Venture Capital in Central

1
Venture Capital in Central Eastern Europe

• MAVA Capital October 2001

2
Vital Statistics

• 2000 - roughly Euro800-900 million raised half as
  much invested
• Diverse funds - regional/country/sector
• 50 funds or so active

3
MAVA Capital

• Manages 2 Funds - 110 million
• Hungarian American Enterprise Fund - 1990
• Hungarian Equity Partners L.P. - 1997
• 1-10 million, diverse sectors
• expansion capital, buy-outs

4
Fundraising Issues

• CEE barely on radar screen
• Development stage issues
• transparency, governance, management capacity
• Current market sentiment
• Experience of teams

5
Investment Issues

• Leadership
• Management skills
• Markets - fragmented, small
• Transparency/reporting
• Governance
• Other business plans, selling skills, language,
  etc.

6
Investment Cycle

• Deal generation/identification
• Negotiation/Structuring
• Investment Memorandum
• Approval
• Due Diligence
• Closing
• Monitoring/Reporting
• Value Creation
• Exit

7
Value Creation

• Strategic input - Board
• Management incentives
• Process reengineering/strengthening
• Buy build - MA help
• capital, know-how
• Network
• Capital

8
EXIT

• Typically after 3-5 yrs.
• IRR gt 25
• Difficult in CEE
• MAVA exits/partial exits
• Cofinec, EuroNet, TelSys, Szobi, Respirátor