‘Venture capital in the Baltics is finally emerging as an asset class’

Despite a tough fundraising environment—global start-up investment was down 38 per cent in 2023—the Baltic tech ecosystem has again demonstrated its robustness and resilience.

Vilnius-based Practica Capital this week announced the final closing of its third vintage and largest fund to date, at an 80 million euros hard cap.

Practica Venture Capital III will significantly increase the amount of capital available for Baltic founders. The fund is the biggest seed fund in the region to date and establishes Practica Capital as a pan-Baltic early-stage investor.

The final closing was completed with the European Investment Fund (EIF) joining as a cornerstone investor alongside the European Bank for Reconstruction and Development (EBRD), SEB Investicijų Valdymas, INVEGA and Swedbank as anchor investors.

The fund was also supported by many individual limited partners, such as the co-founders of Lithuanian unicorns Vinted, Nord Security, and other successful tech companies, including several start-ups previously backed by Practica Capital.

“The majority of capital deployed at early-stage in Europe is domestic. We saw a clear funding gap in a maturing Baltic ecosystem,” says Arvydas Bložė, partner at Practica Capital. “We are pleased to facilitate the interest of Baltic pension fund managers alongside the continuous support by EIF, EBRD, and INVEGA. Venture capital in the Baltics is finally emerging as an asset class and it is a game changer.”

Despite a tough fundraising environment, the robustness and resilience of the Baltic tech ecosystem contributed to investor appetite for the new Practica fund.

“This new fund is set to become one of the largest early-stage funds ever launched in the Baltics,” says EIF Chief Executive Marjut Falkstedt.

“With highly skilled fund managers at the helm, we firmly believe that the launch of Practica Venture Capital III will play a pivotal role in both fortifying the region’s emerging venture capital ecosystem and also ensuring a steady flow of seed funding for ambitious local entrepreneurs, a crucial factor considering the challenging economic landscape ahead.”

Acting from within

Practica will continue its role as lead investor and support break-out attempts by early-stage tech start-ups in Lithuania, Latvia, and Estonia.

The strategy is tailored for the seed stage and is equipped to deploy up to three million euros in initial tickets and support winning companies up to eight million euros over the lifetime of the fund. The fund has already deployed more than 10 million euros and backed six companies, such as Heavy Finance, Sentante, Amlyze, and Breezit.

“We are a local lead investor serving and evolving with the ecosystem and acting from within,” says Donatas Keras, founding partner at Practica Capital. 

“With recent team expansion, we now have secured a presence in Latvia and Estonia, and we are excited to finally fulfil our promise for the ecosystem in the Baltics.”

According to the Baltic Start-up Funding Report, published this week by Firstpick and Change Ventures, two other funds based in the Baltic states, the region is on par with Europe’s leading tech hubs and is on the right track with its ambitions to grow the continent’s next big unicorn.

“Advanced digital governance and an innovation-conductive environment contribute to the region’s appeal to FDI, which will add to further growing investor trust in Baltic equity,” the report states.

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