Cristina Dumitrescu, European Investment Fund: EIF role in supporting the social economy

Cristina Dumitrescu, Senior Investment Manager, European Investment Fund (EIF) spoke at Enterprising for Tomorrow 2024 conference about the role and impact of the EIF in supporting the social economy, particularly through financial and guarantee products aimed at micro, small, and medium-sized enterprises, including social enterprises.

“We have mobilized over 5-6 billion euros in guarantees and financing products, supporting around 2,600 micro and social enterprises in Europe.”

Cristina Dumitrescu, Senior Investment Manager, European Investment Fund (EIF)

Discussion Highlights

  1. Role of the European Investment Fund (EIF):
    • The EIF is a European institution that assumes the risk to facilitate access to finance for European SMEs (small and medium-sized enterprises), including micro-enterprises, social enterprises, and startups.
  2. Products and Services:
    • The EIF operates two main lines of business: financial products (loans and guarantees) and equity products (investments in funds).
  3. History and Impact:
    • The first financial products dedicated to financial and social inclusion were launched in 2010 under the Progress Microfinance program, targeting micro-enterprises created by vulnerable groups such as the unemployed, women, youth, and seniors.
    • Subsequent programs include the Easy program and the InvestEU program, which have significantly contributed to the social economy.
  4. Achievements:
    • Over the past 15 years, the EIF has mobilized over 5-6 billion euros in guarantees and financing products, supporting around 2,600 micro and social enterprises across Europe.
    • Notably, 70-75% of these enterprises received their first credit through these products, highlighting the impact on financial inclusion.
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Cyril Gouiffès, European Investment Fund: Equity products in supporting social impact ventures

Cyril Gouiffès, Head of Social Impact Unit, European Investment Fund (EIF) spoke at Enterprising for Tomorrow 2024 conference about the role of equity products in supporting social impact ventures and how these products complement debt and guarantee products.

Discussion Highlights

  1. Equity Investment for Social Impact:
    • The speaker emphasized that the role of EIF is to invest in funds that target startups with a social impact strategy. These are not just any venture capital funds, but those with a strict measurement of impact.
    • Equity investments differ from microfinance or non-bank financial institutions as they do not have restrictions on the amount of turnover for the companies they finance.
  2. Growth and Market Size:
    • The speaker highlighted the growth of the market over the years. For instance, in 2014, the total social impact investment was 10 million euros in one fund, whereas last year, it grew to 700 million euros across several funds.
  3. Challenges and Opportunities in Romania:
    • Despite active investments in Europe since 2013, the speaker notes the lack of investment in Romanian social impact funds. This is not due to rejection but because they have received very few proposals from Romania over the past decade.
  4. Accountability and Measurement of Impact:
    • The speaker stresses that social finance must not only report on social impact but also be accountable for the impact performance. This involves strict measurement and ensuring that investments truly add social value.

“Back in 2014, the total amount of social impact investment within that 1 billion euros was 10 million euros in one single fund. Last year, the total investment volume of the equity team amounted to 3 billion euros, with 700 million euros focused on social impact.”

“We have to date no investment in Romania… it’s still a bit of a mystery why in these 10 years we have not managed to be able to invest in a Romanian social impact fund.”

“Social finance will strive and flourish if and only if it can be very strong on its social value add. It is not enough to report on social impact; entrepreneurs, investors, intermediaries, and ourselves have to be accountable for the impact performance.”

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