SmartCap Green Fund has started evaluating the first direct investment applications
SmartCap’s Greentech Investment Programme (GTIP), which was launched at the end of October, has received the first funding applications that have passed the preliminary eligibility screening.
SmartCap is currently conducting a more detailed review and evaluation of companies and their applications. The first investment decisions are expected to be made during the first quarter of 2023.
“Just one month after the launch of the Greentech Investment Programme on October 31, start-ups here demonstrate a considerable interest in SmartCap joining their investment round,” said SmartCap’s board member and fund manager Sille Pettai. “We carry out an initial eligibility screening of applications within 20 working days after their receipt, after which we start with the substantive review and evaluation. When reaching an investment decision, the details of the information provided by the applicant, the readiness to involve private investors, the product and technology itself, and their suitability to the strategy of SmartCap Green Fund will be decisive.”
According to Sille Pettai, the investment decision is preceded by a more thorough assessment of compliance with the principles of SmartCap Green Fund and the conditions of Greentech Investment Programme, as well as communication with both the company requesting financing and, if necessary, with the co-investors of the investment round.
“In order to receive financing from SmartCap Green Fund, a start-up must meet several important prerequisites, both formal and substantive. First, it must be an early-stage Estonian green-tech company whose main economic activity takes place in Estonia. The focus of SmartCap Green Fund is primarily on companies concentrating on the development of non-software solutions, whose activities contribute to the achievement of the goals of the green transition,” described Pettai.
The fund manager of SmartCap added that there are several important preconditions, the fulfilment of which is critical for making the investment decision. They concern compliance with the rules of the EU taxonomy for sustainable activities, as well as the volume of the requested investment, private investors involved, etc.
“Private investors must also be involved in the investment round – they do not have to make a final commitment at the time of submitting the application, but by the time the investment is made, the share of private capital must be at least 50%. The investment made by SmartCap Green Fund in one green technology company would be between 250,000 and 2.5 million euros,” explained Sille Pettai.
According to Pettai, the exact time when SmartCap Green Fund will make the first direct investment financing decisions depends on the fulfilment of all prerequisites: “Each financing decision is unique and considers various factors of the applicant, from the team and business model to the ecological contribution and the terms of the transaction, which we evaluate in communication with the green entrepreneur. As of now, we estimate that we will reach the first financing decision in the first quarter of next year.”
The total volume Greentech Investment Programme until the end of 2024 is assumed to be 20 million euros. Investments are made in businesses through equity instruments or convertible loans.
The terms and conditions of SmartCap’s Greentech Direct Investment Programme can be found here.
SmartCap Green Fund is financed by the European Union NextGenerationEU Recovery and Resilience Facility funds.
SmartCap is a subsidiary of the joint agency of KredEx and Enterprise Estonia and a small fund management company registered with the Financial Supervision Authority, which manages two common closed-end alternative investment funds: SmartCap Venture Capital Fund and SmartCap Green Fund.