Baltic Tech Ventures is a newcomer in the Baltic venture capital market. The business development company focuses on early-stage pre-series A startups. Having started investing in the last year, today Baltic Tech Ventures has a portfolio of six companies – Asya, Sizzapp, Orocon, Corebook, Zeew, Kedeon. And two innovation projects – iWrist and Mechanical Macro Keypad. In the future fund aims to invest in 15 to 20 startups.
Baltic Tech Ventures is focused on investing in early-stage startups in the Baltics. “We are focused on the Baltics because we feel this region offers the best risk-reward and best value for investors. There is an incredible talent, the spirit of innovation, and the last five years the government has been doing a lot to help grow the startup ecosystem,” says Gene Zolotarev, founder of Baltic Tech Ventures.
He sees big potential in the Baltic region. “There is nothing stopping any company from becoming really huge. That’s the beauty of venture capital and the beauty of innovation – there are no limitations. The person with the best idea and the most tenacious spirit and tremendous resilience will achieve results. It doesn’t require massive capital to start. I think startups are an asset class for the future,” he says.
Up to 250 thousand euros
The fund is focusing on post revenues pre-series A type of investments. These are companies that have already have a product or service, some traction, but haven’t jet raised meaningful funding and their valuations are still in the low single digits.
Baltic Tech Ventures invests in companies that have achieved basic market validation, revenue and have received some funding either from another VC’s or an accelerator. “Unless you meet these criteria, we can’t work with you. That narrows the field considerably. In the Baltics, there are probably 100 to 120 companies that meet these criteria and we so far are working with seven. We hope to work with 15 to 20,” says G. Zolotarev.
Baltic Tech Ventures ticket size is anywhere from 10 to 50 thousand euros. The company has a strong “friends & family” angel investor network which is often the source of co-investment. As a result, an average investment is 250 thousand euros per project. “We have a great team of people who wants to help startups – to introduce them to markets and strategic partners. We are doing the best we can to turn them into regional leaders. We give some funding and also raise funding for them,” tells G. Zolotarev.
Baltic Tech Ventures aims to exit at series B or series C. Fund aims to work with startups for two to three years.
Stays away from drones and deep-tech
When asked about Baltic Tech Ventures’ focus areas, G. Zolotarev answers that it is not focusing on any individual market. The main criteria of all portfolio companies is to be able to scale outside the Baltic region. “We work with companies that have a scalable product or solution that doesn’t require a highly intensive manufacturing process, which could be very costly or complicated. That’s why we stay away from things like drones and robots. We also stay away from deep science,” he explains.
Baltic Tech Ventures made its first investment in 2020. Right now the fund has a portfolio of six companies. “As we have made our first investment only about six months ago, we have no exits. But we have some really good success stories already. Our companies already have their first success stories. For example, Sizzap was able to attract the leading motorbike racer in the world to cooperate with them. Also, Corebook is growing very well – they have been accepted by 500 Startups accelerators European subprogram 500 Georgia. All of our companies have seen tangible progress,” G. Zolotarev says proudly.
Listed on the stock exchange
Baltic Tech Ventures is listed on the stock exchange. “I already had a company that was listed on Nasdaq Baltic – Baltic Telecom. The company already belonged to me, so it was easy to use the same vehicle. We just cleaned out the balance sheet and renamed it and started actively investing in startups. We don’t have any lockup, any minimum, and we don’t charge any fees. If anyone wants to benefit from a portfolio of companies we have funds and we are growing and nourishing, they just have to buy a share on the stock exchange. Anyone can buy one share,” says G. Zolotarev.
In his mind it’s an attractive value proposition to investors that are interested in VCs, but who don’t want to do it themselves, and also don’t want to lock up their money for ten years. Also, he emphasizes Baltic Tech Ventures as a company that is listed on the stock exchange, is transparent. The fund is openly talking about its portfolio companies when they experience any major developments.
Zolotarev has been working in investment banking, but for the last 15 years he has been investing in VCs, mainly through his family office and participating in projects run by his friends and colleagues. “I have had some very interesting investments. For example, we were fortunate to participate in early investments in Bolt, Transferwise, and Revolut. We were some early investors, but I was not leading the transaction. I joined a pool of investors that were good friends of mine and experts in the VC field and I used it as a learning opportunity,” says G. Zolotarev.