The SEB announces a 20 million euro financing programme for the next unicorn companies

Latvian businesses have the potential for international competitiveness and all the prerequisites to strive for more ambitious growth targets and long-term investments both locally and across borders, only sometimes more encouragement is needed. To encourage both large and small and medium-sized companies to target the next phase of growth by strengthening their export competitiveness, SEB banka is applying for a new EUR 20 million programme — SEB Baltic Venture Debt growth financing. The aim of the programme is to support fast-growing exporters whose founders want to raise capital and retain as much ownership as possible. 

The rapid expansion of technology companies in the world is not new, but in Latvia this sector has developed relatively recently. When the self-raised funds for the development of the business idea are used up, incubators, business angels and accelerators come into play in the next phase of development — already opportunity capital funds with millions in financing, but which in return want to receive shares in the company and hope for significant profits in the future. In the past, banks in the Baltics have not participated in investments in such companies. SEB banka offers a new product: a loan for business development of up to 30% of the total investor capital to be raised, up to a maximum of 2 million euros, which enables the entrepreneur to retain more shares in their company. 

“SEB Baltic Venture Debt gets involved at a time when the company already has a solid product, the idea has gone through the prototype and test phase and a circle of customers has formed who will pay for this product. It is no longer a search for a market niche, but a business model that already works, but the company needs money to master the export market and invest more in staff, facilities, stock and marketing. Investing in business development at a very early stage involves higher risks, but a fast-growing company has the potential to pay back the loan or attract other investors who will be happy to invest as the company grows, as it has good future prospects. We are pleased to introduce such a solution in the Baltics as well, which will significantly contribute to the international competitiveness of companies in our region,” says Pāvils Misiņš, Head of SEB Baltic Venture Debt.

He points out that such an offer in the Baltic market has so far been provided either to a very small extent by domestic investors or to a very large extent by foreign funds, so that entrepreneurs have had to give up more shares in their company when raising finance than, for example, the founders of a similar start-up in Sweden, which has put Latvian, Lithuanian and Estonian entrepreneurs in a tight spot. on an equal footing. SEB Baltic Venture Debt will offer growth financing for companies without claims to company shares. 

“With rapid growth, companies need more money, and they need it now, before the company really makes a profit. The owners need to raise money from investors by selling their own company shares, but they can also borrow money through the growth financing we offer if there is no profit yet, then there are investors willing to support this growth. Investors are not usually expecting solid profits in the short term, they are waiting for the company to become the next unicorn in the foreseeable future. And that may require a doubling of sales within a year or even faster growth. When such a company presents its balance sheet after a regular loan, the bank has no clarity about how the money will flow back, because there are many unknowns in the future, but negative points are visible in the financial statements. Growth financing means — we see and understand that you are growing, you have no profit yet, but your financial projections show that the future is bright, investors believe in you, so we can lend you some of the necessary funds,” explains Pāvils Misiņš. 

SEB Baltic Venture Debt growth funding is available to companies that meet the following criteria. 

• The company is capable of rapid growth, increases turnover by at least 30% per year and is therefore attractive to investors; most likely the company's field of activity is related to technology, as such and even faster growth is difficult to achieve in other areas.
• The entrepreneur is not afraid to attract investors and knows that rapid growth in the export sector is difficult to implement on his own.
• The business ambitions go far beyond the borders of Latvia, it is probably the desire to dominate the markets of the United States or at least the largest European countries, because really rapid growth in Latvia cannot be sustained for long — often after a year or two the entrepreneur has reached the upper limit of the local market.
• The company has a finished product for which customers are already paying, and preferably not in the first year.
• Turnover should reach at least 500,000 EUR a year.
• Experience in working with investors is desirable, as SEB banka will also be one of the investors and will ask similar questions. 

“According to our estimates, there are several dozen companies in Latvia with such potential. The total turnover of these companies exceeds 100 million EUR a year, so the growth of these companies in export markets can bring tangible benefits to the national economy. For Latvia, this means more and more exporting companies, more highly qualified jobs, especially in the technology sector, and higher tax revenues. However, talented professionals should not look for growth opportunities abroad, because interesting things are happening in start-ups internationally. If you want to see the world, — you can do it here in Latvia. This path is not easy, but it is very interesting and valuable,” says Arnis Škapars, a member of the Board of SEB banka.

Parties interested in talking to SEB banka are encouraged to contact their SEB banka advisors or directly contact Pāvils Misiņš (venturedebt@seb.lv). The head of SEB Baltic Venture Debt emphasizes that even if it is too early for the company to qualify for growth financing, this does not mean that it cannot be talked about.