Euroventures IV

Project completed
Beneficiary
Hungarian SMEs receive access to long-term financing, which creates jobs for highly qualified workers. © SECO/DEZA SECO/DEZA

Small and medium enterprises (SMEs) in Hungary continue to face great difficulties in accessing long  term external finance, especially in the aftermath of the global financial crisis. The Euroventures IV Venture Capital Fund provides equity financing to innovative start - up companies.

Country/region Topic Period Budget
Hungary
Promoting economic growth and improving working conditions
Access to external financing for micro-enterprises and SMEs
01.01.2010 - 31.12.2016
CHF 15'215'904
Background

SMEs are the backbone of the Hungarian economy. Roughly 70% of the working population are employed by an estimated 700’000 SMEs which account for approximately 50% of Hungary’s GDP. However, already before the global financial crisis, access to finance, especially bank credit, has been notoriously difficult for SMEs. In the aftermath of the crisis which has hard hit Hungary, access to debt finance is simply out of reach for the vast majority of SMEs due to very high interest and sharply more restrictive bank lending.

Hungarian registration number: SH 5

Objectives
  • Strengthening of the private sector in Hungary
  • Deepening of the Hungarian financial sector
Target groups

Hungarian SMEs

Activities

The Euroventures IV Venture Capital Fund provides equity financing to up to 27 innovative companies with less than five years of existence. The fund is managed by Etalon Capital, a very experienced venture capital (VC) / private equity (PE) fund manager. Etalon co-invests with private investors which provide at least 30% of the capital for each investee company . This way public funds are leveraged to mobilise private resources which expands the financing options of Hungary's SMEs.

Results

Achieved results:  

  • 100% of the Hungarian Euroventures IV Venture Capital Fund's early-stage capital was fully invested by mid-year 2016.
  • Since inception, the  Fund has assessed 699 investment opportunities and has invested in a diverse portfolio of 20 SMEs in areas such as biotechnology, health services, chemical research, customer services and IT. It has also generated 202 new jobs for highly qualified workers.
  • To date, the Fund has sucessfully exited from 5 investee companies. Two of them can be recorded as real success stories in the world of venture capital investments.
  • Overall, the Fund made scare capital available to promising entrepreuneurs and  thus provided growth opportunities to successful SMEs, including benefial side effects such as job creation, developoment of skills and knowledge. It also showcased to the private co-investors and the investment industry in general that Venture Capital investing in Hungary can be highly successful.


Expected results:  

  • A reduced equity gap. By providing easier access to long-term finance for SMEs, the Project helps to augment the firms’ investment level and increase their competitivenes, allowing these businesses to upgrade, grow and expand.
  • Increased employment in small and medium enterprises. Strengthened private investors’ and VC/PC funds’ interest in the SME sector. By attracting and sharing risk with private investors, VM encourages existing as well as newly established risk capital funds to invest in early development stage companies.


Directorate/federal office responsible SECO
Credit area Swiss Contribution to the enlarged EU
Project partners Contract partner
  • Hungarian National Development Agency

Implementing partner
IMV - Magyar Vállalkozásfinanszírozási Zrt and Euroventures Ltd.

Budget Current phase Swiss budget CHF   15'215'904 Swiss disbursement to date CHF   15'215'904 Budget inclusive project partner CHF   0
Project phases

Phase 1 01.01.2010 - 31.12.2016   (Completed)