The first investments from the Cyprus Equity Fund, established by the Cypriot government in collaboration with the European Investment Fund (EIF), are expected to commence in the autumn, it emerged on Thursday.
The fund, with a total budget of €37.5 million, aims to bridge the financing gap in entrepreneurship and innovation.
According to statements made during a press conference, the Bank of Cyprus will be the first institutional investor in 33 East, the company in charge of the fund. The Bank of Cyprus will contribute €2 million to the fund’s capital.
Speaking at the event, Finance Ministry general director George Panteli welcomed the Bank of Cyprus, stating that its participation “demonstrates the importance of the fund and the expectations we all have for its successful management”.
Panteli said that the ministry is focused on entrepreneurship and innovation as key drivers of social and economic development.
“The Cyprus Equity Fund was established to address the financing gap in the economy, targeting the funding of SMEs within this ecosystem,” he said.
The goal is to raise €37.5 million, with €27.5 million coming from state funds, primarily through the Recovery and Resilience Fund and returns from previous financing programmes.
An additional €10 million will be sourced from the private sector. Following a tender process run by the EIF, 33 East was selected to manage the fund.
Eliza Livadiotou, Executive Director of Finance at the Bank of Cyprus, expressed her enthusiasm for joining this government initiative aimed at supporting innovation and youth entrepreneurship.
“We believe that through the Cyprus Equity Fund, a new institutional and operational means of supporting new business ideas is being created,” she stated.
Livadiotou explained that the bank’s decision to invest €2 million in the Cyprus Equity Fund as a founding financier of the 33 East Investment Fund was a deliberate and practical choice, reflecting a commitment to long-term economic sustainability and growth in Cyprus.
Furthermore, Demetrios Zoppos, a partner at 33 East, also welcomed the Bank of Cyprus as the founding and largest institutional investor in the fund.
“We believe this investment will develop into a long-term and fruitful collaboration between the two organisations, helping to push Cyprus towards a new development model based on technology,” he said.
Zoppos also revealed that the fund has reached 50 per cent of its private capital target, with commitments from private investors not yet announced.
According to EIF regulations, €6.5 million of the €10 million private capital must be raised before investments in Cypriot startups can begin.
“The first investments are expected this autumn,” Zoppos said, noting that the fund will focus on rapidly growing sectors.
Both Zoppos and Yiannis Eftychiou, also of 33 East, detailed the fund’s structure as a classic venture capital fund, consisting of two segments.
The acceleration fund, with total investments up to €2.5 million, will distribute between €100,000 and €200,000 per company, providing initial funding to early-stage entrepreneurs for idea evaluation and development.
The venture capital segment will invest €35 million in more mature businesses, with funding between €0.5 million and €1 million per company.
“The fund aims to invest in 15 companies per segment,” Zoppos stated, adding that 100 funding applications have been received so far and will be reviewed.
The funding period will span four to five years, with a target internal rate of return (IRR) of 20 per cent, aiming to triple initial capital over seven to ten years.
“Cyprus needs a success”
When asked if there is an entrepreneurial culture in Cyprus, Zoppos responded, “yes and no,” noting that one in ten businesses exhibited the correct entrepreneurial approach.
“This does not come from nowhere; the ecosystem is built over time,” he said, referring to examples from the United Kingdom and Greece, where one success led to others.
“We need a success in Cyprus. One success will change everything. But it takes time to build an ecosystem,” he said.
On her part, Livadiotou said that “there are many examples of startups that have practically proven that regardless of where you start, if you have the right product, the necessary and well-structured financing, and the right guidance, you can conquer the world”.
“We often read about so-called unicorns, which are startup companies that have managed to surpass a valuation of €1 billion,” she concluded.
