RoBOOST - new financing mechanism for companies

Start-ups, SMEs and companies in expansion will benefit from easier access to capital, after the Investment and Development Bank (IDB), founded under the National Recovery and Resilience Plan, and the European Investment Fund (EIF) signed the Memorandum of Understanding that lays the foundations for the future fund of funds, an instrument considered by the authorities to be a first for the Romanian investment market. The new initiative, called RoBOOST, marks one of the most important changes in the way the Romanian state intends to support the business environment, moving from the model based exclusively on grants and budgetary allocations to the use of financial instruments capable of attracting private and institutional investments. In the first stage, the Investment and Development Bank, mandated by the Romanian Government to implement the project, is considering a contribution of 100 million euros, an amount that would constitute the basis of a mechanism aimed at mobilizing additional capital from private investors and European financial institutions.

The signing of the Memorandum between the IDB and the European Investment Fund consolidates the strategic partnership built in recent years between the two institutions, following the collaborations carried out within the framework of the Innovation Fund of the Three Seas Initiative and the Infrastructure Fund of the same initiative. The authorities estimate that the new project will accelerate the development of the Investment and Development Bank's expertise in managing investment funds and will contribute to the consolidation of the Romanian private equity and venture capital market, two segments considered essential for the financing of innovative companies and businesses with high growth potential.

The Minister of Finance, Alexandru Nazare, stated that RoBOOST represents a premiere for Romania and a project that he has supported since the conception phase, both through the dialogue with the European Investment Fund, the European Investment Bank and the President of the EIB, Nadia Calviño, and by developing the legislative framework that allows the Investment and Development Bank to participate in such investment vehicles.

"This fund is a first for Romania and a project that we initiated and supported from the beginning, both through dialogue with the European Investment Fund, the European Investment Bank and Nadia Calviño, President of the EIB, and by creating the legal framework that allows the Investment and Development Bank to initiate and participate in such investment vehicles,” said the Minister of Finance.

Alexandru Nazare believes that the new mechanism demonstrates the paradigm shift in the use of public resources, by focusing on financial instruments that multiply the impact of state capital.

"This mechanism shows that the Romanian state is starting to use the financial instruments at its disposal more intelligently: not just classic budgetary allocations, but public capital that mobilizes private and institutional capital for Romanian companies. Through RoBOOST, IDB consolidates its role as a national development bank, and Romania takes an important step in developing the private equity and venture capital market. In a volatile international economic context, we need modern mechanisms that direct financing to start-ups, SMEs, growing companies and strategic projects. It is a signal that Romania can build, together with European partners, investment instruments capable of supporting innovation, competitiveness and long-term economic growth", the minister stressed. The Investment and Development Bank will represent the Romanian state in the implementation of RoBOOST and intends to contribute 100 million euros to the development of the new fund of funds, in partnership with the European Investment Fund. However, the memorandum opens the prospect of a broader collaboration between the two institutions, including through Romania's participation in pan-European programs dedicated to advanced technologies, such as the European Tech Champions Initiative 2.0, but also in strategic areas such as defense and cybersecurity, through the DEF 2.0 program.

The General Director of the Investment and Development Bank, Raluca Nicolescu, states that the main objective of the new mechanism is to build a financial infrastructure capable of connecting capital more efficiently with Romanian companies in full growth.

"This partnership reflects the role of the IDB as a national development bank in building a more solid investment market in Romania. We are thus building the infrastructure through which capital can reach Romanian companies with growth potential more efficiently. For entrepreneurs, RoBOOST means access to financing adapted to the stages of business development, and for the Romanian economy it means a more mature, more predictable investment market, capable of supporting innovation, competitiveness and long-term development”, said Raluca Nicolescu.

According to the IDB representatives, RoBOOST is designed to mobilize both public capital and private investments, and will facilitate access to financing for start-ups, small and medium-sized enterprises, companies in expansion and development phases, as well as for major infrastructure projects. Among the areas that could benefit from financing are renewable energy and energy efficiency projects, sectors considered priority in the context of the economic transition and European decarbonization objectives.

For her part, the Executive Director of the European Investment Fund, Marjut Falkstedt, believes that the signing of the Memorandum represents both the continuation of a solid collaboration with Romania and the beginning of a new stage in the relationship with the Investment and Development Bank.

"The signing of this Memorandum of Understanding marks both a continuation of our long-standing collaboration with Romania and an important step forward in our partnership with the Investment and Development Bank. In partnership with the Government of Romania, the EIF has already supported approximately 30 funds equity to invest in Romania, contributing to record levels of investment and fundraising. We also support Romania's potential for integration into pan-European capital markets through programs such as the European Tech Champions Initiative 2.0. Together with the IDB, we aim to capitalize on this favorable moment and further support the development of the Romanian investment ecosystem,” said Marjut Falkstedt.

The model chosen for RoBOOST is that of a "fund of funds”, widely used in developed economies to multiply financial resources and stimulate private investment. Instead of investing directly in companies, the new mechanism will finance professional fund managers, who will select and invest in companies with growth potential. This model is designed to attract institutional investors, expand the financing capacity of investment funds and create a more mature and competitive ecosystem for Romanian entrepreneurship.