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Sylwester Janik, MCI Management presentation from TMT.Ventures'09 Warsaw (http://tmtevents.eu by New Europe Events)
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Venture Capital in CEEVenture Capital in CEE– – challenges and drivers challenges and drivers
Sylwester JanikSylwester Janik
MCI Management MCI Management
MCI Management MCI Management
Who we areWho we are
MCI Management SA is one of the most established and experienced private equity management firms in CEE, focused on venture and growth capital.
Founded in 1999; listed on the Warsaw Stock Exchange since February 2001 with institutional and private investors.
Over PLN 300 million (~€90 million)* of total assets under management.
Four funds under management:
TechVentures 1.0TechVentures 1.0- early stage and growth technology fund (VC)
EurEuroVentures 1.0oVentures 1.0- mid-market buyout fund (PE)
HelixVenturesHelixVentures Partners Partners 1.0 1.0- seed & start-up technology fund (VC)
BBioVentures 1.ioVentures 1.00- early stage health care & biotechnology fund (VC)
* Book value of assets as of 31st Dec 2008
MCI’s presence in the CEEMCI’s presence in the CEE
• MCI is active across the main countries of the CEE region: Poland, the Czech Republic, Slovakia, Bulgaria and Romania.
• 8 Partners with diverse background and experience, supported by team of experienced investment professionals
Sector specialization - areas of particular interest are:
- Internet
- Software
- Telecommunication,
- Wireless & mobile,
- HealthCare & Biotechnology,
- Retail & Distribution,
- Cleantech (practice in development.
Diversified portfolioDiversified portfolio
VC & the CEE market opportunityVC & the CEE market opportunity
by Sequoia Capital
VC & the CEE market opportunityVC & the CEE market opportunity
Fast-growing economy
The stability of the political, legal & regulatory environment
Attractive investment opportunities - success stories (Skype, Grisoft (AVG), Bioton, etc;)
Well-developed exit environment
On average, the CEE countries grow at least 2x faster than USA, Japan and developed countries of the European Union
Source: International Monetary Fund, The World Bank, Eurostat, The Economist Intelligence Unit, Goldman Sachs, Morgan Stanley
Political and legal stability of the region (EU regulations) gives PE/VC funds an advantage to invest in emerging market growth at a risk, that is comparable to that of Western Europe
VC & the CEE market opportunityVC & the CEE market opportunity
2007 2008 est. 2009 F 2007 2008 est.2009 F
(IMF)2009 F (banks)
USA 2,0% 1,3% -0,5%
GD
P G
row
th
6,0% 4,4% 3,6% -1,9%Czech
Rep.
Japan 2,4% 0,4% -0,4% 6,2% 8,5% 4,7% 1,7% Romania
China 11,9% 9,8% 6,7% 6,6% 5,4% 3,8% 0,0% Poland
UK 3,0% 0,7% -1,0% 6,2% 6,5% 4,5% 0,0% Bulgaria
Canada 2,7% 2,7% -1,2% 10,4% 7,0% 4,9% 1,5% Slovakia
Euro Area 2,6% 1,2% 0,1% 7,6% 6,4% 2,5% -2,0% Ukraine
4,5% 3,4% 2,7% -1,5% Turkey
1,1
95
1,0
33
1,0
27
0,7
93
0,7
51
0,6
41
0,6
35
0,6
06
0,5
71
0,5
67
0,5
48
0,5
43
0,4
87
0,4
37
0,4
21
0,4
03
0,3
92
0,3
32
0,3
25
0,3
14
0,3
0,2
22
0,2
06
0,1
93
0,1
77
0,1
39
0,1
33
0,1
04
0,0
46
0,0
43
0,0
07
1,9
23
0
0,5
1
1,5
2
Bulga
ria
Swed
en UK
The
Nethe
rland
s
Latv
ia
Denm
ark
Belgi
um
Fran
ce
Finl
and
Euro
pe
Lith
uania
Serbi
a
Norway
Hunga
ry
Germ
any
Switz
erla
nd
Spain
Roman
ia
Esto
nia
CEE
Austria
I relan
d
Poland
I taly
Greec
e
Mac
edon
ia
Slove
nia
Czech
Rep
ublic
Portu
gal
Croat
ia
Slova
kia
Bosnia/
Herz.
VC & the CEE market opportunityVC & the CEE market opportunity
Substantial growth opportunities for PE/VC funds in relation to developed countries of the European Union
An emerging generation of well-educated and highly motivated entrepreneurs able to build companies successfully competing in a global marketplace
Majority of the region’s investment activity and new investment opportunities concentrated in Poland, the Czech Republic, Romania and Bulgaria
PE/VC investments as % of GDP in 2007
Source: EVCA / PEREP
%
VC & the CEE market opportunityVC & the CEE market opportunity
Viable exit routes for PE/VC funds due to meaningful M&A activity and developed stock exchanges
Venture backed companies are exited mainly by trade sale, but number of IPOs is growing dynamically
Source: EVCA
Geographic interest of LPs worldwideGeographic interest of LPs worldwide
18%
27%
29%
29%
50%
52%
58%
58%
62%
69%
81%
89%Western Europe
North America
India
CEE
China
Other Asia
Japan
Australasia
South Africa
Latin America
Israel
MENA
Source: LP Allocation to Private Equity 2008, Almeida Capital survey (130 LPs)
VC in the CEE region –VC in the CEE region –
challenges & driverschallenges & drivers
EU accession Political as well as economic risks are much lower than they used to be and also
much lower than in other emerging markets
Improvement of ICT infrastructure across CEE Significatnt improvement over last 5 years (+); differences between countries
and regions are still huge (-)
„Come back” of many Eastern Europeans to their home countries Management experience, personal networks, motivation, knowledge, start-up
capital (sometimes)
The attitude towards starting an own business Between what it is in the USA and Western Europe; the region still lacks the
critical mass of people who want to start out on their own
DriversDrivers
An excellent academic track record and a reputation for outstanding scientific research
Still a long way to go to leverage and unlock a commercial potential of universities, incubators and technology parks.
The massive capital inflow into the private equity asset class during the credit boom years
Investors look outside their traditional territories
search for returns and investment opportunities at the smaller end of the investment spectrum following the credit crunch
DriversDrivers
Entrepreneurial environment needs to improve
Investments in infrastructure are needed to form stronger basis for future
growth
Wider adoption of incentives for venture capital investors
government-sponsored programmes , tax breaks, Development of venture
capital-friendly environment & infrastructure
Language and cultural issues
Cost advantage of the CEE region is disappering
Limited number of serial entrepreneurs
Equity gap - seed / early stage investments
ChallengesChallenges
www.mci.euwww.mci.eu
[email protected]@mci.com.pl