October has secured a €30 million commitment from the European Investment Fund (EIF) and the Dutch impact investor Invest-NL in the context of the European Guarantee Fund (EGF) and the Dutch Alternative Credit Instrument mandates. Invest-NL invests €10 million in the October SME IV fund, EIF invests €20 million. The fund, which has now reached a size of €215 million, is dedicated to supporting the growth of European SMEs.
First investment Invest-NL under DACI initiative
The investment of Invest-NL and the EIF takes place in the context of the Dutch Alternative Credit Instrument (DACI) initiative, recently launched by the Dutch government, Invest-NL and the EIF. DACI is a fund of funds investing in debt funds with the aim of providing access to alternative sources of financing for Dutch SMEs, chiefly via non-bank financiers. This investment is Invest-NL’s first one under the DACI initiative for the benefit of Dutch SMEs.
Luuc Mannaerts, CEO of October Netherlands, speaks of a pivotal and much-needed development for Dutch small and medium sized enterprises: “The investment of these two parties shows confidence in October and our technology. SMEs need a simple financing process and investors are looking for the right channel to lend money. October’s platform brings these two needs together and enriches the funding landscape for European SMEs. As the first Dutch institutional investor of October, Invest-NL sets an example for other large institutions.”
First major Dutch investor for October
The October SME IV fund is the fourth generation of October diversified SME debt funds. The fund offers institutional investors direct exposure to a portfolio of loans granted to businesses in France, Italy, Spain, the Netherlands and Germany. Invest-NL is the first major Dutch impact investor joining a community of renowned institutions spanning across the entirety of Europe, including the French investment bank Bpifrance and the French insurance company CNP Assurances, the Italian Cassa Depositi e Prestiti (CDP) and the Spanish Instituto de Crédito Oficial (ICO).
Wouter Bos, CEO of Invest-NL added: “This first investment by Invest-NL via the DACI initiative marks the importance of providing financial solutions to Dutch SMEs supporting them to grow their businesses. Straightforward financing processes enabled by the technology platform of October secure access to capital that is much needed by smaller companies in the Netherlands.”
Alain Godard, EIF chief executive, welcomes Europe’s involvement in the October SME IV fund: “European SMEs need to be able to benefit from sources of financing that are both innovative and easy to access. This is what the European fintech October provides, as it has already financed many European SMEs and is one of the most promising financing technology platforms.”
Unique risk-return profile of the SME IV fund
With 590 projects financed to date for a total amount of EUR 154 million, the October SME IV fund offers investors a highly diversified and granular portfolio of loans with amounts ranging from €30,000 to €5 million. To date about 20% of the portfolio has been financed by October Nederland. The fund, whose investment period started back in March 2020, has a unique risk-return profile with a significant portion of the loans benefitting from an up-to-90% state guarantee in Italy, France and the Netherlands.