Estonian Development Fund, SmartCap and European Investment Bank announced a call to find a private fund manager for the direct investment portfolio that includes 15 start-ups. The expression of interest must be submitted by October 3rd. The results of the call will be disclosed by the end of the year.
European Investment Bank (EIB) was involved in the project in order to organise a transparent competition. According to Bruno Robino, representative of the EIB, the work done by the Estonian public sector to enliven the local venture capital market deserves credit. “The market has already been created, however, a viable venture capital market should be based on the private sector. It is positive that the Estonian government finds the need for these steps important and is implementing them,” he said.
Robino added that finding a fund manager from the private sector to manage tens of millions of euros from the taxpayers must not only be fair but also appear fair. “SmartCap has done everything in their power to make the competition fair for all potential participants,” he said.
Up to 10 million euros for continuation investments
Sille Pettai, Fund Manager of SmartCap, said that the private fund manager is expected to create a new fund, manage direct investments’ portfolio and make follow-on investments. “The existing shares of the Estonian Development Fund and Early Fund II will be incorporated, as well as up to 10 million euros for follow-on investments,” she said. Teams with experience in early phase investments are expected to participate from Estonia and abroad.
The candidates that make it to the second round will be able to get acquainted with the portfolio of SmartCap in depth, after which they will be expected to shape their visions and submit their tenders. The second round will be closed in the end of November. The winner will be chosen before Christmas, taking into consideration the candidates’ previous experience and vision for the future. This will be followed by the last stage, including negotiations with the winning fund manager, which will result in the creation of a new fund. The new fund should commence its operations in Q1 2017.
Public funds will only be invested together with private investors
The winner of the call must invest and manage the fund in market conditions. The returned capital and portfolio companies from which SmartCap will exit before December 31, 2016, will not be included in the new fund.
The fund managed by the private fund manager will retain earlier investment principles, as all the ventures made into the companies’ equity capital will be joint investments with private investors.
The direct investments will continue to be managed as before until the private fund manager is appointed. Applications can be filed until October 3rd, 2016, to firstname.lastname@example.org. Further information about the terms and conditions of the call can be found from the website of SmartCap.