National
Development Agency

The call announced by the National Development Agency within the framework of the New Hungary Venture Capital Programme closed successfully: 18 venture capital fund management applicants submitted tenders up to the end of the August deadline. As an outcome of this successful tender procedure, Hungary will be the first of the 27 EU member states to launch a venture capital programme for small enterprises financed from EU resources. 

A 40.5 billion HUF framework has been made available for the New Hungary Venture Capital Programme. 90% of this entire framework supports strengthening enterprises operating in the 6 convergence regions, whilst 10% has been earmarked for enterprises based in the Central Hungary region. It is important to note that these investments promote the financing of enterprises in their initial phase of operation (seed or start-up phase) or growth phase. In addition, the way in which the combined ratio of innovative and/or initial phase investments in the planned investment portfolio must reach a minimum threshold of 30% is also stipulated as a requirement.     

Otherwise, in terms of its size, the Hungarian venture capital market is larger than the average size of other central-eastern European markets; at the same time, only a minimum rate of venture capital investments have so far been made in small and medium enterprises, as well as enterprises in the start-up phase. It is precisely these small enterprises in the start-up phase that are in most desperate need of capital resources, since alongside their weak credit rating, this sphere of enterprises has been most severely hit by the lack of credit availability arising as an outcome of the financial and economic crisis. European Union resources made available within the framework of the New Hungary Venture Capital Programme will provide effective assistance for starting up and strengthening these types of enterprises. 

The capital fund management organisations listed below were approved funding under the call announced within the framework of the New Hungary Venture Capital Programme (EDOP-2009-4.3 /2 Joint Fund and CHOP-2009-1.3.3 /2 Co-investment Fund Sub-programme). Contracting is expected to take place by the end of the year.

1.    Big George’s NV Equity Venture Capital Fund Management  
2.    Central Fund Venture Capital Fund Management Ltd.
3.    DBH Investment Venture Capital Fund Management Ltd.  
4.    Etalon Venture Capital Fund Management Ltd.  
5.    Finext Start-up Venture Capital Fund Management Ltd. 
6.    Morando Venture Capital Fund Management Ltd.  
7.    Portfolion Venture Capital Fund Management Ltd. 
8.    Primus Capital Venture Capital Fund Management Ltd.  

As an outcome of the tender procedure, approximately 45 billion HUF has been made available to help innovative small and medium enterprise in the start-up or growth phase obtain capital resources, out of which framework 31.5 billion HUF is ensured from Jeremie resources and implies allocating capital resources ranging between 2.8 to 5.0 billion HUF per individual applicant. Private resources amounting to 13.4 billion HUF complement this amount, which, according to the tender call, is equivalent to the 30% minimum requirement, which ratio may however exceed 44% in the case of one applicant approved funding. Since the programme also has a regional focus, Jeremie resources amounting to 4 billion HUF will be allocated to the Central Hungary region, whilst convergence regions will be allocated 27.5 billion HUF.      

In compliance with international practice, the oral presentations of applicants played a key role during the course of the evaluation procedure. Pursuant to the recommendation of the Hungarian Venture Capital and Private Equity Association, the president of the National Development Agency appointed an independent panel of experts comprised of 5 internationally recognised members to evaluate these presentations.   

The institutional system has managed to stick to the schedule promised for the second round and is doing everything in its power to launch the first investments in the SME sector at the end of January 2010.