Round table – Issues of funding small and medium-sized enterprises

On Wednesday, July 15 2015, in the Croatian Employers’ Association, a round table was held on the subject of “Issues of funding small and medium-sized enterprises.” Participants of the round table were Gordan Maras, Minister of Entrepreneurship and Crafts, Davorin Štetner, president of the Croatian business angels network, Anton Starčević from the Raiffeisen Bank, Zdenko Adrović, former president of the Raiffeisen Management Board, Borislav Škegro, president of the Questus Management Board – a venture capital fund, and Petar Lovrić from the Croatian Employers’ Association.

Alternative ways of funding small and medium-sized enterprises are venture capital funds and business angels, although they significantly differ in the amounts of their investments. The issues raised at the round table were: How to enable them to participate more in the development of the company through their investments? What to do to include the more wealthy individuals in this kind of investment, because lately several former bankers have invested or announced this kind of investment in entrepreneurial ventures? Also, what is the status of pension funds which are globally the biggest investors of this kind, and their possibility of getting involved in venture capital funds?

For small and medium-sized entrepreneurs last year was the most positive so far – they have hired nearly 23 thousand new employees, their export has grown 16.4 percent, and they have recorded a significant growth of income and investments.

Croatian Employers’ Association Analysis No. 52 shows that almost 100,000 SME companies that employ around 432 thousand people achieve 9.4 % increase in sales revenue. Their export revenue grew faster than the total revenue. Small “losers” have decreased the overall loss for almost a billion Kuna, and the “gainers” have increased the revenue for almost 3 billion. The question is whether the small, growing enterprises (the so called scale-ups) could have achieved an even better result in order not to face the problem of the lack of equity capital?

“The first part of investment hole, i.e. investing during the project’s earliest phase is covered by the business angels. Since 2008, Croatian business angels network has invested over 20 million Kuna in 25 projects, and the members of CRANE help entrepreneurs as mentors, because apart from the money, they invest their experience and contacts, which is even more important for success in the initial phases of the project.

There are some concrete investments in the sectors outside ICT as well. My colleagues Saša Cvetojević and Mihovil Barančić, members of CRANE board of directors, have just invested in a company called LikeRi Ltd. that produces liquors, and there have also been other examples, such as production and processing of fruits. There is a lack of business angels in Croatia, and one of the strategic goals of CRANE is to include new business angels in our work in order to secure more investments and a stronger mentoring support for the entrepreneurs” – explained Davorin Štetner, president of the Croatian business angels network.