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Day One Capital launches Hungary's first business angel fund

Day One Capital has launched the first institutional business angel fund ever to operate in Hungary, Day One Capital chairman, former Magyar Telekom chief executive Elek Straub announced on Wednesday. The fund aims to invest primarily in businesses in the fields of IT, telecommunications, energy, biotech and finance.

The founders of the company include former Minister of Economy and Transport Csaba Kákosy, György Simó, who held executive positions at Magyar Telekom as well as András Molnár, investment director of PortfoLion Ventures, the venture capital arm of the OTP Group. The founders have invested HUF 80 million in the first six-year fund, which is expected to manage assets at a value of at least HUF 400 million. The company will charge a 5% annual management fee and it is entitled to a performance incentive from profits above an annual 17%.

The Fund plans to invest in 5-10 businesses in the coming year, Simó said. “We are looking for teams rather than lone wolves, who are open and willing to cooperate with us.”The company has already looked at almost 30 companies and intends to approach at least 100 entrepreneurs.

“As business angels we strive to aid entrepreneurs at the very early stages of business development to help them grow into internationally competitive businesses,” Straub said. The number of investments at a value of HUF 200-400 million in the Hungarian venture capital market has shown a significant increase since last year, Straub said.

However, seed capital in an organized form has been unavailable in the market until now. “We do not want to compete with Jeremie funds as we will operate in a market segment placed “below” theirs, with investments at a value of HUF 20-80 million, Kákosy said.

“We feel stronger and better prepared in an institutionalized form,” Straub said. In addition, the organized structure increases the company's transparency, he noted. “We seek partners who would join the four founders, are willing to invest their funds as well as their time and energy in promising high-risk start-up businesses,” Straub said. (GL)