Portugal’s Council of Ministers approves €55 million for the creation of a “paradigm changing” Social Innovation Fund to help finance startups and entrepreneurs.
The Social Innovation Fund (FIS) will finance initiatives of entrepreneurship and social innovation, within the framework of the Portugal Social Innovation Initiative.
Slated to be available in the third quarter of 2018, the FIS will receive €55 million of funds from both the European Social Fund and the State Budget, with only 15% coming out of the State Budget.
The Portugal Social Innovation Fund will operate in two areas, debt and equity.
The debt side will support guarantees for loans that “will allow more favorable financing conditions” for organizations that apply, according to Alameida.
The equity part is intended for capital and quasi-equity co-investment of Small and Medium Enterprises (SMEs) in conjunction with private investors.
Filipe Almeida, president of Portugal Inovação Social, told Diário de Notícias that this is a pioneering fund, since in Europe there are no similar ones guaranteed by the European Social Fund, and that it will “change the paradigm of social projects.”
Almeida went on to say that the FIS will be the only financial instrument available to the social economy that “supports projects through repayable grants” developed by organizations that already have potential for growth and internationalization.
The Portugal Social Innovation Fund fulfills three financing programs of the Portugal Social Innovation Initiative, which are already available and are designed for projects that have a greater maturity, growth potential and internationalization and financial sustainability.
The three financing programs of the Portugal Social Innovation Initiative include:
- Training for Social Investment – which aims to support organizations internally, in training or other skills, to improve their level of response to social problems.
- Impact Partnerships – which has already closed a competition with 35 ongoing projects, in an investment of 10 million euros, seven of which are from Portugal 2020.
- Social Impact Bonds – which aim to finance projects with measurable social results.
The FIS is one of the four financial instruments available under the Portugal 2020 program and integrated in the Portugal Social Innovation Initiative.
The Portugal 2020 Partnership Agreement set out the background for a general, multiannual budget for research and innovation policy, encompassing national and European funding sources.
Portugal 2020 encompasses four thematic Operational Programmes (Competitiveness and Internationalisation; Social Inclusion and Employment; Human Capital; Resource Efficiency and Sustainability) and seven regional Operational Programmes (OPs).
The projects financed by the Portugal Social Innovation Fund will be Initiatives of Innovation and Entrepreneurship (IIES), which present innovative responses to social problems, as opposed to traditional answers.
These include products and services that stand out for their potential social impact and for their financial sustainability.
The projects to be submitted by the companies will be validated by the Portugal Social Innovation Initiative.