FASI: Funding Aid Strategies Investments

35 million euro from EIF and Invest-NL to October SME V fund

Photo credit: European Union, 2015- Photographer: Christophe MaoutThe European Investment Fund (EIF) and Dutch impact investor Invest-NL are going to finance the European SME lending platform October, to support the debt fund October SME V, for the growth of European small businesses.

October is a pan-European FinTech with a mission to finance businesses in a better way. As the number one SME lending platform in continental Europe, it allows private lenders and institutional investors to directly finance SMEs. Located in Paris, Madrid, Milan, Amsterdam and Monaco, during the last 8 years, October has lent more than 965 million euros to 3,800 European SMEs.

How October SME V is financed

This is the fourth commitment by the EIF in an SME fund managed by October, after supporting the SME II, III and IV funds. The financing, which worth 35 million euros, is split up among EIF and Invest-NL:

  • EIF is committing €20 million backed by an EU budget guarantee via InvestEU, the European Union with long-term funding by leveraging substantial private and public funds, supporting investments in line with EU policy priorities, such as the European Green Deal, the digital transition and small businesses;
  • Invest-NL, – the Netherlands' main national promotional institution (NPI), held by the Dutch Ministry of Finance which focuses on sustainable and economic investments – is investing €15 million in the October SME V fund under the Dutch Alternative Credit Instrument (DACI) mandate. DACI is a “fund of funds” which invests in both selective and diversified debt funds, aiming to provide access to alternative sources of financing for Dutch small businesses.

The EIF's funding enabled the October SME V fund to reach €100 million in total commitments following its launch in September 2022. This marks a successful closing for the fund, October's first vehicle to be labelled Article 8 SFDR (Sustainable Finance Disclosure Regulation), a fund promoting Environmental, Social, and Governance, ESG, characteristics.

The EIF's commitment is a renewed sign of trust in October's capacity to efficiently deliver on the mission it shares with the European Investment fund: providing essential, simple and accessible financing to support the growth of European small businesses by providing an alternative source of financing.

The functioning of October SME V

The October SME V fund is expected to grant over 3,000 loans to European small businesses, targeting a total of €400 million in lending over the next two years. It will attract additional public and private investors into the fund, which will target small businesses in France, the Netherlands, Italy, Germany and Spain in more than 15 different sectors. Loan amounts will range from €10.000 to €2 million, with an expected average size of €130.000.

The fund has a unique return profile, addressing borrowers in the lower end of the market, while offering attractive returns to investors. With a short duration, monthly distributions and pricing reviewed on a monthly basis, all measures are taken to best protect investors and their returns against inflation.

“The money we make available for SMEs safeguards and creates many jobs, making the EIF's role in the European economy an important one. I'm glad that the EIF can again partner with October to support small and medium-sized companies with alternative financing”, said Marjut Falkstedt, Chief Executive of the European Investment Fund.