The Lithuanian team of the well-known Estonian accelerator Startup Wise Guys (SWG) has separated from the company and set up its own VC firm, FIRSTPICK. The two firms will now compete for the best early-stage deals across the Baltic region.
The VC has announced it’s targeting a total raise of €20m for the fund, with €15m already committed. It’s anchored by €9m from the Lithuanian state-owned fund of funds, INVEGA, with the rest of the capital coming from private investors, mostly entrepreneurs.
Andra Bagdonaitė, a partner at FIRSTPICK, says that the team wants to focus on Baltic founders, while SWG has an ambition to go more international. She explains that founders from the region have all it takes to succeed during the economic downturn.
“This region is super resilient to outside changes,” she says, stressing that the region’s history, functioning under Soviet occupation, taught the society how to operate despite political and economic disturbances.
“Companies that are built here are less focused on FOMO and high investments. And instead of that, they really have these long-term sustainable strategies that are quite quickly being monetised.”
The break up
For the last four years the founders of FIRSTPICK — Bagdonaitė, Jonė Vaitulevičiūtė, Marijus Andrijauskas and Dmitrij Sosunov — functioned as SWG’s division in Lithuania. They managed an €8m fund and invested in almost 50 startups, including fintech Kevin, data verification startup Ondato, booking service Watalook and fintech Heavy Finance.
“We have finished deploying the fund and had to make a decision: what do we want to do next?” says Bagdonaitė, stressing that their decision wasn’t an “unexpected” one for SWG.
“We had a maturity together, it's just that we decided to part ways because of the strategic differences… We moved in different directions than SWG. They want to be more global. They want to expand into Africa, the Balkans, and this is what they are doing. We want to stay focused on the Baltics, and we want to support Baltic tech founders."
Cristobal Alonso, general partner of the Lithuanian fund and global CEO of SWG, says that the VC’s Lithuanian fund has come to the end and it was the company’s “conscious decision… not to participate in the new fund tender due to its local focus”, stressing that some members of FIRSTPICK will still be involved in monitoring and managing SWG’s Lithuanian fund and portfolio until the end of its period.
Lithuanian founders make up the third-largest group in SWG’s portfolio — Alonso says that the VC remains committed to the country’s ecosystem and is currently looking for an in-country representative.
FIRSTPICK’s pre-seed focus
FIRSTPICK wants to back 45 startups over the next three years.
It offers a pre-accelerator where it hands out grants of up to €20k per team. Then it has an accelerator where the average investment range from €50k to €100k. The VC is then able to make follow-on investments up to Series A, between €200k to €500k.
Unlike SWG, which focuses mostly on SaaS, fintech, cybersecurity and sustainability tech, FIRSTPICK has a sector-agnostic approach. It wants to focus on Lithuania, Latvia and Estonia, but can also invest elsewhere if it sees a good opportunity.
Bagdonaitė says that especially in the Lithuanian and Latvian markets, FIRSTPICK can fill in the financing gap at the earliest stage.
You would assume that local VCs actually see those opportunities very early, and then they would make those bets on good founders. But instead they actually just miss out on them
“When we look at Latvia and Lithuania, this is where there is the biggest market opportunity, especially in the early stage, because we do have seed funds operating but we don't really have pre-seed funds,” she says.
She adds that at SWG, they often invested in startups very early on, in deals that other regional funds had turned down because they had been too premature. That was the case with Kevin, which raised its $65m Series A in May, led by Accel.
“You would assume that local funds, local VCs, actually start seeing those opportunities very early, and then they would make those bets on good founders. But instead they actually just miss out on them. And by the time they want to join the price of getting them becomes much bigger,” she says.
“We as a fund really are more willing to take risks, to make bigger bets, to support founders that maybe don't have very good traction yet, but who have a very good vision, and that we believe they can execute on this vision”.