Innovative Fund Formation – RPCK Advised fair-finance on the Establishment of the First Social Entrepreneurship Fund in Austria

Keyvan Rastegar & Johannes Justin who established the first Social Entrepreneurship Fonds in Austria

November 24, 2021

In cooperation with the law firm RPCK Rastegar Panchal, fair-finance has formed the first social entrepreneurship fund in Austria. The aim of the fund is to provide capital for business models with a socially responsible background.

Companies that address issues such as the climate crisis, poverty, social injustice or education are facing difficulties as they often are rated poorly by banks and are unsuitable for non-profit funding due to their profit orientation.

To solve this problem, Markus Zeilinger of fair-finance turned to RPCK Rastegar Panchal to set up the fund, as they are considered legal pioneers in the social impact field in Austria. The fund will support social enterprises with EUR 200,000 – 500,000 each and a total of EUR 5 million.

fair finance decided together with RPCK Rastegar Panchal (Keyvan Rastegar, Founder, and Johannes Justin, Senior Associate) to use the more flexible European Venture Capital Fund under Regulation (EU) No. 345/2013 of 17.4.2013 (EuVECA) instead of the European Social Entrepreneurship Fund under Regulation (EU) No. 346/2013 of 17.4.2013 (EuSEF).

Typically, EuVECAs are managed only by alternative investment fund managers (AIFMs) registered under the Alternative Investment Fund Managers Act (AIFMG). However, in this case, a fully licensed AIFM had to be used, which presented a new challenge. The possibility to manage a EuVECA fund with a fully licensed AIFM was only created with the Regulation ((EU) 2017/1991) and has never been realized in Austria before.

The Austrian Financial Market Authority registered Austria’s first social entrepreneurship fund, fair-finance SEVECA 1 GmbH & Co KG, at the end of October 2021, giving social entrepreneurs another financing option.

“We are more than happy to have helped set up Austria’s first social entrepreneurship fund. The significance for the rapidly growing sector is enormous and now the global hyper-trends “Impact Investing” and “Social Entrepreneurship” have arrived in Austria,” commented Dr. Keyvan Rastegar on the establishment of the fund with fair-finance.

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