EIF and Practica Capital sign €6 million Seed Fund and €15.7 million Venture Capital Fund for investment into Lithuanian SMEs
The European Investment Fund (EIF) has committed EUR 6m into Practica Seed Capital Fund (Seed Fund), a seed capital fund focusing on new idea development opportunities in Lithuania. The deal has been signed under the local JEREMIE initiative (Joint European Resources for Micro to Medium Enterprises).
The main purpose of the fund is to develop new businesses by financing and incubating the prospective ideas and help them to develop at the pre-seed and seed stages. A “business accelerator” under the name of Startup.lt would actively support the founding process of new companies throughout their early life cycle from their launch to incorporation, thereby filling the gap start-ups experience in Lithuania. The “business accelerator” will provide vital services such as business advice, office space, networks and other services including bookkeeping, legal and intellectual property advice.
EIF's Chief Executive Richard Pelly said “With its investment into Practica Seed Capital Fund the Jeremie Holding Fund, managed on behalf of the Lithuanian Government by EIF, aims to support many young, innovative Lithuanian enterprises. We are convinced that the accelerator will provide solutions to some of the most prominent financing and business development challenges faced by the pre-seed and seed segments and will entice the creation of new start-up companies in Lithuania.”
In parallel, a Practica Venture Capital Fund has been established with a targeted size of EUR 15.7m, where EIF is investing EUR 11 m from the JEREMIE Holding Fund. This venture capital fund could potentially provide follow-on investments for the ideas developed under the Seed Fund, but will also invest in existing high-growth companies.
“Practica Capital, a risk capital fund manager, has successfully attracted private investors to the fund, which, together with the national funds, will be invested to develop businesses that promote innovative ideas and generate high value added. It is important to note that these investments will be aimed to finance the development of start-ups and will help to develop those fields where the state financial support is of vital importance. Through the support to innovative business ideas and high tech companies we will help to create new jobs, accelerate the GDP growth and increase the level of public welfare,” – Minister of Economy Rimantas Žylius said.
Both funds will be managed by the newly established Practica Capital team which consists of well reputed successful entrepreneurs and financial professionals brought together through this initiative.
Practica's partner Dr Anatolijus Faktorovičius said: “Practica Capital represents a diverse and large team of entrepreneurs with real-life business experience and financial professionals, which we think is a good combination to manage seed and venture capital funds in Lithuania. We believe that our team understands local business and can appropriately tailor financing to their situation”.
This transaction is the fourth equity deal signed by EIF on behalf of the Lithuanian Ministry of Economy and Ministry of Finance as part of the management of the JEREMIE Holding Fund. It underlines the importance of continued support to the development of the equity sector in the region which is of key importance in view of the current market conditions.
About EIF
EIF's central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops 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. EIF‟s total net commitments to venture and growth capital funds amounted to over EUR 6bn at end 2011. With investments in over 370 funds, the EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF guarantees loan portfolio totalled over EUR 4.4bn in close to 220 operations at end 2011, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor.
About Practica Capital
Practica Capital is a venture capital firm in Lithuania established in 2011 by a team of entrepreneurs who exited their businesses and financial professionals with institutional private equity experience. The firm manages seed and venture capital funds established under JEREMIE initiative administered by EIF and provides early- and later-stage financing to Lithuanian SMEs. In the past, Practica‟s team members participated in such exemplary transactions like Viltechmeda, a medical device producer founded by Dr Anatolijus Faktorovičius and sold to an NYSE-listed strategic investor Moog Inc. as well as Interdata, an internet hosting company established by Mantas Mikuckas at age of 18 and sold 7 years later to Baltic Data Center (TeliaSonera group). For more information about Practica: www.practica.lt.
About JEREMIE
JEREMIE (Joint European Resources for Micro to Medium Enterprises) is a joint initiative launched by the European Commission (DG Regional Policy) and the European Investment Bank group to improve access to finance for SMEs in the EU within the Structural Funds framework for the period 2007 - 2013. JEREMIE enables the EU Member States and Regions to put money from the structural funds and also national resources into holding funds that can finance SMEs in a flexible and innovative way. Since the products will be provided on a repayment basis, funding will be reinvested and hence more SMEs will benefit from the EU resources.
In Lithuania, JEREMIE Holding Fund is financed from the EU Structural Funds under 2007-2013 Economic Growth Operational Programme of Lithuania.