Recent M&A deals in South-East Europe

Recent M&A deals in South-East Europe

We have seen in the past month new mergers and acquisitions in South-East Europe. Here, we included some of the latest M&A deals in South-East Europe according to an online media source.

Croatia

The European Commission recently approved the proposed acquisition of Slovenian retailer Mercator by Croatia’s Fortenova Group, the successor to the collapsed food-to-retail concern Agrokor. The Commission said in a statement that the transaction will not harm competition in the European Economic Area. Fortenova and Mercator are both active in the supply of daily consumer goods, with the former currently active in Croatia and Slovenia, and the latter primarily located in Slovenia, with a significant presence at the retail level where Fortenova is not active.

There have been more new acquisitions in Croatia. A Digital Realty Company and a leading European provider of carrier- and cloud-neutral colocation data centre solutions, has acquired Altus IT, the leading carrier-neutral data centre provider in Croatia, offering a gateway for interconnection and peering with a number of prominent service providers in South-East Europe.

Romania

Resolution Property and Zeus Capital Management have recently acquired Floreasca Park, a ca. 40,000 sqm office campus in the heart of Bucharest. The property was sold to the joint venture by a fund managed by GLL Real Estate Partners.

“We are very pleased to conclude the acquisition of a landmark prime office building and progress with our investment program in Central East and South East Europe. This is the fifth transaction of our investment platform that is focused on prime commercial real estate properties in the region. We are confident that this market-leading asset in Bucharest’s promising office market will perform exceptionally well for our investors. ”

Stelios Zavvos, Chairman and CEO at Zeus Capital Management for Warsaw Business Journal

Bulgaria

Cyprus-based company Potamiro has completed the acquisition of the owner of Bulgarian hotel operator Sofia Hotel Balkan. The transaction, in which Potamiro acquired indirect sole control of Sofia Hotel Balkan – the company running the five-star hotel of the same name in central Sofia, was concluded on September 3. Following the transaction, Potamiro now controls 100% of Naranjilla Company, which holds 87.49% interest in Sofia Hotel Balkan through its wholly-owned subsidiary Bandola Properties.

Austria’s Energy Development has completed the acquisition of Bulgaria-based ACWA Power CF Karad PV Park, the owner of Karadzhalovo solar power plant, and plant operator NOMAC Bulgaria from Saudi-based ACWA Power. According to SEE News, ACWA Power, a developer, investor and operator of power generation and desalinated water plants, was the end-owner of the Bulgarian companies through two of its subsidiaries – Malta-registered ACF Renewable Energy Ltd, which controlled ACWA Power CF Karad PV Park and Saudi-based NOMAC Ltd., which was the owner of NOMAC Bulgaria. 

Slovenia

Italy-based investment company META Ventures said it acquired the remaining 49% stake in Slovenian fund manager META Ingenium from Slovenia’s sovereign holding company, SDH. The acquisition is a result of a public tender opened by SDH at the end of February, META Ventures said in a statement earlier this month. META Ventures was established in Italy more than 27 years ago, specialising in early-stage equity financing, advisory and academic activities. It has so far invested more than 100 million euro ($116 million) in over 100 high-growth startups across Europe.

For more information on M&A deals in South-East Europe and news, please visit SEE News and Emerging Europe.

How to raise venture capital for a tech startup

How to raise venture capital for a tech startup

There are several ways to fund your business, but raising venture capital for a tech startup is one of the best ways to accelerate growth and gain industry guidance. According to CB Insights, “nearly 67% of startups stall at some point in the VC process and fail to exit or raise follow-on funding.”

That said, raising capital can be a major challenge and can take up to six months to secure, and even longer to be notified of a rejection. We outlined in this article important steps to take when your business is looking to raise venture capital for a tech startup.

 

Identify your needs

 

The majority of businesses only raise venture capital after having traction. Let’s say the word traction in business refers to a startup’s way of breaking the path to progress into measurable growth. And that can come through customers, financially, or through a diverse sort of proven momentum in a startup’s market relation.

Start by creating a detailed business plan, to know how much investments your business will need and why. To identify your business goals, use the SMART method, and ensure they’re practical.

As you create your business plan, you’ll be able to fill in the gaps regarding your business goals, target market, target audience, competitive landscape, product definitions, and financial projections. These are all crucial aspects that investors look for when analyzing your pitch and deciding your potential success rate.

 

Search online to locate potential investors

 

Once you have a better idea of what your business stands for and how to make it profitable, it’s time to research potential investors. With detailed research, you will have a good idea of who’s looking to invest, what they’re interested in investing in, what pitches they typically hear, and so on.

 Think like an investor and make the deal attractive to the investor.

Put yourself in the investor’s shoes, consider what you have to offer, and ask yourself if you would invest in your own business. Several great resources can help you find more information about active investors globally and locally.

Crunchbase: A source for investors and investees on a global scale, filter by location, industry, number of employees, total funding amount, and last funding date. Furthermore, Investor Hunt‘s paid version with a database of over 40,000 investors and 200,000 data points that will allow you to procure their email addresses. British Venture Capital Association (BVCA) also provides a directory of venture capital firms operating in the UK.

Besides online investor databases, you can also do a quick google search to get you started.

 

Networking

 

Forming relationships with venture capital investors, angels and industry peers will help you gain insight into who is looking to invest right now and who isn’t. Besides investment opportunities, networking helps you form a community of like-minded entrepreneurs. So, where can you meet these investors and peers to form and build these relationships?

TechHub, the global community for tech entrepreneurs & startups, run over 1000 events per year that help entrepreneurs make new connections with peers and investors alike. SuperReturn International is a perfect place to meet senior LPs and GPs while working with local regulators and venue and event partners to give you safe and secure networking and learning opportunity. Startup Day is the place for startuppers, investors, executives, world-class experts, and media to meet. There are many more events and networking opportunities taking place online that you can join.

 

Hire an advisor for expert insights

 

If you feel you need more help after networking or searching on your own, an advisor can offer you advice on where to look for capital and how to structure your pitch. Advisors can also introduce you to their network of VCs and angel investors who may be interested in hearing your idea.

It is also important that you develop the skills necessary to prepare for your pitch and appear confident in your pitch and ongoing negotiations.

In general, advisors can help you negotiate the terms of your deal, which is extremely important if you’re raising capital for the first time. Perform due diligence to improve the terms and conditions of your deal, and prepare a business plan, pitch, and term sheet.

 

Create a winning pitch deck

 

Stories help the listener place themselves in the shoes of the people you are targeting. As an example, the Airbnb pitch used to be “Book rooms with locals, rather than hotels”. The pitch should share the value proposition and vision. Your pitch needs to tell the story and explain the problem you’re trying to solve. Be specific with numbers and use your market research here to explain the target audience and market size. 

Raising venture capital for a tech startup can be just what you need to launch your business into the market and achieve your goals and dreams. Take the time to prepare, network, seek advice, and craft the perfect pitch to give yourself the best shot at success.

Sustainable Startups in CEE

Sustainable Startups in CEE

In a world of limited resources and to cope with global challenges, the world needs new ways of production and consumption. Innovative and sustainable ideas are needed that contribute to shaping our world more ecologically. There is a rise in sustainable startups in CEE – changing the world towards sustainability.

The CEE region continues to evolve and compete to be at the forefront of the European tech startup scene. Moreover, CEE startups produced over 10 unicorns with a combined value of €30 billion. 

We’ve focused on these five Eastern European start-ups that are working to make the world a greener place. Sustainable startups in CEE are looking to optimize various processes within the value chain and thereby drastically reduce the ecological footprint. 

 

Top 5 Sustainable Startups in CEE

 

The role of the startups is proven to be important in the innovation process. Therefore, sustainable recovery needs to be backed by venture capital, governments, industry, investors, and other stakeholders. These five sustainable startups in CEE have emphasized the importance of sustainability and climate change the world is facing.

Aeriu – Hungary

Aeriu is a Hungarian startup helping companies to manage inventory while providing a safer environment. Aeriu found a replacement for Forklifts and Electric Scissor Lifts which are using 72 kW electricity in one hour. Since the online business has been booming, the inventory management system has been more and more in the focus of companies. In most companies, it still goes through a manual process which is very complex. Slow, uncertain and it requires more resources: working time, forklift trucks, and energy. Aeriu focuses on simplifying and optimizing this process.

Poland sustainable startups

Handerek Technologies – a sustainable startup from Poland created a patented technology that transforms waste plastic into low carbon alternative fuels. Poland has gained a reputation in the past few years as the new startup-friendly ecosystem. Moreover, this sustainable startup is one more tech startup that has risen from Poland.

This company built a prototype reactor that works via a circulating liquid heat carrier, that allows controlled surface heating. The controlled heating is important to prevent the raw material from burning. The fuel has been tested by the Automotive Industry Institute in Warsaw and the fuel complies with European Standards.

Another sustainable startup from Poland is Make Grow that transforms organic waste such as fruit or vegetables into sustainable packaging or leather alternatives. The organic waste is woven through a biological process and thus turned into material.  The final product is 40 times stronger than paper, 100% plastic-free, not water-soluble, self-adhesive, and best of all, you can compost it at home.

RV Magnetics – Slovakia

RVmagnetics MicroWire replaces several sensors and interfaces with just one. It senses low power consumption therefore it reduces the environmental footprint.

Smart Shelves can detect the addition and removal of items placed on them and give real-time information to the management. The Sensor can solve inventory management issues, especially overstocking and waste reduction.

CleverFarm – Czech Republic

CleverFarm a startup founded in the Czech Republic is a 4-year old, fast-growing, agricultural company that provides data-driven farm management.

CleverFarm’s vision is to enable farming to be automated, economically efficient, and sustainable. Thanks to the use of real information based on SITU research, machine learning, and satellite data, CleverFarm can bring effective water irrigation, threat prediction, reduce the use of fertilizers and chemicals, protect commodities and improve overall farm management.

Startups are crucial elements of fostering knowledge-intensive and sustainable growth. Looking at these examples it is clear that there is a huge potential for sustainable startups in CEE. However, the breakthrough technologies need to be successfully integrated into the market. Therefore it is crucial that governments, industry, investors and other stakeholders support innovation with the aim of accelerating transitions to a green and more sustainable future.

Business environment in CEE facing Digital Challenges

Business environment in CEE facing Digital Challenges

Central and Eastern Europe offer a solid and attractive market for business opportunities. Overall, the business environment in CEE offers many advantages due to its strategic location. Moreover, long-term political stability, competitive tax system, highly skilled workforce and the international community. The wave of globalization calls for reaching beyond the borders, encouraging companies and corporates to conquer new locations.

The number of people in Central and Eastern Europe (CEE) who have accessed at least one online service has risen by 15 per cent. According to the new Covid-19 Digital Sentiment Insights survey by McKinsey & Company. Analysis suggests that the 2019 digital economy in CEE is reaching a value of EUR 94 billion.

Business environment in CEE has changed drastically due to the COVID-19, and a sudden change is a digitalization. Furthermore, the number of services in different sectors accessed digitally by CEE consumers has almost doubled since the start of the pandemic.

 

Digital Challenges in CEE

A survey by McKinsey reveals rapid digital adoption by all age groups and geographies. That goes not just for traditional “early adopters” – young professionals living in large cities. The digital adoption rate also grew significantly during lockdown for consumers aged over 65. This age group showed the strongest growth across the region, with the number of users increasing by 40 per cent.

The most popular online services are banking (accessed by 59% of consumers) and telecommunications (45%).

This is not surprising news, as these two sectors have been investing heavily for the past few years in the digitisation. The number of consumers accessing government services online has more than doubled, but these services received the lowest satisfaction ratings from users.

Even after the COVID-19 crisis passes, policymakers should focus on adding new e-government services. Moreover, with improved existing applications, the business environment in CEE would see a significant improvement for the digital ecosystem.

That said, the public sector should make fewer changes to provide digitisation in CEE. Those include providing telemedicine services to online education and e-government services. In light of the rapid migration of consumers to digital technologies driven by the COVID-19 pandemic, the CEE region has an opportunity to capture the momentum for future growth.

 

Opportunities for the public sector

 

Countries across CEE have launched innovative solutions to help tackle the crisis, including COVID-19 tracing apps. They often developed these solutions by cooperating with the private sector. This was the case, for example, with the Croatian Financial Agency’s so-called “COVID score”. That digital scoring mechanism determines, by linking multiple government databases, how vulnerable a company is to the effects of COVID-19.

Many people have started using online channels for services for the first time, and 70 per cent plan to use them to the same degree or more after the pandemic. This is clear proof that the changes brought about by the pandemic are structural and here to stay.

 

Opportunities for businesses

 

The COVID-19 has shown the biggest example of the change in customer demand for digital channels witnessed in the last six months is unprecedented.

The ability of businesses and the public sector to envision new ways of operating will be crucial to ensuring long-term sustainability and growth in the next normal.

Some companies innovated, expanding their business models and making strategic decisions at a pace hard to imagine before COVID-19.  A good example is a Poland-based company Booksy – application for finding, scheduling, and managing appointments.

Before the pandemic, the company was focused mostly on the beauty sector. The impact of the lockdowns led to a 90 per cent drop in activity on the application. Within a few weeks, however, the company managed to expand its business model by forming partnerships with numerous banks, an electronics chain, and other businesses. That enabled users to make appointments with them without the need to physically wait in line. This business model was helpful during the pandemic.

Furthermore, the business environment in CEE shows a great opportunity for businesses to focus on these strategic areas. Businesses should accelerate the adoption of digital solutions, especially in light of increased customer expectations.

Business environment in CEE has changed drastically due to the COVID-19, and a sudden change is a digitalization. Furthermore, the number of services in different sectors accessed digitally by CEE consumers has almost doubled since the start of the pandemic.

 

CEE startups ecosystem – tech scene

CEE startups ecosystem – tech scene

The CEE region continues to evolve and compete to be at the forefront of the European tech startup scene. Moreover, CEE startups produced over 10 unicorns with a combined value of €30 billion. There’s been a drastic change in the region. That goes for the majority of early-stage startups 5 years ago to companies raising sizable Series A + rounds with international VCs backing them.

Private equity investment in CEE reached €2.7 billion in 2018 to local talents, according to the Invest Europe Association. Furthermore, venture capital investment rose year-on-year by 32% to €160 million. By a number of companies backed in 2018, venture capital registered its second-best year on record.

In recent years, CEE startups in tech-led to huge traction of the market to venture capitals. About 10,000 emerging Eastern European businesses raise their first rounds of funding in the last five years. In the same period, the CEE market has seen more than ten unicorns emerged, with a total valuation of €30 billion.

CEE startups examples in tech

Lots of CEE startups tech companies achieved admirable results in tech space with a huge impact on a global scale. Grammarly Inc. is one of such tech company, founded in Ukraine. The company develops a digital writing tool using natural language processing (NLP) and artificial intelligence for effective writing of the English language. With more than 20 million active daily users, in 2019, the company was able to raise $90 million with a valuation of $1 billion.

We have Russia’s Miro, a digital whiteboard designed to allow distributed teams to work effectively together. The company raised a $50m Series B in April and has five million users worldwide. 

Another example is a Lithuanian company, MailerLite that offers advanced automated email marketing campaigns. The company was recognized by SaaS Magazine as the 5th fastest growing SaaS business in the world.

DocPlanner, an emerging Warsaw-based online healthcare platform, is making it effortless for patients to book appointments with the right doctor. In May 2019, it announced raising an amount of $89.8 million series E funding in less than two years after it raised $16.8 million in venture capital.

Warsaw and Tallinn are currently leading the space as the largest tech hub in the CEE region by impressive numbers in venture rounds.

Poland startup ecosystem

Poland is the largest economy with 30% share of total GDP ($1.59T) in the CEE region. That said, polish technology companies are becoming more sophisticated and many have truly global potential.

Source: Dealroom.co

By invested venture capital, Poland ranks as a second-best in the CEE region. 2019 was record-breaking in terms of the amount of capital invested. As many as 269 transactions totalled over PLN 1.2 billion.

Although the pandemic situation has been trying to thwart our plans, we do believe that 2020 will have also ended with record-breaking results.

– said Eliza Kruczkowska &Maciej Ćwikiewicz from Polish Development Fund Group (PFR)

However, the Polish tech startups are facing some challenges. Many great
ideas lie dormant in the universities’ drawers and laboratories. That may be solved with market professionalisation. That said, mature managers with a good track record will be able to find good projects and convince the originators that together they can achieve success.

One of the key challenges is a clear equity financing gap for later and growth-stage companies who are raising B or C rounds. Additionally, the Polish tech companies should improve managerial capabilities in the area of international business.

Key takeaways

What should we expect from the CEE region in the future? The diversified workforce has great potential. Moreover, the region includes about one million developers (50% in Poland, Romania and the Czech Republic), offering highly-skilled and educated tech workers. As mentioned in the article, Poland in 2019 is having the breaking record in venture capital investments. CEE startups certainly don’t lack innovation and highly-skilled and educated tech workers. Finally, the CEE region will likely gain more attention from investors outside of Europe.