Kanapé Pitch Vol.45 | Krisztián Kölkedi, Balázs Fuchs, Kálmán Nagy | HSUP - Hungarian Startup University Program
A Future Proof Consulting is a special place because it is also home to Barbara Verő, one of the mentors of the TokePortal. This is important to mention, as the Mentorplatform service has been launched to provide mentoring at the right time to start-ups that are currently in the preparation phase. We currently have nearly 50 mentors signed up, but we welcome applications from more!
*Balázs Fuchs and Krisztián Kölkedi
Balázs Fuchs és Krisztián Kölkedi| Express Innovation Agency
The 45th episode was a special one not only because of the location but also because we had Balázs Fuchs and Krisztián Kölkedi, CEO and Deputy CEO of Express Innovation Agency as our guests. It was only 1-2 weeks ago that the company was announced, but TokePortal was immediately interested in the news, as it is a public initiative that has been sorely missing from the startup ecosystem for a long time. Startup support schemes and agencies have popped up from time to time, but this initiative looks more promising.
The National Research, Development and Innovation Office has been actively supporting the ecosystem for years and has launched many new innovation services in recent years. Krisztián says that this is why another form of support was needed: the Express Innovation Agency, which is now the main support service of the Agency, with one of the most important elements being talent management, which is already being done from secondary school onwards, with various programmes, incentives and training.
Their secondary school programme was launched as part of a larger competition in partnership with the INPUT Programme. It is a simpler, non-exam-based, attitude-building version of the university programme, targeting the whole secondary school age group. It is already present in a large number of secondary schools, although for the moment it is more of a trial, as they want to keep improving it on the basis of feedback.
The Hungarian Startup University Program, the university version of talent management, is also part of the Hungarian Startup University Program, which aims to introduce and engage university students in the startup ecosystem. The programme, now in its second year, attracted 2,100 students across 21 universities in its pilot year, and by the end of the programme a total of 400 one-pagers had been submitted and nearly 100 teams selected by the universities, so roughly 500 scholarship students had graduated. Krisztián was pleased to add that there are already several success stories among them. He pointed out that there was one team who learned about innovation and start-ups from the ground up, but then participated in the scholarship programme, went on to receive mentoring and incubation support, and are now negotiating the sale of their first product on the international market.
The program itself is a 2 semester course, which includes 1 semester of mentoring, scholarship program, and even solving problems submitted by their corporate partners and sponsors, such as Antenna Hungária and BME Z10 Incubator, in addition to learning the basics. Finally, the best ideas will be selected and awarded a scholarship of 150.000 HUF per month for those who go further and come up with a winning idea. The main goal is to get the team to an MVP stage by the end of the 2nd semester with the help of a mentor, but of course there is no problem if this cannot be achieved. The main thing is that the students work on the task and try to solve the existing problem.
According to Balázs, it’s not about everyone becoming an entrepreneur. However, he believes that everyone who takes part in this can get a taste of how to start, build and develop something, so it is definitely a useful skill for a university student to acquire. This was confirmed by Nóra, who is an university lecturer, also sees that students appreciate the practice-oriented courses, not to mention the fact that the programme can be very important for entrepreneurship training.
As well as talent management, they also provide incubation support, market and technology validation, international sourcing and export market development for start-ups, among other things, so they have a very broad repertoire. Krisztián stressed that they do not only support start-ups, but basically the whole innovation process itself. They want to be present from before the knowledge is created and they try to cover the period until the knowledge is brought to the international market with different active services.
In terms of their innovation activities, their aim is to create a complex portfolio of services that any project at any stage of development can join at the point where they want to. If, for example, a 14-year-old comes to them with a good idea because they don’t know what to do with it, they are unlikely to be able to provide them with funding, but they will find the right connection to the ecosystem, find them programmes, learning competitions or mentors to work with. And if that’s what a company needs, they can even help to assess the international market or bring a product prototype to market.
They don’t do a tender advice on nationally funded applications, but do tender advice on international applications, but they can show those interested in applying the applications available at the Office, or if they are interested in something completely different, they can also look into it. One of their divisions is specifically dedicated to promoting Horizon funds and access to funding. They also have a mentoring programme with the Office, and in the future they would like to develop an even more extensive service section.
Balázs thinks it is important that they try to live up to their name as Express Innovation Agency. The express refers to the fact that they want to be faster than the speed of public projects, innovation is the basis of the company and agency means that they do not make laws and rules, but try to represent and advance the cases that come to them. They try to do what a government agency cannot do completely, so they try to be fast and they try to have personal contact and meetings.
The Agency itself is located in Budapest, on Bessenyei Street, in a brand new 650 m2 office, and currently has a total of 50 employees. A small number of their colleagues have transferred from the NRDI Office, while the majority of the team has been recruited by them. They don’t really have any partners yet, as we are talking about a newly created Agency, but their programmes, which they consider positioning to be much more important by default. Any professional organisation or company can be their partner, but exactly which partners and how they can join them will be announced in detail as the full portfolio of services is developed.
When asked what their vision is, Krisztián gave the thoughts of the head of the NRDI: “The goal is to be an active player in the ecosystem that does not only play a funding or financial support role, but actually everything else. In innovation, money is only one factor; if it cannot be put to good use, if it is not backed up by information, knowledge, connections, mentoring, it is not worth anything on its own.
In their experience, we are surrounded by a huge amount of information, but information is often decentralised, so if someone wants to access information, they may not be looking in the right place, and if they do, they may not be able to pass it on effectively. This is where the Express Innovation Agency wants to step in, essentially to become an information hub for the ecosystem, where anyone who needs information can go for help.
They felt it was important to have someone who could actively support and represent start-ups without having a vested interest, so that companies would not have to fear that they would be expected to do something in return in the future. So it was essential to create an actor that is present and able to reach the masses before the innovation happens, from the moment it is stimulated. Krisztián stressed that the key is to encourage, not force young people, just introduce them to this world, and if they want to go further on this path, someone has to be there to support them, to mentor them. In this way, they can create a slice of an ecosystem where, in a supportive environment, they can learn to fail themselves and through that to succeed. Of course, it is important that they are there afterwards, for example when the prototype needs to be brought to market, or to establish its market relevance, and even to help when the innovation is ready to generate revenue in international markets. In short, they want to cover the whole innovation process to stimulate the creation of innovations and their subsequent export.
Balázs also highlighted that although the emphasis is on supporting young people, they are not the only ones who can contact the Agency. Anyone who already has a prototype, a company, or would like support is welcome, they do not limit who can contact them, but they want to help everyone they can.
As for the objectives and plans, they said that they want to see not only a lot of ideas and projects on the input side, but also more and more businesses on the output side. In order to achieve this, they need to reach out to the masses, so one of their key agendas is to scale up talent management and training.
According to Krisztián, the Hungarian Startup University Program can actually be counted as a startup, of which the students are the test users. However, in the future, they would like to cooperate not only with universities, but also with different social sectors in a similar way. The more diverse the audience they can involve in the innovation, the more ideas they can support, the more prospective innovations will be created and taken further along the innovation pathway.
On the university scene, they want to go from the current 4,000 or so interested students to 6,000-8,000 in a year, and outside universities they want to reach 20,000-30,000 people a year. This could result in up to 3000-4000 successful projects, and even if only half of these reach the market, that is 1000-1500 projects. And if only half of these succeed in reaching the foreign market, then after a while we can get Hungary to be seen as a so-called innovation incubator. So the Express Innovation Agency wants to create such an environment, where active support is at least as important as regulation and financial support. It is an ecosystem development process, where knowledge-generating universities, supportive environment and partners are essential, and although it is basically a longer process, Krisztián believes that the more active players, the sooner they can achieve it.
According to Balázs, it’s also important to remember that after a while, every project or company that comes their way has to let go. They can’t say there forever if they want to have more businesses that are still going strong years later, and they are happy to remember how much help they got from Express Innovation Agency a few years ago.
Asked whether they have any plans to have a Hungarian unicorn, Krisztián said that they do not consider it a KPI, but it could be part of their activities, as they would like to create the conditions for such a success story to be created. According to him, the US, Estonian or Israeli models are all very good, but we have to be good in our own way, because our circumstances are completely different, we are influenced by different things. For example, Estonia’s startup ecosystem is also supported by the fact that the Estonian market is small, and so you get ‘born to global’ startups. Hungary, on the other hand, is specific in that although it is not big enough for an entrepreneur to start a scalable company, it is big enough to try it out. Krisztián believes that the main question is how we can help the start-up to be born, to stay based here and to have the intellectual property of the innovation in a Hungarian company, but to expand and build a market anywhere in the world. To make that happen, we need lots of new Rubik’s cubes and marbles, lots of new inventions, and we have the knowledge and the capability to do that, but it is not all the same how we support it.
The importance of the role of the state in building the startup ecosystem was also discussed. Nora said that studies show that there has always been a public driver for the take-off of the ecosystem. Krisztián shared that he had attended a conference earlier where this very topic came up with an Estonian and an Israeli colleague. The question was: when will the Hungarian startup ecosystem reach the Israeli level? According to Krisztián, the focus of the question is on MIKOR. For example, in Estonia we have a self-sustaining system with little state support, but in the past it took a lot of money to build the system and a lot of regulations had to be changed. Afterwards, of course, the state will have less of a role in maintaining a functioning system, which Krisztián aptly called “night watchman mode”. But the state will stay in one way or another, e.g. buying services from the start-up sector, but the question should be at what stage the ecosystem is. Usually, a more active support is needed at the beginning and then it can slowly take a back seat. At the moment in this country, we need a phase of more active support, and that is what the Express Innovation Agency wants to do with its programmes, because they say that they are successful when the start-ups are successful.
Arról is szó esett, hogy mennyire is fontos az állam szerepe a startup ökoszisztéma építésében. Nora szerint a vizsgálatok azt mutatják, hogy az ökoszisztéma berobbanásának mindig volt egy állami mozgatórugója. Krisztián megosztotta velünk, hogy részt vett korábban egy konferencián, ahol pont ez a téma jött fel egy észt és egy izraeli kolléga társaságában. A kérdés az volt, hogy mikor fog a magyar startup ökoszisztéma izraeli szintre felérni? Krisztián szerint a kérdésben a hangsúly a MIKOR-on van. Például Észtországban önfenntartó rendszer van, kevés az állami támogatás, de korábban a rendszer kialakításába rendkívül sok pénzt kellett beleölni, és nagyon sok szabályozást kellett megváltoztatni. Utána már a működő rendszer fenntartásában persze kevesebb lesz a szerepe az államnak, ezt Krisztián találóan „éjjeli őr üzemmódnak” nevezte. Az állam viszont így vagy úgy ugyanúgy bent marad, pl. szolgáltatásokat vásárol a startup szektortól, de a kérdés az kell, hogy legyen, hogy millyen fázisban van az adott ökoszisztéma. Általában az elején egy aktívabb segítésre van szükség, és aztán szépen lassan háttérbe lehet majd lépni. Jelenleg itthon az aktívabb segítés fázisa kell, hogy megvalósuljon, az Express Innovation Agency is ezt szeretné megvalósítani programjaival, hiszen elmondásuk szerint ők akkor sikeresek, ha a startupok is sikeresek.
Kálmán Nagy | Concorde MB Partners
In the previous Sofa Pitch, Zoltán Várdy and I had already deciphered the qualities needed to turn a startup into a successful company, but little was said about the future that these companies might face after success, such as exit. This transaction requires complex professional knowledge and a lot of preparation, as it is important that companies are able to expand their services after success and survive even with increasing performance. Exits can be made through a stock market flotation, or they can be sold in a private transaction to a larger company, even abroad.
As a member of the Concorde MB Partners team, Kálmán Nagy has been advising on exactly these types of transactions for almost 25 years. As a result, he has been involved in countless transactions and situations. He stressed that it is indeed a serious series of transactions when one mature company is acquired by another. That is why they provide transaction advice to companies on M&A, capital raising and IPOs. They do so on the basis of their own experience, having carried out such a transaction six years ago when Concorde merged with a former competitor, MB Partners, with the aim of providing a full service and covering the entire market.
Last year, they had over 15 transactions, and this year they expect to reach 20. To reach these numbers in the narrow Hungarian market, a lot of transactions have to be handled, which is why they cover a wide range of size, industry and transaction type. Transactions range in value from up to €1 million to €100 million, but within this range the price is mostly between €5 million and €30 million. In terms of industry, the range is also wide, with everything from healthcare to logistics, most recently for example a regulated real estate transaction facilitated by a listing. As for the type of transaction, it can be said that nearly two thirds of them represent sellers, with the remaining third representing buy orders for large companies.
They provide a full service, which means that if someone is thinking of selling their company, they will guide you through the process, even through years of preparation, and at the right moment, prepare the company properly, through a so-called marketing process to help you make the sale. This involves contacting and identifying potential buyer candidates, which can range from 4-5 to a few 100. Following the company through the whole process leads to an optimal closing. It is also the case that the buyer and seller already know each other and only ask for their help in managing the process.
There are some companies that are easy to sell, but there are also some (the majority) that for some reason are not possible, such as a one-man marketing company. There are also companies that are not easy to sell, but there are domestic investors who are attracted by the company’s activities, technology or market. The decisive motivation is the ownership decision.
To the question that if the owners have any stipulations on how they would like to exit, the answer is that they are typically thinking about private sales, as the Hungarian market is not yet at the stage where going public is the main goal. That is why there have been examples of people who wanted to go public but ended up selling privately. Of course, there are also those who see the stock market as an opportunity, as a partial exit is then possible.
There are many transactions in Hungary, but where an advisor like them can realistically play a role, it is only 25% of the total. Sometimes a seller will approach them with a plan, but Kálmán pointed out that in most cases these are long-term relationships, as they need to talk to them today about selling the company in up to three years’ time. An average transaction takes 9-12 months if the company is prepared for the deal. Before the transaction, they will review key issues and identify value-creating steps that need to be taken before the process can start. It’s important to have a good quality product, which just needs to be packaged neatly and then sold.
They can also help companies to find foreign investors, as in addition to their own international network of contacts, they are also members of an international association of M&A (mergers and acquisitions) companies like themselves, who meet several times a year at various conferences. In such cases, not only do they do the research on potential buyers, but also their association, and from this they create a larger database. One of their big successes is Randivonal.hu, which they also helped to sell when a major German publisher with annual sales of nearly €2 billion came on board. But this is quite an exception, because for a foreign investor to buy a Hungarian company, it needs to reach a significant size, depending on the industry. Although it takes a lot more energy to sell or buy a smaller company than a large one, which we think is also true when we think about the way to raise capital.
Another success that Kálmán highlighted was the case where they worked on the buy-side of the For Trans-Sped, a leading Hungarian freight forwarding and logistics company, which sought advice to buy a minority stake in Webshippy at-ben. Sofa viewers have already heard about this story from Webshippy founder András Perényi!
Finally, Kálmán stressed that anyone thinking about an exit should look to the future, see and understand who the potential customers are, how they think and what is important to them. It is not necessary to give long and detailed advice, but to understand the logic of the buyers, which is linked to what the values are in the company. Confident that the Hungarian startup ecosystem is booming, he encourages startups with good growth and technology to think about listing, something the BSE has invested a lot of effort in, as it has been involved in building a supportive ecosystem. In conclusion, the ideal is for a business to find the right support at every point in the life cycle, and if this system can be built, then entrepreneurship will also increase greatly in Hungary, which will boost the economy.
Viktor Nyics | Sztárüzenet
Viktor Nyics, the campaign manager and one of the founders of the Star Notice, gave a short video message about the past weeks of the campaign. The campaign is currently in a closed phase, which means that negotiations and negotiations have started, and of course, contracts have been signed. On the latter, there were two pieces of great news.
One is that they have an agreement with Trimedio Zrt, whose community and audience is also important for Star Message, as they serve a community that is usually exposed to offline content, for whom this kind of digitalisation of the entertainment industry is a completely new thing. The collaboration will therefore allow Star Notice to communicate through them as Trimedio evolves through the digitalisation of Star Notice. As Viktor said, it is a typical win-win relationship.
The other contract was signed with an agency that manages Youtubers and has a famous and exciting community. Thanks to this, new big names will be appearing in the Youtubers section of the site in the coming days, so those who are looking forward to this content can start to get excited about who they will be able to order their own video messages from soon. You can also, of course, already start exploring the Hungarian stars, many of whom have become Santa’s spokespeople this December.
Viktor also mentioned the success of their first investor meeting with Eva Csobán, the other founder of Sztárüzenet. The meeting turned out to be very exciting, with good questions and ideas from the audience. Several questions were raised about the NFTs that Sztárüzenet would like to implement with the help of potolhatatlan.hu, because, as it has been said before, Sztárüzenet is only the first step in building their digital structure.
Their next online investor meeting will take place on 14 December from 19:00, where they will report in more detail on the contracts signed and further discuss the NFT issue. You can also expect special guests!
If you have any questions about the campaign, you can ask the campaign managers by joining the investor meeting! In the meantime, those who pre-register for the closed phase of the campaign will have access to the campaign documents and the most committed can already invest, with a free pair of star glasses!
Nóra Szeles noted here that Infratrainer is also preparing a huge Christmas campaign, a fair, which may be interesting not only for those who want to invest in the campaign, but also for those who are thinking about buying or renting the machine.
And finally, he announced that last year’s highly successful Startup New Year’s Eve will be held again this year! This time, the number of categories has been expanded, with Startup of the Year, Startup Investor of the Year and Best Crowdfunding Campaign.
The winners will be invited to this year’s special edition of the Sofa Pitch – Startup New Year’s Eve, and will receive a champagne package as a prize, courtesy of the internationally acclaimed Carassia, which has accumulated numerous awards, and is expected to be handed over to them personally by the owner! Voting is now open and you have until midnight on 16 December to cast your vote!