The Growth Debt II fund made its first close of €70 million and is currently in the final stages of negotiations with remaining investors. Among the investors who have already signed up are the European Investment Fund (EIF), Česká Spořitelna, the largest Czech bank, and the Rentea pension fund company (part of Partners Group). Smaller investors can also be part of the Growth Debt fund through another partner, Conseq.
Orbit Capital partner Radovan Nesrsta, had the following to say: “Our firm has introduced Venture Debt – a new type of funding for our region that is attractive to young, fast-growing companies as well as already mature companies that do not yet meet the conditions for traditional bank financing.“
“Venture Debt financing is up to four times cheaper for founders and their investors than if they had to dilute their shares again. Our investors will also benefit: the portfolio of the first fund shows that we can deliver a return of 15%, combined with robust downside protection,” adds Nesrsta.
“I am pleased that we are bringing this innovative concept to the pension fund company, which will allow our clients to invest in a new and interesting way that was previously only available to a limited group of wealthy investors. In this way, we are fulfilling one of Partners’ visions, which is to make financial products accessible to all clients without distinction and to simplify them,” says Petr Borkovec, director of the Partners Group.
Fifteen companies in five years
Since its inception in 2019, Orbit Capital has invested in a total of fifteen Central European companies as part of its venture debt fund, including Czech online supermarket Rohlík, fintech app Twisto, anti-fraud detection company ThreatMark, as well as AI-powered call center software CloudTalk and largest European yacht rental platform Boataround from Slovakia.
“We are providing crucial support to Orbit Capital in its mission to provide alternative financing to innovative companies in Central and Eastern Europe,” says EIF Chief Executive Marjut Falkstedt. “This investment will not only provide much-needed financing to SMEs and small Mid-Caps but also promote innovation, contributing to the region’s economic growth and competitiveness.”
The debt fund primarily supports companies that already have established their reputation, have or are approaching positive cash flow, yet aspire to further charge their growth. The success of the first fund encouraged large institutional investors to join the journey of Orbit Capital.
“The ability to adapt and generate new ideas is crucial for success in today’s rapidly changing world. Česká spořitelna is committed to fostering innovation and creative thinking among its clients, while continuously adapting its own services to meet the evolving needs of various segments. Our investment in the new Orbit Capital Growth Debt II fund is one such initiative. Through this fund, we aim to provide indirect access to venture debt for companies and start-ups that may not qualify for traditional bank loans but show strong innovation potential and promising business models. We believe this investment also contributes to the broader goal of supporting the second economic transformation—a strategic effort to enhance the long-term competitiveness of the Czech economy,” states Jan Seger, Director of Financing and Advisory at Česká Spořitelna.
Loans with the venture debt fund range from three to ten million euros. The fund focuses primarily on technology and tech-enabled companies. “We focus on companies that combine high growth potential with innovative use of technology, fulfilling our strategy of supporting regional champions,” says Nesrsta.
Lukáš Macko, who became a partner at Orbit Capital last year, added the following: “For the second fund, we plan to follow a strategy that will apply what we learned from the first. Although venture debt is a common way of financing fast-growing technology companies in Western markets, we are a pioneer in our region. During the first five years, we managed to build a venture debt infrastructure from the ground up and also the trust of company founders. In the second fund, we will use these foundations to help as many companies as possible.”
“We have been working with Orbit Capital since their inception, and the first fund was a joint project. We expect the second venture debt fund to be a good addition to our clients’ investment portfolios. This type of investment offers a very attractive mix of high expected returns above the stock market level with the risk of debt investment. Investors take on a significantly lower level of risk than when investing in the equity capital of individual companies. In order to offer this option, which is otherwise only available to large investors, to as many clients as possible, we have established the Conseq Venture Debt II fund, which can be entered into with significantly lower capital,” says David Kufa, Director of the Conseq Wealth Management section.
