New deep tech fund to be created in Estonia
National venture capital fund manager SmartCap has opened a call to select a fund manager for establishing and managing a deep tech investment fund, which will start making investments into Estonian deep tech companies.
SmartCap will make the cornerstone investment in an amount of 15 million euros and the new fund manager shall raise additional capital from private investors. The deep tech fund will make investments into companies whose product or service and business model are based predominantly on scientific research and development and commercialization of intellectual property.
Current status of underfunding in deep tech fields outside of software development mainly results from their large capital intensity, longer product or service development cycle, longer period of achieving profitability, but also from higher technology risk level and from the limited experience of investors in research-intensive fields.
“The presence of local patient capital is crucial for starting deep tech companies, since this determines whether they go from research projects to scalable global businesses” highlighted Pettai. Thus, the creation of Estonian deep tech focused investment fund is a market shaping and diversifying step for Estonian startup ecosystem.
A private fund manager for the fund will be selected through an open call. SmartCap is welcoming both first-time teams as well as existing fund managers from Estonia and abroad to participate at the call. Fund manager’s team composition, competence and experience, envisioned investment strategy and terms of the new deep tech fund shall be evaluated during the selection process.
In addition to the investment by SmartCap, the new fund manager will have to raise additional capital from private investors. “State as a trustworthy cornerstone investor, gives reassurance and lowers the entry barrier for private investors. Therefore, we hope to see teams participating at the call who are able to attract private capital,” Pettai added.
The selection of the new fund manager is planned to be finalized in the third quarter of 2021. Expressions of Interest can be submitted until 1 March 2021. Further information about the terms and conditions of the call can be found from the website of SmartCap: https://smartcap.ee/open-calls/deeptech/.
SmartCap is small fund manager registered with the Financial Supervisory Authority, and since 2017, SmartCap has been operating as a subsidiary of Foundation KredEx. The fund assets managed by SmartCap are invested in venture capital funds which, together with private investors, place capital into research and technology-intensive early stage small and medium-sized companies with large international growth potential, mainly located in Estonia.