SERBIA VENTURES PROGRAM
The program is designed to incentivize private investors, high net worth individuals and institutions to engage in financing startups with high growth potential by incorporating venture capital funds in Serbia.
This is not necessary at the time of applying. In order to apply, the Applicant needs to be registered at the SBRA in the legal form of a limited liability company or joint stock company, without any specific requirements regarding the company’s industry code. In order for the Applicant to ultimately receive the funds from IF under this program, the Applicant must be fully registered and licensed by the Securities and Exchange Commission and SBRA as an alternative investment fund managing company and then incorporate and license their venture capital fund.
There isn’t a formally set minimum amount, while the maximum amount the IF can award per each winner is 5M EUR. This amount is based both on the figure which the Applicant requests from the IF and which the IF finally approves following the evaluation phase for each Application.
The program doesn’t stipulate a minimum amount of funds needed to set up a VC fund. The Applicant needs to demonstrate that their proposed fund size, whatever that may be, can operate in an efficient and sustainable manner which can provide a good return on investment for all partners in the VC fund.
No. According to Serbian Company Law regulations, a subsidiary or a branch does not have the status of a legal entity and thus doesn’t meet the corresponding eligibility criterion relating to this aspect of the program.
At least 150% of the amount which the IF invests into the Awardee’s VC fund must be allocated for initial and follow-on investments in seed and series A startups in Serbia. This includes investing into entities which the recipient of the investment (the Serbian startup) has incorporated in other geographies for practical fundraising reasons (e.g., a company founded in Delaware, USA, whose ultimate owners are the same owners as those of the Serbian startup entity whose value proposition the venture fund plans to invest in). The rationale is that the funds may be deployed by the VC fund to the startup’s US entity to stimulate further fundraising, while the US entity will transfer the funds to Serbia to fuel the startup’s operations.
The IF will hire an independent three-member investment commission in the form of professionals with international knowledge and rich practical experience in the venture capital industry.
The program doesn’t have a formal definition of the key LP or anchor investor.
The company which applies for this program, and whose application is approved for funding, must become the alternative investment fund managing company licensed in Serbia and then it must incorporate and license a venture capital fund in Serbia in order to ultimately receive the funds from the IF. The Applicant could theoretically take on additional co-owners in its structure and can manage several AIFs in line with the appropriate legal frameworks and requirements.
No. The company which applies for the program must become the alternative investment fund managing company. It is not possible to set up a different company to implement the program.
No. This registration is done before the signing of the financing agreement, after the IF notifies the Applicant that their application has been approved for funding.
The IF distributes the funds based on capital calls made by the alternative investment fund managing company, in line with the dynamics and conditions set out in the LPA.
No. One Applicant can only receive financing for one VC fund through this program.
No. The program requires that the Awardee sets up a venture capital fund as a legal entity.
No. Commitments from LPs will be ultimately defined through the limited partnership agreement between the respective managers and financiers of the fund. The IF doesn’t insist on a specific type of commitment and allows for different types of commitments to be secured in the application phase (letters of intent, correspondence, etc.).
The alternative investment fund managing company’s contribution must represent at least 1% of total capital raised.
The IF doesn’t have a predefined hurdle rate within the structure of the program. The Applicant needs to propose a hurdle rate for their fund and justify this rationale. The hurdle rate differs based on the industry which the VC fund plans to compete in and its associated risks, especially since there are various strategic industries and fields of interest.
This will be ultimately decided among all the partners through the corresponding partnership agreements, but the general attitude of the IF is to use the pari-passu approach.
The Law on Alternative Investment Funds does not define the master-feeder relationship. If the structure proposed in the Application includes decision-making and resource-sharing with an outside venture capital fund or alternative investment fund managing company in a way that can be perceived as a master-feeder relationship, the Applicant needs to demonstrate the ability of the alternative investment fund managing company and the venture capital fund which are to be founded in Serbia to operate in an independent and sustainable fashion.
The program doesn’t have any specific requirements in this regard.
Yes, this is possible. The contribution could come from selected founders of the alternative investment fund managing company.