The impact of state intervention on the Hungarian venture capital market

Kállay, László; Jáki, Erika

doi:10.1080/1331677x.2019.1629979

Cited by 10 publications

(4 citation statements)

References 12 publications

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“…It would also represent linkage with the previous theme in that a strong focus on state-driven funding of entrepreneurship would, by implication, embody inconsistency with the development of market-driven entrepreneurial culture. Kállay and Jáki (2019) corroborate this view by indicating that although the Hungarian state allocated significant resources to funding VC investments from 2010, the value of average yearly investment barely grew. However, the same study indicates the share of public resources placed on the funding market increased from 4% to 86% in Hungary between 2010 and 2018.…”

Section: B State-based Domination Of Investment Provisionmentioning

confidence: 56%

Understanding the Budapest Entrepreneurial Ecosystem: Human Capital Flows and Social Capital Ties

Huszák¹,

Gittins²

2022

CEBR

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Socio-economic transition in the CEE (Central and Eastern Europe) region in recent decades forms the operating context for young entrepreneurial ecosystems. This study has the aim of analysing institutional and cognitive features of CEE ecosystem development by considering Budapest as a prime example of an urban entrepreneurial ecosystem. Alongside the analysis of event registration data, a qualitative research approach is deployed featuring semistructured interviews with entrepreneurs and other institutional actors attending a networking event in Budapest. The methodological foundation for this approach is adapted from Triple Helix ecosystem theory. A conceptual model is produced from the research process, and ecosystem theory is developed by accounting for dynamic human capital flows and social capital ties do not present in the original Triple Helix theory. Results primarily indicate moderate levels of asset values and that attendance by entrepreneurs is largely motivated by locating start-up funding. Prime outcomes of interviews are a lack of innovation-focused specific human capital and increasingly market-based means of social capital development. Furthermore, the findings presented as propositions assume a partial virtual nature for human capital flows and social capital ties between ecosystem actors. On this basis, the resulting conceptual model accounts for the presence of digitalisation. Thus, ongoing entrepreneurial ecosystem development entails continual institutional adaption to information technologydriven socio-economic conditions. The Budapest ecosystem would, however, need to acquire a stronger virtual aspect in order to realise greater growth potential. Implications for Central European audience: While research on entrepreneurial ecosystems has gained strength, it has barely been applied to the CEE region. This study represents a formative attempt in this regard whereby the resulting conceptual model may be used to empirically evaluate entrepreneurial ecosystems within the region by comparing specific internal and external human and social capital movements. The model primarily implies that digitally derived human and social capital would require deeper integration between start-up firms and institutional actors. Crucially, there is also an implicit need for institutions to develop digitalised infrastructure more intensively in order to nurture innovative start-up activity in the CEE region.

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Section: B State-based Domination Of Investment Provisionmentioning

confidence: 56%

Understanding the Budapest Entrepreneurial Ecosystem: Human Capital Flows and Social Capital Ties

Huszák¹,

Gittins²

2022

CEBR

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“…In terms of investment volume the effort was successful as during the course of the program, venture capital investment increased dramatically in Hungary compared with previous years (see Figure 2). Other effects of the program are subject to debate in the literature (for example, Becsky-Nagy & Fazekas, 2015;Karsai, 2018;Lovas & Illés, 2018;Berlinger, 2019;Kállay & Jáki, 2019). One aim of the JEREMIE program was that of regional development with participating fund managers intending to invest in peripheral regions of Hungary.…”

Section: Studies and Articlesmentioning

confidence: 99%

What qualities do government-owned venture capital investors seek in a new venture? A comparison of investment criteria across pre-seed, seed, and expansion stage startups

Molnár

Jáki

2020

Veztud

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Private venture capital (VC) investors usually do not invest in early life-cycle stage startups such as seed and pre-seed companies, since investment size typically doesn’t reach investment thresholds. The entry of governments with fund managers to venture capital markets presents seed and pre-seed companies with the opportunity to receive funding. This paper examines the main investment preferences of Hungarian government-owned venture capital investors regarding pre-seed, seed, and expansion stage startups. Verbal protocol analysis enabled examination of the screening process in real-time in all three life-cycle stages. It is found that governmental VC funds mostly value financial indicators followed by market-related qualities while private VCs value these characteristics in alternate formation. However, in the pre-seed stage, the financial acumen and capabilities of management teams form the main criteria in similarity to angel investors. Governmental VCs also greatly seek innovational value in target firms.

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“…Their results show that university spill-overs affects development of knowledge intensive ventures, but only in case of services. Kállay and Jáki (2019) examined the impact of state intervention on the Hungarian venture capital market. Based on their results public funding in the Hungarian market did not function as an additional source of finance rather it causes a crowding out effect, gives rise to softer project selection standards and the portfolio financed by public funding is likely to end up below the value of the investment of venture capital funds.…”

Section: Introductionmentioning

confidence: 99%

Survival and growth of Hungarian start-ups

Radácsi¹,

Filep²

2021

JESI

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Most start-ups die and most survivors fail to grow dynamically. The aim of the paper is to summarize the factors found in the international literature, supported by empirical research, that influence the survival and growth of start-ups, and evaluates the results of expert interviews conducted with renowned players in the Hungarian start-up ecosystem. During the research process fourteen expert interviews were conducted and analysed with combined logic, integrating deductive and inductive approaches. Based on the results, there is little overlap among factors identified in the international literature and those highlighted by Hungarian experts as influencing the survival and growth of start-ups. However, international and Hungarian results unanimously emphasize that entrepreneurial education, internationalization, acquisitions and heterogeneity of the start-up team's knowledge and skills play a significant role in the success of startup businesses. Despite the limitations of the research, results may prove to be beneficial to both start-up ecosystem players and policymakers.

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The impact of state intervention on the Hungarian venture capital market

Cited by 10 publications

References 12 publications

Understanding the Budapest Entrepreneurial Ecosystem: Human Capital Flows and Social Capital Ties

Understanding the Budapest Entrepreneurial Ecosystem: Human Capital Flows and Social Capital Ties

What qualities do government-owned venture capital investors seek in a new venture? A comparison of investment criteria across pre-seed, seed, and expansion stage startups

Survival and growth of Hungarian start-ups

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