EIF and EstFund committed EUR 60 million for investments into Estonian SMEs
KredEx through EstFund and the European Investment Fund (EIF) are announcing two new investments into Equity United PE I and Tera Ventures Fund II in Estonia. The two new funds have been signed under the EstFund - an initiative created by cooperation between the Republic of Estonia and the European Investment Fund and financed under European Structural and Investment Funds. EstFund aims to develop the early and expansion stage equity market in Estonia by providing equity financing to high growth small and medium-sized enterprises (“SMEs”) and attract private investors to the local market.
EIF’s Chief Executive Pier Luigi Gilibert, commented: “With this investment into Tera Ventures Fund II and Equity United PE I, the EstFund and EIF aim to support many innovative promising Estonian enterprises. There are currently only a handful of early-stage equity investors active in the Estonian market, and these investments should play a catalytic role in promoting an underserved part of the equity market and supporting the SME eco-system in Estonia.”
Tera Ventures Fund II will focus towards venture capital investments into innovative early stage companies. Equity United PE I will provide expansion capital to SMEs with high growth potential that are aiming to expand to new products or markets. Before starting actively investing in the Estonian market, the fund managers have to fundraise additional resources from private investors, which is to be completed in the upcoming months.
A third investment under EstFund had been signed at the end of 2017 into United Angels Co-investment Fund I that is now actively co-investing together with the other private investors into early stage Estonian SMEs.
KredEx Chief Executive, Lehar Kütt, commented: “Announcing these EstFund's investments, KredEx marks a further step towards the development of the Estonian venture capital market. By mobilising other investors, including funds from the private sector, this is expected to result in overall investments of almost EUR 100 million that would further help to build successful companies in Estonia.”
These transactions complete the fund managers’ selection process under the EstFund, managed by EIF on behalf of the Estonian Ministry of Economics and Communications and KredEx. It underlines the importance of continued support to the development of the equity sector in the region which is of key importance in fostering high growth innovative SMEs and hence economic growth.
About the European Investment Fund:
The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe's micro, small and medium-sized businesses by helping them to access finance. EIF designs and develops both venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.
KredEx is a financing institution that helps Estonian enterprises develop quicker and expand more safely to foreign markets, offering loans, venture capital, credit insurance and credit guarantees with state guarantee.
The EstFund is an equity fund of funds created by cooperation between the Republic of Estonia, KredEx and the European Investment Fund. The EstFund is financed by the European Regional Development Fund from the Operational Programme for Cohesion Policy Funds 2014-2020 in an amount of EUR 48 million, and EIF is co-investing EUR 12 million alongside through the EIF-managed resources. These funds will offer equity financing from seed to growth for Estonian SMEs via the selected equity funds.