2018-09-10 - Széchenyi Tőkealap-kezelő - CEE news

Why choose venture capital

Would you like to boost your business and find a co-investor for the long term? Or you need initial financing and expertise to place your start-up business on the right track? This is exactly what venture capital was invented for.

Venture capital is a financing source that is usually invested in companies operating in high-growth, especially in innovative sectors thereby supporting their market expansion. There are two types of role capital investment that can play a role in a business. Venture capital investors that support operation provide customized help to companies by improving their strategy, translating innovation into commercial practice by developing a new product or service and introducing the firm’s business in the global market. Passive financial investors do not want to participate in the actual business, they put up with only having control over it.

The funds managed by the Széchenyi Venture Capital Fund Management Ltd. (including the Carpathian Basin Business Development Venture Capital Fund) are of this latter, financial type of investors who are interested in the growth of the business and a successful exit but they only want to control and not lead the processes.

What makes the Carpathian Basin Business Development Venture Capital Fund (KMVA) differ from its competitors:

The KMVA’s primary objective is to strengthen cooperation between the businesses in Hungary’s neighbouring countries by investing into Hungarian firms that want to expand to the seven neighbouring countries or are already operating in a neighbouring country and want to focus on Hungary – by at least a branch office or other operation. Whether it is an original Hungarian firm or a company from a neighbouring country, the investment projects are always implemented in Hungary.

The most important cornerstones of the investment:

  • As a venture capital investor, we become a co-owner of the firm by means of capital increase.
  • We do not look at it as bank financing but as a capital investment transaction based on risk-sharing.
  • We do not become the majority shareholder of the firm, instead we want to stay in minority (while being backed by appropriate guarantees).
  • The founders continue to manage the business, and the KMVA acts as a silent partner expecting specific disclosures and controlling rights.
  • We adjust our yield expectations to the industry benchmark.
  • Emphasis is placed on giving an opportunity, wherever possible, for the owners to buy out their share after a period of 3 to 5 years.