dr. Andrea Kozma | CEU InnovationsLab

Dr. Andrea Kozma, Director of CEU InnovationsLab (iLab), previously worked as a lawyer and attorney, and with iLab won the title of the best Hungarian incubator in 2017, the second year after its founding, and has since then been a success story.

iLab is an accelerator of the Central European University and Andrea Kozma, as an MBA student, was introduced to the world of investment and incubators. After a 20-year career in international law, she felt she needed a new challenge, so she applied to the university’s MBA programme, where most people applied because they wanted to become entrepreneurs. There was already a part of the university that acted as an incubator, giving students the opportunity to work on their own projects, but there was no programme linked to it. Andrea was given this opportunity in 2016… The programme developed organically: as a grassroots initiative, it focused on the problems start-ups were facing and the help they needed. Two opportunities were identified: one was to adopt international best practices, and the other was to learn with startups what constitutes useful knowledge in this area.

She is also researching the question of what exactly is the difference between an incubator and an accelerator, but he says that it is a bit of a fashion nowadays what we are talking about – in the last 5-10 years accelerator programmes have been more prevalent. Both programmes basically provide an environment for early-stage startups where only the idea exists or a very early prototype of a later-stage product. One of their biggest tasks is to form an effective team from a group of people, to establish roles and responsibilities within the team, and to validate the product in the market. How long this process takes depends on a number of factors; for a technology-based solution, it may take a few months, while for other industries it may take longer. The timeframe is therefore very different, but the goal is the same: to find out whether or not the product will become a marketable end product. Some start-ups that start the programme do not finish it because the idea is not strong enough, the team cannot work together or the commitment of the team members to the project is different.

Andrea says it is important to always talk through with the teams so that a failed project is not perceived as a failure because if a project fails, it does not necessarily reflect on the founder. In general, the big successful entrepreneurs are all serial entrepreneurs, with success coming after 6-8-10 ventures. He believes that entrepreneurship is a learning process and that it is necessary to emphasize what you have learnt, and what you can learn and incorporate it into the next project. And the ones who can grow quickly are those who are not afraid to face the feedback and use this information to add to their original idea. Learning from failure is a skill that can be acquired and developed. At iLab, the programme also strives to create an environment where continuous learning is possible. You meet a lot of talented people and you see that being an entrepreneur is a difficult career. She often sees that they are exhausted, which is why they also talk a lot about how they can find a balance.

Since 2016, they have incubated more than 85 startups. They are now 5-6 times oversubscribed, so their mission is to design their selection process to work with the companies they can help the most. They have a unique academic structure to their programme, as students are heavily involved in working with the teams through capstone projects or the ‘LLM Clinic’, which provides specific legal support. During the project, students spend an 8-credit work placement at a start-up to gain insight into its operations and provide their expertise to the entrepreneurs, after which students join the start-ups as employees in several cases.

One of their successful startups is Talk-A-Bot, a chatbot agency. When they started to implement it, this solution did not exist in the Hungarian market yet, and Facebook itself opened the chat function in the same year. However, the team was able to make good use of this opportunity and covered a large part of the market very quickly. The team members had known each other for a long time, they were able to work well together, roles were well defined, each area had a leader, and they had a strong development background to draw on.

Another startup she’s very proud of is BrokerChooser, which has developed an algorithm that allows investors and brokerage firms to easily find each other. The founders recognized the problem that people looking for a brokerage firm were doing so within their own country’s borders, as they were not familiar with international options. As the legal framework allows for this, they created a platform to address this. When they came to iLab, they only had an excel spreadsheet of good brokers, but now they have a platform based on a sophisticated algorithm that has become a serious reference for large companies.

InnovationsLab is also open to mentors, who can also help you understand what a start-up entrepreneur is going through. Last year they helped with examples from the US, but they want to continue this. They regularly check in on their social media platforms such as Facebook, LinkedIn and Instagram, but their website is also available if you want to read about them.

Marton Suppan | Peak Financial Services

Marton Suppan, fintech expert and founding director of Peak Financial Services, agrees that all university students should be channeled into such an incubator programme. He envies those who can participate in such programmes, because when he started Peak in 2013, there were no such opportunities in Hungary. As a result, they have made a lot of mistakes, although he considers them a good learning tool, saying that if they had not been, it would have led to a lack of knowledge, which would have given them a weaker foundation.

It started with the realization that we needed a simpler means of payment in Hungary than walking into a bank branch, opening a bank account, and receiving a bank card in 3-4 weeks. Then, in a few months, they put together an infrastructure like the one that Revolut, for example, provides today, but they were basically focused on infrastructure development and service rather than on the end user. The company consists of three pillars: fintech product development and service, fintech consulting, and portfolio. Although at first sight, these three pillars may sound interesting together, he says there is a great cohesion between them.

In Pillar 1, with Peak Fintech Solutions, they provide a neo-banking platform for either financial or non-financial businesses to bring Revolut-like products to market cost-effectively and quickly. As an example, he said that today, if a bank wants to launch a Revolut Union pocket money card for 7-18-year-olds, it can take 2-3 years and between €500 million and €2 billion for even the best-performing regional banks. Their platform, however, can deliver this, and in a service-based model, they can bring the product to market after 3-6 months of preparation at a fraction of that cost – 5-10% of the initial cost. This product could be a final product, or even a pilot product to test before embarking on large-scale development. Overall, they can deliver the service to partners in a fast and compact way. What is extra about this service is that non-financial segments who do not have, for example, a financial license, can also use this service-based model.

Pillar 2 was created because they saw that it was not enough for them to bring these elements to the service providers, as they did not fully understand how to use them. And they have accumulated a lot of knowledge over the years, be it technology, business development, or product development. They looked at over 1,000 companies and started to monetize them, and then created the Peak Science brand, which is a research and consulting division within Peak. It’s a standalone entity with its own costs and revenues, which accounted for more than 50% of the group’s revenues last year. What drives the cost in this area is that they don’t just advise, they do research. There are areas that are being targeted that they think there will be client demand for. So they focus on those and analyze all the way through, is there a need? They try to market this knowledge, focusing mainly on the sustainable and green financial products market, the family banking market, and SME finance. These are their three main themes, but they also have sub-themes.

They also lend their own team members to other projects when needed, but also help partners with business development and product development. They have one project, which Márton has not yet named, as it has not yet been launched on the market, which has started to be built at an international multinational medical device multinational with 120,000 employees. This company approached them with the idea of sensitizing their employees to sustainability and asked for their advice. As a result, an employee benefits application was created that links to employees’ credit cards on an open-banking basis, monitor their CO emissions on a spend basis, how to reduce them, and allows for internal point collection to support the promotion of sustainability within the company.

And the 3rd pillar is news. Marton launched the Fintech World radio show on Trend Fm 6 years ago, and just last Friday the 300th recording was broadcast. The radio show was launched a year after the creation of the fintech.hu news portal, through which more than 4,000 articles have been published since then. Márton believes that this pillar strengthens the other two pillars. Since then, they have added two other new radio shows to their media portfolio, Green Finance Minutes and Blockchain Minutes, but they have also launched their own newsletter and online publication Fintech Sparks, which featured the top fintech stories of the last year in its first issue.

With the media portfolio, they have a clear goal: to communicate in a very tangible way the changes, innovations, and trends in the fintech market, not only to a narrow group of about 1000 professionals but also to anyone else who might be interested in this world.

In retrospect, Marton is glad that he didn’t start a podcast channel but a radio show because he really likes the cooperation with Trend Fm. They currently have over 10,000 listeners and they didn’t have to bother building that base because the radio station already had its own listener base. They just had to expand it.

Marton concluded by saying that he sees huge potential in the Hungarian fintech world, but there are specific obstacles that are recurring and that the sector, not only the fintech sector, but the Hungarian startup sector in general, cannot cope with. However, there are some success stories that he is very proud of, for example, Scheon, which is on a huge success trajectory.

One problem is the lack of incubation programmes and a smarter venture capital market. Another problem, which is not specific to Hungary but rather to the region, is that incubation is so much needed. It is missing, we need a smarter venture capital market, the Hungarian market is small, and it is a regional peculiarity that it is difficult to break out of the domestic reality. There are innovative solutions in the region, but they cannot enter the international market, he added, adding that this is also a difficulty for them. But because of these, he believes they have a huge development potential to fight for.

Renáta Szőcs & Csabi Meggyes | Sztárüzenet

Two guests, singers Renáta Szőcs and Csabi Meggyes, have now come forward on behalf of Sztárüzenet to announce that they have the honour of being the first to test the newest feature of the Sztárüzenet platform, the downloadable extra feature. To achieve this, they have created Valentine’s Day duet called Our Heart’s Feast, which, although available on the usual platforms, has now been made available for purchase as a special feature in the solo versions on the Star Music page. Another special feature of the love song is that it was composed by Attila Gajdos, Évi Sándor, singer of Together Gospel Singers, who played piano and vocals, while the song was mixed by comedian Sándor Szántó.

Csabi said that fans have been very welcoming to both the duets and the downloadable solo versions and that the older generation has also been able to buy the content with ease. According to Reni, this is a very interesting form of support because, as it is not free content, the creator has to be very careful to ensure that the content has real value. That is why they are very grateful to both Star Notice and Capital Portal investors for making this vision possible. They are already thinking about the next downloadable content, but of course, they and the creators involved in the creation of the song are also available to continue to commission personalized video messages.

Zoltán Toma | Syrius

Zoltán Toma, the founder of Syrius, started with a brief introduction of what his company does. The company started its operations in 2000. Initially, they were involved in the sale of power hand tools, metalworking, and petrol-driven machinery, and this took a turn in a direction where they started to specialize more in the metalworking industry, mainly welding and plasma cutting. The competitive advantage of Syrius is the best value for money. There are a lot of players in the market, and many of them are considered to be the only players in the market, their competitors less so if you think about this factor. Also, their good service is a very good support.

Zoltán said that they are the only Hungarian company at the moment that can launch machines on the same technical level as their foreign competitors, and therefore they are planning to expand abroad. When comparing competitors, they compare themselves with brands that their customers compare themselves with. Such competitors include ESAB, FRONIUS and KEMPPI. They have much more economical prices, they also have a much wider product range and no one has a weldometer at the moment. Their problem is that they cannot meet the increased demand for their products. The developments they have started are stalled and some of the developments they have thought of are stuck in a drawer. They also need to build up more inventory because in the current market environment, manufacturers have slowed down and need to double their inventories to meet sales every day.

The completion of the developments they have started is equally important. Their Proficut fine-beam plasma cutter is finally finished and needs to be launched, further developments in laser welding are definitely needed, and the weldometer development needs to be completed – Zoli hopes to have this done this year.

The company sells its products through direct sales. They currently have six sales people, and further increases are essential to achieve their turnover targets. However, the expansion of the sales team can only start when their product range and stock increases. To reach a turnover of HUF 100 million per month, the company needs 20 professional salespeople. He definitely sees NC and CNC machines and robotization as a strong path for development and the future. This is where they will invest time and energy in the coming years. Laser welding is a very new technology that is still in its infancy, but they want to get their share out of it. Once they raise the capital, they will be able to start their development immediately, which will bring new products to the market, which will bring them further sales growth. They also need to expand their sales network because they want to increase their current active customer base of 300 to 1500.

Zoltán Vilmányi, the company’s chief service technician, said that they have a brand-independent service department where they service their own machines, as well as other brands according to market needs. They also undertake safety inspection and verification of welding machines on site. In their workshop, four people repair welding, plasma cutting, and metalworking machines. He stressed that it is very important for Syrius to have its own service department because of the product support.

Máté Füst, the development engineer, said that in collaboration with the University of Miskolc, they are developing a unit for measuring, testing, and processing the general properties of welding equipment, which they have named Weldometer. This module will measure voltage, amperage, and environmental conditions such as temperature, and humidity, and has an internal clock module to time-stamp these. The point of this system would be to accurately monitor the work of the welder, its quality and time. This would be extremely useful from several points of view, including quality assurance and budgetary. The tool itself will not be an end product but would be provided as a service. The service will be available online to any company or group of companies, and as the main feature of the system is its universality, it is expected to generate a really significant revenue stream.

Anita Petró, Chief Financial Officer, presented that the business plan was put together with a focus on 3 main things. One is to set up an inventory plan. The larger the stock the faster the company can meet demand. The other important thing is that if you have stock, you can increase the number of sales people, which will increase your revenue. Thirdly, in terms of development, the focus would be on completing and launching the weldometer first, and then secondly on laser cutting and manual laser welding. They then backed up their plans with some figures.

They want to increase turnover from HUF 454 million to HUF 1.5 billion in 5 years. EBITDA is expected to increase from nearly HUF 65 million to HUF 306 million. Their costs will rise from HUF 400 million to HUF 1.2 billion, with both fixed and variable costs rising in line with the increase in turnover. They want to increase their profit from HUF 54 million to HUF 266 million over 5 years. They would like to raise between HUF 50 and 138 million the capital, 52% of which would be used specifically to increase inventories and 38% to purchase machinery. The machines would not only be used for demonstration purposes, but also for production. For marketing costs, they would like to use 4% of the capital. Fortunately, over the years, their marketing activities have had the expected effect.

This was confirmed by Anna Müller, PR and Marketing Manager. They communicate on a daily basis on their social media platforms, while also investing a lot of energy in giving the public an insight into the company’s daily life. Their aim is to constantly improve, so they try to use a variety of advertising tools. They strive to get their name out to as many partners as possible in the name of excellence.

Balázs Zádor | Recash

Balázs Zádor, one of the founders and CEO of the fintech startup Recash, presented the application already on the market, as it was recently announced that they will launch a community financing campaign on the Capital Portal.

Balázs deliberately started his speech with a concept that many people are unfamiliar with. They are one of the first PSD2 service providers in the European Union. He did this because in order for people to understand what they do, they need to know what the term means. PSD2, which is an acronym, is the European Union’s second Payment Services Directive. What it means is that, in effect, User Bank Account details will be made available to certain licensed companies operating under a strictly regulated framework. The aim is to build innovation on this type of data. Balázs and his team have built a marketing tool on this data, a mobile app that gives users cashback on credit card purchases.

In response to the question of what problem they have seen and solved, they see that at the moment, if you have to put Recash somewhere, it fits in with traditional loyalty schemes, where one of the biggest problems from the User side is that there is always something for the User to do. Whether it’s using a loyalty card, scanning a QR code, or the need to return a receipt scanned in singles. All of these factors are frustrating circumstances for Users. And for the participating partners, it can be observed that the systems they have used so far are excellent for building customer loyalty, but are not suitable for increasing market share, as the traditional programmes are only able to reach their own customers. Seeing these problems, they built an application that, given bank account details, gives users automatic cashback on their credit card purchases from partners. The real innovation here, from the User’s side, is that after a one-minute registration with just a single email address, using the system is effortless, as cashback is automatically received within 6 hours of the purchase being booked. And for partners, it’s a marketing tool that didn’t exist before, allowing them to target competitor customers first and then keep them loyal.

However, there is much more to it than that, as they can provide data to institutions such as commercial banks, non-accounting financial institutions, utility companies, or even telecom companies, which have not had access to this level of data about their users. Two venture capital companies have invested in the company so far, and the number of partners and their names validate the viability of the concept. In addition to having already integrated a number of banks into the system, they have a significant competitive advantage, as it can take up to a year and a half to complete the authorization process and integrate the APIs – they are already ahead of the game. Their business model is simple and transparent; they receive 25% of the commission offered by partners.

Only the figures for the cashback business have been taken into account in the planning, so they expect to reach the €30,000 renewable revenue by autumn. They currently have 22,000 registrations and over 100 partners, which is a good result since the summer. The task for the coming months will be to scale the business. To achieve this, through their community funding campaign, they are looking to raise an investment of HUF 80-120 million, the primary use of which will be in marketing and sales. Balázs also said that they have decided to use the Capital Portal because they consider community fundraising a serious and important success in terms of PR and further fundraising, especially as it involves their existing users. PSD2 came into force on 14 September 2019, but Hungarian banks did not initially meet the requirements, so it was only last summer that the first Hungarian bank could be integrated, and the first major marketing campaign will be launched now. International expansion into the Czech, Slovak and Danish markets has started with the preparation of sales processes. As for the exit, they have various ideas and plans, he says, a takeover by a partner would be obvious, but they are also in talks with professional investors from the US, and he does not rule out going public.

Finally, Balázs also pointed out that they have a commercial marketing agreement with the partners, whereby the cashbacks are paid by the partners, but Recash pre-finances this for the Users; the amount is at the Users’ discretion. The application is considered as an information application, which Users have nothing to do but download and register. It doesn’t take up much space on phones, its function is to notify them of the latest offers, so you wouldn’t think of adding all sorts of add-ons to the app. He thinks it will always be a simple app, rather the data backend will be more involved.