bulgaria in Q4/2012 with a total budget of EUR 21m. Two years later the developments are as follows: The NumbersThe Details More than 4,000 applications for funding mainly from BG but also from the entire Balkans; Investments in 146 start-up companies for a total of EUR 9m; 20-30% of start-ups are set-up by non-BG; EUR 6m invested as follow-on in 12 successful companies by BAs, VCs; Over 300 high-paid jobs created; More than 20 entrepreneurial conferences and workshops were held in BG for 2013 only The majority of start-ups are in the ICT, digital, engineering and med-tech sectors; Follow-on investors in the companies include Earlybird, TechStars, Y-combinator, Tim Draper; More than 20 of the companies are already revenue-generating, with one making EUR 600k for 2013 only; Employees are 2-4 per company on avg., with one having 20+ people on payroll; Regional VCs are now looking onto Bulgaria much more opportunistically;

9. JEREMIE in Bulgaria - Creating start-up ecosystem from scratch 9 City# startups in 2013 London255 Dublin237 Sofia92 Berlin87 Paris87 Brno73 Amsterdam49 Tallinn44 Barcelona42 For 2013, Sofia is the #3 accelerator capital in Europe after only London and Dublin, slightly ahead of more established startup hubs like Berlin and Paris; There are only three accelerators & seed funds that have invested in more startups than Eleven in 2013 and five that have invested in more startups than LAUNCHub; Sofia’s emerging place as start-up hotspot was not missed by reputable media like Wall Street Journal, Forbes Magazine, TechCrunch and etc;

10. JEREMIE Seed in Bulgaria – Success Story 10 Founded in Dec 2012 through the support of EUR 200k under JEREMIE, with 5 staff including founders; Tech heavy company with 2 patents (EU and US) in approval process; The application had 7m downloads and 1.2m regular users within months from inception; Quick market adoption and start of revenue generation – EUR 600k+ for 2013; Attracted the attention of reputable US VC investor – Tim Draper who invested USD 450k in the company as a business angel; Scaled operations and open sales office in San Fran from Q4/2013 to service USA; Turned down an acquisition offer from US cable operator for USD 10m (3x initial valuation) willing to buy the technology; Staff on payroll in Bulgaria grew to more than 20 people; Attracted the attention of big VC investors for Series A round – USD 2.5m from Earlybird, Turkish and Bulgarian business angels; Current company valuation in excess of USD 15m ;

11. New Instruments for 2014-2020: Tech Transfer Fund 11 OPIC Contribution Private Investors TT Facility EUR 30-50m Private Investors Min 90% of funding Up to 10% of funding Management fee Operational management TT Facility Manager Deal sourcing Expertise contribution University 1 University 2.. Tech Park 1 Science Lab 2.. Industry Contacts IP / patent experts Test Labs Corporates Patents Licenses Spin-offs Start-ups

12. Tech Transfer Facility (2) 12 Key Features:  Implement a dedicated facility to serve as a bridge between R&D / science and business, an area currently not adequately supported by public funds.  The Manager of the facility must possess a well-rounded skillset combining financial, industrial and scientific expertise as well as broad network in Bulgaria and abroad.  Could be fine-tuned to support industries and sectors set by State.  Dedicated solely to commercializing technology and innovations deriving from a pool of universities, research centers and tech parks thus fostering entrepreneurship in R&D and capital intensive businesses. Key Benefits:  Utilize an innovative market-oriented way way of “pushing” innovations to the commercial market.  Mobilizing private funding in an area currently perceived as “too risky” to be funded by the business.  Engagement and signaling effect of the corporate sector in providing expertise at very early stage usually perceived as “too early”.  Strengthening the R&D capacity in universities by providing a natural “next stage” to innovations developed in-house.

13. New Instruments for 2014-2020: SME Initiative 13 Private Investors Senior risk (EIB, third parties ) Mezzanine risk (EIF, EU Funds, ESIF) First Loss Piece (ESIF, originator) Retained by the originator Risk tranching EIF guarantee Guarantee Rate up to 80% Loan by Loan SME Loans Financial Intermediary (FI) Beneficiaries SME 1 SME 2 SME n Portfolio of SME Loans

14. The SME initiative (2) Key objectives Better access to finance for SMEs through capital relief, loss protection and liquidity Increased multiplier on public budget through participation of EIB/EIF and private sector Reduction of financial markets fragmentation. Two risk-sharing instruments endorsed by the European Council: 1.Guarantee facility for portfolios of new SME loans; 2.Securitisation instrument for portfolios of both new and existing SME loans ; Eligible assets: SME Loans, leasing and guarantees. Restructured loans should be excluded, no refinancing permitted. Key area of intervention Reduction of collateral requirements for new SME loans Reduction of risk-related interest margins; Unlocking long-term lending – up to 10yrs 14