SmartCap is mapping the availability of capital for Estonian green technology companies
SmartCap is creating the 100-million-euro green technology oriented Green Fund using the funds of NextGenerationEU recovery plan, and is analysing the current state of the ecosystem of Estonian green technology companies, availability of capital, as well as market failures.
The review that is to be completed in April will map out possibilities for developing green technologies and realising the potential of the ecosystem through a public investment fund.
“SmartCap has signed an investment agreement with the state so that the first investments of Green Fund could reach the market already this year,” said Sille Pettai, a member of the management board of SmartCap. “We are also currently conducting an analysis of needs and expectations of companies, as well as challenges of raising capital. In addition, we wish to map willingness, preferences, and constraints of investors when they invest in green technology companies.”
Within the scope of the current analysis, Estonian companies operating in the field of green technology and capital market participants were interviewed with the aim of mapping the current situation to consider strategic choices and investment conditions as part of determining Green Fund’s investment strategy.
“Estonian startup ecosystem has been changing rapidly in recent years, and due consideration of today’s market situation is a prerequisite for the success of Green Fund. Our goal is to move at a pace that would ensure our readiness to open up investment opportunities by the middle of this year,” added Sille Pettai.
The Minister of Entrepreneurship and Information Technology Andres Sutt explained that the establishment of GreenFund is just one but a very significant part of the entire Estonian Recovery Plan, which in addition to the green transition of companies also contributes to their digital transition and energy efficiency, as well as to sustainable solutions in all areas of life.
“While today the digital and green transition may seem like a secondary issue in the light of the war or high energy prices, the opposite is true. The current difficult circumstances clearly show how important it is to reduce the energy dependence of our economy and to give impetus to the development of green technologies. With Green Fund, we are creating preconditions for the emergence of future technologies with export potential in Estonia, which is important both for meeting the climate goals of the entire European Union, and for modernising the Estonian economy and ensuring its innovation capacity. At the same time, we are also thinking about opportunities for innovative companies to grow in Estonia, so that lack of local capital would not force them to leave their home country,” Andres Sutt explained the idea of the plan.
The market analysis is being performed by the international consulting company EY on the order of SmartCap.
The Supervisory Board of SmartCap established Green Fund last December. It focuses on innovative research-intensive companies that contribute to the development and commercialisation of new products, services or technologies that address environmental problems or reduce or capture greenhouse gas emissions.
Through SmartCap’s Green Fund it is planned to offer equity investments in the amount of 100 million euros until 2026, in addition, the contribution of private investors is also expected. Green Fund is funded by the EU with funds of the recovery facility NextGenerationEU.
SmartCap is a subsidiary of Estonian Business and Innovation Agency (after the merger of Foundation KredEx and Enterprise Estonia from January 2022)., and it is registered with the Financial Supervision Authority as a small fund manager which manages a public venture capital fund and a public investment fund.