Vilnius-based Practica Capital has announced the first close of its third fund at €32m. It's targeting a final close of €70m, which would make it the biggest early-stage venture fund in the region. The generalist VC will focus on marketplace, SaaS and deeptech startups with Baltic founders from pre-seed to Series A.
Practica is yet another VC from tiny Lithuania, after Baltic Sandbox Ventures and FIRSTPICK, to announce a fundrise in recent months. The wider central and eastern Europe (CEE) region has seen a flurry of new funds emerging throughout 2022 as the regional ecosystem matures, producing more startup successes and more first-generation founders and state-owned funds willing to back new managers.
The fact that Practica has managed a third fund — which is seen as a milestone for VC funds — is also a sign that the young startup ecosystem in the region is coming of age.
Where will the money go?
The VC plans to invest in initial tickets of up to €3m in 25 companies, primarily at the seed stage, making several initial investments in pre-seed and Series A. More than 50% of the fund will be allocated for follow-on investments.
“We fundamentally believe success stories can come from any sector, however, it is not yet reasonable to expect any sector to deliver numerous success stories by virtue of its small population and young ecosystem,” says Arvydas Bložė, partner at Practica. “Hence, we do evolve our fund strategy in parallel with the tech ecosystem and always centre it around founders.”
What’s Practica’s track record like?
In its ten years, Practica has made more than 50 investments in early-stage startups from the Baltics. It was an early investor of Lithuanian fintech TransferGo, Estonian fintech Montonio and Lithuanian translation software Interactio.
Who has Practica raised money from?
The fund’s first close has been anchored by the Estonian and Lithuanian branches of Swedbank. Its other LPs include the cofounders and early team members of Lithuania's first unicorn Vinted and venture builder Tesonet.
Sifted’s take
For many years, the Lithuanian startup ecosystem has been operating in the shadow of its more mature and more hip Estonian peer. Vilnius has made a big push to become a post-Brexit haven for fintechs from outside the EU which need a European passport to operate across the block (see Revolut’s case) — and this strategy seems to be paying off as fintech startups have been mushrooming across the country.
But the investors seem to think that this ecosystem can offer much more than just fintech. Lithuania, like the whole CEE region, has a vast pool of skilled engineers who can work on advanced deeptech and software solutions. For a long time there hasn’t been enough capital in the region to help many of those ideas develop and grow — but Practica being able to raise a third fund shows that this funding gap might be closing soon, and that investments in the region will generate returns.
