1. Exporting a proven model: Innovation Financing A presentation by KfW Development Bank
Knowledge Economy Forum IX, May 5, 2010
Roland Siller
First Vice President
Europe and Caucasus
KfW Development Bank

2. 60 Years of KfW Financing with a Public Mission
Promotional bank of the Federal Republic of Germany
Founded in 1948 as public law institution Kreditanstalt für Wiederaufbau (KfW)
Shareholders: 80% Federal Republic, 20% federal states
Headquarters: Frankfurt am Main Branches: Berlin and Bonn
Balance sheet (2009): EUR 400 billion
Representative offices: about 60 offices and representations worldwide
No of employees: 4,265
Best rating: AAA/Aaa/AAA
Balance sheet total vs promotional banks EUR in billions (2008)
Balance sheet total vs commercial banks EUR in billions (2008)

3. A Bank with a Wide Array of Roles and Functions
Domestic promotional business
Promotion of
SMEs, entrepreneurs, environmental and
climate protection
business start-ups
Promotion of
housing, education, infrastructure and social development
Financing of municipal infrastructure projects and promotion in Europe
International
project and
export finance
Promotion of
developing and
transition countries
Innovation Finance as an integral part of KfW Mittelstandsbank 3 3 3

4. Approach and Volume of Innovation Financing in Germany Role of KfW Mittelstandsbank
1) Concept
KfW
Application
Commercial bank, venture capital
or private equity company
Application
Entrepreneur
Financing agreement
Refinancing, equity
2) Instruments
Financing of Innovations
Promotion
of Start-ups
Promotion of
emerging,
growing and
established companies
Senior Loan Programmes
Subordinated Loan Programmes (Mezzanine)
Venture Capital Programmes (Equity)
Here we you can see an overview on all our programs, which we run under the roof of the KfW-Mittelstandsbank.
As mentioned before: we use three basic funding instruments: loans, mezzanine and equity.
Where as loans and mezzanine capital is on-lend via banks, the Equity capital programs are distributed in cooperation with VC or PE-companies.
In nearly all of our programs we use the risk-adusted pricing mechanism (Creditworthiness / Collateral).
In some programs we assume a part of the credit risk:
3) Volumes

5. Adaptation of KfW Innovation Finance Programmes to the Russian Federation
Status quo in the Russian Federation:
Innovation definition focuses on hi-tech and global innovation concepts
Existing promotion programmes follow that approach (hardly bankable), no SME focus
Aims of corporation between Vnesheconombank and KfW Development Bank:
Fostering innovation on SME level
Strengthening the Russian banking sector in terms of know-how and programmes
Implementing a 100 mln EUR programme for Russian banks to be onlent to SME
Approach of KfW Development Bank:
Adaptation of existing programmes to Russia; utilization of experiences in Germany
Support in the development and anchorage of a broader innovation definition including innovative modernisation (high demand potential in Russia; bankable products possible)
Establishment of cooperation with development institutions like Vnesheconombank and RosBR
On-lending via eligible partner banks for risk sharing and faster market penetration (KfW-Model)
Focus on SME as a sector with the most promissing growth potential
Step by step approach: loan based programme followed by equity and mezzanine programmes
!! Sustainable success of the programme more important than quick wins !!

6. Overview: Financial and Private Sector Development Europe&Caucasus Activities and Portfolio
Financing / Refinancing of SME and Microbanks in the regions
Greenfielding of 13 banks
Establishment of best practice structured finance projects such like the EFSE
(European Fund for South East Europe; biggest microfinance fund worldwide: >700 mln EUR in assets;<600 mln EUR loan portfolio);
clients, loans disbursed - benchmark for public-private partnership projects
Instruments
Senior loans
Subordinated loans
Equity participations
Risk participations, guarantees
Technical assistance
Countries
Southeast Europe: Serbia, Montenegro, Kosovo, Bosnia & Herzegovina, Albania
EU Accession Countries: Croatia, Macedonia, Turkey, Bulgaria (EU), Romania (EU)
Eastern Europe: Russia, Ukraine, Moldova
Caucasus: Georgia, Armenia, Azerbaidschan
Portfolio
5 billion EUR (as of April 2010)
of which 2,4 billion EUR are channelled through the financial sector (mainly for SME promotion purposes)

7. Thank you very much
for your attention !

8. Leverage of funds: EFSE pursues a Tiered Funding Strategy
EFSE – Innovative Structure Adaptation of Fund Structure for advanced Innovation Finance (Mezzanine, Equity)
Leverage of funds: EFSE pursues a Tiered Funding Strategy 
Dec Dec 09 Target 2011
Fund Volume in EUR million
Donor Funds
International Finance Institutions
Private Investors
A-Shares
and Notes
B-Shares
C-Shares