Q: Marton, what is your story?

A: I’ve been a computer-buff since I was 12 years old. I started my professional career as a developer in a small Budapest based IT company. After a couple of years I found working on an ERP system pretty boring, so I joined Michael Simon’s team who were starting a new project: multi-user web-based gaming. This was cutting edge in 1995! We were a very small company at the time, so everyone had to deal with multiple aspects of our business. I developed a server management software after hours because the existing solutions were extremely frustrating. It worked so well that I quit my job and started a business around RemotelyAnywhere in 1998. We quickly ramped up to $1m in annual sales, but I found the business aspects of running a company frustrating and alien. So I invited my former boss Michael from Uproar to join me. Uproar had been acquired by Vivendi by that time, so he decided to accept. We built a strong team, many key players, engineers, sales & marketing used to work for Uproar.

Q: How was LogMeIn born?

A: In 2003 we wanted to raise the number of potential users so we changed our target customers from IT people to home & office users. The business model was changed as well: we combined the nascent freemium model with software-as-a-service. Our peer-to-peer technology made it possible to offer a high-performance service at a very low cost. Thus, a new remote access application was born: LogMeIn.

Q: How did you get funded?

A: As our team has become bigger, we decided to raise some capital, but it seemed to be extremely difficult in the days after the dotcom bubble burst in 2002. I could finance myself at the beginning when I was working from home, but we had to cover the costs of the 11 member team. Finally 3TS Capital decided to join in with $10 m, but they stipulated that we needed to bring in VCs from US, too. And so we flew to the US and convinced Prism VentureWorks and Integral Capital to join in. In round B we raised another $10m from Polaris Ventures, and round C was a strategic investment of Intel. We could be any time cash-flow positive, but our VCs were very happy when we made our IPO in 2009.

Q: What are your greatest challenges?

A: We deliver products that combine simplicity & ease of use with a lot of invisible technology. One of our greatest challenges right now is finding the very best engineers to grow the team in Budapest. We put a lot of work behind Cubby, our latest product, currently in invitation-only beta. This product competes with products like Google Drive, Dropbox, Skydrive and iCloud.

Q: What is your message for entrepreneurs in Budapest and CEE?

A: My message to entrepreneurs and potential founders in Budapest would be: do not fear failure! This attitude is quite common in Europe, but I was pleasantly surprised to see that in America people are culturally less sensitive to cynicism. It’s great to see startups like Prezi emerge from Budapest, but we need many more like them. Funding is easy to come by these days, there’s no reason not to take a chance with a great idea.

Q: Facts & Figures

A: We have 500+ employees, our development headquarters are in Budapest, Szeged, and a small team in London. Our headquarters are in Boston. Over 200 people work for LogMeIn in Hungary. In 2012 estimated revenue will be around $140m and we will pay approx. HUF 1-1.5bn in taxes to the Hungarian state. Our estimated growth rate is 20% and we have 1.4 m paying users. LogMeIn’s software has been installed on over 200m computers so far.

(by Márton Ősze)

The company was co-founded by professionals from a Szeged based Hungarian web agency, who wanted to create a scalable product after many years of experience in online marketing solutions. The team started to work on the software in June 2011, applied to EEF’s Venture Accelerator, launched public beta in November. Since then Antavo grew its customer base to ~1,800, and received funding from Seedcamp.

This picture was made in March. Since then we are 7 people!

Antavo is a marketing software for small business, marketers and agencies to build intelligent online promotion applications. It is to increase sales and engage customers. “You can run your promotion application either or your Facebook Page or on your website. We think that the integration with websites is very important, because that’s the point of sales.” says Attila Kecsmar, the CEO of Antavo. “Our public beta has already attracted customers from 90+ countries and it saves each of them circa EUR400 compared to an average market solution. We listen to what they say, and adjust the product accordingly.”

That’s how Antavo Promotion App Builder looks from inside. Marketers like it, because it makes the promotion building process easier.

That’s how Antavo Promotion App Builder looks from inside. Marketers like it, because it makes the promotion building process easier.

Three of the 7 member team moved to London recently because Seedcamp invested in their business after attending a Seedcamp event in Tel Aviv. The goal of their stay in London is to find partners for their international expansion and to raise the next level of financing.

“I became an entrepreneur at the age of 23, and gained a lot of experience working together with my friend and colleague, Gabor Csarnai. Later Zsuzsa Szabo as a non-programmer arrived with her customer-oriented attitude. We attended the Venture Accelerator Course organized by the European Entrepreneurship Foundation in fall 2011, and met Andras Bencsik, who also joined Antavo as a co-founder. The course really took us to the next level. Before, I had never thought about raising capital.” The course introduced them into the world of startups, and gave them great role models to follow – he pointed out.

The fall of 2011 was full of events for Antavo team. Zsuzsi Szabo cofounder is pitching at the final event of the Venture Accelerator course at Corvinus University.

“When we got to know, that we are among the chosen teams who can go to Tel Aviv we couldn’t even believe that. The best-in-Europe mentoring and seed investment program wants to get to know us! Andras and Zsuzsi went to Tel Aviv, they made a great pitch, came back, then we got a call. We were welcome to the Seedcamp family.”

“Antavo targets a growing market with great potential, and their team has the skills to succeed.” – explains Reshma Sohoni, partner at Seedcamp why they invested in Antavo. “We think, they can take advantage of our extensive network and other companies from the Seedcamp family.”

Antavo launches a new promotion builder platform in May this year, which also sheds light on their pricing strategy.

(by Peter Záboji)

Panelists: Prezi’s three founding fathers, Ádám Somlai-Fischer, Péter Halacsy, and Péter Árvai, Ustream co-founder Gyula Fehér and Márton Anka of LogMeIn.  In the second half of the event investors have joined the discussion: Christian Lepsen (Sunstone Capital) and Andrew Braccia (Accel).

Prezi’s Founders: Ádám Somlai-Fischer, Péter Árvai, Péter Halacsy

It is tempting to compare the relationship between an investor and an entrepreneur to a marriage: even in a healthy relationship there are conflicts. But if the partners share the same values, it helps to get over situations when they don’t agree. But as all marriages, love has to come by first: how a startup company can appeal to investors? For instance, it needs to have a decent name: Prezi founders funnily revoked a naming conflict, as the product was originally called “Zuiprezi” – which was subsequently changed for the better (not to mention another idea from these ancient times: “Ant and Elephant”). But of course, naming is not everything: “The world is full of tech enthusiasts” – emphasized Somlai, referring to the fact that Prezi has a vast user base and they are all willing to express their ideas and opinions in brand new ways – and their application helps them to do so. In the beginning, what they only had was a “zooming canvas” which potentially could have been used in many other ways (i.e. for mobile phones). But the founders decided to take a different track, thus turning Prezi into the presentation tool of the 21^st century.

Marton Anka, LogMeIn Founder

Does it make any sense to call Prezi or other startups like LogMeIn or Ustream “Hungarian”? Márton Anka said that he thinks of his company, LogMeIn as a primarily US company, as it is listed on NASDAQ. But the general opinion of the panelists was that it does not really matter in today’s globalized economy where a company is actually registered. What matters the most is its competitiveness and readiness to come up with powerful innovations. Péter Árvai added that role models are essential to promote entrepreneurship: Hungary should look at countries of similar size, for example Sweden. Just think of the list of multinational companies that started their successful march in the Scandinavian country: IKEA, Volvo, Ericsson. There is no excuse for small countries, as it is truly possible to build global brands from scratch. Andrew Braccia from Accel expressed his view that Hungary’s strength lies in its educated people, especially in the field of mathematics and science in general. The investor thinks that it is only the level of imagination impeding Hungary’s ascendancy.

Gyula Feher, Ustream Founder

Financing is a crucial issue when starting a company. Márton Anka mentioned that LogMeIn initially had a “tough expansion” – they desperately needed capital. The team relentlessly went from meeting to meeting, pitching their idea to venture capitalists. Strangely, often IT people proved to be superficial when judging the usefulness of their application. Gyula Fehér (Ustream) remembers that he spent the first months with “bootstrapping”, he had all his money in a risky investment. His team faced the challenge which all startup companies need to beat: “raise money or die”. In Silicon Valley they stayed in cheap hotels and pressed in as many meetings as possible to a single day. Altogether Gyula had a positive experience with the people of the Valley: they are very tech savvy and can get easily interested in new ideas. Prezi found its primary investor in a lucky way: they simply got an e-mail from Christian after their debut at an Amsterdam tech show. He actually saw a competitor of Prezi before contacting the Hungarian team, thinking: why not?  They had 5 minutes to introduce the concept. The investor liked what he saw, as he found it very “well packaged”. In Christian’s view a startup must have an easy and distinct way of providing a service and Prezi met this requirement. The other investor on stage, Andrew Braccia emphasized that it was also an important factor that the Prezi guys have already developed the product by themselves.

So what is it, for instance, that Accel is looking at when making an investment decision? They have a globalized practice of focusing on fundamental elements of great entrepreneurs and teams, but it does not really matter where they are from. Christian said that for him it is important to like the team and to build a good relationship with them. “We look at ourselves as partners” – he added, stating that “there is no straight line to success”. Of course, there were some concerns to be settled even with such a great team as that of Prezi as there is always a risk that you make the wrong type of deal at the wrong time. But, according to Andrew it is a common fallacy to believe that  investors control everything in the company. “Once the money is wired in, we’re in!” But also Prezi did due diligence on their would-be investors: they analyzed Accel in and out. What made Peter to opt for Andrew is that he has heard amazing stories about him from other teams they invested in which pushed him towards accepting Accel’s offer.

So what is the ultimate key to success in a startup investment? Christian likes diverse teams, with a multicultural background. In Andrew’s opinion a combination of skill sets that brings value is the most important factor: for a startup it is vital to have nimbleness and speed at the same time. It is a mistake for a team to be laser focused only on one thing, as market changes and competitors could move ahead in the meantime. And first and foremost, he suggests not to take yourself seriously as an investor. Márton Anka added that it is not hard at all to come by good ideas. The question that need to be answered is rather: what NOT to do!

The results of the European Private Equity & Venture Capital Association (EVCA) annual activity survey demonstrates robust fundraising by private equity and venture capital at a time of economic turmoil in Europe. In term of amounts, government agencies, private individuals and corporate investors are the largest investors in VC funds while for buyout & growth funds, pension funds, banks and fund of funds are the major investors.

http://www.evca.eu/uploadedFiles/News1/News_Items/Yearbook_2012_PR_10May2012.pdf

Although there seems to be consensus in the literature that venture capital investors increase the innovation output of their portfolio companies, there is little evidence about how investor type (governmental vs. private) and transaction structure (syndicated vs. non-syndicated) moderate this impact. A recently published research suggests that in companies financed by syndicates and by private venture capital investors, the innovation output increases significantly faster than in non-venture-backed companies. The most supportive form is a heterogeneous syndicate (i.e., consisting of both types of venture capital investors) led by a private investor.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2018770#

Three-quarters of LPs expect their commitments to emerging markets to increase over the next two years. The shift in PE allocations towards emerging markets reflects persistent LP optimism about emerging markets’ ability to outperform developed markets. Once solidly among the three most attractive markets, Central and Eastern Europe, fell to last place.

http://www.empea.net/Main-Menu-Category/Resources/EMPEA-Research/LP-Survey.aspx?utm_source=streamsend&utm_medium=email&utm_content=16031411&utm_campaign=Global%20Limited%20Partners%20Survey

BLStream develops, produces and maintains software for mobile devices (e.g. smartphones and tablets) and develops gaming content for mobile devices and gaming consoles. The company is also a recognized system integrator, connecting modern mobile technologies with online services and legacy IT systems. BLStream’s customers can use mobile devices for remote work, connecting to systems, services and data on the internet or at the company’s own servers.

Founded in 1999, BLStream is based in Finland but almost all of the development work has been done by Polish IT specialists. BLStream’s innovative system solutions, applications and games are currently running in several hundred million portable devices globally. The company has been a long-term software development partner for leading global communication, consumer and entertainment brands such as Good Technology, Intel, Nokia, Play, and BBC as well as almost all of the leading global participants of the gaming software market.

As a result of a record increase in mobile business software,  BLStream has grown exponentially. Its consolidated revenues reached €10.5 million in 2011, which represents 50% growth over the previous year. The company employs 250 IT specialists.

“We are more than happy to have started our partnership with BLStream. The company’s extensive experience in the field of mobile technologies and hundreds of projects completed for leading global technology players provide the perfect base for BLStream’s rapid development in the near future. The launch of smartphones, and especially tablets, has resulted in a very dynamic increase in the demand for mobile software. People want to use mobile devices not only for fun and socializing, but also for work and other purposes. This trend looks set to continue, which I think will help the company triple the scale of its operations over the next four years,” said Tomasz Piętka, Vice President of Enterprise Investors who leads the investment.

“Securing such an experienced and credible investor as Enterprise Investors is a great achievement for us. Due to the rapid growth in mobile device usage worldwide, BLStream wants to accelerate growth through rapid acquisition of new customers. To achieve this goal faster we needed a partner that could provide additional capital and support our further growth, as well as help us attract top talent and find acquisition targets. Hence the owners of the company decided to partner with a venture capital investor,” commented Samuli Koski-Lammi, BLStream’s Founder.

Enterprise Investors is one of the largest private equity and venture capital firms in Poland and Central and Eastern Europe. Active since 1990, the firm manages funds with capital exceeding  €1.7 billion. These funds have invested €1.5 billion in 126 companies across a range of sectors and exited 94 companies with total proceeds of €1.7 billion.

Enterprise Venture Fund I is the most recent fund in the Enterprise Investors group. Raised in 2008 with total capital of €100 million, it is the largest fund of its type in Poland and the CEE region. EVF’s investments range from €1 million to €6 million per project, but can exceed that amount if an investment is attractive and justifies it. The fund finances the expansion of small and medium-sized enterprises operating in different sectors. To date, EVF has realized investments with a total value of €40 million in companies operating in Poland and other CEE countries. BLStream is EVF’s eleventh investment and the fourth technology company in its portfolio.

The Seed Enterprise Investment Scheme (SEIS) is designed to help small, early-stage companies to raise equity finance by offering a range of tax reliefs to individual investors who purchase new shares in those companies. It complements the existing Enterprise Investment Scheme (EIS) by offering tax relief at a higher rate than that offered by the existing EIS.

http://www.hmrc.gov.uk/seedeis/index.htm

The new PrEQIn – Private Equity Quarterly Index shows all private equity strategies, with the exception of venture capital, have outperformed S&P 500 since 2001.

http://www.preqin.com/docs/newsletters/PE/Preqin_Private_Equity_Spotlight_April_2012.pdf

In Europe, a handful of companies are helping struggling start-ups with an unusual model: investing advertising space in them instead of money. Not all start-ups need ads, some are happy with social media, and many others would rather have cash instead. For some it is just what they need. And for the media firms, since the ads would otherwise go unfilled, any return is pure profit.

http://www.economist.com/node/21552271