The Baltics Small Equity Fund (BSEF) is a venture capital firm that invests in small and medium size enterprises in Estonia, Latvia, and Lithuania. BSEF invests in growth-oriented companies and trustworthy entrepreneurs (Portfolio Companies), providing them with financial partnership and technical assistance. BSEF is not a bank. BSEF invests by acquiring newly-issued shares from a Portfolio Company, becoming a partner in the business. BSEF does not typically offer loan financing.

After investing, BSEF uses its experience and contacts with the goal of helping the business grow and profit. If successful, the shares of all the owners, including BSEF, grow in value. Thus, both BSEF and the entrepreneurs benefit from the participation of BSEF in the business.

The shareholders of Baltics Small Equity Fund are:

• The European Bank for Reconstruction and Development (EBRD)
• The Baltic Investment Special Fund
• The Baltic American Enterprise Fund
• Small Enterprise Assistance Funds (SEAF).

SEAF manages BSEF. SEAF employees run the offices in the three Baltic states, helping to develop partner companies and seeking new investment opportunities. SEAF also manages funds in Poland, Bulgaria, Russia, Croatia, Macedonia, the Trans-Balkans and Peru. These funds have over 100 trained staff working to assist the more than 160 investments worldwide. Companies in the SEAF network often work together for greater profitability.

BSEF’s investment guidelines

• BSEF can typically invest up to USD 400,000 (in local currency equivalent) in a single business.
• With the capital it invests, BSEF acquires newly-issued shares, giving BSEF 25% to 49% of the total equity of the company. BSEF will not take a majority share. Except in unusual circumstances. BSEF seeks to support existing management, not to supplant it.
• The terms of investment are designed individually for each company.
• BSEF typically holds its shares in a Portfolio Company for 3 to 7 years. Then BSEF looks to exit its investment by selling its shares in the Portfolio Company. The other shareholders always have the first rights to repurchase BSEF’s shares in the Portfolio Company.
• BSEF can invest in all industry sectors, but will NOT invest in entities whose principal activities involve tobacco or tobacco production, armaments, hard spirits, gambling, financial services, speculative activities such as real estate or commodities trading, or activities harmful to the environment.

How BSEF Profits From Its Investments

• Dividends. All shareholders, including BSEF, receive periodic dividends paid out from a portion of the net income of the business, unless all shareholders agree to reinvest profits.
• Fees. BSEF collects small fees for our time and energy spent in assisting the business after BSEF invests. Typically, these are significantly smaller amounts than owner/managers are paying themselves as salary.
• Sale of Our Shares. If the company has been successful, shares of the Portfolio Company will become more valuable and BSEF will make a profit when it comes time to sell its shares in the Portfolio Company.

What Does BSEF Look For In A Partner

• A Strong Management Team. The management should have a successful track record and a thorough understanding of their market. The management team must work well together and have extraordinary drive to make their company grow. Managers should be concentrated on developing this business, rather than operating several businesses simultaneously.
• An Open Attitude. The management must be willing to be completely open and honest with BSEF, and eager to learn about new ways of doing business and improving their company. They must be enthusiastic about working with a new partner.
• A Successful Business. In most cases, BSEF seeks companies with a history of growing revenues and profits.
• A Quickly Growing Market. The market for the company’s product should have the potential for growth in local and export markets.
• High Quality and Unique Products. BSEF is looking for companies that produce high quality products or offer high quality services that give the company a distinct advantage over its competitors.
• Financial Opportunity. BSEF invests in businesses that it believes will return a profit to the shareholders, including BSEF. Therefore, the investment should go to activities that will help develop the business (not simply to repay liabilities). BSEF is interested in companies that will be increasingly profitable, the shares of which can be sold to management or other investors when BSEF wants to exit.

How BSEF Works With Your Company

• An Active Partner Relationship. BSEF will work with you locally to develop your business. This includes assistance with financial management, business strategy, and international legal arrangements.
• New Market Entry. SEAF’s network of over 160 Portfolio Companies and over 100 staff around the world (including US and Netherlands offices) provide BSEF with invaluable contacts in, and information about, international markets and potential business partners for your company. BSEF has already assisted some of its portfolio companies to establish operations across the Baltic States.
• Technical Assistance. BSEF can find and source experts in your industry to act as consultants to your company at a low cost. BSEF and its affiliated funds have arranged over 100 such projects to date.
• Sourcing of Equipment. SEAF’s United States headquarters can help locate and facilitate the best deals on the purchase of new equipment for your business.
• Attraction of Additional Bank Financing. BSEF’s participation in your company will be seen as a stabilizing factor in your business and will increase the equity capital of the company. If additional financing is needed post-investment, BSEF gets actively involved in negotiating with banks or other investors to secure additional equity or debt for its partners.

BSEF’s Investment Process

• Completion of questionnaire
• Initial due diligence
• Negotiation and signing of Term Sheet
• Final due diligence
• Investment Memorandum/Business Plan Development
• Final Approval or Rejection by Investment Committee (Previous communications are not to be construed as a commitment by BSEF to invest)
• Legal and closing documentation

For more information please contact » our offices.