In this article, we break down the main characteristics of their funding lines and the most common questions that arose during the session with Isaac Tomàs, investment analyst at Avançsa, and Anna Casòliva, Head of Funding at Intelectium
What is Avançsa?
Avançsa is the public investment entity of the Government of Catalonia, which is 100% owned by the autonomous government. Although it was born 40 years ago as an instrument of industrial reactivation, in the last nine years it has evolved significantly to also accommodate startups and innovative projects. A simple way to understand what it does: it is the Generalitarian's strategic venture capital.
Its investment model is based on participatory co-investment loans with private capital, without requiring guarantees or leading rounds. Exceptionally, it also enters capital directly, although it is not its usual line of work.
The only non-negotiable requirement to access any of its instruments is to have an operational headquarters or headquarters in Catalonia.
Avança's three lines of funding
1. Innova lines: for innovative startups and scaleups
The Innova line is the most relevant to the profile of an innovative company and is divided, in turn, into four distinct sub-lines:
Innovate Creixement works as a tailor's box for innovative projects in any sector that have a significant technological layer developed by the company itself. This is, in fact, where most Innova projects end up. There are, among others, projects in quantum computing, health, deep tech and other verticals that cannot be accommodated in the most specific sublines.
Innovate Mobilitat is aimed at projects related to the mobility of the future, while Innovate Fashion and Commerce is aimed at startups in the early stages of sustainable fashion or with new business models in traditional commerce (with tickets that, in this case, tend to be slightly smaller).
Finally, Innova Energy Tech, focused on energy transition projects, is the underline that is currently experiencing the most activity.
In all of them, the profile sought is essentially the same: startups in the pre-Series A or Series A phase, with proven commercial traction, international vocation and investment tickets of between 300,000 and 2,000,000€. The amount around which they feel most comfortable is around one million euros.
2. Extraordinary Projects
This line is reserved for strategic projects for the country: technologies with the potential to be structural in the Catalan economy, with a strong R&D component and capacity to position themselves as world leaders in their sector. Semiconductors, space technologies or quantum computing are representative examples of the profile that Avançsa seeks in this modality.
Tickets can reach 3,000,000€, a figure that has been exceeded in exceptional cases. The multiplier effect of this line is also significantly higher than that of the Innova lines: for every euro provided by Avançsa, four euros of private capital are mobilized.
3. Industrial Reactivation Line
This third line is aimed at traditional Catalan industrial SMEs that are experiencing financial difficulties but whose business model is still viable. The objective profile is that of companies with more than 50 employees and more than 10 million euros in turnover that, despite having restricted access to bank finance, maintain a solvent activity with potential for recovery.
Main characteristics of the loan
The usual conditions are as follows:
- Shortfall: between 12 and 24 months (exclusively from the principal; interest is paid from the start)
- Expiration: between 5 and 7 years
- Fixed interest: Euribor + 500 basis points
- Variable interest: 1.5% of EBITDA when it is positive (it is usually activated only in the most advanced years of the loan)
- Profitability Cap: negotiable, usually between 12% and 15% in total
The key questions of the webinar
What is the ideal time to contact Avançsa?
The ideal time to approach Avançsa is when the company already has real commercial traction, certain recurring revenues and a round of at least 1,000,000€ on the horizon. It is not necessary to have the term sheet closed, but it is necessary to have the process on track and the first contacts with established investors.
An important detail to keep in mind: once the round is closed, Avançsa has only six months to formalize the co-investment. Since their internal process can take three to four months, it is best to contact them three or four months before the scheduled shutdown. Arriving late can mean being left out, even if the project is a perfect fit.
Are there age or minimum billing requirements?
There is no formally established seniority requirement, although Avançsa requests accounts for the last two closed years. Regarding turnover, there is no fixed threshold either, but Isaac points out that sales in the last year of between 300,000 and 400,000€, depending on the amount requested, constitute a reasonable sign that the company is able to bear the financial cost of the loan. The basic criterion is that the company can demonstrate return capacity and that the combined resources of the round and the Avançsa loan allow it to operate with peace of mind for at least 18 months.
Which sectors fit the most? And which ones are excluded?
Avançsa maintains an open orientation at the sectoral level, although it shows special interest in deep tech and in relevant companies with their own technology. There is a particular preference for projects that have emerged from Catalan research centers, given that the guarantee of public origin offers a sign of technological strength that the Avançsa team values positively.
On the contrary, the clearly excluded sectors are real estate and cryptoassets. In more general terms, any project that does not generate a positive and tangible impact on the Catalan economy, in terms of quality employment, technological development or reindustrialization, is difficult to fit into any of its lines.
What co-investor profile does Avança need?
The leader of the round must be a structured private investor: venture capital, business angel, family office or corporate investor. Crowdfunding, on the other hand, is not recognized as a round leader for the purposes of Avançsa. In addition, the leader must commit a minimum of €300,000.
Regarding compatibility with other public instruments, Avançsa can co-invest in the same round with entities such as ENISA, ICF, SETT or the EIC Accelerator, although these do not count as private co-investment. In any case, the limit is that all public funding does not exceed 50% of the total round.
It should be noted that the companies benefiting from the EIC Accelerator are of special interest to Avançsa, since obtaining this European instrument constitutes an indicator of high technological potential validated by the European Commission.
Can the loan be converted into equity?
Yes, although this is the scenario that Avançsa seeks to avoid at all times. Convertibility exists only as a last resort: when a company cannot afford to repay the loan and, after exhausting renegotiation options, conversion into capital is the only way to preserve the company's viability. This is a situation that, according to Isaac, has occurred on rare occasions. His position in this regard is clear: “we don't like being in the capital because we can't provide value if we're not experts in the sector”.
What are the main red flags for Avançsa?
Throughout the webinar, Isaac identified the signs that generate the most rejection in the analysis of a trade:
- Not having headquarters in Catalonia
- Absence of commercial traction evidencing the ability to repay the loan
- Cap table or round structure unclear or inconsistent
- Unknown or insufficiently strong supporting team
- Concurrence of several weaknesses simultaneously: a negative factor can be compensated, but when several weaken at the same time, the operation loses viability
How long does the process take?
Once the transaction has been submitted, Avançsa's internal process, which includes the preparation of the financial report, the preparation of the technical report by an external body, approval by the board, external due diligence and the formal accreditation of the co-investment, can last between three and four months. The technical report, in particular, is commissioned to specialized agencies according to the sub-line: Action for Innova Creixement, CECAM for Fashion and Commerce, ICAEN for Energy Tech and the General Directorate of Industry for Mobility.
Does Avança offer services beyond funding?
Avançsa does not provide mentoring services directly, but it acts as a gateway to the administration of the Generalitat and facilitates the connection with organizations such as Acción or Barcelona Activa. For companies in your portfolio that are in the process of raising capital, try to connect them with other investors in your network as well.
How can Intelectium help?
From Intelectium, we accompanied us by carrying out a first eligibility filter, evaluating the fit with the different available lines, identifying the optimal time for the approach and coordinating the necessary documentation to present the transaction in the best possible conditions.
If you're closing a round or have one on the horizon and want to explore if Avançsa can be a part of your funding structure, we'll be happy to discuss it together.
