The European Investment Fund (EIF) and the national fund managers of Estonia, Latvia and Lithuania signed an agreement to establish a new €225 million Baltic Innovation Fund 3 (BIF 3) to strengthen the private equity and venture capital market in the Baltic region. EIF will commit €75 million to the fund, and each Baltic state will contribute €50 million.
The objective of BIF 3 is to act as a cornerstone investor for both new and experienced fund managers and to invest alongside private investors in Baltic growth-stage companies, mobilising up to €700 million. Approximately 70% of the BIF 3 portfolio will be allocated to funds focusing on growth-stage companies, with the remainder invested in funds making late-stage venture capital investments. Over five years, the plan is to invest in 8–11 funds and allocate up to 20% of the fund’s volume to investments aligned with climate objectives.
BIF 3 was preceded by two earlier innovation funds – BIF 1 and BIF 2 – which have channeled more than €1.19 billion into companies in the region since 2013.
“The Baltic region has shown remarkable resilience and a strong appetite for innovation,” said EIF Chief Executive Marjut Falkstedt. “Building on our very successful prior collaboration, we’re looking to deepen the market with long‑term capital that helps high‑quality companies scale and realise their ambition.”
According to Minister of Economic Affairs and Industry Erkki Keldo, the innovation fund has been long awaited in the Baltic private equity and venture capital market. “The new pan-Baltic venture capital fund will significantly improve access to capital for Estonian companies with the ambition to become market leaders in Europe. By participating in fund investments through SmartCap, the state sends a clear and positive message that investing in our region is safe and profitable despite the complex geopolitical situation. In doing so, we build trust and foster the growth of our companies,” Minister Keldo emphasised.
SmartCap CEO Sille Pettai said the goal is to ensure that the region’s most promising companies have access to the growth capital they need to compete globally. “The new fund is a clear signal to private investors that the Baltics remain an attractive and resilient market and that we continue to address the critical financing needs of companies seeking to grow and scale.”
Hendrik Reimand, Chairman of the Board of EstVCA and founder of venture capital fund 2C Ventures, stressed that BIF 1 and BIF 2 have played a very significant role in the development of Baltic capital markets, acting as cornerstone investors in the majority of Baltic private equity and venture capital funds. “BIF 3 is critically important for the sustainability of the sector and creates strong preconditions to ensure that we will continue to have strong local private equity and venture capital funds supporting our best companies and thereby contributing to the growth of the local economy.”
The BIF 3 partner in Estonia is SmartCap, ALTUM in Latvia, and ILTE in Lithuania.