INVEGA is establishing two new startup accelerators – investing 18 million euros to a new venture capital instrument
The national development institution Investment and Business Guarantees (INVEGA) together with the Ministry of Economy and Innovation is preparing a new 18 million euros venture capital financial instrument for startups “Accelerator 2”. Two fund managers will be selected to implement this measure, who will be required to set up and manage two new venture capital funds each. It is planned that, once the selection conditions have been approved, a call for the selection of these new fund managers will be announced in early summer, with the first investments reaching the business in 2022.
“With the help of mentors, startups not only grow 4 times faster, but also attract 7 times more venture capital than independently developing innovative companies. Accelerator activities, during which startups share experiences and receive advice and financial opportunities to grow faster, are undoubtedly a crucial stage, but pre-acceleration programmes are still the basis for the emergence and formation of startups. Therefore, the new tool will focus special attention on the generation of business ideas, team formation and their mentoring,” said Kęstutis Motiejūnas, General Director of INVEGA.
According to Motiejūnas, the “Accelerator 2” financial instrument will be implemented by two selected financial intermediaries – fund managers, who will have to attract to the funds at least 10% of private funds and set up two venture capital funds: the Pre-seed Fund and the Seed Fund.
The Pre-seed Fund will implement three programmes: a pre-acceleration program, an acceleration program, and a small-scale investment in micro and small enterprises. The implementation of the pre-acceleration programme will focus on organising events that generate business ideas, and inviting individuals working on innovations to form teams. It is planned that at least 120 participants will participate in the pre-acceleration programme organised by each fund manager, from which 30-35 teams will be formed. The acceleration programme will be designed to strengthen teams, grow their competencies, and further develop products. Mentoring and counselling services will be offered to the programme participants. It is expected that within a period of three years, each fund manager will implement at least 3 acceleration programmes, will accelerate at least 45 companies, which will be partially or fully established from pre-acceleration programme participants. All eligible companies will be provided with initial venture capital investments.
The second venture capital fund of the instrument is the Seed Fund, which will invest venture capital in micro and small companies in the pre-seed stage and seed stage. It is estimated that at least 70% of the allocated funds will have to be invested in companies that have participated in pre-seed stage of the fund’s acceleration programmes.
“Currently, INVEGA is successfully implementing two acceleration funds that provide startups with knowledge and funding, but their activities are nearing completion. Therefore, in order for startups to continue to grow without interruptions, we plan to launch two more accelerators in parallel, under the venture capital measure “Accelerator 2”. This way, young businesses will be provided with consistent assistance with funding and knowledge,” added the director of INVEGA.
Motiejūnas emphasises the idea that the new funds will be closely related to investments that will help to achieve sustainability goals in environmental, social and energy efficiency aspects, and the funds’ investments will be targeted at longer-term more sustainable activities.
The “Accelerator 2” measure is implemented from the Innovation Promotion Fund, which was established on 30 December 2020 by the financing agreement concluded between the Ministry of Economy and Innovation, the Ministry of Finance and INVEGA, and is financed from the state budget. The purpose of the Innovation Promotion Fund is to provide sustainable incentive funding to stimulate investment in basic and applied research, experimental development, innovation and its development. Increased funding is crucial to achieving long-term sustainability goals, and the fund is expected to be funded from a variety of public sources in the future, including the EU Structural Funds for 2021-2027.
Investicijų ir verslo garantijos UAB is a national development institution established by the Government of the Republic of Lithuania to help Lithuanian businesses obtain the necessary financing. The mission of the institution is to promote the growth and competitiveness of Lithuanian business: its guarantees help to solve the problem of insufficient or unattractive collateral for financial institutions, and the administered and directly provided soft loans, subsidies and venture capital measures facilitate access to financing.