The pending Baltic Innovations Fund (BIF), which will be officially established tomorrow in Vilnius and whose budget of EUR 200 million will be jointly funded by the governments of Latvia, Lithuania and Estonia, the European Investment Fund and private contributors, will open up new opportunities for cross-border investments in new, creative IT projects, Estonian venture capital investor Allan Martinson says in an interview with the Nozare.lv business portal.

At the moment, the problem is that state funds must always be invested in the same country, for instance, Latvia cannot invest its share of joint European resources for micro to medium enterprises in a Lithuanian or Estonian company. Estonian Development Fund cannot invest in a Latvian company. On the other hand, it is impossible for a venture capital company to be successful if it only does business in one country, said Martinson, adding he was very pleased that the BIF would finally change the situation, writes LETA.

Funds that are active in just one country are forced to invest in "anything that moves", notes Martinson. For instance, Estonian Development Fund has invested money in foundries, wind generators, and suchlike – but one cannot be an expert at everything, adds Martinson.

Thanks to the BIF, the amount of venture capital available in the region will increase significantly. A serious venture capital fund should cover an area with at least 50 million residents, and it must have the capacity to analyze hundreds of applications for financing every year, says Martinson.

Venture capital is very transnational in nature, because it is impossible to run a commercially successful venture capital company in a market with less than 50 million people. Also, a venture capital fund with a capacity of less than EUR 10-20 million makes no sense, because such funding will not be sufficient.

At the moment, there are just two "real" venture capital funds in the Baltic countries – both are privately funded and both located in Estonia, says Martinson. One is Ambient Sound Investments, established by former Skype co-founders who have invested EUR 30 million to EUR 40 million altogether. The other is Martinson's own MTVP, which manages around EUR 17 million provided by Estonian and Finnish investors, as well as one Latvian private investor.