A venture capital company has been set up to provide seed capital to entrepreneurs who wish to develop an idea but are unable to raise financing using traditional sources.

Malta Venture Capital plc, which will be managed by fund managers Curmi & Partners, will have a total authorised share capital of Lm10 million.

To kick-start the venture, the government has invested Lm900,000 in initial capital. The remainder will be generated from the private sector.

Speaking at the launch yesterday, Investment, Industry and IT Minister Austin Gatt said the intention is to help individuals or companies who want to launch or restructure their company but are unable to raise financing from banks.

Dr Gatt insisted that not every “entrepreneur” who had an idea would qualify for financing.

“Anybody applying for financing from the venture capital fund must have a sound business plan. This is not for those with ‘half an idea’ but for people who have bankable ideas yet need seed capital to get the project off the ground,” Dr Gatt said.

This is not the first time that attempts have been made to launch a venture capital initiative locally but those seeking seed capital encountered too many restrictions and security requirements they were unable to meet.

“There is a gap in the market and there are opportunities for venture capital in Malta. A recent Eurobarometer survey found that 87 per cent of businesses use the banks for financing, while 35 per cent of CEOs said that it has become more difficult to take loans from the banking sector.

Through the venture capital fund, individuals or companies can get financial help to start off,” Dr Gatt explained.

He said this is not a miracle solution but the fund will help to finance innovative ideas that are in line with the government’s economic vision for the country, particularly in IT.

The company’s board of directors will be working to formulate policy that the fund managers will apply.

The company intends to seek a listing on the stock exchange and the board will be working on a prospectus in the coming weeks.

Chairman Michael Soler said that the board’s objective was to get things moving as fast as possible.

This process is expected to take between six and nine months.

David Curmi, from fund managers Curmi & Partners, said there is a demand for this type of financing.

The directors on the board are Michael Soler, Joe Camilleri, Louis Farrugia, Alec Mizzi (chairman, Malta Enterprise) and Mario Mizzi (on behalf of Malta Government Investments).

Curmi & Partners was chosen after a public tender. The adjudication board comprised the governor of the Central Bank, the chairman of the Malta Stock Exchange and the chairman of the Malta Financial Services Authority.