Tech Zity
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Tech Zity

Disclaimer

  1. All research on startup and the whole investment memo has been done for personal use of Akim Arhipov.
  2. The memo was created on the preliminary, not yet confirmed information. We will update it once things will will get locked.

Mission

Tech Zity is an infrastructure for success, however it is defined. It's not only about locations because we are creating more than that. We are people creating Tech Zity for people like you, so you could build your own success story here.

There are three main mission driven pillars:

  1. Community, creation of 5k working stations
  2. Sustainability, all buildings are in place, only renovation needed
  3. City within a City concept, multi functionality of the premises
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As the management of the fff.vc, we share the vision Darius is delivering through the project of Tech Zity. We understand and love the value of community thought our network and believe that Tech Zity is also about building a hub to the tech community in Lithuania. What better way to build bridges with our neighbour country.

Overview

Lithuania is striving to become one of the major European tech hubs, supported by a growing number of so-called "unicorn" startups and government efforts to attract a high-profile accelerator to the country. Meanwhile, a new private initiative of €100 million has been announced, aiming to create what could become Europe's largest tech campus, situated in the heart of Lithuania's capital, Vilnius.

Located on the premises of an old Soviet-era sewing factory in the city's New Town, the project named Tech Zity is set to open in 2024, offering office space for 5,000 workers, meeting auditoriums, and more. Furthermore, a key feature will be its focus on hybrid working, with a 24/7 ethos supported by co-living spaces, restaurants, and bars for socializing outside of work.

Spanning 55,000 square meters (592,015 square feet), Tech Zity would be nearly two-thirds larger than Station F in Paris, which opened in 2017.

Check more:

Closer look

Tech Zity project consists of multi-location infrastructure, with the start of the project being put in 2013 by opening up Tech Arts Vilnius, which became home to a large community of innovative and creative minds. Followed by Tech Park Vilnius in 2016, Tech Loft Vilnius in 2020 and Tech Spa Druskininkai in 2021.

As things stan, Tech Zity community consists of nearly 2000 talents working in 90 teams.

To have a more closer look on the infrastructure:

Tech Arts (2013)

Tech Arts is home to a large community of innovative and creative minds. Find an infrastructure created for you with inspiring architecture, cozy studios, coworking, gallery, meeting rooms, event space, and fabulous terraces with breathtaking views at Tech Arts.

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Tech Park (2016)

Conceived and built by Italian architects in the 17th century, Sapieha park was originally a home to the palace of the famous Lithuanian noble family of the same name, until the 19th century, when it was sold to the Tsar. Initially the palace was repurposed to house a military hospital. After adding more buildings to the palace complex, the site continued to provide medical services until 2015.

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Tech Loft (2020)

Tech Loft is located right in the middle of Vilnius City’s heart – New Town. Tech Loft offers modern private offices, meeting rooms, event space, a cozy terrace, and an in-house Specialty Coffee Café BREW.

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Tech Spa (2021)

Tech Spa is a place where you can experience what a healthy work-life balance really means. Modern and peaceful co-living spaces, functional and inspiring workspaces, and cozy common areas – are places for your growth and inspiration, community gatherings, new acquaintances, or just relaxation.

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Tech Zity Vilnius (Next phase)

We are reviving Lithuanian clothing factory Lelija to its second life and turning it into the largest technology hub in Europe. The phrase “city within a city” perfectly captures the project’s vision and plans. Here, a variety of activities will overlap, enhancing one another and catering to the needs of a modern city dweller in terms of both work and life. The complex will breathe life 24/7, offering unique cultural and educational experiences.

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Tech Zity Vilnius

Tech Zity is reviving the territory of Lithuanian sewing factory “Lelija” to its second life and turning all area into the largest sustainable technology hub in the region.

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It will be a dynamic round-the-clock hub. 24/7 eat+work+live+play the most sustainable way to use the city. It will also enriches the fabric of the city featuring a publicly open museum of “Sustainability” in the staircases.

City within city concept

Various activities will intertwine here, complementing each other and meeting the work & life needs of a modern city person. The complex will breathe life 24/7, offering unique cultural and educational activities.

Office with a history

The area's history started in 1940 with a first sewing factory building. Later the factory became the largest, well-mechanized sewing company in the country. Additional sewing factory buildings were added to the territory between 1970-1984.

Opening the Space

The territory was private for years, but will soon be organically integrate into Naujamiestis. Community yards, a city square, a yard for events will appear here, open to the Tech Zity community, city residents & guests.

Architects

Audrius Ambrasas & A2SM - already contributed in other Tech Zity projects. They are joining forces with DO architects.

Positive impact

Instead of destroying old structures and building new ones in their place we will convert the old sewing factory buildings and save 5500 tonnes of unreleased CO2. In addition, TechZity are engaging local creative communities to actualise the legacy of Lelija factory through redesigning & reusing unique elements from site.

Employee health & wellbeing + FITWEL

Spaces where people will increase their potential to perform better and feel happier in a healthy work environment. FITWEL is the world’s leading certification system for buildings and communities that optimises built environment to support health.

  • Workspace physical activity increases performance up to 12%.
  • Healthy nutrition improves performance up to 45%.
  • Natural space increases performance up to 10%.
  • Good lighting and reduced noise level increase performance by 12%.
One place for everything
  • Private offices and co-working spaces - Tech Zity intends to attract 100 businesses of various sizes. 4500+ people will be able to work at the same time in Tech Zity Vilnius.
  • Events, conferences, networking & trainings - 3 conference halls & partly covered event yard will be established in the project. We will constantly organize events for different needs of the community. Also, various educational initiatives will be gathered on site for harvesting the future talents.
  • 50 modern design lofts - We will create lofts of different sizes for modern life needs. When settling here, people will have comfortable workplaces, food options and all the advantages of the city at their fingertips.
  • Food and more - In the most central spot a city square will be formed. Here we will gather creators of healthy and exciting food options. Gathering spots for post-work fun and outdoor enjoyment in warm seasons will take place here as well.

Business overview

Total budget: 90-100m€ (85% of the costs are going to renovation and construction needs)

Instrument: Equity Financing (Fund will be created) + Debt Financing (classical banks to finance)

Built in 2 stages:

Stage 1 (2 years) - 25m€ in total, equity (fund, 7-9m€) + debt, Scandinavian banks (16-18m€) / 15 000m2 reconstructed and refurbished / ETA is to have 3m ARR for rent, considering there will be an occupancy of 75%
  • During the first stage, Tech Zity is aiming to buy out buy out the property (2,6m€) from the government. In case of unfavourable market conditions, Phase 2 can be moved a little forward not to apply additional risk and pressure.
  • There are ongoing discussions with Scandinavian banks, aim is to close debt financing with an interest rate of 6%
  • During the Phase 1 project is aiming to onboard 30 companies to move their offices to the premises.
Stage 2 (2 years) - Terms TBD / 25 000m2 of additional space / 7m ARR in rent after considering there will be an occupancy of 75%. Second stage might be postponed
  • In case Stage 2 will be delayed due to unfavourable market conditions, dividends are still being paid out but exit from the fund might happen later than expected.

Business model: Building the campus, generating rental income, and accumulate value. Margin comes into play from construction and rental operations. Aim it to gain stability and look for an exit (sale), having 120m€ as the projected price.

Value proposition: Joining the fund in a form of an SPV at the valuation (TBC) of 30m€ / Aiming for 15% IRR / Participation will allow fund shareholders to gain value through the increasing value of the fund but, also, dividends in a form of yearly 10% will be paid out in addition.

Fund is being created with a maturity aim of 10 years, currently there are thoughts of potentially listing the fund to the stock exchange, which will allow more convenient liquidity for shareholders.

Core Team: Darius Žakaitis (LT tech pioneer, Contrarian) / Mantas Mikuckas (co-founder of Vinted)

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Fund Valuation of 30m€ is calculated: price of existing real estate - about 80% of the value / 20% is the proposition and infra that will be created. Please note that these numbers are being audited and put together as we speak, we will be sure to follow up once this data is 100% confirmed.

Whats next for the fff.vc members?

We are currently in discussion to receive an exclusive allocation (EE + LV) for the participation with tickets smaller than 300k, in a form of an SPV.

Allocation: up to 1m€

fff.vc fees: 7% one off fee + 7% carry

Valuation: 30m€ as things stand, this number is not final

Minimal ticket (for fff.vc members): 10 000€

Event

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We're currently in final discussions with Darius Žakaitis, the head of given project, about participating as investors in this promising venture. It's likely that fff.vc will have the opportunity invest in a form of an SPV, exclusively bringing together and opening doors for smaller investors.

We're collaborating with the Tech Zity team to organize a special event for fff.vc members on September 6th (during the Startup Fairs investor day) to introduce this opportunity and showcase the premises to our members. It's also a great chance to spend time together and meet our fellow members from Lithuania.

The preliminary agenda for the event is as follows:

  • Meet n' Greet + welcome drinks.
  • Storytelling - present the project, provide updates on current status.
  • On-site tour - show guests around the premises.
  • Snacks and drinks + rooftop networking.

Please let us know if you'd like to join us: https://forms.gle/V9tGUdXyPFkg32jG9