Growth can come from investing in sustainable business ideas

In the coming years SmartCap, which last year created the Green Fund of nearly 100 million euros, will allow green and smart business ideas the opportunity to grow with VC funding and will encourage innovators to undertake both already prepared and new sustainable projects.

As a society, we are more aware than ever and ready to make changes. It is sustainable technological solutions that will play an important role in the success story of our country’s innovation and economic development for the next 100 years.

During the last decades Estonia has been one of Europe’s flagships in terms of the pace of economic development, investment courage and entrepreneurship. “We are used to thinking of ourselves as an innovative e-state whose breakthrough technologies find use and recognition internationally. There are many such examples, for instance, our companies, such as Wise, Skype, Veriff or Bolt,” said SmartCap’s board member Sille Pettai. She added, however, that in order for the success story to continue, we need a change of direction.

Green transition requires will, skills, time and money

The global crises of recent years and the growing climate problems have shown us more and more acutely that it is necessary to develop sustainable ideas and technologies bolder and faster than before. According to Pettai, the continuation of the success story of our technology companies, the well-being of people and the pace of economic development greatly depend on the ability to implement the green transition.

“Of course, there are many variables in the equation of achieving green transition and sustainable growth – daily choices, legislative framework, raising awareness, companies’ ability and will to implement changes, but also the presence of sufficient capital and willingness to take risks. It is all the more important that the state sets an example here and makes well-thought-out investment decisions aimed primarily at environmentally friendly solutions. This ensures that we will still have great solutions to use ten years from now – solutions that also have export potential,” said Pettai.

SmartCap Green Fund invests in solving environmental problems

“SmartCap has been developing the Estonian capital market for over ten years, and we have reached a point where it is possible to address the needs of the market much more precisely. Our current focus is on diversifying the offer of equity investments for companies that focus on a sustainable economic model,” said Pettai. SmartCap Green Fund of nearly 100 million euros created last year is an important step in supporting the resolution of environmental problems and the achievement of a climate-neutral circular economy.

“The goal is not simply to bring to the market new green companies with a marginal innovative element, but to achieve research-intensive breakthrough technologies with investments. It is these solutions that require patient money, willingness to take risks and additional certainty in order to attract private funding,” noted Pettai.

SmartCap Green Fund has already commenced its activities and at the first stage together with private investors two venture capital funds focused on green technologies will be invested in. As an anchor investor, SmartCap contributes 20 million euros to both funds. At the same time, from the end of October, SmartCap also started offering direct investments to Estonian green technology companies, by which the companies can receive financing in the amount of up to totally 20 million euros through equity instruments.

Business ideas must be green in both form and content

It is important to understand that the time for greenwashing is over. “When defining your company and technology and asking for an investment, you have to keep in mind that the activity must comply with the principles of sustainable and green business throughout the life cycle of the product, service or company,” noted Sille Pettai. New technologies and businesses should not tolerate significant social or environmental harm in the name of technological and economic gains.

Pettai believes that in less than ten years we will see the first major changes. “Investors, consumers, and society in general are already interested in technologies that help solve pressing global problems, but the successful introduction of new technologies requires the contribution of all parties. As a result of SmartCap’s Green Fund’s actions, in the coming years we will probably see new Estonian companies achieving international success and the resulting benefits for everyone – for example, in renewable energy, material use or the circular economy,” she explained.

SmartCap invests in the development of innovative Estonian companies with international growth potential thus contributing to the development of the Estonian economy and the local capital market. Until 2026, through funds and direct investments of SmartCap’s Green Fund, 100 million euros will be offered to improve the financing opportunities of Estonian green technology companies.

SmartCap Green Fund is financed by the European Union NextGenerationEU Recovery and Resilience Facility funds.