Private Briefing November 2023
No. 128 | Year XI
November 2023 edition of Private Briefing, analyses both regular, well-established calls innovatively tailored to meet the evolving needs of beneficiaries and entirely new initiatives of significant scope. Among them, the new USAID DIV program targets a wide spectrum, encompassing diverse types of support beneficiaries and goals. Meanwhile, within the realm of regular programs, the Ministry of Economy’s support for women entrepreneurship has gained new layers, aptly aligned with market dynamics. We delve into the details of the recent call for the Smart Start by the Innovation Fund and the co-financing support for the IPARD program, with the first calls of its third iteration anticipated shortly.
IF: Smart Start for Innovative Businesses
// Smart Start programme, implemented by the Innovation Fund, is a significant initiative aimed at empowering innovative teams in the validation and development of their business ideas in a real market environment. This programme is specifically designed to support the development of initial prototypes or minimally viable products, providing teams not only with financial support but also valuable mentoring services. The support includes non-refundable funds up to 45.000EUR per project, constituting a substantial financial incentive, especially considering that this amount represents up to 90% of the total project budget. In addition, the fund allocates up to 5.000EUR for the use of mentoring services, further strengthening teams’ capacity for project management and implementation. Beyond financial support, the Fund also organizes workshops focused on improving organizational capabilities and effectively launching and managing start-up operations.
// The current call is open to projects from various fields of science and technology, with special focus on ICT, machinery and manufacturing processes, foods for future and creative industries. Eligibility criteria require teams to consist of 2 to 5 members with clearly defined and compelling business ideas and innovative products or services. The evaluation of submitted projects focuses on the usefulness and competitive advantages of the proposed solution, the market potential of the idea, and the competency of the team. This comprehensive approach to evaluation ensures that only the most promising ideas receive support, thereby increasing the likelihood of their success in the market. This is further facilitated by clearly defined development deadlines, requiring teams to advance their ideas to the prototype or minimally viable product level within a 9-month timeframe, promoting efficiency and goal-oriented focus.
// Based on previous experiences and the success of supported projects, it is evident that ideas with the greatest potential for success fall within the realm of ICT, as well as energy, engineering, and agriculture. Agricultural robots, smart pet feeders, and a web platform for chess tournaments are just a few of the projects the Fund supported in the previous call, at the early stage of business idea development. Such an approach makes this program a significant option for innovative entrepreneurs to quantify and test their business ideas in a real environment, with the necessary financial and mentoring support. Considering the high level of financial incentives and mentoring support, the program is a well-designed and efficient solution for innovative entrepreneurs. It not only enables entrepreneurs to critically assess their ideas but also to implement necessary modifications, making them more attractive for further financial support and development to a level that is competitive both in the domestic and international markets.
Ministry of Economy, DF and SDA: Improved Support for Women Entrepreneurship
// In the series of regular support programmes of the Ministry of Economy we consistently analyse, this year’s Public Call for the Entrepreneurship Development Incentive Programme through financial support for women entrepreneurs is currently active, implemented in collaboration with the Development Fund and the Serbian Development Agency. Potential beneficiaries are entrepreneurs, micro and small enterprises no older than five years, whose founder and legal representative are women. In the case of multiple owners, a woman must be one of the legal representatives and hold a stake above 51%. Through this program, with a total budget of 600 million dinars, beneficiaries can count on substantial amount of non-refundable funds, up to 40% of the investment value, or even 50% in municipalities of the fourth development group. The remaining financing is provided in the form of a Fund loan, indexed in euros, with a repayment period of up to 5 years, including one year grace. The interest rates are highly favourable, well below market rates, ranging from 1.5% annually with bank guarantee to 2.5% annually with other security measures. The total approved amount per application cannot be less than 400,000 dinars, while the upper limit is 6 million dinars for entities with fewer than 5 employees, or 12 million for those with 5 or more employees.
Eligible purposes include financing the purchase of machinery, tools, and equipment, new computer equipment and software, as well as new and used vehicles, no older than five years, for the transport of own products, raw materials, and other transportation means for production process and service provision. Additionally, eligibility extends to
maintenance and adaptation of business and production premises, up to one million dinars, while the applicants with 5 or more employees can use funds for the purchase of business or production space. Qualified purposes also encompass operational costs, which can participate up to 25% in the structure of the total investment.
The total programme budget has been increased sixfold from last year’s 100 million dinars, with the grant share increased by 5%. The upper limit of the loan amount has doubled, and the option to purchase or build facilities has been introduced. This program evolution aligns with our research in Serbia and the region, indicating that women-led entrepreneurs and businesses have very clear and profiled support needs. Over 80% of women entrepreneurs intend to implement investments in the coming period, with equipment investments leading with over 40%, followed by investments in expanding the market or portfolio at around 30% of clearly identified needs. Around 60% of them plan to use a loan for financing. This demand structure is strongly supported by the belief that, in the current “permacrisis” era of the business environment, business performance has returned to pre-crisis levels or even improved, as estimated by almost two-thirds of women entrepreneurs, while simultaneously expecting the maintenance or improvement of business performance in the upcoming period.
// Given the amounts and repayment periods, as well as the very favourable cost of the loan, the programme adequately combines the use of funds with the estimated needs of women entrepreneurs and businesses. The amount, combined with the maturity, is a very good opportunity to address a range of expressed needs, especially for new equipment, being the investment that provides multiple returns through increased productivity and efficiency. That results in better financial performance through reduced costs, increased revenues and accumulation for new growth. To further support the sustainability of the beneficiaries’ businesses, the program also opens the opportunity for parallel applications to accredited Regional Development Agencies for free training in starting a business, and for advisory and technical assistance regarding application processes. The support provided by RDAs is implemented through the Standardized Set of Services Programme for MSMEs, in creation of which we have actively participated. Considering the overall scope of support this program offers, including the grant, favourable loan, repayment period and necessary advisory services that enhance the possibility of sustainable market performance, it is evident that this represents a significant opportunity for key improvements of women-led businesses.
USAID: DIV Grants for Phased Innovations in All Sectors
// At the end of October, USAID published a call for the entirely new Development Innovation Ventures (DIV) Programme, designed to discover, support, and scale innovative solutions aimed at improving people’s lives. The programme structure, purpose, and implementation methodology are tailored to stimulate a broad spectrum of business and social innovations across different stages of development. This encompasses new technologies, services, and business models, as well as enhanced methods of delivering goods and services, and even the replication of proven innovations in new circumstances or environments. Various sectors are supported, ranging from agriculture to water and sanitation or energy efficiency, including innovators in cross-cutting areas such as traffic safety or child development. Within the eligible interventions scope, the programme recognizes a wide range of applicants, including companies and entrepreneurs, social enterprises, individual innovators, NGOs, R&D sector and government bodies and organizations. This inclusiveness aims to encompass the widest range of potential solutions, supporting them with grants through phases corresponding to different levels of innovation maturity.
The first phase, Pilot, provides funding of up to 200.000 dollars for initial testing of innovations beyond the prototype stage in real conditions, aiming to enable iterative improvements and establish sustainability in test conditions. The second phase, Testing and Positioning for Scaling, significantly increases the funding limit to 1,5 million, supporting innovations that have successfully passed the pilot phase and are ready for further, more restrictive testing and expansion. In this phase, the focus shifts from innovation to impact assessment and market sustainability. The third phase,
Scaling Up, with a funding limit of 15 million, brings a substantial increase in financial support, reflecting the advanced stage of development. This phase aims to enable the scaling of proven concepts and approaches, either in new markets or through new application methods. Finally, in the Evidence Generation phase, with a limit of 1,5 million, the effectiveness of proposed innovations and approaches is assessed, ensuring that only projects demonstrating proven impact, market sustainability, and cost-effectiveness are ultimately scaled.
From the beneficiaries’ perspective, DIV offers a unique opportunity for innovators to materialize their ideas. The multi-tiered financing approach ensures timely and tailored support, maximizing impact and sustainability, while effectively managing innovation throughout the entire development process. Recognizing that the process of establishing and enhancing innovation may require significant time and full commitment of the development team, the program envisions a support duration of three years, with grant disbursements linked to the milestones defined during project planning rather than specific results and effects. However, in certain circumstances, if additional time is needed for further research, analysis, or improvements, support can be extended up to five years, with the new extended period implemented through a new grant. Additionally, the support format may be transformed from a grant into a so-called cooperative agreement, a model involving substantial USAID participation in designing or conducting studies and evaluations, or other activities necessary for the successful project implementation.
// All aspects of the program, particularly substantial funding, clearly defined phased approach, and flexibility in terms of duration and support format, indicate that it recognizes the key challenges of creating, establishing, testing, and effectively launching innovations. Not only that, but the programme structure clearly outlines the path of innovation development, which allows users to identify the development stage they have reached and apply for the corresponding support phase. Moreover, through the flexibility of identifying phased objectives, the program anticipates enabling users to implement iterative changes and adjustments during development, ensuring that the proposed solutions are fully competitive and effective when introduced to the market. Therefore, the program deserves every recommendation, and simultaneously, if you recognize the need to adequately prepare application documentation and a development program with the help of experienced advisors, Glenfield is at your disposal.
Vojvodina Development Fund: Favourable Co-Financing for IPARD
// As a form of support for the development of farmers and agribusiness, IPARD stands out in terms of scope and reach, as it enables a significant amount of grants, exceeding 50% of the value of improvements. A prerequisite for it is the prior implementation of an investment project, with financing from other sources for part of the investment before the verification and approval of the grant. To ensure such support, the Development Fund of Vojvodina has announced a call for loans, securing financial support for projects approved and financed through IPARD. Eligible applicants are active agricultural households, which can apply after submitting the project for IPARD, before the project approval. Loans are indexed and aligned with the amount and purposes of IPARD incentives, amounting to up to 150.000EUR for the purchase of operational agricultural machinery and equipment, and up to 800.000EUR for investments in facilities and equipment. Acceptable forms of collateral range from a pledge on purchased equipment to guarantees, mortgages on buildings or land, and bank guarantees. The interest rate is 1% or 2%, depending on the level of development of applicants’ municipality, if the collateral is a guarantee, while for other collateral types, the interest rate is 1% higher. The maturity is up to 7 years with an included grace period of up to 2 years, and the repayment is monthly, quarterly, or semi-annually. Additionally, no applicant participation is required, and after the payment of IPARD incentive, the Fund can approve a deduction of the loan principal.
IPARD III program in Serbia for the period until 2027 has been approved and active from this year, and the first calls are expected. Out of 13 possible measures, compared to the previous IPARD II and four measures accredited, beneficiaries will have three additional measures at their disposal: Measure 4 – Agroecology – climate and organic farming; Measure 5 – Implementation of local rural development strategies – the LEADER approach; and Measure 6 – Investments in rural public infrastructure.
The introduction of new sectors through the IPARD III program is planned, such as fisheries sector, processing cereals and industrial plants. Within Measure 7, in addition to the rural tourism sector that could count on support in the previous program, new sectors are planned, including the direct sale of agricultural and local products and the sector of services in rural areas. The total program budget is 288 million euros, which, as in previous program iterations, means significant incentives for beneficiaries.
// Pre-financing until the investment completion, or until the moment of incentive payment is often a serious obstacle for harnessing significant opportunities to enhance competitiveness through facilitated investment in facilities, equipment, and other essential assets provided by IPARD. Therefore, the Fund’s program provides a very significant support, especially considering the genuinely favourable financing conditions, including the interest rate, maturity, and grace period. To complete the entire process, expert support, starting from the application for IPARD to submitting the credit request to the Fund, based on the experience and knowledge of consultants, can represent an additional quality that distinguishes an accepted application from a rejected one.
| KEY ECONOMIC INDICATORS | Nov - 23 | |
|---|---|---|
| 1 | Annual inflation | 8.50% |
| 2 | Reference interest rate | 6.50% |
| 3 | Unemployment rate | 9.60% |
| 4 | Average net salary - RSD | 85,066 |
| 5 | Average pension - RSD | 39,874 |
| 6 | Exchange rate RSD/EUR | |
| On the last day of the month | 117.1777 | |
| Average exchange rate for the month | 117.1864 | |
| 7 | Exchange rate RSD/USD | |
| On the last day of the month | 110.5346 | |
| Average exchange rate for the month | 110.9356 | |
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