Startup Wise Guys raising up to EUR 52.5m across three funds

Soft marketing for the Cyber and Opportunity II funds began in May, with Challenger II starting soft marketing in August, according to Alonso. The Estonian accelerator aims to invest in Italy and central and eastern Europe (CEE) – including the Baltic countries, Ukraine, Turkey and members of the Commonwealth of Independent States – besides others globally.

SWG has so far raised EUR 4m and expects to see second closes of up to EUR 10m by the end of January 2022, Alonso noted.

Two of the funds – Cyber and Opportunity Fund II – have conducted 11 investments so far, while Challenger Fund II expects to have begun investments by January 2022. Talks for 24 investments are underway, he added.

Challenger Fund II
SWG is aiming to raise EUR 20m-30m for Challenger Fund II, which has so far raised EUR 500,000 with a target to reach EUR 4m by the end of January 2022, Alonso said. It aims to begin investments in that same month.

Domiciled in Estonia, the fund will have a 10-year lifespan. SWG will acquire stakes of 5-10% in its targets and plans to invest up to EUR 80,000 at the accelerator stage, between EUR 150,000 and EUR 200,000 in follow-ons and EUR 250,000-500,000 in other direct investments, Alonso said. It aims to conduct a total of 180 investments.

Targets will include B2B software-as-a-service (SaaS) startups, fintech businesses, sustainability startups and cybersecurity companies. SWG can co-invest with other VCs, family offices, angel syndicates, and other SWG funds, Alonso said.

Opportunity Fund II
SWG is targeting to raise EUR 6m-10m for Opportunity Fund II, with a EUR 15m hard-cap.

The soft marketing of the fund began in May 2021, with the launch taking place in August 2021. SWG has so far raised EUR 3m and plans a second close to add another EUR 3m by the end of the year, Alonso said.

The fund will have a 10-year lifespan, but SWG plans to make 90% of its investments within 12 months. The fund is domiciled in Estonia and SWG plans to allocate 10% of the fund to pre-seed and bridge rounds, 50% to seed stages, 30% to Series A and 10% to growth stages, Alonso said. Around half of the investments will be in B2B SaaS companies.

The firm will aim to complete 20 investments in total and could increase to 30 if the hard-cap is reached, he added.

The average investment ticket sizes will be between EUR 100,000 and EUR 200,000, according to Alonso. SWG can co-invest with other VCs and family offices, which is the main investment thesis of the fund, he said, adding that it would lead an investment only in extraordinary cases.

It has so far made eight investments and there are four other pre-commitments, with 10 due diligence processes underway, Alonso said. Three quarters of the funds raised so far, including the pre-commitments, have now been invested.

The fund invests only in the outperformers of SWG's own 250 startup portfolio. Its Series A investments to date include Fractory, Ondato and Kevin, while its bridge and seed round investments are in Hive.id, Cenos, VSight, Investory and Clean Kitchen.

Cyber Fund I
SWG is to raise EUR 7.5m for Cyber Fund I. Soft marketing of the fund began in May 2021 with the launch taking place in June 2021, Alsonso said. SWG has so far raised EUR 500,000 and a EUR 3m co-investment commitment from Italian fund-of-funds CDP. A second close is expected by year-end, Alonso added.

Domiciled in Estonia, the fund will have a 10-year lifespan. It plans to allocate 60% of the fund to accelerator-stage businesses and the balance to follow-on pre-seed and seed rounds, Alonso said.

Around 70% of investments will be in cybersecurity and 15% each in fintech and defence. SWG will acquire stakes of 3-10% in the targets. The firm will aim to complete 20 pre-seed and seed rounds, with the average investment size per seed round being between USD 55,000 and USD 250,000, Alonso said.

The fund has so far done three investments in Poland, Australia and Estonia; it already has more than 10 potential deals in the pipeline for Q4, Alonso said.

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• CEE
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