SmartCap updated the terms of the Green Fund Direct Investment Programme, which focuses on green technology start-ups. The changes increase the maximum amount of investment in a single company and shift the focus to start-ups that have reached maturity to invest in their growth and international expansion.
“Estonian green start-ups have shown lively interest in the direct investment program launched by the Green Fund in the autumn of 2022. SmartCap together with private investors has so far financed six companies within this framework,” said SmartCap board member and fund manager Sille Pettai.
To date, eAgronom, a climate-friendly start-up in the agriculture sector, Vok Bikes, a developer of electric cargo bikes, Bisly, a developer of intelligent building technologies, Paul-Tech, a precision agriculture start-up, Cuploop, a developer of technology for recycling reusable packaging, and UP Catalyst, a creator of technology that converts carbon dioxide into carbon materials, have received direct investment from the Green Fund.
The Green Fund Direct Investment Programme aims to improve capital availability for start-ups that develop green technologies. “We are constantly assessing the local market situation and will update SmartCap’s investment conditions according to the changing needs of companies and feedback from the green tech sector. Under the revised terms, the Green Fund will move its direct investments to a somewhat later stage of development for companies. Until now investments have been aimed at companies raising money at an early stage, but now the Green Fund is also ready to invest in later stages, including Series C funding rounds, where companies are in an active expansion phase and need capital to accelerate growth.”
“Changing the focus of the Green Fund’s direct investments will also lead to changes in the size of the investments – the Green Fund’s investment in one start-up will now range from EUR 500,000 to EUR 5 million,” Sille Pettai said. “As before, the principle will continue to apply that the Green Fund invests in companies together with private investors, and private money must account for at least half of this funding round, while at least 30 percent must be new private capital for the company.”
According to Sille Pettai, the purpose of the changes is to ensure better access to capital for green technology companies that have already passed the first rounds of financing and to provide the next push to further develop their product or services and enter new markets.
“Estonia has already established a venture capital fund investing exclusively in green technologies, 2C Ventures, and another fund is expected to be established in 2024. SmartCap will invest 20 million euros through the Green Fund as an anchor investor in both funds which offer financing to early-stage start-ups,” said Sille Pettai. “At the same time, a number of companies have reached the next stage of development and larger funding rounds. We would like to contribute to this development and to provide confidence for private capital owners who are looking for investment opportunities in new funding rounds.”
The primary goal of investments of SmartCap’s Green Fund is to support green technology companies which have a high growth potential, and which operate in strategic areas – energy, agriculture, food industry, transport and logistics, material and chemical industry, and environment. SmartCap’s focus is on companies that are engaged primarily in the development of non-software solutions and aim to achieve the goals of the green transition. The companies must be established in Estonia and conduct business activities here.
The companies interested in SmartCap’s Green Fund funding can find the terms of the investment program here.
Through SmartCap’s Green Fund, the volume of which is 100 million euros, it is planned to offer equity investments together with private investors until 2026. As direct investments, SmartCap plans to provide funding to companies in the amount of up to 20 million euros as equity or convertible instruments.
SmartCap Green Fund is funded by the European Union’s NextGenerationEU recovery fund (RRF).
SmartCap is a small fund management company, a subsidiary of the Estonian Business and Innovation Agency (after the merger of Foundation KredEx and Enterprise Estonia), registered with the Estonian Financial Supervision Authority and managing the SmartCap Venture Capital Fund and SmartCap Green Fund.