SME Financing Use Case European Blockchain Initiative 30.04.2024.pdf

Sme financing use case EU

1. #fastforward
SME Financing Use Case
Xabier Chao - CEO FundingBox
Co-funded by the European Union. This project has received funding from the European Union's Digital Europe
Programme under grant agreement No 101102657. Views and opinions expressed are those of the author(s) only
and do not necessarily reflect those of the European Union or the European Health and Digital Executive
Agency (HADEA). Neither the European Union nor the granting authority can be held responsible.

2. 00
Index
01 SME Financing
02 The Problem
03 Our Vision
06 The Pilot Use Case
07 Demo
08 Roadmap
09 Call to Action
05 The Project Partners
04 Challenge & Opportunity

3. 01
01. SME Financing
What is an SME?
A Small to Medium Sized Enterprise
Fewer than 250 persons
an annual turnover not exceeding EUR 50 million
and/or an annual balance sheet total not exceeding EUR 43 million
22,4 million SMEs in Europe (90% micro enterprises, i.e fewer than 10 employees)
2,4 million Innovative SMEs
Circa 130k Tech Startups per year
National Budgets + Structural Funds in Europe €234 billion
Horizon Europe Programme 2021-27 €95.5 billion
Digital Europe Programme 2021-27 €7,5 billion
Funding available for startups €16bn/year

4. 01. SME Financing
For the SME Owner or Startup Founder
Searching for at least €250k to develop a POC will need to:
fill in forms at least 3 times to say the same things in different ways.
Pass at least 3 KYC checks, providing the same documents each time.
Spend at least 50 hours to apply and wait at least 4 weeks to know the result.
I.e. costing €6,6k to get €250k with a 5% success rate = not less than €132k… to get €250k
For The Investor
What does it look like today?
Scouting and KYC to fund a portfolio of 10 to 20 startups from 1000 applicants:
Will take at least 8 weeks.
Will cost 10% of the funds to be allocated.
02

5. StartUps
03
02. The Problem Summary
3-fold problem
Funding is related to their growth
momentum, they need fast funding.
Searching for funding opps.
Outdated endless static forms
Low success rate
Guessing investor’s interests
Lack of trust/understanding,
especially crossborder
HomeBias = lost opportunities
The cost of opportunity of wasting
funds searching for startups to fund.
Looking for StartUps to fund
Investors
No trust, especially cross-border
10% of funds are wasted
Dont build “scouting platforms”
No standards mean more costs
HomeBias = lost opportunities
Providers
Without a standardized system and
network, they can’t leverage.
Service Providers (Issuers)
Struggle to leverage network
effects
No standard assessment scheme
Due diligence costs cannot be
shared
Guessing investors interests
HomeBias = lost opportunities

6. 04
03. Our Vision
Enabling cross-border investment within Europe by creating a trust
framework between startups, investors and trusted operators* of services
to startups through portable and reusable verifiable credentials
*operators of finance and non-finance services to startups carrying out attestation
of KYC, KYB, and venture readiness i.e. Funding operators, BICs, Accelerators.

7. SAM
5.000+/Year

SOM
1.800+
Year
TAM
≈ 4.244

SAM
≈1.301
TAM
300+
1sd5
SAM
150+
05
04. Challenge & Opportunity
The Challenges
Creating a federated network of trusted operators of services to startups.
Developing a trust framework between startups and investors.
The Opportunity
Create a new market for european cross-
border investment built on portable and
reusable verifiable credentials.
Startups Investors Accelerators

8. 06
Experts in Funding and Scouting for over 10 years with over 150M Euro distributed,
managed more than 12k Funding Applications and 112 OpenCalls
Project Coordinator & Issuers
Digital Identity and wallet
infrastructure provider.
Technical Provider (Wallet)
Bulgarian Industrial Organization
representing interest at the EU level.
Ecosystem involvement & Issuers
Provider of web and mobile innovative
solutions.
Technical Partner (EBSI Node)
JA Bulgaria spin-off commercializing
technical academic research
Ecosystem involvement
Top pre-seed investor/accelerator in the
Nordics (900 startups with 67% invested)
Ecosystem involvement & Issuers
05. The Project Partners

9. Unleashing the
network effects
across borders
Avoid
Task Duplication
Reduce Decision
Making Time
Eliminate
leaks or frauds.
Greatly Enhances
Digital Trust
Open to new
opportunities
Scalable and
interoperable
07
06. The Pilot Use Case
Build a new trust framework with EBSI to boost European cross-border investment.
The goal is to provide a standardized way for startups to
obtain financing from investors, based on a trust framework
created by trusted operators of services to startups.

10. 07
How does EBSI help the Use Case?
A trust framework backed by EBSI
Only authorised nodes
EBSI uses a permissioned blockchain
model, where nodes are vetted and
authorized. This adds an extra layer
of security
Member state involvement
EBSI operates with a clear
governance model involving
multiple European member states.
This creates a sense of shared
ownership and encourages
collaboration. This enhances the
ability to create a standard
framework across borders.
Trust
EBSI-backed credentials
Investors and startups will
immediately trust the validity of the
EBSI-backed credentials, boosting
the reputation of the issuing
institutions and enhancing the
investment opportunities.
Security
Collaboration
Interoperability between pilot use cases
Access to the EBSI ecosystem encourages
interoperabilty between the pilot use cases
promoting standardization across schemas,
promoting better scalability of all of the solutions.
Interoperabilty

11. Know Your Business
A procedure aimed at verifying the
legal existence and activity of a
company and organisation.
Startup Investability
An indicator of a startup’s
investability based on a number of
factors, such as team, resources,
technology, traction..
08
Verification Levels
KYC
Know Your Customer
A procedure aimed at verifying a
natural person’s identity (relates to
the company representatives).
KYB Momentum

12. Holders
Entities holding the data
Early-stage startup companies
Company representatives
Verifiers
Funding Entities
Investors looking to invest in early
stage startups across borders
TAO
Trusted Accreditation
Organisation (TAO)
Registers issuers of KYC, KYB,
Momentum credentials in the
Trusted Register E.g. EBN, Invest
Europe, European Startup Network
Issuers
Verification entities
Issuers of KYC, KYB, and Momentum
credentials, such as BICs, Accelerators,
and Funding Providers (aiming at
maximizing the social and economic
ROI of their support)
Understanding the roles
09

13. Use Case
Overview
10

14. The startup first requests a KYC attestation from a Funding Provider
(e.g. FSTP), which verifies the identity of the startup. KYC information is
requested from the startup, and issues a KYC attestation to the startup.
01
The startup then requests a KYB attestation from a Business Innovation
Centre (BIC), which verifies the business information of the startup. BIC
requests the startup’s KYB information and issues the KYB attestation.
02
The startup then requests a venture readiness attestation from an
Accelerator, which verifies the venture readiness of the startup. They
request venture readiness information from the startup, and issues a
venture readiness attestation to the startup.
03
The startup then requests financing from the investor and provides the
verifiable credentials issued by the FSTP, BIC, and Accelerator to the
investor. The investor verifies the verifiable credentials with the Verifier
and provides financing to the startup.
04
Discover Scenarios
StartUp Journey
11

15. 07. Walk-through DEMO
The Startup go to the OnePass
Bridge Landing page and clicks
the "Join the waitlist" button
Joining in
Startup Journey
12

16. 07. Walk-through DEMO
The Startup goes through a
simple login process
Joining in
12

17. 07. Walk-through DEMO
....and submits the request to join
the pilot.
Joining in
12

18. 07. Walk-through DEMO
They will receive an invitation via
email with a link to start the
enrollment process.
This brings them to the OnePass
bridge landing page
Joining in
12

19. 07. Walk-through DEMO
If the Startup already has the KYC
credential, they can connect their
wallet and present it.
Onboarding - KYC
Verification
12

20. 07. Walk-through DEMO
Otherwise they may request
verification via the onboarding
platform.
This will take them to the IDNow
website where they can complete
the KYC process, receive their
credential and present it here for
verification.
Onboarding - KYC
Attestation
12

21. 07. Walk-through DEMO
If they already have a KYB
credential, they can present here
for verfication.
Onboarding - KYB
verification
12

22. 07. Walk-through DEMO
If not, the startup can request the
KYB attestation by completing the
application form with information
related to the company’s legal
existence.
Onboarding - KYB
Attestation
12

23. 07. Walk-through DEMO
After verification and approval, the
Startup can download the KYB
credetial to their wallet by scanning
the QR code
Download the KYB
credential
12

24. 12
07. Walk-through DEMO
The credential is issued to their
wallet
Credential Issued

25. 07. Walk-through DEMO
The onboarding is completed, the
user may proceed now to the
OnePass Bridge Startup Dashboard
to complete their profile, create a
dataroom and view a list of verified
investors.
Startup Dashboard
12

26. 07. Walk-through DEMO
The Startup requests financing from
an investor and presents the
verifiable credentials issued.
From the dashboard, they can
create a dataroom and securely
share information with selected
investors.
Startup Dashboard
12

27. 07. Walk-through DEMO
Investor Dashboard - The investor
will see any information the Startup
would like to share with them.
Investor Dashboard
12

28. 08. Roadmap
Issuing
StartUp’s
KYC/KYB
1
Issuing of
Momentum
Credential
2
Onboarding
new issuers
and TAOs
3
Project partners acting as
issuers. Issuing KYB/KYC
credentials to startups and
investors in existing programs
Phase for issuing of
Momentum credential.
Opening the program to more
entities
Onboarding of new TAOs and
issuers outside of the project
partners e.g. EBN, Invest
Europe, BICs
13

29. 14
Project Timeline

30. 15
09. Get involved
Potential Issuers
Get involved in the Regulation and Harmonization of
standards for KYC/KYB/Momentum.
Startups & Investors
Become an early adopter of the program.
Join our WaitList!