The Estonian Development Fund (EDF) invests in early stage Estonian companies with ambitious growth plans. It aims to introduce promising startups internationally, promote Estonia as a venture capital destination, and develop the local venture market. The EDF focuses on scalable tech companies pursuing international expansion. It looks for strong teams and sustainable competitive advantages. The EDF makes pari passu investments alongside private investors, taking 10-49% ownership stakes with 5-7 year horizons and targeting 35% annual returns. Notable investments include SmartPost, Ilmarine Engineering, and Goliath Wind. A Skype founder praised Estonia for generating high quality startups given its size.

1. Estonian
Development
Fund (EDF)
Stanislav Ivanov
Investment Manager
March 27, 2011

2. Role of EDF
Objectives:
 introduce successful start-up companies internationally
 promote the image of venture capital investors
 boost venture investments in the local market
 spread VC know-how and good investment practice
Tasks:
 invest into Estonian companies showing a potential for
rapid growth and international success
 activate and develop Estonia’s venture capital market
by engaging co-investors and consolidating cooperation
between the market players

3. Investment focus
Early stage companies with:
 ambitious international expansion plan
 sustainable unique competitive advantage
 strong team
 scalable technology/business model
 clear path to exit
We can also invest into foreign companies that will establish
headquarters in Estonia and bring significant part of
their (R&D) activity to Estonia

4. EDF’s investment strategy
1. Investment decision based on economic calculations.
2. Investing together with independent private investors, pari passu conditions.
3. Investee should have strong international growth perspective and sustainable
competitive edge, usually in the go-to-market phase.
4. Investment period typically 5-7 years.
5. Invest only in expanding the share capital, not buying shares from exisiting
owners. No grants.
6. Share ownership of 10-49%.
7. Expected annual return on investment projects (IRR) at least 35%.

5. POTFOLIO
 SmartPost – automated parcel service
 Ilmarine Engineering - machinery/engineering
 Goliath Wind – direct drive wind turbine
 Fits.me - virtual fitting room for online retailers
 United Dogs and Cats - social network for pet owners
 Biotap - metagenomics in environmental diagnostics
 Posterbee - private social network
 Sportlyzer - virtual fitness coach
 GrabCAD - market place for engineering services
 Cellin – stem cell transplants
 Modesat – cell phone backhaul modem
 Now! Innovations – cell phone parking payment
 Realeyes – analytics for eyetracking

6. Naval Ravikant, Founder of AngelList
Feb 2011:
 „One of the secrets of global seed investing is, I can tell you
right now because of AngelList, where the high quality
companies tend to reside. In Europe the majority of them are
London or Estonia.”
 „If I see a company coming out of Estonia I am reasonably
assured that it will be executed well. That is because there is
a lot of Skype alumni in Estonia. For its size, Estonia is
generating more high quality startups than you would expect.

7. THANK YOU!
Stanislav Ivanov
Skype: stass.ivanov
stanislav.ivanov@arengufond.ee
www.arengufond.ee