In the coming years, Latvian companies will have access to growth capital investments in the amount of approximately 850 million euros from private and venture capital funds registered in Latvia and funds based elsewhere with interest in Baltic companies, informs the Latvian Private and Venture and Capital Association (LVCA).
“Growth capital investments are currently available in a really large amount, funds are currently very actively looking for companies with ambitious future growth potential,” informs LVCA Chairman of the Board, Livonia Partners partner. Kristīne Bērziņa. “If there is a well-developed and sustainable business idea, Latvian entrepreneurs can certainly look in the direction of foreign private and venture capital funds, which have also set Baltic companies as their investment target. Investment for growth is a major driver of the economy, fostering innovation, creating new jobs and helping entrepreneurship. ”
The largest Latvian investment fund to date has started operating
The KS Livonia Partners Fund II was launched in September this year. It plans to offer capital of 147 million euros in the coming years, with a special focus on business ideas aimed at tackling climate change and environmental sustainability. The fund will offer investments in both business growth and buyouts (buyout) stage.
“Registration of the new fund is a great benefit for domestic companies to implement their ideas, but they must be ready for fierce competition with other Baltic and European companies to obtain financing. Several Latvian companies have already confirmed that by attracting growth investment capital, rapid growth of the company, expansion of knowledge and contacts, arrangement of management processes is possible, which allows to conquer the world market, ”emphasizes K.Bērziņa.
The largest funding – for redemption transactions
Currently, the largest investments are available for corporate buyouts – more than 400 million euros, offered by 7 private and venture capital funds. Typically, such transactions take place during the maturity phase of a company, when a private equity fund repurchases another company by acquiring shares from existing owners.
Investments in the growth stage of companies in Latvia are currently provided by 6 funds. These funds can be invested production development, service expanding the range of new market acquisition of competitors or other investments relevant to the company projects.
Late stage venture capital investments are available from 4 funds and early stage from 14 funds. More information on the funds and their investment stages is available in a study published by Deloitte and all Baltic private and venture capital associations in June this year. “Baltic Private Equity and Venture Capital Market Overview” a LVCA website.
LVCA especially invites the authors of ambitious ideas to actively use the early-stage investment opportunities available in combination with acceleration programs. The investment period for the accelerator funds set up with the help of Altum ends in the middle of next year, and it is currently unclear whether these programs will continue.
“Since 2018, when Altum started supporting accelerator funds in Latvia, about 100 investments have been made in early and fast-growing companies. These are significant investments that have given Latvian start-ups the opportunity to develop at the international level. Latvia is a good starting point for companies to move on to the alternative list of the Nasdaq stock exchange, international acceleration programs or to start cooperation with large international industrial corporations. This is also an opportunity to create new jobs here in Latvia, ”says Matīss Neimanis, the leading partner of the accelerator “Buildit Latvia”.
Latvian accelerator-supported company Bercman technologies has started listing on the Nasdaq stock exchange alternative list, several companies have been able to qualify in major international acceleration programs, such as YCombinator (Lastbit), EIT Raw materials (Catalyco), 3D Strong ”), EIT Health (Semantic Intelligence), Brightlands accelerator (Catalyco, Adianano tech), Imec.Istart (InLable), many have partnered with large international industrial corporations ( Squad Robotics, PurOceans, Catalyco, 3D Strong, Empyrio, Crystals Growing, Chemcode) or have started marketing their products in the USA (Roboeatz, Winmill).
The Latvian Private and Venture Capital Association (LVCA) is the oldest such association in the Baltic region. In 2003, it was established by the six largest companies operating in the venture capital sector at that time, as well as the Latvian Investment and Development Agency.
The members of the association are fund management companies operating in Latvia, lawyers and financial consultants working in this sector. Currently, the association unites 39 organizations, ie the majority of Latvian private and venture capital industry participants. LVCA represents the interests of the industry in legislative and executive institutions. The association also informs entrepreneurs and the public about the possibilities of receiving private and venture capital financing, promotes the exchange of knowledge and experience between the members of the association, organizes and ensures cooperation with international and foreign private and venture capital associations.