Question 1

1. What is the investment process?

Accepted Answer

The startup (already having or not potential co-investors) contacts the Fund by submitting its pitch deck online;
If the Fund is interested in the idea, we continue to communicate with the startup and inform it on next steps and actions;

Fund statistics: we have invested in 10% of companies applying to the fund.

The startup continues seeking co-investors; the Fund may assist in this process through its own network;
Investors undergo KYC & AML procedures with the Fund, including accreditation, if applicable;
The Fund's investment committee makes a preliminary decision to proceed with due diligence or not;
The Fund performs preliminary startup assessment and proposes a term sheet;
Upon signing the term sheet, the Fund's lawyers and/or other designated experts perform due diligence;
Investment contracts are drafted and negotiated on the basis of the Term Sheet and due diligence and typically include an Investment Agreement (IA), a Shareholders' Agreement (SHA) and a Shares Subscription Agreement (SSA). In addition, the Fund and its accredited investors sign Investors' Group Agreement (IGA);
Agreements are signed, pre-closing actions taken and investment is made (closed).

Question 2

2. What are the main investment conditions of the Fund?

Accepted Answer

The Fund co-invests together with other investors.
The Fund typically acts as a „silent investor.”
The Fund transfers its non-material rights to the investors who represent the interests of the Fund.
The Fund has the right to receive all information about the portfolio company free of charge. The portfolio company commits to provide quarterly and audited annual financial statements.
The Fund exits (by selling or other disposal of investment) from the company not later than the investors with whom it has invested.
The Fund invests in the target company's equity through new equity issue or in convertible bonds.
On average the Fund expects to exit the investment after 5 - 7 years.
If the target company meets state aid requirements, the Fund’s annual return is limited to 4% or 6% of annually compounded interest. The remaining excess returns are transferred to accredited co-investors.
More information can be found in the investment strategy description of a particular sub-fund.

Question 3

3. What are the criteria for the target company in order to get state aid?

Accepted Answer

The fund’s return on investment is limited to 4% or 6% of annual compound interest if the target company meets the following criteria:

the company is a micro or small enterprise as defined by the SME Law;
the company is not listed on a stock exchange;
the company is younger than 5 years old (the company has been incorporated and registered with the relevant registers less than 5 years ago);
the company has never allocated its profits to its shareholders or members;
the company was not established as a result of a merger; the company has not taken over the activities of another company;
the company has not used De minimis aid.

Question 4

4. Can an investor, who is not included in the list of Fund's accredited investors, submit an investment proposal?

Accepted Answer

Yes, they can; however, all actual investors will need to comply with KYC & AML requirements, and in order to participate in the profit-sharing scheme, an investor must be accredited by the Fund, so it is recommended to apply for accreditation early to save time.

Question 5

5. Can a request for an investment be submitted by a company that needs funding?

Accepted Answer

Yes, but the Fund will only proceed with the investment preparation in case there are relevant co-investors available. The Fund may assist the startup in seeking investors by forwarding its request to Fund's accredited investors. If any of them become interested in the company’s offer, they will contact the company directly.

Question 6

6. What is the Fund's proportion in the investment round?

Accepted Answer

The maximum Fund's proportion in the investment round may be up to 70 – 90 %. The Fund's proportion in the investment round is decided on a case-by-case basis and may be less than the maximum amount. Important factors considered by the Fund in deciding on the share of an investment are the experience of the investors, investor's analysis and justification of an investment, a business plan, company management, and other relevant information.

Question 7

7. What is smart specialization?

Accepted Answer

In case Koinvest II Sub-Fund invests in the target company operating in the field of smart specialization, the Fund's share in the investment round can be increased by 10%.

More information about program and its priorities can be found at sumani2020.lt.

Question 8

8. How many requests for an investment can be submitted by the investor?

Accepted Answer

The number of individual investor's requests for an investment is not limited and does not affect the decisions of the Fund.

Question 9

9. Who can be an investor with whom the Fund would co-invest in the target companies?

Accepted Answer

Investors must be independent from the target company:

investors must not be the current shareholders of the target company;
investors, through related legal or natural persons, must not own 5% or more of the votes or shares of the target company.

Question 10

10. What criteria business angels have to meet in order to be included in the list of Fund's investors?

Accepted Answer

A business angel must be a financially stable person, must have business and investment experience and intend to participate in the management of the target company and be able to provide it with added value (specific experience, business contacts, etc.). Business angels must be of impeccable repute, have no criminal record, and meet other eligibility requirements. A business angel may be both a legal and a natural person.

Question 11

11. What information should a venture capital fund or a business angel include in the application for inclusion in the list of the investors?

Accepted Answer

Investors should submit their accreditation documents to the Fund documents (including all annexes) online on the Fund’s website.

Question 12

12. Until when can the investors submit the documents to be included in the Fund’s list of investors?

Accepted Answer

Applications to be included in the Fund’s list of the investors are accepted and considered constantly. The list of the investors may include an unlimited number of the investors and is continuously supplemented. The list is regularly reviewed upon receipt of new information on already approved investors. By decision of the Investment Committee, the investors may be excluded from this list if, according to new information received, these investors no longer meet the requirements for the investors.

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