Hungary to become one of the largest venture capital investors in CEE!

On Jan 8, 2022

The Hungarian state owns Hiventures Zrt. It is one of the most active and important venture capital investors in Eastern Europe. Such investors finance start-ups or early-stage high-potential companies. Most of these will not be profitable, but whichever will be, its business success will offset the other losses.

Why will the Hungarian state be an investor?

For many, the question may arise as to why the state invests in risky startups. Until the mid-2010s, Hungary was among the last countries in Europe to invest in venture capital. Subsequently, a large number of equity funds was launched, largely with EU funding.

Hiventures currently invests in 240 companies.

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The company, which started in 2017, has spent less than half of its resources. The European Union wants more and more repayable aid. The goal is that if the funds are invested well, the money from the sale of successful companies can be reinvested, writes g7.hu. In most of the investments, Hiventures came in with another equity fund.

Initially, Hiventures only financed startups, but later, it also turned to domestic companies.

We have to wait a long time for the result

Although they operate on taxpayers’ money, the annual accounts and the current value of the investments are not disclosed. It is also often questioned why they have invested in a particular industry and company. Many associate the idea of setting up the fund with the eldest daughter of Hungarian Prime Minister Viktor Orbán, Ráhel Orbán.

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Overall, Hiventures companies closed the year on a good note.

The sales of the companies that have acquired the investment are increasing. In addition, export sales also increased, writes napi.hu. At the end of 2020, Hiventures employed 2,856 people. Until then, the company paid HUF 33.8 billion, which means that a new startup job can cost an average of HUF 11.8 million. This is a very cheap way of creating jobs. In large companies, it may be 3-6 times this amount.

In summary, no globally revolutionary startup idea has received state funding just yet. However, most companies are in the early stages and growing. We can judge the success of the program only at the end of the decade.