Community Development Venture Capital Alliance

Fundusz Polnocny Spolka Akcyjna (The North Fund)
Main Offices: Linki 5/5, Olsztyn 10-534, Poland
Website: www.seaf.com/northfund
Email: northfund@fp.org.pl

Fund Manager: Small Enterprise Assistance Funds (SEAF)

Key Personnel: Sylwia Taras, Director General

Established: 1999

Total Committed Capital: US $1 million

Amount Invested: US $485,516 (49%)

Shareholders: Ford Foundation

Geographic Focus: the Fund covers all or a large portion of the four northernmost of Poland's sixteen provinces (the voivoidships of Warmia-Mazuria, Pomerania, Western Pomerania, and Kujawo-Pomerania).

Background
Fundusz Polnocny Spolka Akcyjna (The North Fund) is a community development venture capital fund and provides equity and quasi-equity financing and business assistance to selected small and medium-sized enterprises (SMEs) in northern Poland. The North Fund was established with the help of the Ford Foundation, which provided a loan to the Fund. The main aim of the fund is to promote entrepreneurship and sustainable regional development in the underdeveloped and economically neglected North Region of Poland. Investments are made in combination with a management training and technical assistance component in order to enhance the business performance of the Fund's investments and to help meet its developmental objectives. The Fund actively assists its portfolio companies in implementing appropriate improvements in management techniques and practices, especially relating to financial control, cost accounting, quality control, and marketing. In addition, the Fund Manager's investment officers are actively engaged in implementing business strategy and in following-up with advice rendered by outside experts. Business support programs are sponsored not only by the Fund, but also by other international and local agencies.

Social Mission
The Fund's principal mission is to provide affordable financing to private sector SMEs in northern Poland in order to create jobs, promote business development, and strengthen economic development in what includes some of the most economically neglected areas in the country. Investment capital in northern Poland is scarce and, along with an underdeveloped financial infrastructure, there is a dearth of financial skills and know-how. The Fund seeks to build the capacity of the SMEs to expand production, access new technology, improve competitiveness, reach wider markets, increase profits, and achieve long-term commercial sustainability. By supplementing investments with technical assistance, SEAF aims to help develop business and management skills, improve corporate governance and transparency, and formalize legal structures, business structures, and tax reporting. The development of a vibrant and sustainable SME sector will help to generate new employment, export revenues, and government tax revenues; stimulate economic growth; promote free markets; improve social welfare; and contribute to political stability in developing countries. The Fund also seeks to provide examples of successful private enterprises to entrepreneurs and investors, help SMEs establish new customer and banking relationships with the formal banking sector, create a culture of equity investment, institutionalize investment methods and structures, and help to develop the country's overall financial sector.

Investment Information
The Fund invests in a variety of business sectors, with particular attention given to companies involved in export activity and those with strong growth prospects. The investment team seeks to build and cultivate a diverse portfolio of companies engaged in business operations that make use of the regions competitive advantages. Current investments consist of a fish processor and distributor, a book retailer, and a bakery operation. The Fund will not invest in enterprises engaged in the following activities: banking, insurance, and financial services; speculative investment activities such as real estate or commodities trading; production or sale of tobacco products or hard alcohol; arms manufacturing or other military-related activities; operation of casinos or other gambling-related activities; operation of abortion clinics; or activities harmful to the environment. Generally, the Fund seeks a combined 20% to 49% minority stake in local, private companies and a target an average investment exposure per portfolio company of US $250,000. The maximum amount of financing available to any one company is US $400,000, and the minimum is US $25,000. Generally, the Fund seeks a combined 20% to 49% minority stake in local, private companies and a target an average investment exposure per portfolio company of US $250,000. The maximum amount of financing available to any one company is US $400,000, and the minimum is US $25,000. The North Fund invests jointly with CARESBAC-Polska SA.