Make it Grow: The Role of Venture Capitalists (event archive)

May 18, 2011 by  

Our Start Up! event featured our Entrepreneur-In-Residence, creator and organizer of the E-Workshop series, Peter Záboji (European Entrepreneurship Foundation) who grilled  Venture Capitalists, Business Angels, and Private Equity Investors. The panel included Iván Halász (Finext), Áron Szabó (Riverside), and András Molnár(Portfolion).

Scroll down for event summary!

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Summary

Governments don’t create jobs. “Entrepreneurs and entrepreneurial investors do!” Peter Záboji shared his credo at Common Sense Society’s private event with successful entrepreneurs and students who aspire to be employers, rather than employees.

He conducted his presentation using Prezi, a dynamic visual presentation tool developed by a Hungarian artist who turned it into a hugely successful business, with more than 3 million users world wide in only two years!. Peter thus made another point: wannabe entrepreneurs need role models. And they need entrepreneurial investors, so he invited venture capitalists, the very people who help make ideas and start-ups become successful businesses! Our investors for the night were Iván Halász (Finext), András Molnár (PortfoLion) and Áron Szabó (Riverside) talked about how to pick startup companies and their funder teams.

Startup investments have a higher than average risk profile, Not surprisingly therefore, venture capitalists prefer investing in proven business models and growth companies. In order to help creating businesses, the European Union provides funds and financial incentives via its JEREMIE program  encouraging venture capitalists to investing in startups.. The JEREMIE program “subsidizes your time and appetite for risks”, explained Iván Halász, “as it is hard to find good exit value companies in Eastern Europe to balance for risks otherwise”.

So how do they pick promising companies? The panelists said they look at the past performance of the founders and the upside potential of the venture asking for funding. But “really, what you need is a very good crystal ball”, admitted András Molnár candidly. The panelists all agreed that choosing and nurturing the winner company at a “seed phase” is more of an art than science and despite the many tools and market analysis; decisions must be made on a case by case. As success depends more on execution than ideas, what really matters is the experience of the founder team.

Is there a hot sector that promises better returns? ”Such sectors hypes are often based on misbelieves”, – said Áron Szabó. He pointed out that subsidized industries such as the green sector are likely to lose government support once there is a need for spending cuts. Whatever is a hype today, turns out to be riskier later, especially government regulated sectors, where conditions for doing business may change very fast.

Besides high, albeit subsidized risk, a lot of unpredictable factors, and the need for that reliable crystal ball, there are fun aspects to being a venture capitalist, too. They get to try the newest inventions and business ideas. András Molnár and his boss were among the first to test the new bicycle in Budapest that is operated without a chain and tends to be a little faster than the traditional models. András said he was satisfied and that during the test period some cyclists would even run after him to check out this never before seen bike at a red traffic light.

There are many people with good ideas, and teams are getting off the ground.  They can increase their chances by positioning their venture in the global context! We have many of the ingredients already: role models, founder teams and Jeremy funds. We are still short on angel investors and incubators. The CEE region is still laggings but started catching up. We need to grow the entrepreneurial ecosystem to so that we can make grow the economy!

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