Building the Startup Community Thru Crowdfunding
Tokeportal bills itself as the first Hungarian equity-based crowdfunding platform, and one of the pioneers in Central and Eastern Europe. The Budapest Business Journal spoke with business development manager Nóra Szeles about bringing the concept to Hungary.
BBJ: What is crowd funding and why is it becoming so popular?
Nóra Szeles: Crowdfunding has always been here and will always exist. Ever since people wanted to realize their ideas and did not have enough resources, they asked their network for money. Now it is all web-based. Crowdfunding is a platform-based financial service, where campaign initiators ask people to participate in their campaign. If they return the money in the form of a share, it is then crowd investing, if they do not offer any compensation, then it is donation. Crowd funding raises awareness for local projects and enterprises and offers easy access to investments to a large number of people who would contribute with small amounts.
BBJ: When and how did Tokeportal.hu come into being?
NSz: Ever since the World Bank published its first in-depth research on the effects of the new born crowdfunding market in 2013, which highlighted how important the role of crowd diligence is, namely the communication process that validates a startup, and how much new capital can enter the economy through crowd funding, we started to think about launching a platform. When the European Crowd Funding Service Providers Regulation was drafted, we knew this would change the capital market. Then MKB bank established its FinTechLab and invested in our project. Since then, business angels have joined our journey. We launched the first campaigns not long ago, and realize a growing interest from both retail and institutional investors, despite COVID-19, which of course occurred as a black swan.
BBJ: How do equity-based campaigns work on Tokeportal.hu?
NSz: In accordance with industry standards, similarly to what venture capitalists do, we review and score all campaigns before they hit the platform. Depending on the phase of the project, this can take four-10 weeks. Crowdfund seekers should do their homework and we help them a lot in order to onboard their prospective investors, including perhaps a lead investor. We help them establish the investable company structure, strengthen the value proposition and communicate successfully.
BBJ: Who are the platform’s most important cooperating partners?
NSz: We believe in building and contributing to the startup ecosystem that includes incubators, accelerators, startup experts and mentors and industry associations and, of course, the regulators. We recently established the Hungarian FinTech Association, as together we can better strengthen our mission, and advocate our interests. We believe that large institutions such as the Budapest Stock Exchange, or even Big 4 company such as KMPG, which is a partner, are stakeholders, as crowdfunded companies are more open to a later IPO than bank-financed or private ones. Advisers from the large British platform Seedrs and the Austrian Conda and the Estonian Funderbeam, and the European Crowdfunding network all believe that the local ecosystems are key drivers of the economy.
BBJ: What would you consider the biggest success of your platform so far?
NSz: Despite our small size and early phase, we notice that our brand is acknowledged. Even foreign investors have expressed an interest, and a few Budapest-based expats have also already contributed to a few campaigns. Not only Rotary Club Budapest-Center closed a successful campaign, but a new Hungarian-international cultural medium is being born through crowdfunding, onboard the picturesque TRIP ship at Batthyany tér, where expats can enjoy English performances either in person or online. These initiatives need the crowd’s support.
BBJ: Does Tokeportal.hu have regional aspirations?
NSz: Sure we do, there is still space in the neighboring markets such as Romania or Bulgaria. This is a next step.
BBJ: How does the portal’s Crowd Capital Indicator contribute to the fight against COVID-19?
NSz: The CCI represents the crowd capital that the society is able to offer in such times. The index, which has just hit HUF 12 billion, mirrors the value of donations that aim at abating the negative effects of the pandemic. Those who donate to the fight against COVID-19 will be rewarded by having their good deed communicated to the public via the index.
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