Raiffeisen Bank in Romania has launched the second edition of Factory by RAIFFEISEN BANK, a startup lending program. The main purpose of the program is to encourage the development of new businesses, to support entrepreneurs that have solid business plans, to develop and implement viable business projects with added value for the economy. This in turn will lead to the implementation of innovative ideas that will improve the position of SMEs on the market and increase competitiveness in the field.

The startup project competition takes place via the platform www.raiffeisenfactory.ro, where in addition to the terms and conditions of the competition and the application form, entrepreneurs can also find a series of useful resources designed to guide or inspire them in running their own businesses. Video testimonials from some of the entrepreneurs funded in the first edition of the program are also available and provide new recommendations and ideas.

The submitted projects will be assessed by the bank’s specialists between April 1 and April 21, after which jury sessions will be held from May 3 to May 30 in order to select the most innovative and viable business ideas, with the chosen projects then receiving up to EUR 50,000 in financing. The loans will be provided through the COSME program, with a guarantee from the European Investment Fund.

The program is addressed to companies in their first year of activity or to those with an operating history of up to 5 years but which have not exceeded EUR 1 million in net annual revenue that also have an innovative product or service. The program is aimed at Romanian entrepreneurs and companies that may or may not be clients of Raiffeisen Bank when they submit their projects. If selected for funding, finalists will have to open an account with the bank to receive the financing.

During the first edition of factory by RAIFFEISEN BANK, which took place in March – June 2018, 27 new businesses received funding. Out of the 84 applications submitted in the first edition of this program, 52 reached the final stage, and 27 were selected for funding in the amount of up to EUR 750,000.

Through this initiative Bank has financed many interesting business ideas, including: businesses that are creating new software tools for the design of novel, advance, nano-materials and pharmaceutically active materials as well as for the pharmacological and toxicological assessment of the same; businesses that apply augmented reality in teaching children science, geography and history and allow them to play together and socialize; businesses that grow lavender plants and manufacture added-value products – dried lavender bundles, lavender buds, aromatherapy products, skin-care products, sachets and herbal pillows; a factory that has a production line for bone broth; different mobile apps, etc.

Source: Press release by Raiffeisen Bank Romania from February 12, 2019, www.raiffeisenfactory.ro

Factory Award Gala, celebrating the start-up entrepreneurs financed in the first edition of the Factory by Raiffeisen Bank program. October 16, 2018, Bucharest, Romania

Extra questions from SME Banking Club:

  1. Olena Gryniuk: What are the lessons learned after the first edition of factory? Have you changed the criteria for the second edition of the competition?

Factory Team: We have learned a lot after the first edition, and we’ve recognized the need to convert this learning into action. Therefore, we planned the second edition carefully in advance. We adjusted our media campaign, we tried to smooth out the application process through a new, user-friendly platform and a simplified application form, we expanded the application period and, most importantly, we improved the definition of a startup.

We have realized that there are active companies on the market that reach the limits of their addressable market and want to expand into new markets with the proper financial support. These companies are eligible under the program if they use the loan to innovate in terms of their product offering, services provided or internal processes. Usually they are perceived as startups, due to the intrinsic risk of technological or industrial failure associated with innovation. We believe that by introducing the innovation criterion, we can test tolerance for risk and distinguish between companies driven by profitability and long-term value versus top-end revenue and growth potential – a startup characteristic.

At the same time, companies which have potential for rapid growth (for example, IT businesses) and develop solutions that can expand rapidly at a global scale can be considered startups, in contrast with companies with limited growth potential, irrespective of the age of the business.

For these reasons, we have improved the definition of a startup applied under the program, so that we have a financial solution for this untapped market.

  1. OG: Who is makes up the jury under the program?

FT: We split the assessment between a “credit committee”, where representatives from business, risk and other departments within the bank join forces with entrepreneurs from the business environment, who are experts on the local market. The short-listed candidates pitch their business ideas to the jury, and Raiffeisen Bank specialists and experienced entrepreneurs  that make up the jury then select the projects to be funded by Raiffeisen Bank. Participants have the opportunity to defend their business model, discuss with experts from different industries and receive feedback and pro bono business advice.

In fact, these interviews proved to be of paramount importance for the final decision last year, so this will be an important step also in this year’s program.

  1. OG: Did you continue to support the winners of the first edition after the contest ended?

FT: Yes, we’ve kept in close contact with the first edition finalists. They become brand ambassadors, and we believe that the impressive number of applicants this year is due to the fact that many other entrepreneurs reacted to their stories and the advice they gave via testimonials.

The first year of business poses many challenges, and we tried to help them with the strategic and financial issues they were likely to face by developing a workshop curriculum covers subjects like digital strategy, pricing and business models, cash flow management and leadership. Also, we allocated them a dedicated relationship manager who can offer banking services that best meet their needs.

  1. OG: What is the scale of the second edition of factory? How many applications do you expect to receive and, how many projects do you intend to finance at the end of the program?

FT: We expect to receive about 300 applications, although we are prepared for many more. Out of these 300, we want to select 100 finalists to benefit from our startup offer.