Roadmap to a European Minerals Investment Platform. t Dr. Andreas Benkitsch, CFA CFO, EIT RawMaterials

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1 Roadmap to a European Minerals Investment Platform t Dr. Andreas Benkitsch, CFA CFO, EIT RawMaterials

2 Why are raw materials important? 0,2g of Indium * 40-60kg of rocks to be moved 20kg of Zinc Ore.because there is no modern life or economic growth without them t x 1.4bn mobile phones p.a..and we consume tons of them during our lifetime ** *amount of Indium per mobile phone ** average consumption of minerals and metals per capita during lifetime (Pär Weihed, Luleå University of Technology) 2

3 t How does innovation help with this challenge? On primary sources of raw materials (exploration, mining): e.g. Deep mining Innovations to make mining of small deposits financially viable Increase of efficiency in mining operations: e.g. automation, preventive maintenance On secondary sources of raw materials (recycling) Technologies to increase degrees of recycling and close material loops to reach a circular economy (Growth still needs to be covered by primary sources!) Through tertiary means Substitution of critical raw materials to the extent physically/chemically possible Intelligent design to reduce or avoid usage of critical raw materials where feasible and to make recycling easier 3

4 Where does the need for an investment platform come from? 2 nd Valley of death Phases Funding 1 st Valley of death Time Pre-seed Seed Funding Start-up Mezzanine Growth Commercialization/ Industrialization Growth/ Stability Covered by EIT- RM Not covered by EIT-RM. Target of EIT impact fund currently being developed Source of graph: Dr. Eberhardt Gschwindt (EIB): EIB Funding Possibilities, Only partially covered by the EIT-RM Target of European Minerals Investment Platform (EUMIP) currently being developed by EIT-RM with DG-GROW The EIT-RM can currently not fully cover both valleys of death, but with an investment platform we can 4

5 Where does the need for an investment platform come from? Europe and the US produce about the same number of start-ups per year, however US-VCs are more successful in creating successful businesses. How come? US VC-Model EU VC-Model VC/PE Funds US VCs are not more visionary. They simply shape the markets jointly with US Corporates US Corporates VC/PE Funds EU Corporates Direct equity investments by the KICs can close this gap by: Reduce barriers to equity funding for start-ups and SMEs Applying a rigorous and better informed process than VCs and PEs can which reduce barriers for follow-on investments Reduce perceived risks for investors by bringing the investment and exit routes closer 5

6 What does our KIC have to offer through this platform? The EIT-RM offers a unique access to the raw material industry no VC or PE fund can match: Exclusive access to start-ups very early on through pre-seed funding instruments Pool of industry experts along the whole value chain evaluating ideas for start-ups Due diligence provider for the key technical and commercial aspects of target companies Access to business developers, CTOs, some CEOs for investment committees A pool of potential board members from our industry Access to the trade-sale channels in our industry which will be the exit route for an estimated 90% of our investments 6

7 Fund Structure Generic tasks are performed here (accounting, controlling, standard investment docs) EIT-RM 100% Return on Invested Capital small capital contribution to be represented in the fund (1-2%) Investors (EIT, EIB, EIF, EFSI,..) Main capital contribution 98-99% Return on Invested Capital Value added tasks are performed here in the KIC-RM: - Deal souring - Investment process - Due diligence - Portfolio management - Exit Management Management Company Management Fees Management Services for investment process KIC1 KIC2 KIC3 KIC4 KIC5 KIC6 The structure is open for other KICs to join Management Services Management Fees + carried interest (2-3% p.a.) Services (Coaching, Board Support) Service Fees to cover costs of services rendered: Coaching, Board Support. Etc. FUND KIC1 KIC2 KIC3 KIC4 KIC5 KIC6 Portfolio Companies Separate subfunds or umbrella fund open for other KICs to join. Target size: 100m/sub-fund 7

8 Next steps Phase 1: Development of a frame agreement to co-invest on a deal by deal basis between the EIB, EIF and EIT-RM The purpose of such an agreement is to build-up trust between the EIB, EIT and the EIT-RM Phase 2: Setting-up of a team with the EIB, EIF and the EIT-RM to structure a fund as proposed As phase 2 will have a longer lead time, we will start phase 2 already in January This needs your political support! 8

9 Dr. Andreas Benkitsch, CFA CFO Spreepalais c/o Helmholtz HQ Anna-Louisa-Karsch-Str Berlin, Germany T: E: andreas.benkitsch@eitrawmaterials.eu W: THANK YOU! 9