Information about State aid

As a public provider of financing, Finnvera must take the EU rules on State aid into account when making financing decisions.

Before March 2009, investments made by Seed Fund Vera were either subject to de minimis rules or were made on market terms. De minimis rules restricted the Fund’s operations to the extent that Finnvera together with the Ministry of Employment and the Economy, drew up a proposal on a new mode of operations for the Fund. A notification of the proposal was submitted to the European Commission, which approved the proposal in February 2009.

More information about De minimis

Terms of the notification

The notification sets certain terms on investment activities. In cases where Seed Fund Vera is the only initial investor, Vera’s investment can be at most 500,000 euros. If Seed Fund Vera makes further investments in the same company, the total sum of the initial and follow-up investments together may not exceed 1,500,000 euros. As was said, these maximum sums apply to cases where there are no other investors.

However, private investors are also sought regularly during investment rounds. If investments are made together with other investors (syndication), the total sum invested during a period of 12 months can be at most 1,500,000 euros.

Investments can only be made in small enterprises with fewer than 50 employees. A limit of 10 million euros has been set for the enterprise’s turnover and balance sheet total. However, one of these two limits may be exceeded.

Investments are not made in enterprises that are in difficulties.

A minimum of 70 per cent of Seed Fund Vera’s investments must be equity investments. The interest charged on loans follows the minimum interest rate determined by the EU.

Conditions for private capital

The notification sets certain conditions on the percentage of private capital, especially in the start-up and expansion stages. The seed stage does not have any specific requirements for private capital. The terms applied to investments made by private investors and by Seed Fund Vera must be treated pari passu, i.e. on an equal footing.

See the end of this page for more detailed descriptions of financing at the start-up, expansion and seed stages.

Start-up stage

Private capital must account for at least 30 per cent of investments made in assisted areas. Outside assisted areas, private capital must account for at least 50 per cent.

Private capital already existing in Seed Fund Vera is taken into account in these calculations.

Read more about assisted areas.

Expansion stage

When investments are made during the expansion stage, private capital must account for at least 30 per cent (in assisted areas) or 50 per cent (outside assisted areas) of the total investments made.

Private capital already existing in Seed Fund Vera is taken into account in these calculations.

Accumulation of aid

The maximum levels of other types of State aid are lowered by 50 per cent (20 per cent in assisted areas) for a period of three years starting from the Fund’s decision to make its initial investment. However, this deduction does not apply to support for R&D&I.

An enterprise applying for public support is responsible for reporting any other public support it may have received to the authorities that process the application.

The rule on the accumulation of aid affects, for instance, de minimis aid and the temporary support of 500,000 euros in situations where de minimis aid or the temporary support is granted simultaneously with Seed Fund Vera’s initial investment. This refers to the financing round during which the enterprise’s financing package has been compiled. It is generally considered that a period of 2–4 months constitutes one financing round.

Definitions of the various stages in the enterprise’s life-cycle

Financing granted for the seed stage = Financing intended for exploring, assessing and developing a preliminary business idea before the start-up stage. The enterprise does not yet have any commercial sales proper.

Financing granted for the start-up stage = Financing for product development and initial marketing for enterprises that have not yet sold their products or services commercially and do not yet make a profit.

Financing granted for the expansion stage = Financing intended for the growth and expansion of the enterprise irrespective of whether the enterprise makes a profit. The financing is meant for increasing production capacity, for developing markets or products, or for acquiring more working capital.