“The goal of SmartCap investments is to develop the local capital market and improve the availability of capital for Estonian businesses, including contributing to initiatives that add significant value to the local venture capital ecosystem,” said Sille Pettai, SmartCap board member and fund manager. “So far SmartCap has only invested in funds using an open call-based process, whereas interested parties who applied by a specific deadline were evaluated in a way that made them comparable and the candidates were ranked, with an view to invest in only one or two of such funds. Now, however, the approach is much closer to typical market practice and the new strategy and process allows the capital of Venture Capital Fund to be invested on an ongoing basis in accordance with the market situation, as well as the interest and needs of market participants. The doors of SmartCap are open to private sector venture capital funds whose investment strategy matches the focus of the Venture Capital Fund.”
Potential new SmartCap Venture Capital Fund investments are evaluated in aspects such as market fit and competitive advantages, as well as the investment strategy, the experience and competence of the team, the offered terms and the return prospects.
“When making investment decisions, we continue to evaluate the team, the strategy and the terms offered, but we are increasingly placing emphasis on evaluating the market position and competitive advantages of the funds. We still see ourselves as anchor investors in emerging funds, which are the starters on the local technology company market, but we have also reached a stage where we increasingly emphasize the consistent development of the local capital market as a whole, which might also require investing in already existing and successful local fund managers to improve their growth prospects,” described Sille Pettai.
“SmartCap Venture Capital Fund is ready to join as an investor if we see a high potential in the offered investment strategy and the team has what it takes to execute it. It can be either a fund with a specific Estonian focus or international fund, whose investment activities bring an important value-adding component to the local ecosystem,” added Pettai. The size of a possible single fund investment starts at 2 million euros.
As of today, SmartCap Venture Capital Fund investment portfolio includes four fund investments: Tera Ventures I, Superangel One, Superangel Two and NATO Innovation Fund. As of the end of 2022, through fund and direct investments SmartCap Venture Capital Fund has invested in a total of 117 start-up companies, which had a combined turnover of 1.32 billion euros in 2022.