Invest-NL: a new method of investing in the Netherlands?
On 12 December 2019, Invest-NL N.V. (Invest-NL) was incorporated by the Dutch minister of finance (minister van Financiën) and on 16 January 2020 Invest-NL was launched. As of 16 January, the activities of Invest-NL are being developed and Invest-NL is able to invest in projects and companies which are working on solutions regarding social transition issues (maatschappelijke transitieopgaven) and the growth of SMEs and start- and scale-ups (said the Dutch minister of economic affairs and climate (minister van Economische Zaken en Klimaat) in a letter dated 16 January 2020)
In this newsletter, we will discuss the background of Invest-NL and the current conditions of funding provided by Invest-NL.
On 4 December 2019, the Authorisation Act incorporation Invest-NL (Machtigingswet oprichting Invest-NL, the Authorisation Act) has come into effect. The Authorisation Act lists – amongst others – the purpose and duties of Invest-NL. In addition, as per 31 December 2019, the Dutch Investment Agency (Nederlandse Investerings Agentschap) ceased to exist and merged into Invest-NL.
From the Authorisation Act it follows that Invest-NL has the purpose to contribute to the financing and realisation of social transition issues by companies and to provide access to corporate finance in the event the market does not provide for sufficient funding. In this regard, Invest-NL focusses on investments which contribute to the acceleration of the energy transition and/or the acceleration of the growth of innovative start- and scale-ups with a high impact potential. Although Invest-NL is part of the market, it is not intended for Invest-NL tp compete with other financing parties. Invest-NL will only act if other parties are not willing to finance (whether in whole or in part) the project/company.
Duties of Invest-NL
From the Authorisation Act it follows that Invest-NL has various duties. For example, Invest-NL has the duty to support initiatives and companies with the development of projects which e.g. contribute to the solutions for Dutch social transition issues. In addition, Invest-NL can be authorised to execute certain grants (subsidies) on behalf of a certain ministries or to exercise certain shareholders’ rights on behalf of the State of the Netherlands. Invest-NL also has the duty to finance certain projects/companies.
Current conditions of funding provided by Invest-NL
In order to qualify for funding provided by Invest-NL, the project/company should in any case meet the following conditions:
- the project/company should match with the purposes of Invest-NL;
- there should be a clear business plan which demonstrates the viability of the project/company;
- there should be a qualified and motivated management team;
- at least 50% of the total funding amount should be provided by other professional financing parties;
- full financing cannot be achieved via regular financing channels;
- the total funding amount (including the funding amounts provided by other financing parties) should be more than EUR 10 million; and
- funding in relation to technological developments should be used for the development towards the “demonstration” and “deployment” phases.
Funding by Invest-NL can be provided by way of a participation (in which case Invest-NL will acquire a minority interest) or by way of a (subordinated) loan. In the event of a participation, it is important that the entrepreneur/management also participates in the project by providing capital. In the event of a loan, the duration thereof will reflect the need and aim of the funding and various options in relation to security, repayment schedules and option structures may apply.
Corporate social responsibility (maatschappelijk verantwoord ondernemen) and the sustainability and innovation of the Netherlands are part of the Invest-NL’s objectives. In this regard, Invest-NL has drawn up exclusion criteria and has taken precautionary measures in order to prevent any (direct or indirect) undesired side effects of funding provided by Invest-NL. For example, Invest-NL does not engage in businesses or with parties involved in corruption and Invest-NL does not support projects which are focused on non-sustainable energy which do not form an intermediary step in the development of a more sustainable energy system. In addition, any situation in which there is unauthorized state aid (ongeoorloofde staatssteun) is not allowed..
Currently, Invest-NL offers a quickscan on its website which can be used to assess whether a project/company qualifies for funding provided by Invest-NL.