Vilnius-headquartered venture capital firm Baltic Sandbox Ventures has closed a €10 million investment into its latest €13 million deeptech fund and accelerator. The cornerstone investor is INVEGA, a Lithuanian government agency, the program financed from its Innovation Promotion Fund, with the balance coming from private investors, including Vytautas Kašėta, (SUPER HOW?) and Pijus Makarevičius (Furniture1). The fund will be split into two equal parts of €6.5 million each, aimed at pre-seed and seed investments into up to 80 emerging Baltic deeptech startups, building grassroots deeptech and life sciences ecosystems.
CEE is one of the fastest growing regions for VC funding in Europe, according to Dealroom, growing 7.6x since 2017 and 19x since 2010. While average funding per startup is decreasing globally, it’s actually still increasing in CEE. One key reason for the region’s attractiveness is the availability of strong technical skills. Despite this advantage, deeptech investment remains relatively muted in CEE. A recent EU-funded report found that only one quarter of all European venture capital is allocated to deeptech startups, a total of just €10 billion in 2020. And according to another recent Dealroom and Sifted report, the Baltic region is even further behind at less than 3%.
With its new model for deeptech investing, Baltic Sandbox aims to rectify this. The team, former founders and operators with technical backgrounds and experience building and scaling deeptech companies, believes that the root cause of CEE’s deeptech funding shortfall is not just greater risk aversion than in the US, but failure to identify and nurture suitable early-stage founders while they are still at the stage of technical problem-solving. Baltic Sandbox’s model invests time in environments where technically-minded inventors are still developing and streamlining their ideas. The accelerator expects the new approach to unleash a new wave of opportunities for deeptech startups in CEE.
Sandra Golbreich, General Partner at Baltic Sandbox, said: “The way we look at deeptech investment in Europe is wrong. The talent is there, but potential deeptech entrepreneurs are not making it through to seed stages and often end up inside global corporations located outside the region. That’s because the people who come up with new deeptech innovation are initially more focused on engineering problem-solving.
They remain invisible to VCs stuck in a game of popularity contests around pitching, charisma and the hype-cycle, rather than the substance of the founding team and the underlying business or technological advantages. Our edge is that we understand deeptech and know how to find and communicate with the right people.”
Baltic Sandbox Ventures was founded in Vilnius, Lithuania, by Sandra Golbreich, Andrius Milinavičius and Erik Bhullar. The company grew out of a regional accelerator – also called Baltic Sandbox – which had already screened 1,300 potential investments, leading to positions in startups including ZENOO, ViaCorex, SEARADAR and Roble App.
The new fund follows earlier success helping 18 startups to raise €5 million and grow valuations up to 20x. Baltic Sandbox helped personalised pet food startup ZENOO, for example, to launch its product from scratch in Lithuania and enter the EU and Asian markets in less than 2 years.
Erik Bhullar, Venture Partner at Baltic Sandbox, said: “We cannot have innovation or meaningful growth if we believe that networks, social circles, pitching, and presumptions of pedigree are what make for a successful venture-grade business. Most people in venture overlook what really matters like competencies, merit, the development of edge, and the ambition to make an impact globally. By focusing on the right things, we believe Baltic Sandbox Ventures will be the symbol for quality on founder cap-tables.”
Baltic Sandbox will initially focus on the Baltics before launching additional funds through 2023 and 2024 for deeptech investments across Europe.
