PLN 100m for start-ups from the energy sector
During the next 5 years, a joint fund established by the PGE Capital Group, Polish Development Fund and the National Centre for Research and Development will invest PLN 100m in the most innovative energy start-ups. The fund will focus on: Industry 4.0, digitisation, energy storage, e-mobility, ICT and Big Data.
PGE Ventures, owned by the PGE Capital Group; PFR Ventures, owned by the PFR Group; SpeedUp Group and the National Centre for Research and Development (NCBR) jointly formed the SpeedUp Energy Innovation powered by PGE Ventures (SEI Fund). The goal of this newly established corporate venture capital (CVC) is to invest in start-ups at the growth and expansion stage. Ultimately, the capitalisation of the new fund is expected to reach PLN 100m.
The Polish energy sector needs innovation and people to implement cutting-edge technologies. The new fund, in my opinion, will help start-ups overcome the final stage of development and successfully enter the Polish energy market. Financial support of the SEI Fund as well as PGE’s infrastructure act as drivers in accelerating business and technological processes important for energy consumers in Poland and the Polish industry itself – said Krzysztof Tchórzewski, Minister of Energy.
Setting up the SEI Fund is yet another step in developing a strong base of innovation in the PGE Group. New business models which are being implemented in the PGE Group enable PGE to extend business also onto capital markets. The investment agreement signed with the Polish Development Fund (PFR) demonstrates the process of building a strong position of PGE on the VC market in Poland. The entity responsible for the implementation this type of initiatives is PGE Ventures. PGE Ventures will also have influence on the SEI Fund’s investment policy.
Together with the PFR, we are proud to co-create an investment fund of a great importance for the Polish economy and, in particular, for increasing the level of innovation in the Polish energy sector. Financial support provided by SEI Fund will be used for the development of the most innovative technological start-ups, the growth of which may bring benefits to the Polish industry – said Henryk Baranowski, CEO of the PGE Group.
Increasing financial support for young and innovative companies places high amongst PFR’s strategic objectives. Such support is expected to promote the development of Economy 4.0, which would transform Poland into an innovation hub of European significance. This goal is also being realised by PFR Ventures, which together with independent investors and through independent funds plans to locate ca PLN 4.5b into promising start-ups. One of such independent entities is SEI Fund – said Paweł Borys, CEO of PFR.
The fund will be managed by a professional team, which will conduct investments on market terms (regardless the source of capital). The overall aim of the fund, on the other hand, will be increasing the value of the companies as well as maximising the value of the portfolio as a whole – said Maciej Ćwikiewicz, CEO of PFR Ventures.
A joint fund of PGE Ventures, PFR Ventures and NCBR is world’s first institutional CVC Fund of Funds (FoF): PFR NCBR CVC FIZ. Half of its funds comes from the EU’s POIR 2014-2020 Programme. SEI Fund will be financed jointly by PGE Ventures and FoF’s funds, with either party contributing the same amount. SEI Fund will be focused on technological start-ups related to PGE Group’s value chain and those characterised by a high level of innovation and growth potential.
The new fund is a large step towards developing a Polish system of support for assorted R&D projects. It is also a testimony to NCBR’s success in responding to investors’ needs regarding the next financing rounds for research projects. SEI Fund will perfectly complement the portfolio of financing instruments for R&D projects, which are offered to start-ups by institutions such as NCBR and the PFR Group – said prof. Maciej Chorowski, NCBR Director.
The natural stage in the development of the SpeedUp Venture Capital Group is engaging in funds which give us the opportunity to invest in companies in more advanced growth stages. Multiple initiatives supporting start-ups’ early stages can be found on the Polish market; however, the capital supporting projects in the growth and commercialisation stage is still lacking. SEI Fund will be the perfect complementation of this structure as well as a chance for start-ups which will proceed from the early stages – said Bartłomiej Gola, SpeedUp Group Founding Partner.
Thanks to SEI Fund’s investment activity, the PGE Group will be present in each stage of the development of young companies. This will allow us to access innovative technologies developed by the most advanced start-ups. Above all, SEI Fund’s investment policy is aligned with our business strategy. It will therefore be possible to test projects from SEI Fund’s portfolio under real work conditions using PGE’s infrastructure (incl. coal mines, power plants, CHPs, distribution assets and customer service systems). Upon successful completion of such trials, these technologies could also be implemented in Group’s business line, contributing to the optimisation of business processes and development of new technologies – added Henryk Baranowski.
Ultimately, SEI Fund’s capitalisation is expected to reach PLN 100m. These funds will be allocated to cover investment and operational costs alike. During the five-year investment period, the SEI Fund intends to conduct ca 12 one-off and several follow-on investments. The investment ticket for the first investment round is planned to be PLN 3-3.5m while follow-on investments can reach up to PLN 10m. The SEI Fund will also stay open for co-investments, particularly regarding follow-on investments.
The new fund will be particularly interested in innovative high-tech start-ups with significant potential for generating financial flows. Such companies need to be at least in the early growth stage as set out in SEI Fund’s investment criteria. Moreover, such projects must generate revenues whilst their capital requirements should focus on market expansion.
The SEI Fund’s investment policy is based on targeting energy-related sectors, which are consistent with the interest of the PGE Capital Group.
PFR NCBR CVC FoF’s capitalisation stands at ca EUR 200m, which corresponds to ca PLN 865m. The maximum capitalisation of equity funds may reach up to PLN 320m while the maximum investment in a single project up to PLN 60m.