PUBLIC-PRIVATE DIALOGUE ON EQUITY-BASED FINANCING FOR SME’S IN SERBIA
Serbian Chamber of Commerce
September 14th, Belgrade
About conference
Although official data indicate that the Serbian economy is composed of over 97,000 small and medium-sized companies, as well as that their participation in the overall Serbian economic activity and employment is very important, these companies are still faced with a significant lack of external financing sources, which are currently primary structured in the form of loans and other similar products of commercial banks, while other sources of external financing are still mostly underdeveloped.
For innovative companies in the early stage of development banking financing sources are particularly inaccessible.
In order to encourage public dialogue and support creation of diversified financing structure, tailored to each stage of business development of domestic companies, WM Equity Partners, on the 14th September 2017, with the support of USAID Business Enabling Project, organized a public discussion related to that issue.
Public discussion was very successful and brought together over 95 participants, of which 33% were representatives of small and medium-sized companies in Serbia, interested in collecting new information and knowledge on this topic.
PANEL I – VC&PE EXPERIENCE IN SERBIA
About panel
Local experience
This panel session is dedicated to local Venture Capital and Private Equity funds and companies from their investment portfolio sharing their story – expectations they had, results they have accomplished and general experience concerning their partnership including the process of preparing company for financing.
Main topics
- What is the ideal portfolio company (expansion phase, level of revenues, profitability)
- Investment process, post investment value creation and exit
- Benefits from the perspective of the portfolio company
- Main challenges in closing the transactions and operation
- Lessons learned and message for other SMEs
Moderator
Vladimir Pavlović, CEO, WM Equity Partners
Panelists
Jan Kobler, Managing Partner, SC Ventures
Igor Jović, CEO / Founder, City Experts Global
Milan Popadić, CUBE Team
Dragan Marković, Tetragon
Nebojša Lazić, Managing Director, StartLabs
Panel conclusions
- Increasing engagement of professional equity investors is evident in the Serbian market, with number of equity transactions in company development early stages, with currently expressed focus on the IT industry;
- Professional equity investors bring much more than financial support to company, professionalization of management, improvement of organizational structure, improvement of financial management system, support to development of existing and new markets are just some of the added values of professional equity investors that go beyond pure financial support;
- Transparency and good corporate governance represent the basis of successful cooperation. At the beginning of cooperation with professional equity investor, it is important to clearly define all responsibilities and activities, as well as a planned Exit strategy. Application of good corporate governance practices, tailored to each individual company and its requirements for organizational structure, represent the key for resolving potential conflicts in daily operations;
- The willingness of management and owners for cooperation and business improvement, clearly defined product, and in the later stages of development stable cash flow, are the key prerequisites for professional equity investors;
- Identified challenges in cooperation with professional equity investors are primarily related to the requirements of a more formal way of doing business, reinforced structure and management control, which in the short-term bring growth of certain costs and decline of profitability, but in medium-term contribute to growth and stability of business operations.
PANEL II – REGIONAL EXPERIENCE
About panel
Regional experience
This panel session is dedicated to regional experiences, sharing local success story of increasing access to finance for SME’s. Presenting SME’s with the overall financial mix, covering all phases of their business development cycle with special emphasis on economic impact these regional initiatives achieved.
Main topics
- Integration of all relevant stakeholders as a key approach to successful SME sector development
- Past, present and future regional initiatives regarding SME support and financing
- Successful regional initiatives and their impact on local economy
- Main challenges for the region
- Lessons learned from the regional case studies
Moderator
Aleksandar Zarić, USAID-BEP
Panelists
Evgeny Angelov, Bulgarian Private Equity and Venture Capital Association
Krešimir Kukec, CIO, Inspire Investments, Croatia
Branimir Gajić, President of the SPEA, Serbian Private Equity Association
Milan Marinković, Serbian Association of Investment Management Companies
János Fabricius Ferke, Hungarian Venture Capital Association
Panel conclusions
- Growth of venture capital industry in the region has essentially been realized through the joint operation of regional countries governments and international financial institutions. The integration of all relevant participants has led to the formation of a unified system for financing local economy, based on market and transparent principles of investment, control and monitoring;
- Success was inevitable, and the key to success is creating a unique ecosystem conducive to the development of innovative small and medium-sized companies, with available financing sources, tailored to each stage of business development;
- The results achieved in Bulgaria were impressive, where the JEREMIE initiative engaged over 875 million EUR to support small and medium-sized companies through various forms of financing, which led to funding of 9,500 SME companies and employment of 25,500 new highly skilled workers;
- Tax incentives and initiatives are important and have been identified as an important growth factor for local Venture Capital industry although these initiatives have not significantly contributed to the development of venture capital industry in the tax systems where relevant tax rates are low i.e. lower than the EU average;
- In the process of EU integration, Serbia is carrying out the modernization of the legislation related to the industry of investment funds, which will provide a favorable basis for the promotion and development of the venture capital industry in Serbia.
PANEL III – PROSPECTS FOR SERBIA
About panel
Prospects for Serbia
This panel session is dedicated to Serbian Government Institutions and IFIs presenting their results, experiences and future plans regarding the increase of access to finance to SME’s in Serbia. This closing session should unite all previously realized discussions and focus on exact ideas and initiatives that could be realized in Serbia.
Main topics
- Scope of current Government initiatives regarding the SME development
- Strategies and plans for the future
- Main challenges currently confronted
- Conclusions and message for investors and SMEs
Moderator
Miloš Savić, Partner, WM Equity Partners
Panelists
Ivan Djoković, Vice-President of the Government of the Autonomous Province of Vojvodina and Provincial Secretary for Economy and Tourism
Nenad Paunović, Advisor for IT and Entrepreneurship, Serbian Prime Minister Office
Marco Natoli, Head of Lower Mid-Market – Northern, Eastern & Southern Europe, European Investment Fund
Fabio Serri, Regional Head for SME Finance and Development Group, EBRD
Milena Kostadinović, Manager, Serbian Innovation Fund
Panel conclusions
- Representatives of the Serbian Innovation Fund pointed out noticeable positive trend of growth of the innovation volume and general interest for their financing programs, which is a very positive result and the basis for planning of future initiatives and action plans for this institution. Very successful and active cooperation with all relevant market participants was pointed out, especially in the context of WBEDIF initiative, in which Serbia has realized its participation through the Serbian Innovation Fund;
- Serbian Government recognizes the importance of innovation and entrepreneurship for the growth of domestic economy and is actively working on establishing a more favorable climate for the development of local SME scene, with particular emphasis on improving the education process and the creation of favorable environment with less administrative burdens for company;
- It was pointed out that there is always room for improvement at the state level but that the necessary improvements are also needed at the company level, their willingness to turn to innovation, to promote professionalization in their operations and create basis for a new generation of entrepreneurs, keeping in mind that the entrepreneurial scene in Serbia is only at the early stage of its development;
- At the provincial level the importance of entrepreneurship and innovation has also been recognized and many support and funding projects are active, but it is evident that not all regions are equally active and that there are significant differences in development, which is an issue that is actively being worked on, because it is important to maintain economic development on the level of the whole region;
- The presence of the international financial institutions was rated as extremely important especially initiative such as WBEDIF i.e. the formation of ENIF and ENEF Fund;
- Representatives of the European Investment Fund have emphasized its presence in the domestic market, although Serbia is currently seen mainly as part of a broader portfolio of Western Balkan countries. Support to the local SME sector is primarily provided through various programs and initiatives of bank guarantees and these funds have successfully supported over 1,500 companies with potential to increase this exposure to local companies in the coming period;
- Once again, panelists indicated that the introduction of professional investor encourages professional development of company and that financial support is not the only benefit for company, as well as that creation and work on ecosystem suitable for the company growth is the key for future development.
Attendance
| Total number of visitors | 96 | 100% |
| SME | 30 | 31% |
| Consultants | 15 | 16% |
| State institutions | 14 | 15% |
| Investors (Fund representatives) | 10 | 10% |
| Other international institutions and projects | 8 | 8% |
| Other | 7 | 7% |
| Domestic financial institutions | 5 | 5% |
| International financial institutions | 4 | 4% |
| Universities | 3 | 3% |
Survey results
During the panel discussion, all present visitors filled out a short survey regarding the availability of alternative sources of financing in Serbia, experiences working with professional investors, as well as the usefulness of topics discussed for their everyday business.
We highlight some of the results:
Do you think that SMEs in Serbia are sufficiently familiar with alternative sources of funding?
On a scale, how would you rate the actuality of the discussed topics? (1 – low, 5 – high)
Have you gained some new knowledge during the conference that you feel will be useful for further business?
PANELISTS
Jan Kobler
Managing Partner,
SC Ventures
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Jan is a managing partner at South Central Ventures, a 40 mio EUR regional VC fund. He is enthusiastic about working closely with regional startups and being an active partner on their growth path. Having a primarily financial background, he also spent a considerable part of his career working operationally in early stage companies, thus having understanding for both sides of the investment process.
Igor Jović
CEO / Founder,
City Experts Global
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Igor Jovic is a 25 years old founder and CEO of City Expert. Igor start gaining his working experience from the age of 15 and he is an entrepreneur since the age of 18.
Igor has rich experience in various activities such as production, aviation, training centres (he opened the first private academy for aviation personnel), marketing and business development (from the age of 20 to 23 he was a director of development and board member of one of the largest regional companies in aviation and tourism).
The visionary and leader who gathered five young entrepreneurs in 2015 and started a revolution in the real estate market by establishing City Expert and breaking into the top in less than a year of business. After a year of business, he provided an investment for further development and expansion of the company.
Milan Popadić
CUBE Team
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After his education in the United States, Milan continued his academic training at the American College of Greece in Athens. There he worked tirelessly to build his professional career in Coca Cola HBC and several financial institutions, including ProCredit Bank and Intesa Leasing in risk and credit positions Analysis. In 2012, with Marko Radojčić, he founded CUBE Team, where their vision has grown from a small team to the leading provider of business information in Serbia.
Dragan Marković
Tetragon
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Dragan Markovic, director of TETRAGON DOO from Čačak, was born on February 21, 1953. He obtained higher education at the Faculty of Economics in Belgrade and fluently speaks English and German, and uses Russian language. He gained his working experience in the companies PARTIZAN, Čačak, on Foreign Trade and Textile Exports position, the German company ILLER TEXTIL, Ausburg, and the Joint venture business with the German partner in the field of textile exports. Since its founding in 1992, he has been working in Tetragon. By 2006, he worked in parallel with other jobs, and since 2007 he has been director of Tetragon. He works with his wife, Slobodanka, who is the majority owner of the company.
Nebojša Lazić,
General Partner,
StartLabs
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After working for over 20 years in software development, Nebojsa gained broad experience in various technologies, ranging from mobile to enterprise cloud applications. Nebojsa was serving as CTO in 6 technology startups and most recently a General Partner in StartLabs – a seed investment fund based in San Francisco focused on investing in startups from Southeast Europe. Nebojsa is passionate about software, entrepreneurship and startups with a strong understanding of early stage startup needs. Nebojsa is being recognized as a creative and dynamic startup mentor with proven expertise in consistently helping founders to turn their idea into high-growth startups.
Evgeny Angelov
Bulgarian Private Equity and Venture Capital Association
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Evgeny Angelov is Chairman of the Bulgarian Private Equity and Venture Capital Association. He is currently an investor and works actively with regional equity funds, investing in growth companies.
Previously, Evgeny was the Economic Advisor to the President of Bulgaria and the Deputy Minister of Economy. His focus in the public sector has been on economic, investment and innovation policy formulation and implementation. He supervised over 50 state-owned companies and was responsible for the €1.2bn Operational Programme “Competitiveness”. He served as Chairman of the Board of both the Bulgarian Energy Holding and the National Electricity Company. Concurrently, he was the Head of the Investment Board of JEREMIE Bulgaria, a €350mm fund of funds, which provides equity and debt financing to start-ups and SME’s. He was also an initiator and board member of Sofia Tech Park.
Prior to his public sector roles, Evgeny was Director at Trigranit Development Corporation, a leading real estate development company in Central and Eastern Europe. Before that he held various positions at the European Bank for Reconstruction and Development in London, where he structured, negotiated and executed debt and equity transactions in the financial services, pharmaceutical, cement, real estate and chemical industries in ten Central and Eastern European countries.
Evgeny holds an MBA degree from the Harvard Business School.
Krešimir Kukec
CIO,
Inspire Investments,
Croatia
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During his 15 years of experience Mr. Kukec held a number of functions in banks, investment banking and real-estate companies. Mr. Kukec has started his career in retail sector and continued in SME sector and continued in SME sector in Privredna Banka Zagreb. He joined CROATIAN Postal bank as investments banking specialist where he was member of the team responsible for first IPO and biggest IPO in Croatia. His career continued in investing banking as fund manager responsible for equity funds where he managed portfolio for professional and private investors, afterwards he helped started and establish one of the largest Private equity fund in Croatia where he was involved in a number of M&A transactions and worked as consultant on projects. He also worked as senior advisor for capital markets in Colliers international-one of the largest global real-estate advisors.
Branimir Gajić
President of the SPEA,
Serbian Private Equity Association
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In December 2015, Branimir Gajić, joined SEAF, a global investment management group (>$700 million) headquartered in Washington DC, which as of December 2014 has made approximately 400 risk capital investments throughout 35 countries worldwide. He currently serves as the Investment Director of SEAF Opportunity Serbia Fund, a private equity fund focused on Serbian Market. Prior to SEAF, he held the Chief Financial Officer position at West Group Holding Companies (SRB), a market leader in distribution and servicing activities of Iveco, GM (Opel and Chevrolet) and business lines such as Piaggio Road Vehicles, Valvoline, Robert Bosch Machinery and Loriblu. He also held managerial position at Deloitte (SRB and MNE) where he was engaged advisory activities. Furthermore, he was a consultant for renowned UK based investment fund Ashmore Asset Management Limited where he provided consultancy services regarding merger and acquisition activities. Also, he acted as financial consultant for Prudential Financial (USA) and served as Chairman of the Supervisory Board and Financial Advisor to BIP (SRB), largest Serbian brewing company. Moreover, he acted as a private consultant for the Privatization Agency of Serbia.
Branimir Gajić earned a Bachelor’s degree with high honors from Wichita State University (USA) and Master of Arts from University of Belgrade (SRB). Likewise, he attained professional designations such us Series 6, Series 63, Life Accident and Health.
Branimir Gajić is fluent in English and Serbian.
Milan Marinković
Serbian Association of Investment Management Companies
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Milan has a rich fifteen-year experience in a multiple projects in the Serbian financial markets. Since 2007 he is working as a Director of Asset Management Company “FIMA Invest” with lot of experience in the SMEs funding activities. He is the Chairman of Association of Serbian Asset Management Companies. He has a degree in Law at Belgrade University and was the author of many professional articles for domestic and foreign publications.
János Fabricius Ferke
Hungarian Venture Capital Association
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János Fabricius Ferke is Partner at OXO Ventures Zrt. advising the EUR 50 million OXO CEE Angel Fund that has the capacity to provide multi-stage funding from EUR 0.25 million to EUR 5 million per into Central Eastern European technology driven projects at early or growth stage, typically in Series A financing round.
Janos has over 15 years of experience in transactional finance with a balanced knowledge base from transactional advisory and VC/PE investments and portfolio management through corporate banking. János worked several years in structured bank financing at the KBC Group member K&H Bank in Hungary, portfolio manager at MAVA Capital managing the Hungarian American Enterprise Fund/Hungarian Equity Partners PE funds and the Hungarian Innovative Technology VC Fund, senior investment manager at Docler Investments, the VC arm of the IT powerhouse Docler Group.
János participated and had senior responsibility in more than 50 M&A, bank loan financing transactions, venture capital and private equity deals during his career and out of them more than 25 deals were carried out on the investor side.
János spent one year at the Chicago Board of Trade, USA. János holds M.Sc. in Economics from Budapest Corvinus University and Executive MBA from the CEU Business School, Budapest/NYC. Janos fills out Operational and Advisory Board Member roles in portfolio undertakings. Since 2014 May, János is Member of the Board at the Hungarian Private Equity and Venture Capital Association (HVCA), and he is the Treasurer of HVCA, since March 2015.
Nenad Paunović
Advisor for IT and Entrepreneurship, Serbian Prime Minister Office
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Advisor for IT and Entrepreneurship, Serbian Prime Minister Office. He has 20 years of business experience, 12 of which as an entrepreneur. Founder of Belgrade Venture Forum and member of global Value Innovations consultancy team. President of the Board of Cotrugli Business School Alumni Club in Serbia.
Ivan Djoković
Vice-President of the Government of the Autonomous Province of Vojvodina and Provincial Secretary for Economy and Tourism
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Ivan Đoković is the Vice-President of the Provincial Government and Provincial Secretary for Economy and Tourism. He was born in 1981 in Belgrade. He graduated from the Faculty of Law. He was in the position of the Secretary of the Italian and Serbian Chamber of Commerce in 2005. Then he worked at the First Municipal Court in Belgrade. From 2013 he worked as the executive director for legal affairs at the “South Stream” company in Novi Sad. He was in charge of a range of important duties at the Univerzal Bank in Belgrade.
Marco Natoli
Head of Lower Mid-Market – Northern, Eastern & Southern Europe, European Investment Fund
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At EIF since January 2009, Marco is heading the Lower Mid-Market team investing in equity, hybrid debt / equity and private debt funds across Europe, with a particular focus on the Northern, Eastern and Southern regions. He represents EIF on the Advisory Boards of over 20 funds.
Prior to joining EIF in January 2009, he worked in direct investments as a senior Investment Manager at Innogest Capital, an Italian VC fund focused on early stage investments.
Previous appointments include Project and Engagement Manager at Capgemini (2001 to 2004), where he successfully led large management consulting engagements, and at Ernst & Young Consultants, where he started his career in 1998.
Marco holds a M.S. degree in Industrial Engineering and Management from the Polytechnic of Turin (Italy).
European Investment Fund (EIF)
Established in 1994, EIF is part of the European Investment Bank (EIB) Group. Based in Luxembourg it has over EUR 10 billion of Net Equity Commitments across over 550 funds all over European Union and Accession Countries. EIF has a tripartite shareholding, which includes the EIB, the European Union represented by the European Commission, and a number of public and private European banks and financial institutions. EIF is rated AAA/Aaa. Beyond their expected performance, the EIF is selecting private equity and mezzanine funds directly contributing to EU objectives, such as the development of a knowledge-based society, with a focus on innovation, growth and employment, the promotion of entrepreneurial spirit, regional development and the cohesion of the European Union and Accession Countries.
Fabio Serri
Regional Head for SME Finance and Development Group, EBRD
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Fabio joined the EBRD in 2006 as a Special Adviser in Skopje. He took up his current role as Regional Head for SME Finance & Development Group for the WB based in Belgrade in January 2015 at the same time he also supervises the operations of the new Enterprise Expansion Fund covering the Western Balkans, Serbia and Croatia. Prior to his current he has served as Head of Office, Tirana from 2010 after having served as Head of Pristina from 2008. Fabio has extensive experience in the Western Balkans having worked in the region as a Resident Representative for the Kosovo Reconstruction Equity Fund and also advised the Albanian Reconstruction equity Fund since 1998. Fabio began his career working as an International Export Manager before moving into consultancy. Fabio has a degree in International Affairs from the Università degli Studi di Bologna and a Master in International Business Development from Profingest Bologna.
Milena Kostadinović
Manager,
Serbian Innovation Fund
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Operations Manager as of May 2015. responsible for managing projects and programs of the Innovation Fund as well as for international cooperation and financing. As Program Manager within the Innovation Fund, Milena succesfully worked in the period 2011-2015 on preparation, implementation and monitoring of programs and projects. Milena also gained extensive experience as procurement specialist; She worked as Director of the Procurement Department in Hypo Alpe Adria Bank; Procurement Specialist Consultant in the Ministry of Agriculture, Trade, Forestry and Water Management and Ministry of Trade, Tourism and Telecommunications; Coordinated procurement activities and managed projects financed by the World Bank and other financial institutions while working at the Privatization Agency, Republic of Serbia.
Milena has master degree in Industrial System Engineering obtained in the École Central Paris and she has a University degree in Food Science and Technology from the University of Belgrade.
Moderators
Vladimir Pavlović
CEO,
WM Equity Partners
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Vladimir has more than 15 years of experience in Serbian financial markets. He has proven track record in the creation of legal and institutional framework (National Bank of Serbia, Serbian Central Securities Depository), but also as an active participant in financial markets (CEO of FIMA International-brokerage, Portfolio Manager of the FIMA Proactive fund).
Vladimir is a managing partner of the WM Equity Partners since its incorporation. He participated in numerous SMEs funding mandates, M&A and corporate finance activities.
He obtained his bachelor and master’s degree from the Belgrade Faculty of Economics and PhD in Public Finance on the Faculty of Political Sciences. Since 2006 he is a CFA charter-holder.
Aleksandar Zarić
USAID-BEP
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Aleksandar Zarić is an expert on the USAID Business Enabling Project, implemented by Cardno Emerging Markets. On the Project, Aleksandar is leading activities related on improving the efficiency of execution of court decisions and collection of receivables. Also, Aleksandar is engaged in activities related to the creation of the profession of real estate appraisers, formulation of regulations for the operation of non-banking financial institutions, and other activities related to improving access to financing sources for micro, small and medium-sized enterprises.
Prior to joining the Project in 2013, Aleksandar was director of the Legal Affairs and Compliance Department in KBC Securities in the Balkan region (Serbia, Macedonia, Montenegro, and Bosnia and Herzegovina). KBC Securities, deals with investment activities as part of the KBC Group.
Miloš Savić
Partner,
WM Equity Partners
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Miloš has a rich working experience in financial analysis, as well as working on projects of SMEs financing and improvement of corporate governance. After completing his management graduate studies, he enters the global program for obtaining the CFA charter and since 2014 he is a CFA charterholder. He actively participates in several projects in the field of finding strategic partners and raising funds for various projects and company recapitalization. Since 2016 Miloš has a portfolio management license and he is a member of the European professional association in the field of restructuring (EACTP). Milos is one of the founding members and one of the board members of the TMA Serbia.
MEDIA COVERAGE
- Srbiji potrebni alternativni izvori finansiranja malih i srednjih kompanija – eKapija 07.09.2017.
- Lakše do novca kroz ustupanje dela firme – Večernje Novosti Online 15.09.2017.
- BVCA – Bulgarian Private Equity and Venture Capital Association
- Alternativnih izvora finansiranja kompanija u Srbiji – Kamatica 27.09.2017.
- Brži razvoj uz investicione fondove – Nacionalna služba za zapošljavanje 28.09.2017.
CONACT
If you need support in securing additional financing for your company, or if you have additional questions regarding the event, please contact WM Equity Partners
Mr. Vladimir Pavlović, e-mail: vladimir.pavlovic@wmep.rs,
mob: +381 60 249 1111
Mr. Miloš Savić, e-mail: milos.savic@wmep.rs,
mob: +381 60 0249 751
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Disclaimer: The author’s views expressed on in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.