"Co-investment Fund II" is a risk capital instrument.
The risk capital market in Lithuania is still emerging but developing rapidly due to the various initiatives that were implemented since the 2007–2013 programming period. Therefore, more efforts are still needed to further stimulate equity investments into Lithuanian enterprises, especially start-ups.
The main objectives of the Co-investment Fund II:
- Increase private sector activity in research and experimental development and innovation under Smart Specialization Strategy, entrepreneurship and productivity of SMEs;
- Develop the risk capital investment environment in the country as well as stimulate investments in businesses and jobs in the regions;
- Increase the level of investments from business angels;
- Promote the development of the Alternative Market (First North), creating conditions for the companies to prepare for entering the regulated securities market.
The objective of the Co-investment Fund II is not only to facilitate funding for companies, but also to: (a) assist them in their development in order to increase their growth possibilities and to evolve successfully; and (b) to attract and leverage additional private resources, e. g. private risk capital funds and business angels.
The Co-investment Fund II aims to fill the existing funding market gap and invest as much as possible in the earliest stage companies, those fall within the highest risk investment group.
The financial instrument Co-investment Fund II is financed from the fund of funds Business Financing Fund, funded by the European Regional Development Fund. The Ministry of Economy and Innovation earmarked EUR 9.28 million for the investments under Co-investment Fund II.
Evidence of success
As of the end of Q1 2019:
- 102 business angels and risk capital fund management companies were selected as eligible for investing together with Koinvesticinis fondas;
- 4 enterprises received investments for the amount of EUR 1.76 million invested from the Co-investment Fund II as well as EUR 0.92 million from private investors.
The beginning of the implementation of the financial instrument Co-investment Fund II showed the strong need to strengthen the cooperation between business angels.
Potential for learning or transfer
"Co-investment fund II” provides a good example of how public authorities may build on previous positive experience (regarding market knowledge, successful financial products implemented and work with various stakeholders) in order to define and cope with new challenges such as better structuring the RDI sector with the support of financial instruments.
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