Equity Investment Fund Small Enterprises

closed

The project's general objective is to spur the growth of small enterprises (SEs) outside the Metropolitan Region, introducing an investment finance and managerial support instrument to the market. Specific objectives are to: (i) set up a venture capital fund and (ii) disseminate the concept of venture capital and help create an enabling environment for development of the venture capital industry. The project has two components. The first would establish a Santiago-based venture capital fund styled Negocios Regionales to invest in small and mid-sized enterprises in Chile, outside the Metropolitan Region. Negocios Regionales is a closed-end investment company to be set up for 10 years, regulated by Law 18,815 as most recently amended (congressional approval of recent proposed changes is expected this year). The Fund will be managed by a specialized company, FCMI Administradora de Fondos No Regulados S.A. The MIF investment will leverage other Fund investments in small companies, defined as those having fewer than 100 employees and under US$5 million in sales and assets. Though the proposed structure for the Fund may appear to be quite traditional, the MIF's involvement is justified by a number of innovative features and higher risks: targeting of the regions, not including the Metropolitan Area; the SE target market and channeling of private funds to these businesses; and the management company, a pooling of professional venture capitalists, a corporate management and restructuring expert, and a technology development agency, Fundación Chile. Comprising the second component -fostering a dialogue on small-business finance- will be a number of technical studies on Chile's venture capital industry and market constraints, and an analysis of key issues relating to SEs' access to the capital market. A workshop is planned as a forum for high-level technical discussions, with foreign experts participating, to launch a constructive dialogue between the public, private, and financial sectors and the academic community. This project will pave the way for a larger conference at which the key issues in the aforementioned exchange of views will be presented and open discussion will be encouraged. This will also be an opportunity to report on progress in the Negocios Regionales Fund.