On operating results
In the first three quarters of 2025, Capitalia reported a turnover of EUR 1.35 million. Operating revenue remained stable, and a modest loss of EUR 11 thousand was accumulated. Financing activity was slower in the third quarter of 2025, and issued funding was lower compared to Q2. However, at the time of this report, the last quarter of the year started very strongly, with a record monthly funded amount of EUR 3 million reached in October.  

On key events
In the third quarter of 2025, we managed to issue a funding amount of EUR 4.0 million (EUR 5.1 million in the second quarter of 2025). We continued to test the lending environment and opportunities in Finland. A significant effort has been made to change the integration with the payment services provider Lemonway due to regulatory requirements. In alternative fund management, we did not have any exits or other notable events.

On plans for the next quarter
The last quarter of this year started with a very strong business financing activity, and we expect it to continue this way. We have completed all the new hires planned for this year. We continue developing a number of important features for our platform investors

The full financial report is available after login on our Investor relations page (available for logged in users). 

In order to comply with current regulatory requirements, Capitalia must collect and regularly update certain information relating to the identity of its users. This is part of the KYC (Know Your Customer) process, which aims to enhance security and combat money laundering and terrorist financing. 
 

This process is carried out in partnership with Lemonway, a payment institution authorised in France and supervised by the ACPR (Bank of France), our official payment service provider. 
 

In the next few days, you will receive a secure email from Lemonway inviting you to complete or confirm your personal information. This step is essential to continue using your account and remain compliant with European regulations(in particular the PSD2 directive and AML/CFT legislation). 
 

• Lemonway is an authorised and trusted payment institution 
• The email you will receive is legitimate and complies with strict regulations 
• Your data is processed securely and in accordance with the GDPR 

In the form sent by Lemonway, some information might be stated in French, as it is a French-based company. Please do not get confused by that and use the Google Translate web extension for translating to a language of your preference.
 

If you have any questions or concerns, please do not hesitate to contact our customer support team at the following address: support@capitalia.com. Thank you for your understanding and cooperation.
 

FAQ on recertification

In September 2025, our partner, authorized payment institution Lemonway, will perform its client recertification process to comply with the newest KYC regulations. This process will require action from all Capitalia clients as well who will need to update their information on Lemonway interface.
 

What is recertification? - Recertification means updating and confirming your personal or company information so it remains accurate and compliant with European financial regulations. This process is part of the KYC (Know Your Customer) requirements designed to protect your account, prevent identity fraud, and combat money laundering and terrorist financing.
 

Our trusted payment partner Lemonway, authorised and supervised by the ACPR (Bank of France), securely collects and verifies this information.
 

How will the recertification happen? - You will receive a secure, personal link from Lemonway via email. You will receive a secure, personal link from Lemonway via email. The sender will be no-reply <no-reply@lemonway.com>. The link that is shown if you move the mouse over the button will start with https://e-eu.customeriomail.com/. The site that opens on the click is collect.ondorse.co.

This link will take you to a protected online portal where:

• Your existing information will already be pre-filled.
• You simply review it, update any changes, and upload required documents.
• A summary will be shown for your confirmation before submission.

The process only takes a few minutes and can be completed from your computer or mobile device.

What information do I need to update? 
 

For individuals:

• Confirm or correct your personal details (name, address, date of birth, nationality, etc.)
• Upload requested documents (if nothing indicated, just continue the process and not upload documents)

For companies:

• Confirm or update company registration details
• Provide information about the legal representative(s)
• Upload requested documents (if nothing indicated, just continue the process and not upload documents)

The form is shown not entirely in English
For best results, we suggest staying in the English language, as it seems other languages are not fully supported yet, even if available. There could be some details, explanations or choice options in another language; we have reported the issue to Lemonway.

What is the real deadline?
Two different dates were communicated via emails. October 31st and November 15th. Please be informed that the real actual deadline is November 15th, 2025.
 

Not possible to change the country of incorporation (companies)
This happens when the Beneficial owners’ country initially was different from the Country of incorporation of the Company. In these individual cases, please contact support@capitalia.com. We will coordinate with Lemonway and a new portal for recertification will be created for you.
 

Unclear what documents to upload
When any new document is needed, it's clearly stated, however, the document part is visible in all cases. If you do not see any details what document to upload, please do continue to next step without uploading documents.
 

Did not receive an email from Lemonway
Some users reported that these emails were sent to their SPAM folder, please check there. Otherwise, please do not worry. In some circumstances Lemonway had all required KYC information and your account could have been skipped. Lemonway does send reminders every 15 days as well.
 

What happens if I don’t update the information?
Updating your KYC information is mandatory. If you do not complete this process by the specified deadline, your account may be blocked or suspended in accordance with regulatory obligations. That means you will no longer be able to send money to your Lemonway account, receive money from your Lemonway account, and (for investors) invest in Capitalia crowdfunding projects.

To avoid interruptions to your services, please complete your update as soon as possible once you receive the secure email from Lemonway.

Whom can I contact for more information? - If you have any additional questions that this page does not cover, please get in touch with us by writing to support@capitalia.com or calling +372 5864 0880.

Capitalia is the recipient of Code of Good Conduct Certificate. In accordance with this certificate, Capitalia regulary publishes the disclosure of financial and operational information. The latest disclosure as of July 2025 can be found here.

The Automatic investment function allows investing a pre-determined investment amount in loan projects based on stipulated risk, geography, and term preferences. Investors can create their own automatic investment algorithm or use our offered strategies. Using Auto-invest ensures that you do not miss great opportunities as the most attractive projects and achieve a well diversified portfolio.


The first step is to access the Auto-invest area. You need to login into your profile and then in Invest menu choose Auto-invest.

We offer to choose one of the predefined strategies by Capitalia or create your own customized strategy. 

In predefined strategies, you only need to enter the Total investment amount. In Custom strategy, you choose settings such as Countries, Term, interest rate, and can adjust the desired allocation to each Risk rate.

The essential part of any Auto-invest strategy is choosing the total investment amount (Investment amount field) that you want to achieve with this strategy. We recommend investing at least in 25 different projects, however, the more projects you invest in the more diversified your portfolio will be, meaning that any single project delay or loss will not have a significant impact on overall portfolio performance.

The final step is to Activate and Save your strategy as shown below:



Once you Activate and Save your strategy it will be running until you turn it off. Once the target is reached, Auto-invest will resume investing once any of the previous projects are repaid. Auto-invest works ONLY when your Wallet balance is sufficient for next investment.

Below we also share useful tips.

The smoothest automatic investing so far

The intended way of using Auto-invest is to invest in a large number of projects, maximizing diversification instead of picking projects individually. For this the Investment Wallet feature brings the true benefit of automated investments - you add funds once to your wallet and everything else is taken care of automatically. Just make sure to add enough funds to the wallet to last either for the total strategy amount or at least for 1-2 months' worth of investments. Reach out to us at support@capitalia.com and we can indicate this specific amount suggested for your individual strategy. 

Why it is important to keep funds on the Investment Wallet

All investments, including auto-invest are possible only from the available wallet balance. This means you should keep the wallet balance sufficient at all times.

Tip on the Total investment amount
Reflection period

Once you activate Auto-invest for the first time, or make significant changes (for example changing from one predefined strategy to another) a 4-day reflection period will be in force. This means Auto-invest will wait for 4 days before it starts investing allowing you to have a cool-down period in case you change your mind.

Most Profitable Investments in the Last 5 Years

The stock market events of the last six months could be described as a roller coaster ride, where excessive investor optimism alternates with concerns and fears. Donald Trump and his new administration's decisions have had a significant impact on this investor sentiment, substantially shaking diplomatic ties, the global economy, and the previously established order. Moreover, the four-year presidential term is only at its starting line. Therefore, investors' question is justified - where currently is the least risk and greatest profit potential for investing?

It's interesting to examine how different investment categories have performed over the past five years - from more conservative deposits to investments in stock markets. The following table summarizes the annual returns from seven different investment instruments, including not only investments in financial markets but also real estate and business loans. The sources for investment returns in global stocks, bonds, real estate, and deposits are the most popular index funds for these investment categories.

	2020	2021	2022	2023	2024	Average	Fluctuation
Business Loans	11.92%	8.55%	10.11%	12.05%	11.73%	10.87%	1.52%
Baltic Stocks	11.27%	42.01%	-11.75%	4.19%	1.46%	9.44%	20.03%
Global Stocks	15.90%	21.90%	-18.00%	23.90%	18.70%	12.48%	17.31%
Real Estate	-9.50%	25.20%	-24.30%	9.90%	1%	0.46%	18.80%
Investment Grade Bonds	-11.14%	-1.57%	-18.01%	9.27%	0.99%	-4.09%	10.65%
Speculative Bonds	7.10%	0.50%	-12.50%	13.40%	2.90%	2.28%	9.60%
Deposits	-0.59%	-0.69%	-0.15%	2.66%	3.17%	0.88%	1.88%

As can be seen, investments in global stocks have yielded the best returns over the past five years (with an average return of 12.48% per year), but the Baltic stock index is not far behind, showing a high yield of 9.44%. However, it should be noted that investment returns from stocks have been very volatile (17.31%). A large amplitude of return fluctuations means higher risk for investors. In this regard, the largest price amplitude has been in Baltic stocks (20.03%), followed by income fluctuations from investments in real estate (18.8%) and global stocks (17.31%).

Overall, real estate, which is traditionally considered a safe long-term investment, has been quite unpredictable during this period with an average return of only 0.46% and large fluctuations. Meanwhile, bonds, which have historically been a safe haven for investors, show even negative average returns in this five-year period (-4.09% for investment-grade bonds and 2.28% for speculative bonds), but with small fluctuations (around 10%). Therefore, it can be said that bonds are a safer investment solution than stocks, but at the same time these small fluctuations have yielded around 0 or negative returns.

It's worth remembering that investments in financial markets are not the only investment opportunity, which is why this review also includes business loans through the Capitalia crowdfunding platform. Interestingly, such loans have brought investors the second-best return (10.97%), following global stocks, and provided the lowest return fluctuation (1.52%). Business loans don't have daily stock market prices and constant value fluctuations, so investment in such an instrument could be suitable for an investor who doesn't want stress but desires good and predictable results.

The Capitalia platform now already has more than 1,700 investors, mainly from the Baltic countries. Among the investors on the platform are both institutional investors (such as Signet Bank) and a number of business owners and management-level employees. Each loan project can be invested in from EUR 200, which allows for a well-diversified (25 projects) portfolio with just a EUR 5 thousand investment. Among the companies financed through the platform are recognizable companies such as Pure Chocolate, Stenders, and Aerodium.

Given the difference in results for each investment category, it's interesting to observe how investment choices impact the total amount of savings. The graph below shows how the value of EUR 1000 investments in each investment would have changed over the past five years.



It's evident that investments in stocks have provided investors with very good returns, though requiring them to accept fairly significant fluctuations in investment value. Meanwhile, for investors who want to maintain peace of mind but ensure almost equally good returns, it's worth evaluating the opportunities offered by crowdfunding platforms to lend to small and medium-sized enterprises in the Baltic states.

Answering the question posed at the beginning of the article - where is there currently the least risk and greatest profit potential for investing? If the goal is to maximize profit and you're not afraid of higher risk, then the stock market is still the main path to high returns. However, if stability with attractive returns is the priority, business loans can be an excellent alternative to traditional investments.

On operating results
In the first quarter of 2025, Capitalia reported a turnover of EUR 474 thousand and a profit of EUR 28 thousand. The operating revenue and profit grew in the last reporting quarter. We expect the revenue to continue growing. January and February activity remained slow, and in March it has picked up. During the first quarter of 2025, we managed to issue funding of EUR 5.3 million. 

On key events
In the first quarter of 2025, we managed to issue a funding amount of EUR 5.3 million (EUR 6.5 million in the last quarter of 2024). Among the financed businesses during this period were, for example, such companies as Sontransa, UAB (transportation), Betonmax, SIA (manufacturing), and Prosport.lt, UAB (retail trade). 
In alternative fund management, we have made 1 new investment from our cost-efficient Baltic bond fund and acquired bonds of Delfingroup (consumer finance).

On plans for the next quarter
The second quarter of the new year started with strong business financing activity and we expect it to continue this way. The available capital of investors to be deployed in business loans continues to be at record levels. We continue focusing energy on building a strong sales pipeline and stronger relationships with our existing client portfolio.

The full financial report is available after login on our Investor relations page (available for logged in users). 

On operating results
In 2024 Capitalia reported a turnover of EUR 1.66 million and a profit of EUR 8 thousand. The annual revenue grew by almost 15% last year. We kept hiring and growing our sales and financing team throughout the year to facilitate further growth. This has impacted cost base growth and thus the net profitability remained modest for 2024. During 2024 our managed loan portfolio has grown by 36%. Our platform investor base has grown significantly during 2024 by 118% and reached almost 1.5k investors at the end of the year. In October we observed a record level of activity and during the Q4 we managed to issue a solid monthly funding amount of EUR 6.5 million. 

On key events
In the last quarter of 2024, we managed to issue a funding amount of EUR 6.5 million (EUR 4.5 million in the last quarter of 2023). Among the financed businesses during this period were, for example, such companies as Brain games, SIA (retail trade), Ondato, UAB (software), Aeonpump, SIA (manufacturing), Timberex group, SIA (manufacturing). 

In alternative fund management, we have made three new investments from our cost-efficient Baltic bond fund and acquired bonds of Four Finance (consumer finance), Zalvaris (waste management), and Latraps (agriculture). Our venture capital fund investment period has ended, and no realizations have been made in the last quarter. We have launched one new special purpose fund, SWG Secondaries Fund, which has bought out a few early investors in Startup Wise Guys Ventures Fund 1 (Challenger 1).

On plans for the next quarter
The first quarter of the new year started slower than expected. While the available capital of investors to be deployed in business loans is at record levels, companies willing to borrow are not rushing. We continue focusing energy on building a strong sales pipeline and stronger relationships with our existing client portfolio.

On operating results
In the first three quarters of 2024, Capitalia reported a turnover of EUR 1.15 million and a loss of less then EUR 10 thousand. Operating revenue remained stable, however, administrative costs increased resulting in a small operating loss. The increased costs are associated with building up the sales team and IT development capacity. We expect the consolidated revenue to grow in Q4 and profit to be achieved as the consolidated portfolio under management is growing strongly and at the moment of reporting reached a record of over EUR 25 million. Financing activity remained stable in the third quarter of 2024 and our issued funding amount was the same as in Q2. Our investor base has grown strongly by 15% over the third quarter and more than half of this growth comes from outside of Baltic countries.  

On key events
In the third quarter of 2024, we managed to issue a funding amount of EUR 4.7 million (EUR 4.7 million in the second quarter of 2024). Among the financed businesses during this period were, for example, such companies as Agrocredit Latvia, SIA (finance), Storent, SIA (construction equipment rental), Traktoriem, SIA (machinery repair and trade). 

In alternative fund management, we have made 3 new investments from our cost-efficient Baltic bond fund and acquired bonds of Fern group (engineering solutions), Summus capital (real estate), and Auga group (agriculture). Our venture capital fund investment period has ended, and no realizations made in the last quarter. We had launched a new feeder fund - Siena Secondaries Feeder Fund. With this we provided opportunity for our investors to participate in the second fund of Siena with a lower minimum investment amount and slower capital calls. Siena specializes in late stage pre-IPO startups in the Nordics & CEE region which serves as addition to our early stage VC co-investment fund and also Change ventures feeder fund.

On plans for the next quarter
The last quarter of 2024 started with strong business financing activity and October tracking to reach a record monthly funding volume so far. We are onboarding the first institutional investors, a local investment bank, which will significantly strengthen our funding capacity. We continue implementing changes and improvements on our crowdfunding platform. Building up our sales team is slower than expected, but continues to achieve a stronger outreach both to potential borrowers as well as to new investors.    

On operating results
In the first half of 2024, Capitalia reported a turnover of EUR 764 thousand and a profit of EUR 27 thousand. This is the first time we are reporting consolidated figures. Operating revenue slightly grew and a positive net profit was achieved. We expect the consolidated revenue to continue growing together with the consolidated portfolio under management. Financing activity remained stable in the second quarter of 2024. During the first half of 2024, we managed to issue a funding amount of EUR 10.60 million (EUR 13.03 million during the first half of 2023). The lower issued amount and higher portfolio under management are explained by a discontinuation of a few larger factoring type of contracts and the average term of issued loans getting longer.

On key events
In the second quarter of 2024, we managed to issue a funding amount of EUR 4.7 million (EUR 5.9 million in the first quarter of 2024). Among the financed businesses during this period were, for example, such companies as Digital mind AS (information technologies), Genecode AS (scientific research), and MIG Baltic SIA (wholesale & retail trade). 
In alternative fund management, we have made 1 new investment from our cost-efficient Baltic bond fund and acquired bonds of Given Jewellery, AS (Latvian jewelry retail company). Our venture capital fund investment period has ended, and no realizations made in the last quarter.

On plans for the next quarter
The third quarter, despite the slower season of summer, continues with a stable business financing activity and we expect no changes here. We continue implementing final changes on our platform to ensure compliance with the European Crowdfunding Service Provider requirements, as well as executing other performance updates for the benefit of the financing clients and investors.   

Retail stores create a large part of Capitalia’s overall client range due to their regular financing need. Purchasing additional goods for sale before the high season, renovating the premises, expanding and opening new stores - the options are endless. Retail companies often choose alternative financing thanks to the possibility to tailor the repayment schedule and low collateral requirements.

Lithuanian sports inventory retail business Prosport.lt is one of Capitalia’s most loyal customers, using the business loans regularly since 2014. Prosport.lt is a tennis sportswear retailer in Lithuania, but it also sells cycling, skiing, and other sports equipment. With the help of the seasonal Capitalia financing, the company has been able to expand its range of products, satisfy the growing demand, and maintain the necessary inventory levels in stores in Kaunas and Vilnius.

This spring has been no exception, with Prosport.lt acquiring working capital financing from Capitalia to finance the purchase of additional bicycle and Padel inventory for the active summer season. With this business loan, the company will be able to increase its turnover and meet the increasing demand.

If your retail business is interested in quick and tailored alternative financing to prepare for the high season or expand the store, get in touch with us by calling +371 2880 0880 or writing to financing@capitalia.com

On operating results
In the first quarter of 2024, Capitalia reported a turnover of EUR 353 thousand and a profit of EUR 57 thousand. The operating revenue remained stable in the last reporting quarter and solid profit growth was achieved. We expect the revenue to remain stable or slightly decrease due to changes in investing in crowdfunded loans on our platform. Since the reception of the ECSP licence Capitalia SE as a platform operator cannot invest in loans and our holding company continues this activity. January and February activity was strong while March was slower. During the first quarter of 2024, we managed to issued funding amount reached EUR 5.9 million. 

On key events
In the first quarter of 2024, we managed to issue a funding amount of EUR 5.9 million (EUR 4.5 million in the last quarter of 2023). Among the financed businesses during this period were, for example, such companies as Kalna 22A, SIA (retail trade), SFM Latvia, SIA (metal products manufacturing), Adamlights, AS (lighting solutions manufacturing). 

In alternative fund management, we have made 3 new investments from our cost-efficient Baltic bond fund and acquired bonds of Orkela (real estate development), Mapon (fleet management and asset tracking SaaS), and SBA Furniture Group (furniture manufacturing). Our venture capital fund investment period has ended, and no realizations made in the last quarter.

On plans for the next quarter
The second quarter of the new year started with strong business financing activity and we expect it to continue this way. We continue implementing final changes on our platform to ensure compliance with the European Crowdfunding Service Provider requirements. We continue building up our sales team for stronger outreach both to potential borrowers as well as to new investors.  

Find out what changes Capitalia has implemented as required by the ECSP regulations and how it impacts investors' experience. Most of the changes concern investor protection and all of it is approved by the regulating body Bank of Latvia to ensure they match the EU regulations.

Additional due diligence checks for new projects ✅

In addition to the risk scoring that Capitalia is using, now Project owners have a requirement to submit additional information for due diligence checks. This includes such items as proof of impeccable criminal records and information about past payment defaults to any creditors of the project owner.

 

Publication of Credit scoring and loan pricing policy ✅

Our published Description of Credit Risk Scoring Model and Loan Pricing Methods will improve transparency with our investors. This document has been published in the Risk management section of the website. Investors now can better understand how we score projects and set pricing. Capitalia strives to ensure fair and appropriate pricing for the loans originated on the Platform. 

• D02, Description of Credit Risk Scoring Model and Loan Pricing Methods 

 

Conflict of interest ✅

Our published Conflict of Interest Policy covers important aspects and changes in this field coming from regulation. To date employees of Capitalia were active investors on the platform, however, their investments will be limited to only Auto-invest strategies. Also, special rules for platform-related company Capitalia Investment Holding, AS, were laid out, allowing it to invest 2.5% of the target financing amount in every project. Capitalia has been co-investing in projects since the very beginning and we believe continuing it ensures the alignment of interest of Capitalia and investors. 

• D03: Conflict of Interest Policy

 

Key Investment Information Sheet (KIIS) publication on new projects ✅

A new document now appears on new projects called "Key Investment Information Sheet" (in short “KIIS”). Every licensed crowdfunding platform must provide such a sheet for each project and the goal is that investors could easily compare projects between different platforms. This document includes details about the project owner, a description of risks, key financials, and similar.

 

Knowledge assessment test ✅

Capitalia implemented an entry knowledge assessment test that all investors must take. Test results will be valid for 2 years. 

 

Net worth calculation and loss simulation ✅

In addition to the knowledge test, a net worth calculation and a loss simulator are

required for each investor. This will help investors to understand better the risks involved in crowdfunding. These details are used only for showing the relevant risk warnings and applying correct limits.

 

Risk warnings based on net worth and lending amounts ✅

Based on the ability to bear loss simulation test, we started showing additional risk warnings to investors when making new investments larger than 5% of their net worth (or EUR 1,000, whichever is lower). These warnings will raise the awareness of investors and provide a choice to continue by approving that they do understand the potential risks.

 

On operating results
In 2023 Capitalia reported a turnover of EUR 1.45 million and a profit of EUR 2 thousand. The annual revenue grew by almost 16% last year, however, due to additional costs in transitioning to licensed operations the net profitability was impacted. While in October we again observed low activity it started picking up in November and in December we managed to issue a solid monthly funding amount of EUR 2.2 million. 

On key events
In the last quarter of 2023, we managed to issue a funding amount of EUR 4.5 million (EUR 5.3 million in the third quarter of 2022). Among the financed businesses during this period were, for example, such companies as Ozermedia, SIA (manufacturing and wholesale trade), Digital Mind, AS (information technologies), and JMD, SIA (real estate). 

In the last quarter, we have successfully received the European Crowdfunding Service Provider license from the Bank of Latvia. We also completed internal reorganization as a result of which the Capitalia SE and Capitalia Fund Management SIA have become daughter companies of the Capitalia Investment Holding AS. The reorganization has been initiated due to the licensing requirements of the crowdfunding platform operations.

In alternative fund management, we have made 7 new investments from our cost-efficient Baltic bond fund and acquired bonds of made 7 new investments: Civinity AB (building maintenance and engineering solutions company), Eco Baltia (waste management company), Eleving Group (financial technology company), Capitalica (asset management company), iCotton (cotton products manufacturing company), Modus Grupe (renewable energy, mobility services, auto business provider), Omberg Group (real estate management company). Our venture capital fund has made two new investments in an Estonian real estate rental management platform Rendin and in Giraffe360, which already was part of the Fund’s portfolio. The last quarter marked the end of the investment period of the Fund.

On plans for the next quarter
The first quarter of the new year started with strong business financing activity and we expect it to continue this way. We continue implementing various changes on our platform to ensure compliance with the European Crowdfunding Service Provider requirements. We are also building up our sales team and preparing for stronger outreach both to potential borrowers as well as to new investors.   

The full financial report is available after login on our Investor relations page (available for logged in users). 

In the era of digital advancements, cybercrime rates are escalating, rendering the reliance on mere passwords insufficient for ensuring complete account safety. Understanding the paramount significance of user security, Capitalia has recently integrated Google Authenticator into our security measures. This implementation enhances security compared to only password login and is required for all users.

What is Google Authenticator?

Google Authenticator is an app that generates a unique time-limited, six-digit code which you will need to enter during the login process. It is straightforward to use the app on your phone and it is available for free both on Android and iOS devices. 

A step by step guide 

1. Login to your Capitalia account and go to My profile. Then open the last tab named Two-step Verification Setup


2. Download the Google Authenticator app from the App Store or Google Play Store and open it to set it up (skip this step in case you already use this app). 

3. Once Google Authenticator app is set up and open on your phone, click the + sign in the bottom right corner, and choose Scan a QR code.

4. Scan the QR code shown in your browser (My profile -> Two-step Verification Setup) using the app, and Capitalia account will be added in the list.



5. Input the 6 digit code from your Google Authenticator app and select “Save”.

6. Once you click “Save”, you’re all set and Capitalia will ask you to login again using the Google Authenticator code. You can choose to trust the device for 30 days, in which case this 6 digit code from the app would not be required on that device for next 30 days. 

Google Authenticator is one of the applications that supports this way of 2FA, you can also use Authly, Microsoft Authenticator, or other possible alternatives.

Using the two factor authentication and the Google Authenticator app is required for more secure access to your account. If you are unable to use Google Authenticator contact support@capitalia.com.

Invest from EUR 200
With us you can invest in loans to Baltic small and medium companies. You can use automated strategies for best diversification or select individual projects manually. The minimum investment in one project is from EUR 200. Investing on Capitalia is totally free for investors.
 
Complete your registration
Make sure to complete all the steps of registration. After you complete the registration in full you will need to wait for your account to be validated. For individuals it usually takes up to 48 hours, for companies - up to 72 hours. The following documents are required for account validation and they help us to build a trusted relationship with you and prevent illegal activity on the platform. We are a licensed financial institution and activities are subject to financial laws, including anti-money laundering laws.
 
Individuals
-       A personal identification document (ID, passport, driving license) and a selfie (service provided by Onfido and is a step of the onboarding process)
-       A bank account statement showing your IBAN and Name, Surname (this is needed later, when you are setting up your account for funds withdrawal)
 
Companies
-       Personal identification document of company representative as well as of beneficial owners
-       A bank account statement showing your IBAN and company name
-       Latest version of Articles of Association
-       Extract from official company register of your country
-       In case the Ultimate Beneficiary Owners are not listed in the Extract, additional document about them is needed.
 
Aligned interests
Capitalia invests own funds in every published project in order to have a very clearly aligned interests with investors. You have peace of mind that we publish only such projects where we are willing to invest our own capital as well.
 
Monthly repayments on 1st and 15th
Each month you receive repayments from the projects in which you have invested. All our loan contracts with borrowers have either 1st or 15th of each month as a monthly repayment date. Repayments go directly to your Investment Wallet. We highly recommend to continue reinvesting these funds in new projects to continue growing your portfolio and increasing the level of diversification. In case you choose to withdraw funds to your standard bank account you can do it at any point. All transactions are free of charge. You can check the Account statement page to see transactions for any past period.
 
The importance of diversification
We recommend to investors to hold at least 25 active investments and the more investments you hold, the lower chances are of any single project default to have significant impact on your return. If you plan to invest EUR 5,000 on our platform, we recommend to make 25 x EUR 200 investments. More detailed information and analysis of our investors past returns can be found here.
 
Taxes
In case you are investing via a company account - there are no taxes applied. For individual investors we must follow Latvian legislation of taxation and personal income tax witholding is applied. For more information, list of countries with Tax treaties for reduced withholding tax and how to apply for it are available here.
 
Non Performing Loans
Investing in loans to small and medium companies carries a risk of capital loss. Capitalia uses its vast experience, being in the business of lending to companies since 2011, in handling all the loan repayment delays, restructurings and defaults. We take care of all required steps and cover all collection costs on behalf of investors. To date we have an exceptional Loan loss rate of just 1.18%.
 
Other useful links
1. Risk management 
2. Advised Account Service is our most premium account type & offers a passive and relaxed way to invest and earn from lending to Baltic businesses.
3. Auto-invest ensures that you do not miss great opportunities. The tutorial for setting up is here.
4. Resources for investors - our collection of articles useful for investors. Materials include practical tips and tools for investing in stocks, bonds, gold, and (later) crypto.
5. Statistics on the loans that have been co-financed with Capitalia. Data is renewed daily.
6. Tutorials page covers account statements & tax reports, the benefits of diversification, withholding tax for private investors, and more.
7. Investment Wallet. Everything you need to know about using it.

In order to invest in loans published on Capitalia platform investors must hold an Investment Wallet, which is usually created within 48 hours after finishing the registration. The Investment Wallet is your safe dedicated payment account that you can use to store money for investing on Capitalia platform, receive project repayments and withdraw cash to your standard bank account when needed. You will be able to access this Investment Wallet directly on Capitalia platform.
 
Key benefits for investors:
 
● Safety - your funds will be clearly segregated from Capitalia at all times and money will be transferred directly between investors and borrowers. Your money will be held in separated client-money accounts opened with large and safe partner banks, such as BNP Paribas
● Convenience - you will be able to top up the Investment Wallet with a single transfer and then make multiple investments to new projects directly on our platform without paying bank fees for each transaction 
● Reinvesting - since the repayments will accumulate in your Investment Wallet, it will be effortless to reinvest funds in new projects
● Auto-invest - your auto-invest strategy, as well as Advised account service will require even less attention as you will no longer need to make a new bank transfer for every project automatically booked for you
 
The keeping of the Investment wallets will be provided by the French licensed payment institution supervised by ACFR and widely used by many of the largest European crowdfunding platforms - Lemonway. Money kept in Investment Wallets is held in separated client-money accounts opened with partner banks, such as BNP Paribas.
 
Checking Investment Wallet balance

When logged in to your account on our platform you will always see the current Investment Wallet balance next to your account menu in the top right corner:



Clicking on the balance will take you to the dedicated Investment Wallet page where you will see sub-pages:
Balance - See available wallet balance
Statement - Obtain an account statement for the desired period of time
Adding funds - Will show you the information required to make a transfer for adding funds to the wallet
Withdrawing funds - Here you will be able to withdraw funds to your bank account.



Adding funds
To add funds to your Investment Wallet you will need to make a SEPA payment in EUR. You can add funds from any bank account, just make sure it is your bank account. The Name Surname, or Company title will have to match your profile information for payment to be accepted. Important - The beneficiary is Lemonway, and IBAN is individual for every investor. You can use the button Copy for convenience when making a bank payment in your internet bank. 



In case your bank requires a BIC for making SEPA payments, use the following BIC code - BNPAFRPPXXX 
In case an address is required, use the following: 8, rue du Sentier - 75002 Paris - France.

 
Withdrawing funds
To withdraw funds you just need to enter the amount, which you wish to withdraw and confirm it with your account password. You can withdraw any amount which is available on your Investment Wallet. Withdrawal will be done to your bank account indicated in your profile and visible on the Withdrawing funds page. 


 
Q&A regarding Investment Wallets
 
In whose name will the bank account (“wallet”) be opened?
In the name of Investor.
 
How will my accountant be able to access the bank account statement?
The statement will be available on the Capitalia platform, under the Investment Wallet menu. The user using the platform will have to get it and submit it to accounting.
 
Where will the money be held?
Money kept in Investment Wallets is held in separated client-money accounts opened with 4 tier-1 partner banks, such as BNP Paribas.
 
Will deposit guarantees apply at the bank?
Yes, for instance, BNP Paribas operates under Deposit Guarantee Scheme, where €100,000 per depositor is guaranteed. Customer funds regardless if an EU bank goes insolvent are guaranteed (up to EUR 100,000 per depositor) under provisions outlined by European Union regulation.
 
Where can I get more information about safeguarding of funds?
You can access more information here.
 
I finished registration/updated my profile but do not see my Investment Wallet
Wallets will become visible starting from October 16th, we will send an email about it and information on how to top it up with funds. If you just registered or just updated the required information on your profile - it can take up to 48 hours to get your Wallet opened.
 
Can I invest in a project if my Wallet balance is insufficient?
No, all investments, including Auto-invest, require to have sufficient wallet balance in order to make investments. 

Information for press
September 21, 2023

Summer has ended with another great investment for Capitalia Co-Investment Fund - the fund has concluded an investment deal with an Estonian startup Xolo OÜ in the amount of EUR 150,000. The lead investor for this investment round was Karma Ventures and this is the 10th investment for Capitalia’s Co-Investment Fund which was founded in autumn of 2021.

Xolo, founded in 2015 in Estonia, is a platform for freelancers to set up and run their businesses. Xolo takes care of all accounting and legal issues for solo entrepreneurs and helps them to connect with peers to find new work opportunities. Xolo automated accounting solution is available in Spain, Italy and Estonia. However, entrepreneurs from other countries can use Xolo’s services to open a company in Estonia, using the country’s e-residency benefits.  Xolo takes care of taxes and reporting, business account opening in Estonia, and provides other recommendations on how to run a business in Estonia.

The company’s current investment funding round was led by Karma Ventures, a well-known industry leader who has invested in numerous prosperous startups, including Wirepass, CG Trader, Plumbr, and Cybebexer. Other investors in the company include Specialist VC, Contriber Ventures and Id4 Ventures, while it also has raised capital through the crowdfunding platform Funderbeam.

“Meeting new Baltic startups and assisting in their growth path is very satisfying and Xolo is no exception. We cannot wait to see what new developments the company will experience with the help of our investment and we are glad to offer our investors and the Baltic companies the possibility to boost the region’s economic growth,” Capitalia’s fund manager Gintaras Matuzas reveals.

Xolo’s CEO Mikko Teerenhovi comments on the investment success: “Xolo is an industry leader in the freelancer space and we have a lot of ambitious plans for the future. It’s great to find like-minded investors in the Baltic states.”

Capitalia’s Co-Investment Fund was founded in 2021 and its current investment amount exceeds EUR 2 million. As of now, the fund has invested in 10 companies - Cenos, Inzmo, Scratcher, Aispeco, Ondato, Aerones, Giraffe360, Favro, Bolt, and the newest addition of Xolo. With a minimum investment of EUR 30 thousand, the fund offers investors a cost-effective way to gain investment exposure to dynamic and fast-growing technology companies in the Baltic States. The fund already has 34 investors from Latvia and other European countries and is attracting new ones only until the end of October 2023.

Here are some links that we believe are useful for getting the most out of investment opportunities with Capitalia: 

• Advised Account Service is our most premium account type & offers a passive and relaxed way to invest and earn from lending to Baltic businesses. 
• Auto-invest ensures that you do not miss great opportunities. The tutorial for setting up is here. 
• Sign up for our quarterly investment commentary & insights. We share our observations with regard to investor sentiment in the Baltics, as well as outline general news and investment offers from Capitalia. We also share our managed funds results.
• Resources for investors our collection of articles useful for investors. Materials include practical tips and tools for investing in stocks, bonds, gold, and (later) crypto. 
• Statistics on the loans that have been co-financed with Capitalia. Data is renewed daily. 
• Tutorials page covers account statement & tax report, the benefits of diversification, withholding tax for private investors, and more.

On operating results
In the first half of 2023, Capitalia reported a turnover of  EUR 705 thousand and losses of  EUR 52 thousand. The operating results were negatively impacted by extraordinary one-off expenses which resulted from the sale of a subsidiary holding a brokerage license. As part of the costs associated with opening, and maintaining the subsidiary as well as obtaining the license were not fully amortized, they were booked at the moment of subsidiary sale. Financing activity remained strong in the second quarter of 2023. During the first half of 2023, we managed to issue a funding amount of EUR 13.03 million (EUR 9.85 million during the first half of 2022).

On key events
In the second quarter of the year, Capitalia issued new financing in the amount of EUR 5.6 million (EUR 7.43 million in the previous quarter). Among the financed businesses during this period were, for example, such companies as Aeonpump (manufacturing), MIG Baltic (wholesale and retail trade), and Selva Būve (construction). 

In alternative fund management, we have made 3 new investments from our cost-efficient Baltic bond fund and acquired bonds of Integre Trans (a Lithuanian logistics company), Akropolis Group (a Lithuanian retail property development company), and Eleving loan-backed securities - a Latvian finance company - on the Mintos Marketplace platform. 

 

On plans for the next quarter
We believe that over the third quarter of 2023 the business financing activity will continue strongly despite the still ongoing economic concerns. We continue to observe that companies are adjusting to working in the still high inflation as well as higher interest rates environment. Our financing is becoming more attractive as interest rates at commercial banks have increased and we expect to see good projects for financing throughout the year.  

   

The full financial report is available after login on our Investor relations page (available for logged in users). 

After logging in to VMI, you need to select Paslaugos then in the search field enter Pažyma dėl pripažinimo rezidentu dvigubo apmokestinimo išvengimo sutarties tikslais and pick the form. 

Continue pressing the green button Pildyti, then click Pridėti, pick country Latvia and year 2025. Continue ordering the form to your Mano VMI (to receive a signed e-document).

The certificate will be prepared in .adoc signed e-document format in a few days. Once it is ready, please submit it by sending to support@capitalia.com.

Tax Certificates will be valid until the end of January of next year. At the start of new year we will remind affected investors to obtain new Certificated and submit them to us.

Our platform operates from Latvia and we must comply with local legislation. Due to this when private individuals invest on Capitalia, we must deduct a withholding tax from their interest and late interest income received.

When the tax withholding happens:

1. You invest in a project.
2. The borrower makes a payment that covers interest (interest or late interest). 
3. Once the received payment is processed and is being distributed to investors, a part of the interest payment is automatically deducted from repayment to your account as withholding tax based on the applicable tax rate.
4. When you declare your income in your country of tax residence, you might be able to reduce the tax payable in your country by the withheld amount. Please consult your local tax legislation and seek professional advice if needed. 
5. You can see the withheld amount as a separate entry in the account statement, as well as in the bank transfer payment details text. The total withheld amount will be visible on your tax report which you can download from the Account statement page. 

Please note that no withholding tax is deducted from investors - legal entities. 
Please note that personal income tax rate in Latvia changed from 20% up to 25.5% starting from 1st of January, 2025.

The withholding tax rate depends on your country of tax residence. Currently, the following rates are applicable:

• For investors who are tax residents of Latvia, the withholding tax rate is 25.5%, in line with the Personal Income Tax Act.
• Investors who invest as private persons and are tax residents of Lithuania can reduce their withholding tax rate to 0% if they provide a tax resident certificate. Note: In case your income on Capitalia platform is over EUR 5,000 the original tax resident certificate must be submitted to our office in Vilnius or Riga via post or in person. Tax resident certificates must be renewed every year and submitted to us no later than the 31st of January of the new year.
• For all other investors who invest as private persons, the standard withholding tax rate is 25.5%. The rate can be reduced if the investor provides a tax resident certificate. Note: In case your annual income on Capitalia platform is over EUR 5,000 the original tax resident certificate (2 copies) must be mailed to our office in Riga via post. Tax resident certificates must be renewed every year and submitted to us no later than the 31st of January of the new year. Please see the full list of reduced applicable tax rates:
• 
  

  Country	Double tax treaty rate (%)	Country	Double tax treaty rate (5)
  EU		Non-EU
  Austria	10	Albania	10
  Belgium	10	Armenia	10
  Bulgaria	5	Azerbaijan	10
  Croatia	10	Belarus	10
  Cyprus	10	Canada	10
  Czech Republic	10	China	10
  Denmark	10	Georgia	10
  Estonia	10	Hong Kong SAR	10
  Finland	10	Iceland	10
  France	10	India	10
  Germany	10	Israel	10
  Greece	10	Japan	10
  Hungary	10	Kazakhstan	10
  Ireland	10	Korea (ROK)	10
  Italy	10	Kosovo	10
  Lithuania	0	Kuwait	5
  Luxembourg	10	Kyrgyzstan	5
  Malta	10	Mexico	10
  Netherlands	10	Moldova	10
  Poland	10	Montenegro	10
  Portugal	10	Morocco	10
  Romania	10	North Macedonia	5
  Slovakia	10	Norway	10
  Slovenia	10	Qatar	5
  Spain	10	Saudi Arabia	5
  Sweden	10	Serbia	10
  		Singapore	10
  		Switzerland	10
  		Tajikistan	7
  		Turkiye	10
  		Turkmenistan	10
  		Ukraine	10
  		United Arab Emirates	2.5
  		United Kingdom	10
  		United States	10
  		Uzbekistan	10
  		Vietnam	10

To register your tax residence and apply a reduced withholding tax rate, we are required to receive a tax resident certificate from you. Check with your local tax authorities to see how you can obtain a tax resident certificate in your country of tax residence. Your tax resident certificate must meet the following requirements to be accepted:

• It must contain your full name and tax identification number
• It must confirm your tax residence for the current year
• It should specify that it applies to income generated in Latvia
• It must be in English and signed by the issuing tax office

You can submit your tax resident certificate via email support@capitalia.com

The reduced withholding tax will be applied from the next month after Capitalia has received and processed your tax resident certificate. If the tax resident certificate is provided later, but not more than 3 years after the date of receiving interest, you can request repayment from the Latvian tax authorities.

Unless stated otherwise, your tax resident certificate remains valid until the end of the specified calendar year. You will need to submit a new tax resident certificate to reduce your tax withholding rate in the next calendar year.

An additional form only needs to be provided when you generate more than €5000 in income during one calendar year.

On operating results
In the first quarter of 2023 Capitalia reported turnover of EUR 363 thousand and profit of EUR 70 thousand. The operating results improved in the last reporting quarter and a solid profit growth was achieved. While in January activity was still lower it picked up and was very strong in February and March. During the first quarter of 2023 we managed to issue a record monthly funding amount of EUR 2.95m in March and a record quarterly funding amount of EUR 7.43 million. 

On key events
In the first quarter of the year Capitalia issued new financing in the amount of EUR 7.43 million (EUR 5.6 million in the previous quarter). Among the financed businesses during this period were, for example, such companies as Silver real-estate (manufacturing), Maudis (manufacturing) and Visual media group (advertising). 

In alternative fund management, we have made 4 new investments from our cost-efficient Baltic bond fund and acquired bonds of Eco Baltia (Latvian waste management company), Mainor Ulemiste (Estonian real estate developer), and of two entities of financial services provider Eleving Group - Eleving Group S.A. (Luxembourg) and Mogo, AS (Latvia). Furthermore, we made additional investment in the Baltic Horizon Fund’s bonds. 

On plans for the next quarter
We believe that over the second quarter of 2023 the business financing activity will continue strongly despite the ongoing economic concerns. We have identified several industries with high optimism regarding future outlook as well as can observe that companies have started to adjust to working in the current high inflation environment. Our financing is becoming more attractive as commercial banks are increasing their interest rates and we expect to see good projects for financing throughout the year.   

To comply with article 42 and clause 4 of the Law on Investment Firms, Capitalia informs that the annual report of Capitalia Investment Services, SIA, together with the auditor's report has been published. The auditor's report can be publicly accessed here while the annual report itself can be accessed here. Both documents can also be found in the public databases of the Enterprise Register and the Bank of Latvia.

We kindly remind you that Investors have to declare income from investments in our platform themselves. The tax report is available under the Account statement section (after login in the right side top menu).





1. Shortcut for most common period selection. Once you click it the range in Item No. 2 changes and the page refreshes automatically;
2. Period selector in case you wish to manually select a specific period;
3. This will download your Tax report for the currently selected time period in PDF format;
4. Here you can download the same information just in Excel format;
5. Here you can see the summary for the selected period. 

A quick way to get a Tax report for last year: Open Account statement page -> select Last year (1) ->  Once the page refreshes click on Tax report (3)

On operating results
In 2022 Capitalia reported turnover of EUR 1.25 million and profit of EUR 48 thousand. The operating results slightly improved in the last reporting quarter and a modest profit growth was achieved. While in October activity was still low it started picking up in November and in December we managed to issue a record monthly funding amount of EUR 2.7m. 

On key events
In the last quarter of the year Capitalia issued new financing in the amount of EUR 5.6 million (EUR 3.5 million in the previous quarter). Among the financed businesses during this period were, for example, such companies as Cinīši Agro (agriculture), Fito-AL (agriculture) and Grind grupa (plastic waste trade). 

In alternative fund management, we have completed venture capital investment in Giraffe360 (Latvia), in an investment round led by pan-European VC firm Founders Fund. We have made the first 3 investments from our new cost-efficient Baltic bond fund and acquired bonds of CleanR grupa (Latvia, waste management services), Delfingroup (Latvia, financial services), and Baltic Horizon (Estonia, real estate).  

On plans for the next quarter
We believe that over the first quarter of 2023 the business financing activity will start slower and increase towards the middle of the quarter despite the ongoing economic concerns. We have identified several industries with high optimism regarding future outlook as well as can observe that companies have started to adjust to working in the current high inflation environment. Our financing is becoming more attractive as commercial banks are increasing their interest rates and we expect to see good projects for financing.   

Full financial report is available after login on our Investor relations page. 

For wholesale and retail companies, it is significantly important to keep high levels of inventory to meet the clients’ demands. With the help of Capitalia financing, the well-known cleaning solutions wholesaler ZEP Eesti was able to increase its turnover and use its own funds to start a new business segment.

Use Capitalia working capital financing to release your company’s funds as well and apply for a consultation by calling to +371 2880 0880 or writing to financing@capitalia.com.

Continuing to expand cost-efficient investment opportunities in the Baltics, Capitalia has launched the first bond fund in Latvia that invests in bonds of Baltic companies. The target return of the fund is 8-10% annually. Investment in this fund enables private investors to purchase securities that were unavailable due to the price and the investment amount.

The minimum investment amount in the Capitalia bond fund is EUR 25,000. By investing, the investor acquires professionally evaluated and managed diversified Baltic companies ‘ securities portfolio. Capitalia has more than 12 years of experience in business lending, financing more than 5,000 businesses, that way it has mastered its competency to analyze company credit risks.

Taking into account the overall financial markets drop, this is a suitable time to start investing in order to acquire securities for a good price. It is expected that the fund will make its first investments in November 2022, gradually increasing its investment amount over the upcoming years.

In addition to the Baltic bond fund, Capitalia manages its venture capital fund, provides investment consultations to investors and offers financing to small and medium companies through its investment platform.

The surrounding anxiety and suspense about the potentially upcoming crisis can quite easily initiate a stressful environment for any company. Fear of increasing invoice expenses, inflation, and the war nearby make the investors act more cautiously when planning next year’s budget and expansion plans. However, the probability of a crisis, if the company is well-prepared, is also an opportunity. There are numerous options for how a company can use additional financing to prepare for a more stable future.

The right time to buy out a competitor
A potential crisis for one is a growth opportunity for another. Perhaps this is the right time to buy out or merge with another competitor? By buying out another company, it is possible to acquire the competitor’s equipment, product/service features, and list of clients. The seller can feel satisfied because he has gotten rid of the crisis stress, but your company has realized its expansion dream. Capitalia buyout loan can be a useful tool for company buyouts since it provides part of the necessary funds for buy out and Capitalia helps to manage the selling process.

A larger purchase before another price increase
Due to inflation, lack of materials, and the ongoing war, prices continue to rise for many product and service groups. Unfortunately, even the most optimistic experts do not predict soon price decreases; therefore, it is an understandable counter-reaction to purchase extra spare goods for sale or equipment for the current price. Just to be on the safe side, get in touch with the manufacturer or the seller and find out, if the seller is not planning to raise the prices. In case you are hesitant to cover the whole purchasing price with the company’s funds, consider the possibility to finance part of the purchase with the help of Capitalia’s financing or leasing, or working capital loan.

Safety net for hard times
Cautiousness is a desirable trait and, if you are a businessman who believes that it is better to play it safe (have the money in the account rather than spent on a new machine), we are not planning to change your mind. However, during times when expenses grow surprisingly fast, additional working capital financing can be the necessary safety net to make the crisis seem less scary. With the help of a loan it is possible to increase the material or product amount before the price increase, and maintain the desired working capital buffer. Thanks to the personalization of payment schedules, it is possible to create a perfectly tailored repayment schedule for your business plans and cash flow.

Refinancing of more expensive loans
For safety purposes, credit institutions increasingly encourage companies to settle their remaining financial liabilities and reduce leverage. Full loan repayment often is not that easy to do; therefore, the companies choose to refinance to some less expensive financiers. If possible, the most convenient option is to refinance to a commercial bank, but thanks to the personalized repayment schedule and relatively low interest rates, Capitalia can also help reduce the liability burden. In addition, Capitalia offers help in attracting bank financing, that way helping the client find the most suitable solution among numerous capital providers.

On operating results
In the third quarter of 2022  Capitalia reported turnover of EUR 916 thousand and profit of EUR 30 thousand. The operating results worsened in the last reporting quarter as a result of low seasonal activity among companies seeking business financing, as well as administrative costs (IT development) associated to transition to licensed operating framework. 

On key events
In the last quarter of the year Capitalia issued new financing in the amount of EUR 3.5 million (EUR 4.9 million in the previous quarter). Among the financed businesses during this period were, for example, such companies as Rūjas Meži (forestry), Saltus (forestry) and GP Systems (specialized construction). 

In the alternative fund management, we have completed venture capital investments in Aispeco (Lithuania), in investment round led by Superhero Capital (Finland) and Ondato (Lithuania) in transaction led by OTB Ventures (Poland). We have finalized the launch of a new cost-efficient Baltic bond fund and we expect to make the first investments from this fund in the last quarter of the year.  

On plans for the next quarter
We believe that over the last quarter of 2022 the business financing activity will be increase despite the concerns regarding overall economic activity. We have identified several industries with high optimism regarding future outlook as well as can observe that companies have started to adjust to working in the current high inflation environment. We are continuing work on licensing our funding platform in Latvia but have pushed back the expected completion of the licensing to the middle of year 2023. 

Capitalia invests EUR 150,000 in a Danish start-up Scratcher together with a Finnish venture capital fund Innovestor. Scratcher.io is a marketing company, which uses gamification elements to turn the industry upside down.

In recent years, the so-called gamification marketing has graduated from being a niche technology to being an increasingly important part of companies' sales and marketing toolbox for lead generation as well as customer loyalty and engagement. One of the leading companies in gamification marketing in the Nordics is the Danish company Scratcher. It already has customers in over 15 European markets and is now ready to take on and conquer even more of the World.

The CEO and Co-founder Casper Christiansen says that:

"It is Scratcher's goal to become a leader on a global level, and we must achieve this by showing companies that gamification marketing is more than fun and games. On the contrary, it has the potential to be the best digital and strategic tool available to ensure top results possible. We have just scratched the surface of what the technology can do and contribute in relation to data-based customer engagement and campaign performance”.

Scratcher’s financing round was led by Finnish Venture Capital firm Innovestor and together with a consortium of Baltic co-investors 70V.com and Capitalia, EUR 1.2 million was invested in the company.

“We established our Co-investment Fund to participate in the development of the Baltic start-up environment. But, with both VCs and entrepreneurs that we are working with, we are expanding beyond our initial geographical base. Scratcher, a Denmark-based start-up with a subsidiary in Lithuania, is a perfect example of this trend. It is great to see knowledge and experience transfer from both the company’s founders and big international venture capital funds to the Baltics.” says Juris Grišins, manager of Capitalia.

It is the belief in the team’s own abilities and the global potential of the platform that motivated the lead investor to invest, and Scratcher’s innovation is on its way to change the performance limits of digital marketing, adds Innovestor’s Group Chair Tommi Äijälä.

About Capitalia
Capitalia Co-Investment Fund is the daughter company of the leading alternative financing provider Capitalia. Since its foundation at the end of 2021, the fund has already provided venture capital to 7 fast-growing European startups. Capitalia has also financed working capital and capital investments for more than 5,000 companies, investing more than EUR 100 million in their development.

Capitalia invests EUR 150,000 in a Lithuanian startup Aispeco in its seed financing round led by a Finnish venture capital fund Superhero Capital.

AISPECO is a Lithuanian company, which provides geospatial monitoring systems for helicopters, planes, UAVs, and terrestrial vehicles. The company has developed a versatile platform where its operator can combine multiple different sensors (cameras, LiDAR scanners, etc.) depending on the monitoring parameters and the object’s specifics. Currently, AISPECO’s product is used by power line operators like Elia group, Manitoba Hydro, Geodigital, and others. The aim of this financing round is to enter new markets and expand horizontally in different industries, for example, railway and gas pipeline inspections.

“This is our first cooperation with a venture capital fund outside the Baltics. The interest from foreign venture capital funds regarding possibilities to invest in the Baltic companies is on the rise, and it is a nice indicator that the market is active and more foreign investments can be expected soon.” Capitalia’s Juris Grišins shares his experience.

In total, Aispeco attracted a little over EUR 1 million in this financing round from the lead investor Superhero capital, 70Ventures, and Capitalia.

This is the seventh investment that Capitalia Co-investment Fund has made since its foundation at the end of 2021. Therefore, investment in Aispeco was preceded by successful investments in Aerones, Bolt, Cenos, Favro, Inzmo, and Scratcher. In order to continue supporting fast-growing European startups, Capitalia Co-Investment Fund is actively fundraising and attracting more investors with a minimum investment amount of EUR 25,000.

About Capitalia
Capitalia Co-Investment Fund is the daughter company of the leading alternative financing provider Capitalia. Since its foundation at the end of 2021, the fund has already provided venture capital to 7 fast-growing European startups. Capitalia has also financed working capital and capital investments for more than 5,000 companies, investing more than 100 million euros in their development.
 
About Superhero capital
Superhero Capital started operating in 2015 and it is an early-stage venture capital fund that focuses on backing founders in Finland and the Baltics. They are now making investments from their 2nd EUR 40 million fund. To date, Superhero has made investments in Leadfeeder, Flowplayer, Printonpack.com, Cloud Factory, and many other startups. 

In this article, we’d like to highlight the significant advantages of diversification in investing. Lending to businesses inherently carries the risk of not receiving back some or even all of the amount you’ve lent. To mitigate this risk, it’s crucial to adopt a strategy of consistent investment over time and across a range of projects. By doing so, you can achieve two key objectives:
 

1. Minimizing the impact of individual loan performance on your overall return.

2. Avoiding the pitfalls of poor timing.

The value of diversification is clearly demonstrated by the historical returns data from our platform. When we factor in loan losses and provisions for potential losses, we can see the following portfolio returns based on the number of loans invested in by each investor:
 

Chart: Portfolio Return on Investment vs. Number of Loans Invested

From this graph we can draw several clear conclusions:

 

1. All investors who have invested in 27 or more projects have achieved a positive net return above 5%;

2. Some investors that have built a relatively small portfolio of up to 20 loans can get higher than average returns, however, most small portfolios will deliver lower than average results;

3. Investing in all loans by Capitalia would bring a return of 10% (investors who have invested in more than 130 projects have a net return from 9.5% to 10.5%);

4. In many cases investors that have built portfolios with over 25 loans but have reported below average returns, have invested much higher than their average amounts in a few riskier loans;

5. Only 13 out of 800 active investors have a negative return. 

 

With these conclusions in mind we strongly recommend you to follow the following principles when investing in Capitalia (or anywhere else for that matter):
 

• Aim to continuously have a portfolio of at least 25 investments;

• Invest a similar amount in each project;

• Make smaller investments but invest in a larger number of projects;

• Use our Auto-invest tool for headache free automatic diversification. 

 

Below we provide a similar chart, but with returns of investors who have invested in more than 25 projects

One of the leading real estate developers in Liepāja, Lion Estate, SIA, actively takes part in improving and renovating apartment houses in Liepāja. In order to realize numerous projects simultaneously, the company used Capitalia financing for settlements with suppliers and for material purchase.
 
Apply for Capitalia financing and reach your business goals sooner by calling to +371 2880 0880 or writing to financing@capitalia.com.

With the constantly increasing material costs, construction companies and real estate developers are interested in finishing their projects sooner for lower costs. Sometimes the process can be sped up with additional financing.
 
MNĪP, SIA, is a real estate developer and management company. In the beginning of 2022, the company started constructing an apartment bulding in Mūrmuiža village nearby Valmiera. As Valmiera is gradually expanding outside city borders and Mūrmuiža is approximately 10 kilometers away from the city, the village has the potential to become a significant residential place. Already now Mūrmuiža is the place of residence for families thanks to its closeness to the city and calm environment. With the help of Capitalia real estate development loan, the company was able to speed up the construction process and save on the increasing material costs.
 
Speed up your construction project with the help of Capitalia financing and apply for a consultation by calling to +371 2880 0880 or writing to financing@capitalia.com!

Turbulent economic events tend to highlight the most stable industries which most successfully survive economic fluctuations. In the last two years, it can be seen that forestry is a stable value – it is an attractive industry both for the lenders and investors.

The total forest area in Latvia is 3.08 million hectares – thanks to the overall forest proportion in comparison to the total area, Latvia is very rich in forests. With the consistent wood prices increase, growing demand, and exporting potential, forestry businesses need increasingly more equity.

Most popular financing needs – felling, forest property, and equipment acquisition
Currently, the most common financing needs for the local forestry businesses are felling and forest property acquisition. However, alternative financing providers have an advantage for these financing purposes due to a higher speed and flexible conditions. In other words, the first buyer who has the necessary funds is the one who will purchase the particular felling or property. Usually, the loan amount for felling or forest purchase is up to EUR 100,000 and it is issued without any additional collateral. Nevertheless, entrepreneurs often provide the existing forest properties as collateral in order to improve the financing conditions.

With the increase in the number of felling purchases, the demand for processing and transportation services grows as well. This spring the demand for equipment was significantly larger than last year. Usually, forestry businesses purchase forwarders or harvesters with a value between EUR 50,000 and EUR 100,000. Depending on the equipment price and specifics, it can be financed both as a loan or leasing.

Transportation costs as a delaying factor for export growth
As a result of the disbalance between goods for sale and containers, in 2020 we observed a rapid sea container price increase of up to 3 times in comparison to 2019. The companies who exported to distant destinations, including logging businesses, especially suffered from these changes. Even though the transportation price increase was momentous, agreeing on a new price for wood with the clients in Asia and other continents required more time. In addition, there were situations where a compromise that would fully compensate for the increased transportation expenses could not be reached. The combination of these circumstances altered the net profit margins of the exporting companies and often caused a need for additional working capital financing. Exporting companies were also motivated to seek other buyers and closer exporting destinations.

Construction trends – positive indications for long-term growth for the forestry industry
According to the data gathered by “BCC Research”, the global wooden frame house manufacturing market grows by 6.7% on a yearly basis. Wood has proven to be sustainable and durable material for constructing industrial and residential buildings. Learning about wood processing and protection technologies also contributes to the trend of using wood for construction. In accordance with the data of “Luminor” bank, the financing provided in 2020 and 2021 for wooden building construction reached 45% of the total financing issued for construction purposes. The change in construction trends increases the demand for wooden materials and corrects their price. Thanks to the cooperation with numerous wooden house manufacturers, “Capitalia” as a financier has also experienced the growing dynamics in this manufacturing segment. “Capitalia” has provided working capital financing both for the manufacturers and for the developers of the wooden buildings.

Forest as a secure and profitable long-term investment
Unlike other types of investment, the amount of wood in the forest naturally increases by 3-5% annually without any owner’s input. While part of forest owners rush to sell fellings and properties when wood prices rise, others purchase forest properties and glades as investment objects. It is a known fact that the developed forest areas tend to be purchased by Scandinavian and local funds, which provide long-term forest management. In addition, the market consolidation and the formation of property “packages” increase the sales price in the future. It is expected that the rapid decrease in wood imports from Russia and Belarus will cause a price increase for local resources and properties. Therefore, in order to promote the capital access to the local investors, “Capitalia” has also started issuing loans with forest property collateral. With such an action, “Capitalia” wants to concentrate this valuable natural resource in the hands of the local investors.

During recent years, the business environment has experienced various disruptions, where the difficulties caused by the pandemic are shifted into rapid energy and material price increases. Changing market conditions require careful planning and preventive actions in order to mitigate potential negative impacts. Although it is impossible to predict the future, there are numerous actions the entrepreneur can take to adapt to the changes in the business environment.
 
Review and optimization of expenses
It is not always possible to quickly decrease expenses when the turnover levels drop, that way potentially causing significant losses and a lack of working capital. It is essential to be aware of the largest expenses and hold them on a healthy level in comparison to the turnover. It is beneficial to annually review all of the regular invoices and rethink if all of them are necessary. Quite often workforce creates the largest payment - it is important to check the team’s efficiency and redistribution of duties on time. One must also take into account that successful business continuation might also require such unpopular decisions as laying some employees off.
 
Revenue planning
High sales turnover today does not guarantee a stable income tomorrow. It is very important to maintain regular contact with the main clients and suppliers, that way monitoring the partners’ future plans and potential changes in sales volumes. If the company’s operations depend on cooperation with one are a few large clients, it is also important to regularly check the clients’ financial stability and the payment terms. If the additional research reveals a worsening of the client’s financial situation or other alarming signals such as increasing tax debt or publicly registered late payments to the suppliers, we advise reviewing the cooperation and payment terms with the particular client. The diversification of clients and products can require more time; therefore, it will not be a quick crisis management strategy, but a long-term strategy that the company should take up to gradually reduce the dependence on key clients. Another important aspect to reduce business risks can be the diversification of products and services so that the business is not dependent on one specific product or service. Additionally, Capitalia's free-of-charge planning tools can be useful to plan the company’s cash flow and income.
 
Reviewing financial liabilities
Under dynamic market circumstances, settlements with lenders can raise numerous issues. It is essential to monitor credit lines and overdrafts, whose terms end soon, and we encourage the entrepreneurs to early begin the discussions about the annual extension. If the financial burden already seems too large, we encourage discussing potential schedule changes. On the other hand, if the company has a low level of financial liabilities or does not have them at all, additional short-term financing in the form of a loan or credit line can increase the security and reserves for unplanned or seasonal expenses.
 
Decreasing debtor risks
The fluctuating economic situation can affect the clients’ payment discipline, which can cause loss of working capital and losses in the form of unrecoverable debts. Capitalia has previously summarized and published various pieces of advice for decreasing debtors’ risks, and we invite entrepreneurs to use this advice in their daily business operations. One must perform not only regular control of existing debtors but also careful research of new cooperation partners before offering the option of delayed payment.
 
Removing unprofitable products and services
If the company manufactures, sells or provides a wide range of products and services, it is important to be aware of each product or service category’s profitability on its own. Sometimes the companies continue producing unprofitable products due to a long-term cooperation or due to other economically invalid reasons. If necessary, we encourage removing unprofitable products or services, that way also reducing the costs of manufacturing and providing these products.

When a company is in a rapid growth stage, additional financial liabilities can create a burden on the development plans and even make the business spend all incoming cash flow on covering monthly payments. In order to avoid financial liabilities and keep control over the business, venture capital can be a convenient tool to reach the desired development goals.
 
Initially, it might seem that venture capital endangers the owner’s position in the company by transferring the shares and voting rights to venture capital investors. However, venture capital investors usually own a minority part of the company’s capital, that way the decisions are still made by the founders.
 
The well-known Latvian startup Aerones, which provides wind turbine maintenance, has also used Capitalia venture capital financing. Aerones is the industry leader in the world, and it cooperates with such companies as Siemens Gamesa, Enel, GE and Vesta, maintaining wind turbine operations in 17 countries. With the help of Capitalia’s raised EUR 1.4 million and financial consultations, the company quickens its growth and plans to tenfold increase its turnover in a year’s time.
 
Develop your business with the help of Capitalia venture capital financing and apply for a free-of-charge venture capital assessment evaluation by calling to +371 2880 0880 or writing to financing@capitalia.com.

In accordance with the European Code of Good Conduct for Microcredit Provision, Capitalia publishes its disclosure of financial and operational information. This disclosure will be updated on an annual basis to report the most up-to-date information.  Currently, the document includes data of 2021, which has been externally validated by MicroFinanza Srl evaluators who act on behalf of EaSI (Employment and Social Innovation).
 
Read the full disclosure here!

Event Center is one of the leading event machinery and equipment rental company in Estonia. The company provides stage and fencing constructions and sound, light and video equipment for various concerts, seminars, sports, culture, and other events. In spring 2022, when the active sports and cultural events lifestyle has resumed, the company decided to make significant investments in inventory and equipment, that way increasing the rental capacity. Capitalia in cooperation with the venture capital fund FlyCap co-financed investments to purchase new machinery.

Invest in the development in your company with Capitalia financing and apply for free-of-charge business evaluation by calling to +371 2880 0880 or writing to financing@capitalia.com! 

On operating results
In the first half of 2022 Capitalia reported turnover of EUR 648 thousand and profit of EUR 104 thousand. Despite the extraordinary economic and political conditions, the business environment has remained favorable and interest in financing among small and medium sized companies was stable. 

On key events
In the last quarter of the year Capitalia issued new financing in the amount of EUR 4.9 million (EUR 3.8 million in the previous quarter). Among the financed businesses during this period were, for example, such companies as Ceranos Invest (manufacturing), Z Haus (real estate development) and Finto Capital (car leasing). Altogether, interest in the business financing has been strong.  

In the alternative fund management, we have completed venture capital investments in Scratcher (Denmark), in investment round led by Innovestor (Finland) and Bolt Technologies (Estonia) in secondary transaction led by Specialist VC (Estonia). We have raised the first close amount for a new cost-efficient Baltic bond fund that we are preparing to launch in the Q3 of 2022.  

On plans for the next quarter
We believe that over the third quarter of 2022 the business financing activity will be relatively low as summer months are typically low season in activity. We are continuing work on licensing our funding platform in Latvia and expect that this process will finish in the last quarter of this year.  

Visual Media SIA is one of the market leaders in the media industry – the company places large format advertising posters in Riga, and also sells the slots to marketing agencies. At the moment, the company has 30 advertising slots. With the help of Capitalia financing, the company could participate in an auction organized by Riga municipality to obtain more advertising slots. Expand your business with Capitalia financing, too, and apply for free-of-charge business evaluation by calling to +371 2880 0880 or writing to financing@capitalia.com! 

Latvian startup Aerones attracted seed investment of USD 9 million to develop robotic services for wind energy operators in the whole world.

The target of the investment – to be an innovative trend-setter in the wind energy segment and increase the turnover in the upcoming year by 10 times.

Aerones is a world leader in the wind turbine blades inspection and maintenance sector – it cooperates with 9 of the ten largest wind energy companies in the world. The client includes Siemens gamesa, Enel, GE and Vestas. Currently, Aerones services more than 3000 wind turbines in Europe, North America and South America.

Aerones’ services are automated, using highly-specialized equipment and IT solutions which provide quicker, safer, and more effective results. By using patented robotic equipment, Aerones performs turbine inspection and maintenance six times faster and 40% more profitably than it would be possible with manual work.

Ceranos Invest, OU, is a well-known sea kayak manufacturer operating under brand name Seabird Designs. This spring Capitalia was proud to help the company execute its ambitious expansion plans. With the help of Capitalia financing, the company was able to build a new production plant and expand its production line – now Seabird Designs also manufactures motor boats.

Reach your company’s goals with Capitalia financing as well and apply for a consultation by calling to 2880 0880 or calling finansejums@capitalia.com!

During the last few months with the geographically close war activities and price increases, companies ofter find themselves in financial difficulties which cause payment delays. Before starting cooperation with a new business partner, it is important to verify that the client will pay on time. How to avoid potentially late debtors?

Control of debtors. Before agreeing on paying after the goods or the services are provided, it is worth checking the partner’s financial stability. It can be done by using Teatmik and various credit information bureaus, such as Creditinfo. When evaluating the company, it is worth checking such indicators as outstanding tax debts, share capital size, active late payments to creditors or suppliers, and the amount of outstanding financial liabilities. In addition, it is important that your company has its own inner (at least very simple) procedure on in which cases postpay is acceptable and how postpay amount is set and updated.

International databases. Before cooperating with a new international client, it is even more important to verify the client’s integrity and ability to pay. Information about each company can be found in the respective country’s business register, for example Germany, the UK or Sweden – information about late payments and tax debts can give a great insight in the company’s payment discipline. It is also important to check the company’s security from the money laundering perspective by verifying if the company and its related persons are not included in sanction lists here.

Developed debtor control mechanism. If the client starts being late, it is important not to avoid the problem and perform specific actions to recover the debt. Many companies have already prepared procedures on what to do if the client is late for a payment. During the first late days, it is recommended to contact the client via phone or email in order to understand the reason for the late payment and the potential repayment date. If the payment is late for a longer time, it is recommended to gradually send various warnings about publishing the debt to public databases. However, in cases when the client is continuously late or is not reachable, it is necessary to contact collection agents who would collect the debt through court.

Debtor insurance. For wholesale companies with large sales amounts and long client payment days a suitable solution to avoid late debtors is invoice purchasing or debtor insurance. Insurance companies prefer to insure international companies with large sales amounts.

After the long months of winter and rain, the arrival of warm weather also starts the active season for forestry companies. In order to work faster, numerous forestry companies purchase new and slightly used forestry machinery and trucks, but not all companies have enough funds to make the purchase.

Capitalia machinery leasing can be a useful tool to purchase the necessary equipment for the new season. With the help of Capitalia leasing, the company can immediately obtain its planned technical unit and save its own funds for working capital purposes. Capitalia provides leasing financing to purchase also used and specialized machinery.

Capitalia leasing is available for up to 36 months and the necessary collateral is the machinery itself. It is possible to finance up to 100% of the machinery value. Find out more how leasing financing can be useful for your company by calling to +372 881 0880 or writing to financing@capitalia.com.

Capitalia as a financier participated in RCG Lighthouse, SIA, share buyout. With the help of Capitalia financing, the founders and managers of the company bought 49% of shares that belonged to a venture capital fund. After the buyout, the founders became the 100% owners of the company. Company management buyout situations have become Capitalia specialty – up until now, Capitalia has financed more than 10 such companies.

RCG Lighthouse was established in 2013. The company provides energy efficient lighting solutions, lighting audit services for companies and municipalities, operating by ESCO principle. The clients of the company include such companies as Jysk, Būvniecības ABC and Accenture.

Recently inflation has become the most relevant economic issue of the world. Last December the inflation level in Latvia reached a record-high level of 7.9%. Such an inflation increase is the consequence of both the large money amount that has been introduced in the economy to fight with the impacts of the pandemic, and the global delivery delays. In circumstances when money quickly loses it value, it is important to act so that the investment returns grow at least at the inflation rate.

There are some financial instruments abroad whose profitability is highly correlated with the inflation – those so-called inflation linked bonds. Unfortunately, the inflation-correlated return is low. When purchasing, for example, France inflation linked bonds, the investor can rely that he will receive an annual return which is about 1.5% lower than the inflation level. At the same time, in the Baltics, it is technically difficult to purchase individual foreign bonds. As a result, if the investor wants to ensure a return that is higher than inflation, additional risks and purchase of another assets, such as real estate, shares, gold, are needed.

Real estate, for instance, rental apartment, purchase is a very popular savings method among Baltic investors. It is understandable, because real estate is tangible and comprehensible, and emotionally very comfortable. Also when calculating on paper, apartment rent seems as a profitable option and real estate value can increase in the future. In addition, up until now rental prices could be easily increased together with the inflation. However, investors often do not take into account other expenses, such as their time spent when communicating with the tenant and managing the apartment, insurance, taxes, property downtime and depreciation which causes a regular need to make additional investments. Therefore, after including all of these factors, rental apartment return is not 7-8% annually but 3-4% annually. The more rental real estate the investor owns, the higher return they can provide. For example, if the investor owns 5 apartments in one building, the administrative expenses significantly decrease. An alternative to the rental real estate purchase is investing in exchange traded real estate funds, such as Eften Real Estate and Baltic Horizon. Such investments can provide both a higher return and liquidity, which follow from the option to sell the investment in the stock exchange. If such real estate funds can index its rental income at least by the inflation amount, they can also increase their value in increasing interest rate environment.

Shares is one more alternative. The idea that investments in shares can save capital from inflation follows from the assumption that many companies are able to increase prices for their clients when the material costs and salaries increase. The exceptions are industries where long-term projects with fixed costs (e.g., construction) are executed, and startups, whose profits are expected in further future.

When reviewing the historical return of developed countries’ stock markets, it significantly exceeds inflation. However, this strategy’s results differ in various times. For example, an investor who invested in S&P 500 index in 1972, would experience a value decrease, from which it would recover (also taking into account inflation’s impact) only after 12 years. High inflation was relevant in the 1970s as well. Therefore, it is important to do long-term (longer than 10 years) investments in stock market, make several deposits over time and make sure of the portfolio’s diversification. The most convenient way to provide diversification is investing in exchange-traded funds. A great basis for an investment portfolio would be iShares World ETF (invests in developed countries’ shares) and iShares Emerging Markets ETF (invests in developing countries). In addition, increasingly more new companies, which can be attractive long-term investment options, publish their shares on Baltic stock exchange.

Larger returns can be provided with high-return bonds and loans to companies. When inflation level exceeds 5% annually, low-risk country and company bonds do not provide sufficient security against inflation. Short-term low-risk bonds in euros have negative return, but long-term bonds expose rather than protect investors against the interest rate changes. Therefore, part of the investment portfolio should consist of higher-return and higher-risk bonds. Baltic states have numerous companies whose bonds with interest rates in the range of 5-10% can be purchased in the Baltic stock exchange. Such companies include Elko grupa, Storent, IuteCredit, Auga, and others. Those investors who seek higher interest rates can invest in Capitalia loan platform which allows financing small and medium-sized Baltic companies with the historical average annual interest rate of 12%. Such investors have invested in, for example, Stenders, Pure Chocolate, Gandrs, and other companies.

Another strategy is investing in physical assets whose price should increase with inflation. Purchase of gold is traditionally considered to be the base protection strategy against high inflation and economic uncertainty. One can invest in gold physically by purchasing gold coins or bars, but they have to be stored and secured properly. Physical purchases also have significant commission fees. Gold can be bought from, for example, Tavex and Paysera. Besides them, there are numerous international service providers, such as Goldsilver.com, which provides sale of precious metals and their storage in several locations in the world. An alternative to a physical gold purchase is buying electronical gold XAU – it is a digital instrument whose value is linked to the gold price in stock exchange. Such a service is offered by Revolut, Paysera and many other brokerage platforms. It is also possible to purchase index funds or gold processing companies’ index funds whose value is linked to gold prices, for example, iShares Gold Producers UCITS ETF. At the beginning of the pandemic, gold price swiftly increased by 25%, but then it dropped. In the past 20 years, investments in gold have provided 9.5% average return, protecting the investor against rising inflation. However, investors rarely check gold prices’ changes in the long term. If they did, they would see that gold prices are highly fluctuating. Therefore, gold has a tendency to quickly change its value, which makes it a very unstable type of investment.  

Prices of raw materials, such as oil, gas, metals and grains usually well adjust to inflation’s price increase. However, the prices of raw materials are also heavily affected by short-term changes in supply and demand for these materials. The pandemic has shown a great example of such changes. As a result, investment in raw materials can become very risky and experience abrupt changes. Raw materials can be purchased electronically (as an artificial financial instrument) or as part of the producers’ shares, or the producers’ index funds. An interesting index fund is iShares Diversified Commodity Swap UCITS ETF which offers investing in raw materials with the help of derived financial instruments.

It is important to understand that investment in gold or raw materials does not bring any income (dividends) and it is fully speculative. Therefore, it should not exceed a small percent of the individual investment portfolio.

As it can be seen, although high inflation level is an unpleasant situation for any saver, there are numerous investment options which can protect against inflation increase. Potentially the worst thing that an investor can do during inflation rise, is sitting with large cash reserves and doing nothing with them. This is a good time to make your money work.

*The information above is my personal opinion and it is not a recommendation to do or not do any specific investments.

Capitalia invests EUR 300,000 in a Swedish startup Favro and joins a group of investors in the SEED round led by Practica Capital. Favro is a work platform for collaborative planning that has attracted significant traction from leading companies around the world.
 
Favro is a platform for collaborative planning that is used mostly by SaaS and gaming companies. It helps to plan work more efficiently within and between teams across all disciplines in an organization. Favro’s 1500+ worldwide customers include Wolt, Unity, EA, and Volvo Car Mobility. Other investors in Favro include Practica, Creandum, Inbox Capital, Scale Capital, and a select few strategic business angels. For Capitalia, this is the 4th investment from its Co-investment Fund which was founded late last year.

About Capitalia

Capitalia is the leading provider of alternative financing and financial advice in the Baltic States. Capitalia has financed working capital and capital investments for more than 5,000 companies, investing more than 90 million euros in their development. In addition to loans and venture capital, Capitalia also offers companies professional advice on selling a business and raising financing.

About Practica

Practica Capital is an early-stage venture capital fund dedicated to backing Baltic founders. They have invested exclusively in tech potential in the Baltic States for the last 10 years. Practica backs great founders in their ambition in seed and selected pre-seed and A stages partnering with them as company builders. To date, we have made more than 70 investments, including companies like TransferGo, PVcase, Interactio, Eneba, Ovoko, Trafi, CGtrader, Sonarworks, Montonio, and others.

In May 2022, Capitalia investment fund Co-Investment Fund purchased shares of Estonian unicorn Bolt in the total amount of EUR 300,000, that way becoming the first fund in Latvia to invest in this company. 
 
In this transaction, one of the first business angels that had invested in Bolt wanted to sell part of the owned shares. Together with one of Estonia’s leading venture capital funds Specialist VC, Capitalia purchased Bolt shares from this business angel. Capitalia-managed fund’s investment amount was EUR 300,000.
 
“Increasingly more initial startup investors seek options to partially realize and diversify their investment. That consequently gives an opportunity to other investors, such as our fund, to invest in already established and well-known startups. I believe that the number of such deals in the upcoming years will significantly increase, and it will only benefit the startup financing ecosystem in the Baltics,” comments Capitalia manager Juris Grišins.
 
With this deal, Capitalia has become the first Latvia-registered fund, which has made an investment in the Estonian unicorn Bolt. Unicorns are companies, which have reached the value of at least USD 1 billion. Bolt earned this status already in 2019, becoming the fourth unicorn in Estonia. Investment in Bolt is Capitalia fund’s fifth investment since the foundation in September 2021.
 
Capitalia Co-Investment Fund is a passive strategy venture capital fund. Its target investors are private investors who are offered simple, low-cost investment instruments for investing in companies with large growth potential. Currently, the fund is actively seeking new investment opportunities and attracts financing from qualified private investors in the amount starting from EUR 25,000.

On operating results
In the first quarter of 2022 Capitalia reported turnover of EUR 309 thousand and profit of EUR 51 thousand. The Company reported a strong financial results in the period thanks to the high interest in business financing products from the clients. The Company showed a significant operational sustainability ratio of 1.20, indicating that the Company's turnover would be able to cover all of the financial, operating, and impairment expenses.

On key events
In the last quarter of the year Capitalia issued new financing in the amount of EUR 3.8 million (EUR 5.91 million in the previous quarter). Among the financed businesses during this period were, for example, such companies as Event Center (equipment rental), Mig Baltic (wholesale of construction equipment) and Inclusion/Planet42 (car rental). Altogether, interest in the business financing has been strong, as a result of Russia’s attack in Ukraine the rate of new financing applications has reduced significantly.  

In the alternative fund management, we have completed one venture capital investment – Favro (Lithuania), in investment round led by Practica Capital (Lithuania). We have also prepared two concepts for two new alternative investment funds to be launched in the next quarter. 

On plans for the next quarter
We believe that over the second quarter of 2022 the business financing activity will be relatively active as is typically characteristic to this season. We have started work on licensing our funding platform in Latvia and expect that this process will finish in the third or last quarter of this year.  

Capitalia received the award for the most environmentally friendly investment of 2021 in Latvia. The recognition was awarded for the investment in Aerones - a fast-growing startup based in Latvia that manufactures drones for wind turbine maintenance. Capitalia invested in the company through its unique co-investment fund that invests in fast growing Baltic companies along with the leading regional venture capital investors. The annual award ceremony was organized by Latvian Private Equity and Venture Capital association in association with Latvian Business Angel network

Founded in 2015 Aerones with their proprietary drone equipment performs turbine maintenance work for international wind park operators providing significant cost savings to their clients. Capitalia invested EUR 300,000 in the company as well as provided a business loan facility. The company is  also backed by Change Ventures and YCombinator.

Capitalia has created a new alternative investment fund, which allows private investors to invest in the leading Baltic venture capital fund Change Ventures. The total investment amount of the fund is 1 million EUR. Change Ventures offers financing to relatively international companies operating in the technology sector. Venture capital has historically been a financial instrument for large institutional investors (for example, pension funds) or very affluent private investors. Capitalia alternative fund is innovative in its accessibility to a much wider range of investors. 28 investors from the Baltic countries have invested in the Capitalia investment fund.

Lately, the pandemic’s negative economic aftermath of inflation has become increasingly relevant. For example, in December 2021, inflation in Latvia reached a record-high level of 7.9%. It is important that, under the circumstances when cash swiftly loses its value, it works, not sits in the deposit or savings account. Money can work proactively either by investing in companies (purchasing shares) or lending to the companies.
 
At the moment, it seems like the world’s and also the Baltics’ stock markets are at their historically highest value. It means that there is a significant risk that further share value growth will be slower or even that the share prices will be corrected. In this situation, issuing business loans is great money protection against inflation if the interest rate is higher than the forecasted inflation rate.

One of the easiest ways to issue and manage business loans is on the financing platform of Capitalia. Experienced in business financing since 2007, Capitalia offers investors the possibility to co-finance loans to Baltic companies, which use these funds to develop and grow their businesses. Co-financing concept means that all Capitalia-provided loans have at least 5% investments from Capitalia itself. This unique type of operation ensures that Capitalia and platform investors share the same interests. Capitalia also provides company analysis, payment control and, if needed, works with loan recovery.

Capitalia co-financing platform has financed more than 500 companies, and the historic average annual interest rate for investors is above 12% (including provisions for bad loans). Capitalia-offered loans to the companies often are used as an addition to bank financing to provide working capital, investments in machinery, or finance company buyouts. The average term for such loans is 12 months, but overall the available loan terms are from 2 to 36 months. Capitalia financing has been used by such companies as Pure Chocolate, Aerodium, Aerones, Gandrs, Peruza, Stenders, and many others. Most frequently investors are offered to lend to companies operating in agriculture, manufacturing and trade industries. On average, investors receive 3-5 new loan investment opportunities a week.

Loan financing through Capitalia platform allows the investor to gain passive income and easily create a diversified portfolio. Additionally, loan financing not only lets money earn, but also supports the Latvian economy, helping the local businesses. Registration in Capitalia investment platform is based on a detailed investor selection process to review the investors’ experience and investing goals, and their conformity to this financial instrument. After registration, the investor receives access to a detailed description and Capitalia analysts’ prepared analysis of each offered loan. Taking into account this information, the investor can apply to co-finance the particular business loan. The minimum investment amount in one loan is EUR 1,000. The investors are also offered to create a customized, automatic investment selection.
 
Investors can choose the loans based on wide risk, collateral, and term preferences. The full interest rate range is between 6% and 18% per annum. Loans with the lowest rate provide the highest investment security. For example, Capitalia offers to invest in loans with a European Investment Fund guarantee. In case such loan is late for more than 90 days, this loan is automatically repaid to the investor with the accrued interest. Capitalia provides regular updates and information about each financed loan.

Of course, loans to small and medium companies are exposed to risk. Even though losses from bad debts on Capitalia platform create only 0.07% of all issued loans, this statistic can significantly change with the economic situation. Therefore, the investors should be able to individually assess the risks of each loan and understand the business financial analysis. They should not take up risks that are not compatible with the investor’s financial situation and investment strategy.
 
With its long operational history, Capitalia is one of the first alternative financiers in the Baltics. In addition to loans, Capitalia offers businesses venture capital investments and consultations in business sale and financing attraction deals. To investors, Capitalia offers its research about Baltic bonds, investments in venture capital funds, and soon investment advisory services will also be provided.
 
The main reasons to start business co-financing on Capitalia platform:
●     Historic annual return above 12%;
●     Option to easily create a diversified loan portfolio;
●     Easy and convenient risk and investment preferences management;
●     Loans to recognizable Baltic companies with a great reputation;
●     Financing encourages additional support to the local businesses.
 
Additional information about investor services is available on the website https://www.capitalia.com/en/invest/cofinancing/ but registering as an investor is possible here https://www.capitalia.com/en/registration/.
 
Contacts: info@capitalia.com and +371 2880 0880.

Capitalia business loans co-financing platform (P2B) has been operating since the end of 2017 financing projects with a closed network of investors. During this term, 512 business loans have been funded for a total of EUR 38 million. Investors' historic average return on the platform is 12.67% annual interest rate and the loan loss rate to date is only 0.07%. Showing such exceptional results, Capitalia has made a decision to open its platform for all interested investors.
 
Since this update Capitalia platform already has been evaluated and reviewed by an independent P2P platforms expert - P2P Empire. Capitalia went through due diligence and interview rounds as well as P2P Empire team registered on the platform and tested various features. P2P Empire review’s summary: 
“Are you considering investing on a professional and transparent peer-to-peer business platform with an average annual return of 12.67%? If so, read our Capitalia review to learn more about one of the best options to invest in high-yielding business loans.”  
 
Read the full review on P2P Empire website - https://p2pempire.com/en/review/capitalia

Information for media
2^nd of February, 2022

Last year, Capitalia issued more than 20 million euros of debt financing to more than 200 businesses in the Baltic States. For the third year in a row, more than half of funding was allocated to Latvian companies, while Lithuania and Estonia share the remaining part equally. To increase the attraction of funding for companies in the Baltic states, Capitalia has launched two alternative investment funds and made its first venture capital investments.
 
"The Covid-19 pandemic will soon reach two years, and those years have been shockingly different. In 2020 many Baltic companies were scared, stagnating, and aiming to just survive. However, in 2021 the majority of businesses were back in full gear, aiming for growth, expansions and acquisitions. Last year, Capitalia concluded many complex structures and non-standard transactions. Such deals include the acquisition of shares and buy-out transactions which are difficult to finance with a traditional bank loan. The brightest of them was the energy efficiency and lighting service provider RCG Lighthouse, SIA. Within the framework of this transaction, the management of the company bought out 49% of shares from the Venture Capital Fund “FlyCap”. Structurally complex and unusual transactions are one of the niches in which Capitalia's financing may be particularly suitable” emphasizes Artūrs Soročenkovs, Capitalia's head of financing projects.
 
Last year, the largest demand for Capitalia's financing was observed in the trade, agriculture, and manufacturing sectors – these 3 industries’ companies together comprise almost 60% of all loan transactions. The average loan amount of Capitalia continued growing and reached 64 thousand euros, ranging from 5 thousand euros to 824 thousand euros. In 2021, the largest loan was issued to an experienced metal products manufacturing company in Latvia to purchase a production building in Riga.
 
Capitalia is also successfully continuing its cooperation with the European Investment Fund (hereinafter - the EIF), implementing a loan guarantee program under which the EIF guarantees 80% of the loan principal. Under the EIF guarantee program, a loan of up to EUR 50,000 is more accessible and affordable for small and medium-sized enterprises in the Baltics. 124 companies were financed under EIF EaSI scheme for a total of more than EUR 3 million last year.
 
New financing solutions
In 2021, Capitalia has developed many new products and services. Last spring, Capitalia began providing leasing financing for the purchase of transport, machinery, and equipment, which was followed by the establishment of Capitalia's alternative investment funds. The first EUR 0.5 million venture debt transaction was also concluded with a fast-growing and promising pet food producer in Lithuania, „Rocketo”. At the end of the year, Capitalia started offering bank financing attraction services to companies that want to receive financing offers from various Latvian commercial banks with the professional help of Capitalia managers and minimal time consumption and effort.
 
"In recent years Capitalia has successfully transformed from a niche business lender into a comprehensive one-stop financial partner providing investment banking services. We are especially pleased with establishment of two alternative investment funds - Capitalia Co-Investment fund and Capitalia Feeder fund. Capitalia Co-Investment Fund, together with the leading Baltic venture capital funds, will invest in promising Baltic start-ups. Currently, the first 3 investments have already been made for the total amount of 750 thousand euros. Capitalia Feeder-fund, on the other hand, has invested in the well-known venture capital fund Change Ventures II fund.. We are proud that in addition to the opportunity to co-finance loan Cases, we have provided regional investors an opportunity to cost-efficiently participate also in equity investments of the promising pan-Baltic start-ups,” notes Juris Grišins, CEO of Capitalia.
 
 
About Capitalia
We have funded more than 5000 businesses investing over EUR 100 million in their development. We have also advised more than 100 companies in business valuation, finance attraction, and sales transactions. While for investors we offer a wide range of lending opportunities in businesses, including debt and equity investments as well as financial instruments. Among our clients are smaller companies like TasteCaps and Erenpreiss, as well recognized companies such as Stenders, Aerodium Technologies and Uprent.
 
Contacts:
info@capitalia.com
 +371 2880 0880

Capitalia has invested EUR 250 thousand in an engineering simulation and modeling startup Cenos. In this financing round led by Startup Wise Guys, in total, the Latvian-based company raised EUR 1 million. Together with Capitalia and Startup Wise Guys, several business angels invested in the company as well. The proceeds of the financing round will be used to expand the team and further product development. In 2022, Cenos aims to introduce its platform for another 2 applications.   
 
Cenos was founded in 2017 by 3 Latvian PhDs, who wanted to develop simulation software that would be affordable and easy to use for every engineer. So far, Cenos has developed software for product testing for induction heating and antenna design industries.  
 
Capitalia’s venture capital co-investment fund was founded at the end of 2021, and since then has made three investments, investing under EUR 1 million already. The fund is actively seeking new investment opportunities and attracting financing from private investors. With its unique strategy of only co-investing with reputable lead investors, Capitalia offers private investors low management fees and accessible opportunities to gain exposure to the fast-developing Baltic startup field. The minimum investment in the fund is from EUR 25,000. 

On operating results
In 2021 Capitalia reported turnover of EUR 1.19 million and profit of EUR 174 thousand. The Company reported a very strong financial results in the last quarter of the year because of very high interest in business financing. In addition, as an important milestone, Capitalia raised another alternative investment fund in this period, a feeder fund for Change Ventures. Although our funds are not expected to provide significant revenue contribution in the near term, they mark an important strategic step in the direction of asset management and are expected to open new business opportunities in the future. 

On key events
In the last quarter of the year Capitalia issued new financing in the amount of EUR 5.91 million (EUR 3.86 million in the previous quarter). Among the financed businesses during this period were, for example, such companies as Aerones Engineering (industrial drone manufacturing), Prosport (sporting goods retail), RCG Lighthouse (industrial lighting solutions) and Visual Media Group (digital outdoor advertising). Altogether, interest in the business loans has been very strong and is expected to continue such. 

With regards to corporate finance activities, we have finished the transaction advisory project on the sale of an IT distribution company TVG Baltic to a strategic investor from the USA. At the same time, we have been engaged in two new business sale projects. In the alternative fund management, we have completed three venture capital investments – Inzmo (Estonia), Aerones Engineering (Latvia) and Cenos Platform (Latvia). The pipeline for new investment opportunities is very strong and we are actively continuing our fundraising and seeking new investors. Lastly, we have raised a feeder fund for investment in the second fund managed by Change Ventures. 

On plans for the next quarter
We believe that over the first quarter of 2022 the business financing activity will be relatively calm as typically characteristic to this season. We will focus on building the operating and administrative capacity to continue growing our loan and equity investment portfolio in the remainder of the year. Capitalia expects to complete the process for acquiring brokerage license in the first quarter of 2022 as well. 

Capitalia encourages companies to think about and implement good environmental, social and corporate governance (“ESG”) standards. That is why already since 2018 ESG factors have been important components of Capitalia’s scoring and pricing for financing small and medium businesses in the Baltic countries. As of the beginning of the year 2022 we have increased the weight of these factors and now companies with high marks for leading environmental, social and governance practices can get even cheaper access to business loans. 

As the next step we plan to communicate our ESG scoring results also through our co-investment platform, allowing investors to identify the companies that are the most conscious of the environmental and social impacts. 

In January 6, 2022 pan-Baltic cloud software distribution company TVG was acquired by USA-based distributor Pax8 that operates in Europe under Resello brand. With headquarters in Riga and offices in Vilnius and Tallinn, TVG has over 20 years of experience in cloud service and software distribution in the region. It works with products of such companies as Microsoft, Adobe, Corel, TeamViewer and others. Acquisition of TVG drives the European expansion strategy of Pax8 that sees Baltic region as important next geographical step.

Capitalia acted as sole financial advisor to the owners of TVG in the business sale and search of the strategic investor. From Capitalia’s side the project was lead by Juris Grišins. Legal advisory to the company has been provided by Cobalt Legal. Work on this transaction solidifies Capitalia’s leading market position as financial advisor to the Baltic small and medium sized companies, complementing our investment and business financing products. 

In the third quarter of 2021 Capitalia reported turnover of EUR 903 thousand and profit of EUR 172 thousand. The Company reported good financial results in the third quarter of the year as a result of active business financing interest. Additional revenue was contributed from the completion of a number of business sale advisory transactions.

In the third quarter of the year Capitalia issued new financing in the amount of EUR 3.86 million (EUR 4.39 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as Volgers Eesti (demolition services), Saules Graža (solar panel installation) and Arcofire (fire safety equipment trade). Altogether, interest in the business financing has showed an increasing trend.

During the reporting quarter we have continued to develop alternative services, including advisory on the business sale and capital raising. In this quarter we have successfully helped to find a buyer for a nonbank financial institution in Latvia, as well as are continuing work on a number of other business disposal transactions. Also, we have closed our first alternative investment fund that would co-invest venture capital along with other leading regional funds.

We believe that over the fourth quarter of 2021 the financing activity will remain strong as we are planning to close a number of already initiated financing deals. In addition to growing the financing portfolio we will continue working on developing our advisory services to consolidate our position as trusted advisors both to businesses and investors.  We also expect that our venture capital fund will conduct its first 2-3 transactions.

In the first quarter of 2021 Capitalia reported turnover of EUR 626 thousand and profit of EUR 138 thousand. The Company reported good financial results in the second quarter of the year as a result of active business financing interest and successful completion of a number of restructuring projects. In anticipation to upcoming bond refinancing our liquidity and balance sheet position has remained strong with significant available cash reserve.

In the first quarter of the year Capitalia issued new financing in the amount of EUR 4.39 million (EUR 4.69 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as Maudis (manufacture of saunas), Finto Capital (car leasing services) and Panamir (manufacturer of cocoa products). Altogether, interest in the business financing has showed an increasing trend. 

During the reporting quarter we have continued to develop alternative services and part of such strategy we have closed one business sale project and are working on two additional transactions. We have actively started provision of advisory on debt financing attraction from banks and state institutions. Also, we are in the final stage for raising our first alternative investment fund that will conduct venture capital co-investment deals with the leading venture capital funds in the Baltic region. 

We believe that over the third quarter of 2021 the financing activity will remain strong. In addition to growing the financing portfolio we will continue working on developing our advisory services to consolidate our position as trusted advisors both to businesses and investors.  

The fast-growing Lithuanian start-up Rocketo, which produces and sells organic dog food, received EUR 200 thousand. venture debt. This is the first transaction of its kind where a venture debt is provided to a start-up by a local financier operating in the Baltic States. According to experts, this is a significant event for the Lithuanian, Latvian and Estonian start-up ecosystem, which opens up new financing opportunities for fast-growing start-ups, and at the same time provides a greater competitive advantage.

Rocketo plans to use the received venture debt for production - increase the amount of stocks required to meet the rapidly growing sales throughout Europe, part of the loan will be used for marketing optimization.

"Start-ups, especially fast-growing ones with the ambition to expand all over the world, are often working with losses for many years. Ordinary bank loans are not available to us. Therefore, start-ups traditionally finance activities by selling shares to venture capital funds in financing rounds. Meanwhile, the venture debt is a very needed additional financing that allows you to grow without reducing the share of existing investors and founders” says Arūnas Matačius, the founder and CEO of Rocketo.

Until now, venture debt for start-ups in the Baltic States have been provided only by international funds, whose transactions usually amount to more than 2 million. euros.

After evaluating the products manufactured by Rocketo, its growing demand and the growing turnover every month, a venture debt financing was granted to a Lithuanian start-up by the business financing company Capitalia.

"We are a local financier who was the first to trust a Lithuanian start-up by providing them with a venture debt financing, but we should see a breakthrough in this market soon. And the explanation is simple - there are more and more start-ups in the Baltics, and venture capital fund managers already have a lot of experience and insight into which start-ups have the potential to grow significantly”, says Gintaras Matuzas, Capitalia's manager in Lithuania.

According to him, usually international funds provide venture debt from EUR 2 m. However, Capitalia, operating in the local market, is able to offer smaller financing as well. For fast-growing start-ups, who need money not for product development, but for growth, the most relevant loan amount is usually from EUR 200 thousand up to EUR 2 million.

“There are numerous situations when venture debt is likely to be a good option for a startup to consider. For instance, it can help startups that are already backed by VC access additional capital to boost their growth, to reach important value creation milestones while preventing the need for a new bridge round. It can be useful as a way to finance opportunities, such as acquisitions or big capital expenditures with limited costs to the business. In light of the pandemic-related uncertainty, venture debt opportunities are likely to get momentum in a startup ecosystem”, says Gerda Sakalauskaite, Managing Director, LT VCA

Venture debt is also used by very well-known start-ups, such as Spotify, Airbnb and Uber, and this type of financing helps them to achieve great growth.

About Capitalia:
Capitalia is a leading provider of financing and financial consulting to companies in the Baltic countries. Capitalia has financed working capital and capital investments for more than 5,000 companies, investing more than € 85 million in their development. In addition to loans and venture capital, Capitalia also offers companies professional advice on buying, selling businesses and raising capital.

In the first quarter of 2021 Capitalia reported turnover of EUR 264 thousand and profit of EUR 26 thousand. The small drop of turnover reflects the smaller volume of deals that we have financed. We were able to report profit for the period as a result of low sales costs while keeping the same revenue amount. Our liquidity and balance sheet position has remained strong with significant available cash reserve.

In the first quarter of the year Capitalia issued new financing in the amount of EUR 4.69 million (EUR 4.38 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as MIG Baltic (distribution of construction supplies), Ginmika (manufacturing of sewage products), Nākotne (manufacturing of metal elements) and Pure Chocolate (production of chocolate products). Altogether, interest in the business financing has remained subdued. Companies continue to be cautious in attraction of new debt financing as they await how the impact of the pandemic will weight on the regional economies. 

During the reporting quarter we have continued to develop alternative services and part of such strategy are managing four business sale and acquisition transactions. Also, we are finalizing work to acquire brokerage license. We hope to receive the license in the second quarter of 2021. We have established another daughter company SIA Capitalia Fund Management with the base capital of EUR 25,000 that aims to manage a number of alternative investment funds. We have prepared prospectuses for two planned funds and have started the fundraising process. 

We believe that over the second quarter of 2021 the financing activity will pick up. In addition to growing the financing portfolio we will start working on re-financing our maturing bond emission as well as fund raising of the planned investment funds.  

When the global pandemic started in the spring of 2020, the prices of the world and Baltic states’ securities were rapidly falling. At the same time, the number of recently opened securities accounts was skyrocketing. While some investors start panicking, the others (the brave or reckless ones) see this moment as an opportunity. It is worth remembering Warren Buffet’s quote: “Be scared when others are greedy and be greedy when others are scared”. However, saying that is easier than implementing.

Until March 2020, my investing experience was concentrated in index instruments (ETFs) or in rare experiments in foreign shares. During the pandemic, I decided to pay more attention to what is happening in the Baltic Stock Exchange. Similarly to other investors I know, I was buried in prejudice that our stock exchange is illiquid and that it does not have many well-managed enterprises. However, that is not the case. Therefore, how and why invest in the Baltic Stock Exchange securities?
 
The choice of stockbroker
Regarding the preparation for investing, the first step is to open an investment account. An investment account is more convenient than a standard security account due to tax policies. In other words, taxes for the investment profit have to be paid only when a larger sum is paid out of the account than is paid in. As a result, it is possible to “postpone” the tax payments until you wish to take the cash out for consumption. Additionally, an investment account allows reducing the personal income tax for the amount of losses caused by unsuccessful investments.

When choosing the right stock broker to use for the Baltic stock trade, in my opinion, there is only one option. Swedbank is the only bank in Latvia that offers trading in the Baltic Stock Exchange without an additional commission fee. For sums below EUR 30,000, there is also no portfolio management fee to be paid. In addition, the Swedbank investment account can be opened and managed also through Internetbank. Banks’ shares trading interface is quite simple (in comparison to what foreign stockbrokers offer), but sufficient. Swedbank analysts also provide their own opinion on numerous shares, that way it is possible to expand one’s information field.
 
Invest in what you understand
Regardless of my earlier career in venture capital (or thanks to it!), I am a conservative investor and I follow the philosophy of value investors. This methodology is based on an assumption that the financial markets are not rational but mostly emotional; therefore, good and bad news’ influence is regularly overrated. As a result, shares on the stock exchange market can often be sold both significantly below and above their actual value. Taking into account the financials of the company and a more detailed analysis of the industry, value investors also try to find these undervalued companies. Similarly, I do not support speculative short-term investing. In my opinion, one has to purchase shares of those companies that you are willing to hold for at least 10 years. A successful venture capitalist is one who can successfully evaluate and forecast upcoming trends. It is similar to investments in shares – one must think in longer horizons and visualize if the particular industry and company are able to successfully grow. Therefore, my first investment criterion – invest in those industries or companies that you understand. For example, I am struggling to understand the product manufactured by SAF Tehnika, because I am not that competent in technologies. Therefore, SAF Tehnika (regardless of their great new Aranet product which I’m also using) is not a company, whose shares I would purchase. Meanwhile other investors, possibly, are well-oriented in the SAF Tehnika field and its shares would be perfectly suitable for them.

I recommend that everyone begins investment research by analyzing the financials. There are relatively few quoted shares in the Baltic states; therefore, it is quite easy to analyze and formulate an opinion about them. For instance, I export a list of all quoted shares from the NASDAQ Baltic Stock Exchange webpage and paste the information to a Google Sheets document. There with Google Finance functions, I can create a suitable tool to follow both the price changes and deal amounts. Firstly, I took out all of the shares whose average daily buy/sell deal amount is below EUR 1,000. If the daily deal number is low, it is difficult to both purchase and sell the shares for the desired price. Shares with low liquidity have a large bid/ask spread.
 
Then I start observing and analyzing these companies which at the first glance seem promising or easy for me to understand. Taking into account my own working area, I usually analyze bank shares, for example, LHV Group, Coop Pank, Siauliu Bankas. I begin each analysis by reading the latest annual report. Yes, I know that it is not the most interesting reading material, but it provides valuable information. When reading the annual report, I recommend paying attention to the management’s comments about the recent year and forecasts, and turnover and profit changes in the last five years, balance sheet and profit and loss statement positions that have significantly changed. In a nutshell – the most important information can be found in the notes of the annual report. Why is that important? Because, when looking at the company and its financials as a whole, one can try to estimate what would be an appropriate price to purchase the company. From this value, I calculate the value of, in my opinion, the appropriate share price. If my calculated price is larger than the one on the stock exchange, it is worth considering investing in it.

NASDAQ Baltic stock exchange provides the companies’ financials on its website. It comprises both annual reports and inter-period results. Analysts’ reviews of the companies are also valuable to take into account. Enlight Research, LHV Group, and Swedbank publish similar reviews on NASDAQ Baltic webpage as well. I personally prefer the analysis conducted by LHV Group – I tend to agree with their conclusions and their analysis is useful to expand your own knowledge of the particular company.
 
Bond investments pay off only for large sums
In addition to shares, NASDAQ Baltic offers investing in funds and bonds. Funds contain a group of enterprises or real estate, that is managed by a professional fund manager. A fund I personally like is Baltic Horizon Fund – it is a real estate fund with mostly premium class offices and shopping malls in the Baltic states. This fund has a significant operational history, relatively low commission fees, and great liquidity in the stock market.

On the other hand, bonds (corporate debt securities) enable the investor to receive an expected return on the investment – bonds provide regular interest payments (coupons) to their owners. The annual interest rate for Baltic companies’ bonds fluctuates between 2% (Ignitis Grupe in Lithuania) to 14% (DelfinGroup in Latvia) with numerous issuers who offer returns in-between. Bond analysis requires a completely different approach than share analysis. When purchasing bonds, the investor must evaluate the main risks while, when purchasing shares – opportunities. Moreover, it is quite complicated to purchase bonds – I am not aware of any internet bank that allows to do that. Therefore, to purchase a bond, one must call the broker and tell the purchasing instructions. Consequently, the commission fees of bond purchases are quite high. It means that it is more profitable to trade bonds in large quantities and hold them until the term ends. To create a well-diversified investment portfolio, in my opinion, one must spend at least EUR 100,000 on bonds. However, it is difficult to achieve diversity, because most bonds available on the stock exchange are of low liquidity. Therefore, although investing in bonds, in my opinion, is an attractive instrument with many interesting investment options, they are more suitable for affluent investors who can invest relatively large amounts. And even in such situations, I would advise applying in the initial bond issues, not purchasing the securities from the stock exchange. From the bonds available on the Baltic stock exchange, I personally find attractive, for example, Auga Group and DelfinGroup bonds – they have a great risk-to-return ratio. Soon the highly demanded Elko Grupa bonds will also be available for purchase on the Baltic Stock Exchange.
 
Companies whom I follow
Up until now, I have analyzed around 30 companies quoted on the Baltic Stock Exchange by the methodology described earlier. One conclusion is that Estonian companies are valued higher than similar Latvian or Lithuanian companies. That might be related to the fact that Estonia has more active private investors. My hypothesis is that when the Baltic financial market develops even more and investors start paying more attention to the possibility to invest in local shares, the differences between the countries will gradually disappear. I personally have been following and have invested in Siauliu Bankas, Olainfarm, Auga Group and HansaMatrix. For every investment that I make I create a short justification “story” in which I explain why I made this investment decision and under what circumstances I would sell these shares. Later it is interesting to follow the developments and check if my initial prognosis has come true.

In conclusion, I would like to encourage the existing and potential investors to pay attention to investments in the Baltic Stock Exchange. To make a successful investment, both perspective companies and attractive valuations can be found there. Besides, remember that you are advantaged by investing in companies that operate in the country you live in. You can assess the company’s position in the market, product demand, management’s reputation, and other factors better than foreign investors could. I believe that soon we will see numerous new companies that will decide to publish their shares on the stock exchange. If you start investing right away, you will gain experience and knowledge which will make you superior to those investors who will start investing in the Baltic Stock Exchange later. And currently, there are not so many alternatives where you can make your money earn itself – the deposit era is over and other financial instruments do not even come close to those profit options that investments in securities can offer.

Capitalia is expanding its financing product offering to include leasing of heavy machinery and equipment to agricultural, manufacturing, and industrial sector companies. We aim to continue to complement the products offered by the traditional banks and our addition of leasing provides another useful tool besides business loans and invoice purchasing for businesses to fund expansion and operations. To reach out to potential purchasers of heavy machinery, we have concluded a partnership with Mascus, the leading marketplace of agricultural and industrial machinery in the Baltics.

Leasing of equipment will be offered for up to EUR 500,000 and up to 36 month period. Capitalia can fund also 100% of the equipment's value. With our streamlined evaluation process, we are able to provide fast financing offers in 1-3 days. To find out more, please reach out to us by calling or sending an email to financing@capitalia.com.

 

Information for press
26th of February, 2021
 
Capitalia expands its operations in the investment field by becoming an alternative investment fund management.

To increase the attraction of funding for companies in the Baltic states, Capitalia expands its operations and it plans to establish and manage two closed alternative investment funds through its daughter company “Capitalia Fund Management AIFP”. Financial and Capital Market Commission has confirmed financial company Capitalia’s application for becoming alternative investment fund management.

“We plan to create and offer two new concept investment funds to our investors in the near future. The investment strategies of these funds will be based on our long-term experience in business financing. We see this as the next step for expanding our operations to promote the attraction of financing and the development of local enterprises,” Capitalia manager Juris Grišins comments.

The first fund will be a direct loan fund with the expected amount of EUR 20 million. The fund will provide short and medium-term financing for companies registered in the Baltic states, and this fund will be intended for institutional investors, such as pension funds.

The second fund will make co-investments in fast-growing Baltic start-ups together with the leading risk capital funds of the region. The target investors of the fund will be private investors who will be offered basic, low-cost investment instruments for investments in businesses with large growth potential.

It is expected that both above-mentioned funds will begin their operations by the end of 2021.  

About Capitalia
Capitalia is the leading financer and financial advisory provider for enterprises in the Baltic States. Capitalia has financed working capital and equity investments for more than 5000 companies, investing more than EUR 85 million in their development. In addition to loans and venture capital, Capitalia also offers consultations about selling businesses and the attraction of financing.

For the year 2020 Capitalia reported turnover of EUR 978 thousand and profit of EUR 30 thousand. The drop of turnover (decrease of 22% compared to the last year) reflects the smaller volume of deals that we have financed. The profit has decreased more significantly (lower by 80% year-on-year) as with the lower issued financing amount the fixed cost base has remained relatively unchanged. Our liquidity and balance sheet position has remained strong with significant available cash reserve.

In the second quarter of the year Capitalia issued new financing to businesses in the amount of EUR 4.38 million (EUR 4.59 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as Panamir (distribution of coffee beans), Longo Group (trade of used vehicles), Prosport.lt (trade of outdoor cloths and equipment) and Aerodium Technologies (production of wind tunnels). We have completed the transition of financing all of the deals through our own platform minimizing dependence on Mintos. In the long term this will give us benefits in profitability margin as well as decrease dependence on third-party service providers. In the last quarter of the year a number of larger short-term deals were financed that yielded smaller issuance commissions to our historic averages. As a result, despite relatively large volume of issued loans, our profitability decreased. This was influenced also by a number of other factors, including, extra-ordinary collection costs, increase in provisions and costs of annual audit. 

Companies continue to be cautious in attraction of new debt financing from businesses as they await how the impact of the pandemic will weight on the regional economy. As a result, we are continuing focusing on development of other services. Among such are advisory on equity finance raising, business sale and business acquisition. 

Full financial report is available after login on our Investor relations page. 

In the first three quarters of 2020 Capitalia reported turnover of EUR 763 thousand and profit of EUR 80 thousand. The drop of turnover (decrease of 25% compared to the corresponding period last year) reflects the smaller volume of deals that we have financed and hence lower commission income. Our liquidity and balance sheet position has remained strong with significant available cash reserve.

In the second quarter of the year Capitalia issued new financing in the amount of EUR 4.53 million (EUR 2.99 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as Pure Chocolate (production of chocolate products), Agrocredit Latvia (financing of agricultural companies) and Eskaro (production of paints and tarnishes). Almost all of the deals we are now financing through our co-financing platform minimizing the dependence of capital flow from Mintos platform. With increasing cautiousness in attraction of new debt financing from businesses as they await how the impact of the pandemic will weight on the regional economy, we are increasingly focusing on development of other services. Among such are advisory on equity finance raising, business sale and business acquisition. Also, we are working on development of new investment instruments for our pool of investors. We plan to offer bond placements (including secondary market transactions) as well as real estate deals. These activities are done in parallel to application for the brokerage license for which a daughter company of Capitalia – SIA Capitalia Investment Services – has applied. The daughter company has paid-up capital of EUR 100,000. 

We believe that over the last quarter of the year the financing activity will be relatively low. With that in mind we will continue to focus on developing alternative review channels, mainly consulting on corporate finance transactions. 

In the first half of 2020 Capitalia reported turnover of EUR 505 thousand and profit of EUR 22 thousand. The drop of turnover (minus 18% compared to the corresponding period last year) reflects the smaller volume of deals that we have financed and hence lower commission income. The total amount of rescheduled loans due to pandemic impact has increased from 15% to 20%. On these loans we have allocated provisions in the amount of 10% from the outstanding principal. Our liquidity and balance sheet position has remained strong.

In the second quarter of the year Capitalia issued new financing in the amount of EUR 2.99 million (EUR 3.77 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as SV Digital (production of planners), Manta North (production of pre-fabricated houses) and Cietkoks (production of wood materials). After initial shock of the impact from Covid-19 pandemic and its economic consequences, the companies in the portfolio have recovered well and we did not have to make any significant further provisions to reflect worsening financial performance of the portfolio companies. Capitalia has resumed sales activities with reduced sales manager count. We have obtained a new mandate for fundraising transaction advisory and are in negotiations on a number of new additional cases. Our reliance on Mintos has diminished further and almost all of the new loans are financed within our own investor network using the functionality of Capitalia’s co-financing platform. Growth of the investor network has remained one of our key priorities for the upcoming period as in some cases we have used our current depth of investors and have to participate in projects with larger own capital commitment to finalize the funding transactions. 

We believe that over the third quarter of the year our financing activity will revert back to levels as experienced in the same period last year. In addition to financing new financing deals, we are actively seeking interesting equity investments as well as other investment opportunities. We also will continue to seek new transaction advisory engagements with focus on fundraising for businesses. 

Year 2019 has been a dynamic one for Capitalia. We have issued a new record of EUR 20 million of loan and venture capital financing to small and medium businesses in the Baltic States. In addition, we have been the first alternative financing provider in the region to receive European compliance certificate for good code of conduct lending practices. So before jumping to the execution of ambitious plans for the year 2020 let’s take a look how did the last period look in numbers.



Over the last year we have seen very active interest in alternative financing from the Baltic companies. Such interest has been helped by the increasing passivity from the banks despite steadily growing economic conditions. Companies increasingly accept and learn to use the alternative lending and venture capital products in their businesses.

As a result, we have been delighted to offer our capital to 342 companies providing financing for the total amount of EUR 20 million. This is 34% more than we issued in the previous year. Of the funded companies 60% have been in Latvia, 30% in Lithuania and 10% in Estonia. Over the last year the largest deal that we funded was EUR 580 thousand. A working capital for increasing manufacturing output was provided to the regional leader of paint and varnish manufacturing - Eskaro, based in Estonia.

Among other companies that benefited from our financing were Pure Chocolate (sweets manufacturing), Peruza (industrial equipment production), Svaros Broliai (carwash and cleaning services) and Aerodium (wind tunnel manufacturing). Together with a leading Lithuanian venture capital fund Practica Capital we provided expansion capital to a fast-growing Latvian education technology company Edurio. In most cases alternative financing from Capitalia was used in parallel and in addition to bank loan products. A typical use of attracted capital would be for execution of a large contract, acquisition of new manufacturing equipment or balancing cash flow situations.

We are deeply thankful to our investors and clients for another successful year and are looking forward for new milestones and challenges in year 2020!

In the fourth quarter of 2019 Capitalia reported anual turnover of EUR 1.25 million and profit before tax of EUR 124 thousand. The results are good reflection of the result of our strategy shift that was implemented over the course of the last year and as a result of which the Company is concentrating on financing of larger businesses through co-financing with other investors.

The last quarter of the year was unexpectedly quiet with total issued financing of EUR 4.09 million (EUR 5.65 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as Eskaro (paint production), Švaros Broliai (cleaning and carwash services), Pure Chocolate (chocolate product production) and Countin IT (stock-taking services). Capitalia has also concluded a venture capital investment in an education technology company Edurio that provides survey solutions for schools in Latvia and United Kingdom. Lastly, in December of the last year Capitalia became the first alternative financing provider that has received European code of good conduct compliance for its lending activities.

During the first quarter of 2020 we expect significant interest from the companies in alternative financing products and are hence aiming for active growth period of our portfolio under management. We also will continue to seek interesting venture capital investment opportunities.

Full interim annual report is available in Capitalia webpage in For Investors section (requires log-in). 

In the third quarter of 2019 Capitalia reported turnover of EUR 956 thousand and profit of EUR 132 thousand. The results are good reflection of the result of our strategy shift that was implemented over the course of the last year and as a result of which the Company is concentrating on financing of larger businesses through co-financing with other investors. 

The third quarter of the year was unexpectedly active and Capitalia financed businesses for the total amount of EUR 5.65 million (EUR 4.69 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as Kleintech (IT development), Peruza (production of industrial equipment), PTC (wholesale of packaging equipment and materials) and Volas (roofing services). Furthermore, we have concluded a venture capital investment in a fast growing and ambitious Latvian venture working in education sector. We have also continued to provide loans with European Investment Fund’s guarantee instrument and since launch of the program in the beginning of this year 51 companies have received the financing with this subsidy. 

During the fourth quarter of the year we expect to focus on the growth of financing portfolio, especially expanding our presence in the Estonian market. 

In the first half of 2019 Capitalia reported turnover of EUR 607 thousand and profit of EUR 116 thousand. The results are good reflection of the result of our strategy shift that was implemented over the course of the last year and as a result of which the Company is concentrating on financing of larger businesses through co-financing with other investors.  

The second quarter of the year continued to be very active and Capitalia financed businesses for the total amount of EUR 4.69 million (EUR 5.36 million in the previous quarter). Among the financed businesses during this period where, for example, such companies as MoonCom (wholesale of electronic equipment), Peruza (production of industrial equipment), AgroCredit Latvia (financing of agricultural companies) and Abavas Dārzi (drink manufacturing). Furthermore, we have agreed in principal regarding venture capital investment in a fast growing and ambitious Latvian venture working in education sector. By implementing guarantee support initiative with European Investment Fund we have already provided financing to 32 small businesses for the total amount in excess of EUR 400 thousands. 


During the third quarter of the year we expect to focus on the growth of financing portfolio, including, activating and expanding our operations in Estonia. 

In the first quarter of 2019 Capitalia reported turnover of EUR 296 thousand and profit of EUR 54 thousand. The results are good reflection of the result of our strategy shift that was implemented over the course of the last year and as a result of which the Company is concentrating on financing of larger businesses through co-financing with other investors.  

The first quarter of the year was very active and Capitalia financing businesses for the total amount of EUR 5.36 millions. Among the financed businesses during this period where, for example, such companies as AB Parks (entertainment parks), Banderi (food retail under Elvi franchize) and Auto Republika (car trade). Also Capitalia has conducted its next venture capital investment in property vizualisation technology developer Giraffe360. In the beginning of the year Capitalia and European Investment Fund have signed a EUR 10 million agreement on guarantee instrument for issuing loans to SMEs in Latvia, Estonia and Lithuania over the course of the next 5 years. This guarantee will provide more accessible and cheaper financing to small businesses. We are proud that Capitalia is the first alternative financing company in the Baltics that has received rights to provide its clients with such a guarantee instrument. To foster access to alternative financing, Capitalia has also launched a new interactive tool that helps businesses to find the most suitable loan or equity provider based on the stage and goals of each company.

During the second quarter of the year we expect to focus on the growth of financing portfolio, including, evaluating a number of venture capital investments.

On operating results
In the year of 2018 Capitalia reported turnover of EUR 716 thousand and profit of EUR 37 thousand. The turnover result is difficult to compare to previous financial year as due to reorganization part of the turnover and profit has been reported in the closing reports of Estonian and Lithuanian daughter companies. In accordance to the strategy, the Company has continued to decrease its overall assets that were EUR 2,205 thousand at the end of the reporting period, while total loans under management increased and stood at EUR 5,897 thousand.

On key events
During the year of 2018 we continued our focus on attraction of new clients and cooperation partners in all of the Baltic countries. We refinanced our public bond issue that as listed in NASDAQ Baltic with a new smaller closed bond placement. During the year we concluded reorganization of the Company as a result of which operations in Lithuania and Estonia are continued through branches rather than daughter companies. This will allow for easier cross-border administration of the Company. Furthermore, we continued with increased focus on financing medium sized companies though making loan syndicates with other investors. As a result of such strategy we have been able to significantly decrease amount of our liabilities that will ensure more stable and safe operations.

On plans for the next year
In 2019 Capitalia plans to continue promotion of the existing financing products, including venture capital investments, in the Baltics. In the first quarter of 2019 the Company has concluded landmark guarantee agreement with European Investment Fund for the total value of EUR 10 million that will allow us to more actively compete in the small business loan (up to EUR 25,000) issuance.

Full financial report is available in the Investor relations web page. 

Capitalia and the European Investment Fund (EIF) have signed an agreement on a guarantee instrument supporting small businesses in Latvia, Lithuania and Estonia, for a total amount of EUR 10 million. With this guarantee, small businesses will get better access to finance. The agreement is supported by the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe, and by the Employment and Social Innovation (EaSI) programme
Marianne Thyssen, Commissioner for Employment, Social Affairs, Skills and Labour Mobility, said: "Giving small entrepreneurs the means put their talent to work with better access to finance is one of our key priorities. This is how we will build a fairer and a more inclusive European Union."
 
Head of Inclusive Finance at EIF, Per-Erik Eriksson said: “With the support of the EU’s EaSI programme, Capitalia will be able to scale up its micro and small business lending activities in line with its strategy to maintain its unique market position as micro-credit provider in the Baltics. This expansion of its activity is expected to provide a significant impact in terms of financial and social inclusion in all three Baltic countries and EIF is pleased to support this aim.”
 
“We are very pleased that Capitalia is the first private alternative financing institution in the Baltics that has qualified for this reputable guarantee program. Conclusion of this deal with EIF means that we will be able to provide loans to businesses at more favorable rates and without collateral requirements. Under this program companies will be able to receive financing of up to EUR 25 000,” explains Juris Grišins, manager of Capitalia.

In order to qualify for the EaSI guarantee companies should have turnover below EUR 2 million and have no more than 9 employees. Financing to businesses will be provided for term of 3 months to 5 years. Companies can apply for the loan and find other qualifying criteria through the webpage of Capitalia www.capitalia.com. The EaSI Guarantee under the Programme for Employment and Social Innovation (EaSI) is funded by the European Union. The European Commission has selected the European Investment Fund to implement the EaSI Guarantee.

About Capitalia
Capitalia is the leading alternative financer for small and medium enterprises in the Baltic States. Operating since 2007 it has financed more than 5000 businesses in Latvia, Lithuania and Estonia, investing over EUR 50 million in their development. In addition to loans, Capitalia provides venture capital as well as fundraising and other investment banking services.
 
About the Programme for Employment and Social Innovation
Under the European Programme for Employment and Social Innovation (EaSI) the European Commission supports microfinance and social entrepreneurship finance with an overall envelope of EUR 193 million for the 2014-2020 period. The aim is to increase access to microfinance, i.e. loans of up to EUR 25 000, in particular for vulnerable persons and micro-enterprises. In addition, for the first time, the European Commission is also supporting social enterprises through investments of up to EUR 500 000. The microfinance and social entrepreneurship support is first implemented through the EaSI Guarantee, which shall enable microcredit providers and social enterprise investors to reach out to entrepreneurs they would not have been able to finance otherwise for risk considerations. The European Commission has selected the EIF to implement the EaSI Guarantee.
 
About the Investment Plan for Europe
The Investment Plan for Europe, known as the “Juncker Plan”, is one of the European Commission’s top priorities. It focuses on boosting investment to generate jobs and growth by making smarter use of new and existing financial resources, removing obstacles to investment, and providing visibility and technical assistance to investment projects.
The European Fund for Strategic Investments (EFSI) is the main pillar of the Juncker Plan and provides first loss guarantees, enabling the EIB to invest in more projects that often come with greater risks. EFSI has already yielded tangible results. The projects and agreements approved for financing under EFSI are expected to mobilise almost EUR 380 billion in investments, and support 842 000 SMEs in the 28 Member States. More information on the results of the Investment Plan for Europe is available here.

In the first half of 2018 Capitalia reported turnover of EUR 597 thousand and profit of EUR 55 thousand. In accordance to the strategy, company has decreased its overall assets that were EUR 3,540 thousand at the end of the reporting period, while total business loans under management increased and stood at EUR 5,624 thousand.

On key events

During the first half of 2018 we continued our focus on attraction of new clients and cooperation partners in all of the Baltic countries. Also, we continue preparation for refinancing of our bonds that mature in October this year. As typical, client activity is lower during the summer months, what provides us an opportunity to work on improvement of our operating procedures and organizational set-ups. As part of such project, we are continuing reorganization process with the daughter companies in Lithuania and Estonia, where we plan to continue working through branches.

On plans for the next quarter

For the following three months the key focus of Capitalia will be to continue initiated reorganization process, as well as prepare for more active financing season in the autumn. Particular focus we plan to put on development of invoice purchasing product for whom we see great potential in the Baltic States.

On Capitalia

Capitalia funds small and medium enterprises in Latvia, Lithuania and Estonia. To date Capitalia has financed working capital and investment needs of more than 1000 companies investing over EUR 30 million in growth of these businesses.

On operating results

In 2017 Capitalia reported total revenues of EUR 1,197 thousand, which is an increase by 30% compared to the year 2016. In the current period we achieved profit of EUR 36 thousand that more than covers losses of the previous financial year. We have managed to achieve a solid growth in the loan portfolio with total amount of EUR 4,881 thousand as of the end of the reporting year. 

On key events

During year 2017 we have made significant improvement in organization management, updated and improved our operating procedures as well as successfully finished establishment of investment manager team in Estonia. Also, in the fall of year 2017 we have launched publicly our co-financing platform Capitalia.com through which we allow investors to invest in the Baltic companies along with us. In the first two months since the launch of the platform we have already financed 6 companies for the total amount in excess of EUR 500 thousand.   

On plans for the next quarter

In the following quarter Capitalia will concentrate on growth of the investment portfolio, particularly in Estonia. Also we will strongly focus on bringing in more financing projects though our co-financing platform Capitalia.com.   

 

Capitalia has been interviewed by a blog specializing in reviewing and introducing various peer-to-peer investment opportunities. In the interview we describe our history and opportunities of investment in our loans that are sold through marketplace platform Mintos.com. Read the full interview here. 

During the year 2015 Capitalia has issued over 3 million of loans to small and medium sized businesses in the Baltic States. The financing offered by the company was used by 237 companies. Average issued loan amount to one company was EUR 9 000 while average term was 12 months. Most business loans were issued to companies in retail and manufacturing industries. Notably, most of the clients have been companies from the regions.

“Over the course of the last year Capitalia has introduced a number of new business financing products aimed at small and medium sized businesses. Our invoice purchasing and line of credit offer has already gained large popularity among the clients. We have also enjoyed successful cooperation with state institution Altum in Latvia by issuing 84 loans to businesses with subsidized terms. Also in 2016 we are planning to actively increase our issued loan volume by attracting venture capital and commercial bank financing. Our aim is to double the number and amount of loans issued. We have also made all of the necessary preparatory tasks to start working in Estonian market, where companies display similar interest in alternative financing sources to commercial bank loans,” explains manager of Capitalia Juris Grišins.

Capitalia has also noticed that clients are increasingly showing their interest and appreciation for services offered by non-bank finance and financial technology companies like Capitalia, Mintos, Monea and others. Similar to the tendencies in the rest of the world, also in the Baltic States the role of traditional banks in the financial ecosystem continues to diminish giving way for new non-bank finance companies.

During the last year Capitalia business loans has been used by such companies as Erenpreiss Original (bicycle manufacturing), Take-a-Look (optics retail), Valtera Restorāns (restaurant) and many others. Interestingly, the benefits of Capitalia financing have been noticed also by a number of municipality owned companies that have become active users of various financing products offered by the company.

Investors are offered to invest in invoice backed short-term loans.
 
From today, February 4, marketplace platform Mintos will offer to its investors an opportunity to invest in AS Capitalia loans that are backed by issued but yet unpaid invoices. This enables to invest in invoices that small and medium sized companies have issued to largest enterprises in the Baltic States.
 
“Expanded cooperation with Mintos will allow investors even further investment opportunities, while small and medium sized enterprises in the Baltic States will gain cheaper and more accessible financing. Loans against invoices or invoice purchasing is a new service by AS Capitalia that has rapidly gained popularity and interest from our clients. While loans issued by AS Capitalia have provided active interest from Mintos investors with over 1.3m EUR of total investment in loans issued by our company” comments Juris Grišins, manager of AS Capitalia.
 
“On average three out of four SMEs in the Baltic States identify that timely payment of invoices is critical for daily cash flow management and unhindered development of the business. We are very pleased that over 4000 investors that have registered in our platform will have the opportunity to invest in invoice backed loans of AS Capitalia, thus also making business financing to SMEs even more accessible” explains Mārtiņš Šulte, manager of marketplace platform Mintos .
 
Invoice purchasing allows companies to sell their issued invoices and receive payment for such invoices instantly without having to wait for payment term of 30 or even 90 days. For small and medium sized businesses that allows to free up working capital and use it for the development of the business. For example, actively this financing product is used by manufacturing and wholesale companies that offer their goods to such retail chains as Rimi and Maxima.
 
Although invoice purchasing product has been launched by AS Capitalia only just 3 months ago, it has been already used by over 30 companies in Latvia and Lithuania, selling invoices of over 1m EUR.
 
AS Capitalia finances 90% of the unpaid invoice amount. Average sum of invoices greatly varies between 1,000 EUR and 20,000 EUR. All loans that are put forward in Mintos platform have been pre-financed, hence investors can start earning from the moment of investment.
 
About AS Capitalia
AS Capitalia, represented in NASDAQ Riga, is the leading lender to small and medium size enterprises in the Baltic States. Since foundation in 2007 Capitalia has financed more than 500 companies in Latvia, Lithuania and Estonia.

Capitalia, represented in NASDAQ Riga stock exchange, is the leading alternative financing provider for small and medium enterprises in Latvia and Lithuania. It offers modern and simple loans to businesses that often are overlooked by the traditional banking sector. To date Capitalia has financed working capital and investment needs of more than 500 enterprises investing over EUR 12 million. From January 2016 company has obtained necessary permits and will start servicing clients also in Estonia.
 
In the current financial conditions banks are very cautious to finance businesses, especially small  and medium sized enterprises.. Globally as well as in Estonia alternative financing providers like Capitalia - FundingCircle (UK), Marketinvoice (UK) and OnDeck (USA) - are stepping in and providing capital that businesses need to develop. Similar decrease of financing reliance on the commercial banks can be expected also in Estonia, as it is in Latvia and Lithuania.
 
„We are very excited to start working in Estonia as we see here similar market need and opportunities like in Latvian and Lithuanian markets. We will target the companies that have received „no“ from commercial banks and try to help them with financing to enable their business growth“ commented Alar Lūkk, manager of Capitalia in Estonia.
 
Capitalia specializes in financing small and medium enterprises and has been operating in the market since 2010. It started as a financial institution that serves businesses who are unable financing from commercial banks. However, thanks to its simple and fast application and review process, companies in Latvia and Lithuania often use Capitalia’s financing instead or in addition to banks. On top of loans, Capitalia provides also invoice purchasing service that has grown to be a popular tool for managing cash flow for small and medium sized companies.
 
Capitalia provides financing from EUR 1,000 to EUR 100,000 for periods of one month to 5 years. Among more than 500 customers there are clients in merchandising, transportation, manufacturing and many other industries. Business loans issued by Capitalia are financed also through fast growing crowdfunding platform Mintos.com.
 
NASDAQ represented Capitalia is the leading financing provider for small and medium enterprises in the Baltic States. To date Capitalia has financed more than 500 enterprises investing over EUR 12 million in growth of small businesses.

From today JSC Capitalia will provide new finance product for small and medium enterprises – invoice purchasing. Invoice purchasing is an easy and convenient way for businesses to improve cash flow and increase working capital.  With this product companies can sell their issued invoices for goods or services and receive payment already on the following day. This new and innovative financing product is a modern alternative to traditional factoring provided by commercial banks.
 
Application for invoice financing can be done at dedicated website www.pardodrekinu.lv. The invoice financing product is available only for invoices exceeding EUR 1,000 and for companies working at least for 6 months with annual turnover not less than EUR 50,000. Unlike traditional factoring provided by banks, invoice purchasing by Capitalia can be started the following day after filling in the application with fast and easy evaluation process.
 
“Invoice financing is a type of financing that allows to receive money already today for invoices that are issued to customers. It assures that high debtor days are no longer a hurdle to capture all business growth opportunities. This product is especially suited for small and medium enterprises that often have difficult access to traditional banking products. Our aim is to provide businesses with financing product that is easy to understand, convenient and transparent.” states Juris Grišins, manager of JSC Capitalia.
 
Invoice purchasing allows companies to receive funds for their invoices sooner than expected initially thus improving cash flow and increasing working capital. By releasing its working capital, company has the opportunity to boost its competitiveness by offering customers more elastic payment terms.

We would like to notify that we have moved our offices from September 2015, and our new office can be found on Brivibas street 40.

Our new mail address is:
 
JSC Captialia
Brivibas street 40-35
LV-1050, Riga, Latvia
 
You are welcome to visit us in our new office!

Starting from 23rd of July, 2015., loans issued by Capitalia are available on Mintos marketplace and each and every investor can invest in small and medium enterprises in Latvia. The minimum investment is EUR 10.
Mintos marketplace joins borrowers willing to borrow and investors seeking for a convenient and easy way to invest money. Due to the cooperation with Mintos, Capitalia will be able to provide accessible and simple loans to even more SME in Latvia.

As of November 3, 2014 Capitalia, AS bonds are listed on the Nasdaq Baltic Bond list by Nasdaq Riga. According to the issue terms, trading will be possible with so far issued 1 000 bonds with the total nominal value of EUR 1 million. 
 
“Bond listing is an attractive financing option for many non-bank financial intermediaries in Latvia. Capitalia has also chosen bond placement on the stock exchange to simplify investment possibilities of its current investors as well as open the doors for attraction of new investors in the company,” said Juris Grišins, Manager at Capitalia, AS.
 
“We congratulate Capitalia on successful bond listing on the Nasdaq Baltic Bond Market,” said Daiga Auziņa-Melalksne, Head of Exchange Services at Nasdaq Baltic Market. “We are happy to see further development of the Baltic fixed income segment.”

We are happy to have clients from various business sectors, who share their observations about our business financing products. We believe that it will be interesting and useful to our existing and future customers. 

Director of JSC Versse Kestutis notes that halfway through the year 2014 his company was looking for ways to increase working capital. Versse is carrying out various trainings, which are funded by the EU institutions or public funds. In order to successfully and efficiently carry out these trainings, it requires substantial capital cash flow for transportation, accommodation, catering and classroom rental costs. Thus they have instant expenses while they get paid only after implementation of the projects, and usually not in time.

"Current financial market environment is such, that if companies need to get some working capital (short-term needs of the project), the banks, as a traditional financial instrument mostly will not help. Bank gave a very clear answer to our company that loan amounts lower than EUR 30 000 are not worth the time for bank evaluation procedures. In fact, for such short term it is virtually imposible to get loan of 10-20 thousand EUR on the market" - says the director, adding: 

"Really big thanks to one of the banks, which gave us the advice to apply for Capitalia in solving our problems. Our experience is really short, I think 2 times is not an experience, but I feel confident evaluating other factors. First of all, it's a relatively straightforward and simple, and at the same time a professional approach to work.

Care and attention to the commitments, responsible approach, and available flexibility, which is strange enough for financial market. All that we, as customers, do not only feel but also receive."

Capitalia financing is a good option for companies to whom traditional business loans are not available or suitable. The traditional business loan availability might depend on various aspects of the company– length of operating history, industry, financial parameters etc. The suitability is in most cases the choice of the company, thus it is particularly important to know the advantages of various financing products available at the market.

Here you can find a short comparison of Capitalia microloan and traditional business loan:

Capitalia microloan	vs.	Traditional business loan *
Basic documentation, all information exchange electronically	Application Requirements	Additional documentation to be prepared
Short online application form and a telephone interview	Application Process	Detailed application form online and a consultation at Customer Service Unit
One to five working days	Time to Decision	A week or longer
Solutions available for non-standard loan terms and conditions, early repayment wthout penalties	Flexibility	Standard solutions available, early repayment charge applies
Available for companies with short operating history and small or illiquid collateral	Availability	Available for companies with minimum two year operating history, strict collateral requirements
Direct communication wit the Loan Manager	Customer Service	Call center and contact form based customer service

* Comparisons have been obtained through publicly available sources and individual terms of some business loan providers might be different than stated above.

Capitalia signs agreement with the Latvian Guarantee Agency and expands financing product portfolio introducing microloan with state aid. The program provides lower interest rate and commission fee, and offers loans for longer term than the standard Capitalia microloan. The state aid program is designed to improve the financing availability to small and medium companies
 
To find out if your company qualifies for the microloan with state aid, please contact Capitalia Loan Manager at e-mail: info@capitalia.lv or phone: +371 28800880.

Capitalia offers new business financing product - factoring. It is a financial transaction based on invoices that are pledged as collateral. It is a widely used type of loan among wholesalers and manufacturers, and now it is available also to small and medium companies that cannot apply for bank financing.
 
Like other Capitalia financing products factoring has convenient and fast evaluation procedure and after the factoring agreement is signed it takes only one working day to receive payments for your invoices. Capitalia factoring can be up to 100% of the invoice value and is available for accounts receivable from partners operating in Latvia and Lithuania.
 
Capitalia loan manager Elana Novikova explains main benefits of the product: “Factoring improves company cash flow and facilitates financial planning. The invoices are pledged as collateral and additional pledge is required only on certain circumstances.”

Capitalia has registred change of legal status from Limited Liability company (SIA) to Joint stock company (AS). This is another step in the company development which as well closes merger process with two Limited Liability companies – Poscredit and Rinovus. With the changes of the legal status all contracts and liabilities remain valid and enforceable.
 
Capitalia is the leading business financing, investment and transaction advisory provider for small and medium enterprises in the Baltic States. Capitalia microloan is a tailored business loan product for small and medium sized companies that require financing for working capital or investment projects.

For the second year in a row the Entrepreneurship course at the Stockholm School of Economics in Riga has a new frame. It is called the Laboratory of Entrepreneurship and designed so that students during the course develop a real business idea and present it to investors for evaluation. The most successful student teams of the Laboratory of Entrepreneurship course receive awards in several categories.
 
This year the ceremony took place on January 24 (some pictures here) and it had four categories: Entrepreneurial spirit, Biggest potential, Conceptual excellence and Design excellence. In addition Capitalia awarded a special price to all three winning teams of the category Biggest potential – “Inspiring frames”, “Study mate” and “Auto ad”. Capitalia objective is to enhance their potential even more by providing free access to any type of business advice. We wish lots of enthusiasm to all the potential young entrepreneurs.

On the 17th of December Latvian Venture Capital Association (LVCA) held the annual closing event. This time the event was especially remarkable because of the 10th anniversary of the association. LVCA Board member, the former Chairman of the Board, manager of the leading SME financing company in the Baltics Capitalia, Juris Grišins: “Venture capital in our country is still rather under-developed and for the next ten years we have to work hard until it takes stable and self-sufficient role in the Latvian financial system.”


Photo: Juris Grišins at Latvian Venture Capital Association annual closing event

Private entity ŠILUMA IR KO is producing storage tanks and bulk water heaters. Company is continuously expanding and has competitive adventage by supplying high quality products at attractive prices.
 
Starting production
Before the establishment of the company M. Balčiūnas worked in the heating system installation and service field. Due to rising prices of gas number of orders to install solid fuel boilers was increasing and storage tanks is one of compulsory parts for it. At that time i.e. in 2005 only imported storage tanks were available on the market and their price was high due to margins of traders, transportation and storage costs. A decision to establish a business and start producing the storage tanks was made. The beginning of operations was very difficult – slowly purchasing needed equipment, renting a modest 50 m² premises. After a while output began to increase and company started to produce tanks not only for their own needs but also for other installers (company offered price was about 50 % lower than for imported tanks).
 
Development of the business
In 2010 production volume has increased so much that it was decided to completely abandon installation services and company concentrated only on production. In the beginning growth was financed out of their own savings and using working capital. However, in order to expand faster and efficiently it was not enough. M. Balčiūnas began to look for additional sources of business financing. Bank credit was not available because the company was small and did not have adequate collateral. At that time it was decided to apply for Capitalia microloan for businesses and with its loan increase needed working capital. After receiving the first loan company moved to larger premises 700 m² indispensable to increase production capacity. "Growing clients list ( today we have about 60 regular customers), and increasing production output (currently producing about 500 units annually) Capitalia was financing us and repeatedly issued needed loans for working capital - and without working capital business cannot grow," said M. Balčiūnas.
 
For future
This year company started production of thermal insulation products. Started preparing premises, found suppliers of raw materials, developed production technology. This innovation is expected to increase storage tanks production volume. Next year the company plans to launch a steel sheet plasma cutting machines to produce blanks for both their own needs and offer the service to other users. Services should have its demand as currently only few providers of such service is present.

The Bank of Lithuania announced the first half-year report covering the loan portfolio trends. Business loans portfolio increased by 2% during the first two quarters and bank survey shows expectations for further growth. One of impacts for slow recovery was bankruptcy of local bank Ūkio bankas and closure of AS UniCredit Bank Lithuanian Branch. Although commercial banks claim that lending policies are less stringent than 2-3 years ago, loosing these two banks means that small and medium-sized businesses have fewer opportunities to obtain bank credit. Firstly because UniCredit was more active in SME financing. Secondly Ūkio bankas had 7% market share which leads to tangible lower business loans supply. Lending policies are less stringent in form of lower interest rates and collateral requirements. The latter is still higher than before the economic downturn and only really liquid collateral is accepted. Companies without it or with illiquid collateral can apply to guaranty agencies, however it is long and resource consuming way.

Another source for business loans is credit unions. Unions were taking risky projects even during after crisis period and their business loan portfolio was growing for a long time until last official report (2nd quarter) when it decreased. This came from much tighter regulation and differential capital requirements by Bank of Lithuania for credit unions as well as by decrease in number of working credit unions.

Even though banks’ lending policies are getting milder and business loan portfolio size is forecasted to continue increasing, many companies will still not qualify for bank or credit union loan. In previous survey of commercial banks by Bank of Lithuania results revealed expected increase in demand for business loans of 38%; however portfolio grew only by 2%. Furthermore current survey shows that increase in demand is going to be even bigger for next period and is estimated at 60%. As a result business loans portfolio will be increasing; however big part of this demand will not be satisfied by banks and credit unions.

The situation when there is big gap between supply and demand of bank loans creates favorable environment for non-banking sector such as microloan companies. Even though in Eastern Europe micro lending for businesses takes a stable and substantial proportion from the overall issued loan amount, in Lithuania and the rest of the Baltics this sector has developed only during the few past years. As for example micro lending company Capitalia that operates in the market only since year 2010 has already issued over 300 business loans in the Baltic States and more than 200 loans only for last year. The number is simillar to the average number of loans issued by one Lithuanian commercial bank, which indicates substantial unmet demand for the particular loan type.

Twice per year the Bank of Latvia conducts a commercial bank survey including research of demand for business loans. Most of the banks since year 2010 have reported increasing demand for the particular type of financing. The trend seems to be clear and evident as the Latvian economic situation has experienced solid growth that in turn stimulates the entrepreneurial optimism and the desire to invest in business development. However, according to the quarterly report of The Financial and Capital Market Commission, despite the increasing demand, the total commercial bank business loan portfolio is declining.
 
The decline of issued amount of business loans has to have more than one simple reason. One of the factors is the caution of the lending policy that contrasts the excessive lending aggression during the pre-crisis period. In 2006-2008 the lending guidelines of the commercial banks were so loose that bank loans were competing even with venture capital. What is more, a substantial impact is also from portfolio “restructuration” – loans for less desirable sectors such as construction and real estate are replaced with other sectors like agriculture. As a side effect to the slowdown of bank lending is also the low deposit rates. This means that the commercial banks do not see many investment opportunities in the market (both types – loans and investments in financial markets) and therefore the banks do not need to attract new capital (i.e. deposits).
 
The situation when it is hard for enterprises to attract bank financing creates positive environment for non-banking sectors like development of microloans. Even though in Eastern Europe micro lending for businesses takes a stable and substantial proportion from the overall issued loan amount, in Latvia and the rest of the Baltics this sector has developed only during the few past years. As for example micro lending company Capitalia that operates in the market only since year 2010 has already issued over 300 business loans in the Baltic States and more than 200 loans only for last year. The number is equal to the average loan amount issued by Latvian commercial banks, which indicates substantial unmet demand for the particular loan type.
 
In this situation state can take an active accelerator role to stimulate additional business financing in Latvian economy. Currently the Latvian Guarantee Agency (LGA) is undertaking the main related activities: export guarantees, venture capital, mezzanine and micro lending (anticipated) programs. But taking into account the poor interest of banks to increase business loan portfolio size, LGA would have to intensify the undertaken actions. 

Sandwich school
 

SIA “Sviestmaize” (sandwich in English) co-owner Edgars Runcis did not choose the name of his company at random – his first business in 2009 was indeed the sandwich business. The idea was to sell self designed sandwiches – initially a café on Brivibas street then a kiosk on Barona street, and after that, following significant transformation, a kitchen service at NABACLAB. The first café was serious learning experience, especially when it comes to cash management and financial planning. Every next step provided Edgars with new insights about the restaurant business and eating habits of Latvians, for example, they do not like to eat a sandwich and walk down the street and the menu is considered adequate if it has chicken meat and vegetarian options.

 
A place were to sit down
 

In 2011 he opened the café Pasēdēt (Sit Down). As the owner describes in his Facebook page, this is the place to sit down, eat, drink and party on weekends. Until recently, the entrepreneur financed his operations from savings and operating cash flow except for investor financing which was raised for the launch of the initial project. However it is very difficult for small business owners to make significant investments without the help of outside financing. Bank loans for such cases most of the time are not available. This was the case with expansion plans for Pasēdēt – the bank loans were not available. Thanks to Capitalia’s POS credit – a loan facility targeted at retail businesses, Pasēdēt was able to finance the construction of the second floor. POS credit is especially convenient for businesses whose clients mostly pay with payment cards, because the repayment of the loan is automatic and Edgars does not have to follow the payment schedule. 

A leader, not a boss
 

Edgars Runcis is very passionate about his business and plans to expand within the existing location. He only gets discouraged when he is faced with bureaucracy to obtain each additional permit to continue his operations. Speaking about his future plans he does not plan to open any new locations as he wants to focus on the existing place.  Instead, he keeps working alongside with his employees at the bar and sees himself more as a leader rather than a boss. For example, he is fine with skipping some fun events once in a while when is his turn at the bar, but he is telling this with joy, as this was the approach he chose himself.

„From idea to investor” is a practical education program for young entrepreneurs. Capitalia supports Nordea business school participants by sharing its financial expertise. This year Juris Grišins, Manager of Capitalia and Board member of Latvian Venture Capital Association was sharing his knowledge on how to raise funds for business startups.
 
„Nordea approach to support new entrepreneurs is a long-term and efficient investment in business development. This is not just a one time funding but practical knowledge and leading experts’ advice that leads to a successful business in long term. The large number of applications proofs how important such knowledge is for young entrepreneurs,”- says Juris Grišins.
 
This year Nordea business school chose 50 startup entrepreneurs from over 300 applications with business ideas for unique engineering projects, including house design and construction, souvenirs, children’s educational toys and clothing production and successful projects in service industry. 

On 9 April 2013 the regular General Meeting of Latvian Venture Capital Association took place and the main issue on the agenda was reelection of the board.
 
With full support from other members, the representative of Capitalia Juris Grišins will continue to perform his duties of board for the next two years.
 
Our aim is to contribute and promote the development of venture capital and alternative investments (microloan and mezzanine) sector in Latvia. Furthermore we will continue to assist to the government institutions to identify flaws and develop according support program to avoid them.
 
During the General Meeting the board adopted Code of Professional Ethics and changed the name of the Association to Latvian Private and Venture Capital Association.

Capitalia manager Juris Grišins participated in the conference organized by Ministry of Economics representing Latvian Venture Capital Association and presenting overview on alternative financing issues in Latvia.
 
The presentation reviews the current situation and the future perspectives of business microlending, mezzanine and venture capital sectors. For entrepreneurs interested in business financing there is relevant information mentioned in the presentation about the alternative investment providers in Latvia. The main finding from the presentation says that the financing for businesses is still difficult to access and to stimulate the availability further and continuous government support is necessary.

Competition “Commercialization of sustainable business idea” took place on February 21 at the premises of Riga State Gymnasium No 2. Representative of Capitalia Ģirts Tihomirovs participated in the jury by evaluating business idea presentations and advising pupils about further idea realization process. Capitalia gave a special award to a team from Preiļi State Gymnasium that presented idea about manufacturing wooden toys.