As the pandemic triggers a boom in digital ventures, one of Sweden’s pioneering e-commerce investors has become the first to tap new European Union start-up funding.

Swedish private equity firm eEquity is closing its fourth fund after raising 1.6 billion kronor ($195 million), it said on Thursday. The European Investment Fund committed 37.5 million euros, it said.

The EU injection is the first from a 300 million euro pilot program, ESCALAR, aimed at helping businesses in the bloc withstand the blow dealt by the pandemic. The idea is to support start-ups amid concern that Europe is falling behind in the global innovation race.

“Too many EU companies are sold to the U.S. at a too early-stage,” eEquity’s managing partner Patrik Hedelin said in an interview. “If e-commerce gets an extra boost during Covid-19, that’s less of an issue compared to how we improve competitiveness in the EU.”

eEquity, which specialises in e-commerce and digital companies in the Nordics, is already a minority investor in several brands such as NA-KD, iDeal of Sweden and TwistShake. Previous investments include WhiteAway, Footway and Royal Design.

Hedelin founded fashion retailer Boo.com in 1999, which went bust after the dot com bubble. He’s been running eEquity together with partner and Pricerunner founder, Magnus Wiberg, since 2010.

“When I started Boo.com, the Swedish online market was 300 million kronor ($37 million). Now, if we exclude foods, it’s 85 billion kronor. If it continues to grow 25 percent per year in the coming five years, that means that 170 billion kronor will go from off-line to online” commerce, Hedelin said.

“That will have significant consequences, not least for the real estate sector,” he said. “It will mean falling rents and, with that, lower real estate prices.”

By Rafaela Lindeberg.