Trans Balkan Fund goes business hunting

Trans Balkan Fund Romania, the newest venture capital fund on the Romanian market, made its first investment worth $600,000 in a software developing company, Constantin Bogdan, investment manager with the fund, said.

The fund is managed by the Small Enterprise Assistance Funds Management Romania SRL, part of the international SEAF Group. SEAF administers 14 funds in several countries in Central and Eastern Europe and Asia and has $140 million available for investments.

The fund became operational on March 31 and has $8 million in capital. “A fundraising operation scheduled to end by late this year and bring us another $4 million in additional capital is currently in progress,” says Constantin Bogdan.

The bulk of financing comes from the European Bank for Reconstruction and Development, the United States Agency for International Development and the International Finance Corporation.

Trans Balkan Fund is the only venture capital fund to have entered Romania since the beginning of the year, given that those funds already there have run a little short of cash.

Trans Balkan Fund Romania can fund investments worth $100,000 to $1,000,000. In case a business turns out to be very profitable and in need of more than one million dollars, the fund may enlist the help of co-investors.

Trans Balkan Fund Romania can conclude partnerships with Growth Fund and Soros Fund, which may feed another $1 to 2.5 million into the business.

“We’re after companies faced with real business opportunities and which may quickly grow as long as they have the necessary funds,” Constantin Bogdan specified.

The fund participates in capital increases, along with loan granting, possibly convertible into shares. It usually prefers minority stakes, that is 20-49%, without major territorial restrictions. “We want the entrepreneur to retain control over the business and therefore his motivation,” Bogdan says.

The investment is run throughout three to six years, the prospect of relinquishing the business and making profit off it at some point in time being one the main conditions for the fund to place its money.

In exchange for the financing, Trans Balkan Fund requests representation in the Board of Directors and has an important say in strategic and in major operational decisions, such as closing a deal to account for 25-30% in the company’s turnover.