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Overview

 

Between September 2007 and August 2010 the Estonian Development Fund's investment division analysed more than 250 business projects. The fund has made 7 investments: Smartpost OÜ, Ilmarine Engineering OÜ, Goliath Wind OÜ, Massi Miliano OÜ, United Dogs and Cats OÜ, BiotaP OÜ and GrabCAD OÜ. There are severel other projects in active stage of negotiations and enterprises are welcome to present new projects.

In addition to Estonian business plans, around 5% of the projects submitted in the last twelve months were from other countries, where entrepreneurs are searching for additional capital injections from around the world due to the restricted number of offers.
The majority of projects submitted as investment proposals were connected to various ICT (information and communication technology) applications. There were also a significant number of ideas associated with electronics, biotechnology and the production of alternative energy.

Most of the projects did not meet the Development Fund's investment strategy criteria as they were not suitable for venture capital investment.

More than half projects analysed over last two years were those in which the fund would be unable to invest at all due to the principles of venture capital investment. Development Fund is searching for the projects with clear competitive possibility, with aim at rapid international growth or unique market edge. The planned field of operations should not be in areas within traditional branches of the economy and involve business models in which venture capital could not be invested with the expectation of high returns.

Just tenth of the projects submitted were sufficiently mature, based on the principles of venture capital investment, for negotiations to be launched.There were also projects for which business angels or private sector venture capitalists were offering more favourable investment conditions, in which case there was no reason for the Development Fund to compete with private capital


  

The remaining third of the projects need to be further developed in the areas of market research, protection of intellectual property or product development.
Only after such additional work it can be established weather the business project has sufficient potential for rapid growth in international market. Such projects are pre-processed in the SeedBooster incubator.

As of August 2010 the Development Fund's investment portfolio included 7 innovative companies, each of which has a business model which focuses on international growth.

Several other projects are in the stage of additional analysis and negotiations, while the SeedBooster incubator is developing 5-6 projects.

The Development Fund is actively involved in the management of its portfolio companies at the supervisory board level, advising them through strategic development and operative management. Venture capital investors, who are more than just providers of money, help the companies identify the direction they should be taking, raise resources and build up sales and communications networks which support their operations. The Development Fund has 1-2 members on the supervisory boards of every company in which it invests.

The co-investor who invested in the company on the same terms as the Development Fund contributes to it's development in the same way. The working meetings of the supervisory boards are held periodically, monthly or weekly depending on the development phase of the firm and the tasks that need to be completed.