Capitalia provides first local venture debt deal in the Baltics

The fast-growing Lithuanian start-up Rocketo, which produces and sells organic dog food, received EUR 200 thousand. venture debt. This is the first transaction of its kind where a venture debt is provided to a start-up by a local financier operating in the Baltic States. According to experts, this is a significant event for the Lithuanian, Latvian and Estonian start-up ecosystem, which opens up new financing opportunities for fast-growing start-ups, and at the same time provides a greater competitive advantage.

Rocketo plans to use the received venture debt for production - increase the amount of stocks required to meet the rapidly growing sales throughout Europe, part of the loan will be used for marketing optimization.

"Start-ups, especially fast-growing ones with the ambition to expand all over the world, are often working with losses for many years. Ordinary bank loans are not available to us. Therefore, start-ups traditionally finance activities by selling shares to venture capital funds in financing rounds. Meanwhile, the venture debt is a very needed additional financing that allows you to grow without reducing the share of existing investors and founders” says Arūnas Matačius, the founder and CEO of Rocketo.

Until now, venture debt for start-ups in the Baltic States have been provided only by international funds, whose transactions usually amount to more than 2 million. euros.

After evaluating the products manufactured by Rocketo, its growing demand and the growing turnover every month, a venture debt financing was granted to a Lithuanian start-up by the business financing company Capitalia.

"We are a local financier who was the first to trust a Lithuanian start-up by providing them with a venture debt financing, but we should see a breakthrough in this market soon. And the explanation is simple - there are more and more start-ups in the Baltics, and venture capital fund managers already have a lot of experience and insight into which start-ups have the potential to grow significantly”, says Gintaras Matuzas, Capitalia's manager in Lithuania.

According to him, usually international funds provide venture debt from EUR 2 m. However, Capitalia, operating in the local market, is able to offer smaller financing as well. For fast-growing start-ups, who need money not for product development, but for growth, the most relevant loan amount is usually from EUR 200 thousand up to EUR 2 million.

“There are numerous situations when venture debt is likely to be a good option for a startup to consider. For instance, it can help startups that are already backed by VC access additional capital to boost their growth, to reach important value creation milestones while preventing the need for a new bridge round. It can be useful as a way to finance opportunities, such as acquisitions or big capital expenditures with limited costs to the business. In light of the pandemic-related uncertainty, venture debt opportunities are likely to get momentum in a startup ecosystem”, says Gerda Sakalauskaite, Managing Director, LT VCA

Venture debt is also used by very well-known start-ups, such as Spotify, Airbnb and Uber, and this type of financing helps them to achieve great growth.

About Capitalia:
Capitalia is a leading provider of financing and financial consulting to companies in the Baltic countries. Capitalia has financed working capital and capital investments for more than 5,000 companies, investing more than € 85 million in their development. In addition to loans and venture capital, Capitalia also offers companies professional advice on buying, selling businesses and raising capital.
Published by at. 11:50