Regulation of the Capital Fund for Innovative Ventures was adopted
On December 2, 2020, Supreme Decree No. 375-2020-EF was published in the Official Gazette El Peruano, whereby the Regulations of the Capital Fund for Innovative Ventures (the “Regulations“) were adopted, through which the operation of the Capital Fund for Innovative Ventures (“FCEI“) is regulated. The FCEI was created by Emergency Decree No. 013-2020 with the purpose of investing in private or public funds whose investment strategy is oriented to entrepreneurial capital and making equity investments in dynamic and high impact ventures.
Among the most important aspects of the FCEI Regulations are the following:
1. Corporación Financiera de Desarrollo S.A. (“COFIDE“) is the entity in charge of managing the FCEI. The investments made by the FCEI are subject to specific criteria, diversification policies, and prudential management rules, which are evaluated by the FCEI’s Investment Committee.
2. The FCEI’s resources are intended for investment in Eligible Funds, those placed through public or private offerings and whose exclusive purpose is to invest (through equity or debt instruments) in Startups. The Regulations define Startup as a “dynamic and high impact venture, in the consolidation stage in the market”.
3. Eligible Funds must, among others:
(i) be managed by an investment fund management entity (“EAFI“);
(ii) have a capital contribution from the respective EAFI of no less than 1% of the fund’s assets and in no case less than US$50,000;
(iii) be incorporated in Peru or abroad and its investment policy must include Startups.
4. Startups benefiting from the Eligible Fund must comply with at least one of the following conditions:
(i) be a legal entity incorporated in Peru, and/or have an operation that declares and pays taxes in Peru at the time of investment;
(ii) have a significant level of operations in Peru (as defined by the Investment Committee of the FCEI); and/or
(iii) that the investment round in which an Eligible Fund participates will be intended to finance the expansion of operations and/or investments of Startups in Peru.
5. The FCEI may be a shareholder in two or more eligible funds managed by the same EAFI, provided that the portfolios of the funds do not have investments in the same Startup. Likewise, the FCEI only enters into the participation fee subscription contract when it takes a participation up to a maximum of forty-nine percent (49%) of each eligible fund, with a maximum of S/.20 million.
