Dubrovnik hosts the global investment elite of private equity and venture capital fund managers, worth more than four billion euros
On Wednesday, 17 May, and Thursday, 18 May, Dubrovnik hosted the investment elite of private equity and venture capital fund managers (GPs) worth more than four billion euros, the value of two recently built Peljeseac bridges. In addition, their end-investors (LPs), whose amount of capital under management exceeds the Croatian GDP many times over, were also at the conference. The organisers of the LP-GP Networking Event, the Croatian Private Equity and Venture Capital Association (CVCA), point out that the investment elite had the opportunity to get exclusive insight into the potential of Croatia and the region in creating unicorns, successful scaling of startups and the opportunities that venture capital provides for successful Croatian entrepreneurs.
“Croatia has already positioned itself highly in terms of attracting private equity and venture capital in the region, thanks to numerous success stories such as one Rimac and Infobip, but also CVCA members, fund managers who manage more than 3.2 billion euros of capital. Few people know that private equity and venture capital investments in Croatia have become a significant driving force in the economy and that such investments have exceeded 2.5 billion euros in the past two years. Croatia is one of the fastest growing markets in Central and Eastern Europe (CEE) in terms of growth rate, and we are catching up with more developed CEE markets such as Estonia and Poland.” – said Mirna Marovic, President of CVCA. “Examples of venture capital and private equity investments are not only in the Croatian unicorns Rimac and Infobip, and high-tech companies. We find examples of private equity investments at every step, for example, going to a bakery (Mlinar or Pan-Pek), a store (Studenac) or a private health facility – mostly, these are companies that have received such investments“, said Mirna Marovic.
Victoria Zinchuk, Regional Director, EBRD, had a keynote presentation on the important role of the EBRD in building the resilient private equity industry in the CEE/SEE region. With EBRD’s rigorous due diligence and vetting process, EBRD acts as one of the anchor investors for the fund managers and mobilises capital from other investors. EBRD has current total exposure to private equity funds exceeding 3 billion euros, with historical commitments approaching 6 billion euros with more than 2,100 underlying portfolio companies supported to date. Besides traditionally supporting private equity funds, EBRD recently enhanced its support to early-stage innovation, including venture capital investments directly, supporting fund managers and through the star venture programme.
Gelsomina Vigliotti, Vice-president, EIB, and Chair of the Board of Directors, EIF, presented the crucial role of the EIF in supporting the European private equity and venture capital industry with more than 30 billion euros in private equity and venture capital commitments. However, the CEE/SEE region is still underdeveloped compared to the EU average, with the main challenge for the CEE/SEE fund managers remaining fundraising. and in particular, reaching the first closing. EIF has a crucial role as an anchor investor providing the ‘seal-of-approval’ for other investors to invest in the CEE/SEE private equity funds, and EIF has provided lots of support through various dedicated programmes over the last 12 years. To draw in foreign investors, it would be beneficial to showcase market potential through flagship transactions, both investments and exits, to gain attention from market participants, and to have a signalling effect driven by local investors, such as pension funds, actively supporting players within their domestic markets.
Ivan Osmak, CEO of Quantive (formerly Gtmhub), a soonicorn from the SEE region, presented a powerful demonstration of their journey to efficient growth at the LP-GP Networking Event. Osmak revealed that by adopting an AI-driven approach and challenging the status quo of B2B SaaS companies, Quantive achieved a staggering 67% YoY revenue growth, while concurrently reducing operational expenses by 56%. The company completely overhauled its operations, examining every function for incremental improvements and building an efficient business model that led to significant productivity gains in customer support, sales, marketing, and operations. Leveraging acquired AI expertise, they launched a suite of tools, including ‘Ask Quantive’ for internal support, ‘Quantive Cold’ for marketing, a ‘Transcript Summarizer’ for sales, and ‘Quantive Athena’ for operations. Osmak emphasised the crucial role of AI in businesses’ survival and growth, asserting that the ability to achieve more with less is not just possible, but a continuous requirement for modern business operations.
Dominic Maier from AXA Venture Partners, a 1.2 billion dollar venture capital firm, acting mostly as a fund-of-funds (or an LPs) with some direct investments, presented what it takes to make a VC fund successful in the eyes of LPs. His firm focuses on finding VC fund managers who can deliver 3x returns which is hard. However, the VC industry shows statistical and scientific evidence of the persistence of returns in the fund managers that achieve consecutive top-quartile return performance in follow-on funds. Despite the current market valuation turmoil, some of the greatest opportunities are created post-market downturns. An example includes Spotify, created in 2006 before the global financial crisis. The venture capital market valuation correction may not be over, but there is a clear upside.
Dariusz Pietrzak from Enterprise Investors, the oldest and one of the largest private equity firms in the CEE, presented the recent trends and untapped opportunities in the region. Enterprises Investors focuses on two major investment themes: consumption-driven and export-driven companies. The CEE private equity markets represent the growth opportunity to close the gap of lagging behind Western European counterparts. However, attracting LPs remains challenging in the current market environment due to the denominator effect (other asset classes valuations falling), recent rapid capital deployment/change in valuations, and avoidance of geopolitical risks more present in the CEE.
During the LP-GP Networking Event’s Fireside Chat, Nenad Marovac, Founder and Managing Partner of DN Capital, engaged in a conversation moderated by Mirna Marovic. With more than 25 years of venture capital and private equity investment experience, Marovac shared his journey into venture capital, his founding of DN Capital, and his leadership that has contributed to the creation of ten unicorn companies. Marovac explained the traits he looks for in potential unicorn investments, emphasising market size, team strength, unique and defendable products, traction, and price. Using the example of Shazam, he highlighted his active participation in building unicorns. Marovac also shared his views on the CEE/SEE region’s potential for venture capital ecosystem development and unicorn creation, recommending international orientation from the start for companies in smaller markets. He addressed the importance of LPs as the lifeblood of the industry and the necessity for continuous engagement and communication with them. Discussing his secret sauce for persistently delivering returns for end-investors, Marovac emphasised the importance of discipline, diversification, and backing winning companies. As a highly respected figure in the venture capital industry, Marovac gave his insights into the evolution of the sector, anticipating a period of consolidation and challenging times ahead due to falling tech stocks, downrounds, geopolitical conflict, energy crisis, and rising inflation. Despite these challenges, Marovac remained optimistic about finding excellent investment opportunities and emphasized the importance of launching DN Capital’s sixth fund to seize these opportunities.
A dynamic VC panel discussion took place with Valeri Petrov of Eleven Ventures, Julien Coustaury from Fil Rouge Capital, Domagoj Oreb of Feelsgood Capital, and Silvije Radisic from Aymo Ventures, moderated by Mirna Marovic, President of CVCA. The panellists explored the unique challenges and opportunities within the CEE/SEE region venture capital ecosystem, debating whether the current landscape, with more realistic valuations and less available capital, presents an optimal time for investment. They shared insights on identifying promising startups, emphasising the potential for creating unicorns within the CEE/SEE region. With exponential growth of local venture capital investment in the early stage startups, the CEE/SEE region now represents an attractive opportunity for further scalling of local startups.
An insightful PE panel discussion was conducted by distinguished panellists: Ivan Kurtovic from InterCapital Asset Management, Igor Cicak of Provectus Capital Partners, Marko Hinic at Integral Venture Partners, Janez Skrubej from Invera Private Equity Partners, and Ivana Hatvalic Poljak of Prosperus Invest, moderated by Mirna Marovic, President of CVCA. They analysed the potential of value creation strategies, including long-term views ranging from buy-and-build approaches, cost-cutting, and commercial excellence, to financial structure optimisation. The panellists examined how these strategies have shifted in light of current market conditions. In discussing how the CEE/SEE region might close the private equity investment activity gap with Western Europe, they acknowledged challenges related to market size, fragmentation, legal/regulatory uncertainties, and attracting end investors. The challenges and potential solutions for attracting LPs from outside the CEE/SEE region to local growth capital and private equity funds were also discussed, along with the impact of the green transition on investment strategies. They contemplated the opportunities and challenges linked to a shift towards sustainable investments, and the potential of ESG/sustainability integration as a value creation source at the fund and portfolio company levels.
An engaging panel discussion with the Limited Partners (LPs’) views on the Central and Southeast Europe (CEE/SEE) region and outlook included Victoria Zinchuk from the EBRD, Marco Natoli of the EIF, Gordan Kuvek representing HBOR, Dominic Maier of AXA Venture Partners, and Gordana Neralic from Erste Ltd., with moderation provided by Mirna Marovic, President of CVCA. The panellists delved into the role of public investors, international financing institutions, and national development promotional banks in venture and growth capital investments, emphasising the Croatian context. They further explored criteria for investment decisions in the CEE/SEE region, providing insights into successful fundraising. Market volatility and its effect on LP allocations, illiquidity risk, and LP-GP dynamics in fundraising were major points of discussion. Emphasising the current shift towards green transition, the panellists evaluated the impact of ESG and sustainability considerations on investment strategies, arguing for their potential as sources of value creation. They also explored the role of LPs and General Partners (GPs) in promoting diversity, equity, and inclusion within the venture capital and private equity ecosystem.
The LP-GP Networking Event concludes with the dynamic LPs-GPs ‘speed-dating’ one-to-one round-table discussions, fostering direct dialogue between end-investors or Limited Partners (LPs) and PE/VC fund managers or General Partners (GPs) to uncover promising investment opportunities in the CEE/SEE private equity and venture capital markets. The side events offered additional opportunities for networking between LPs and GPs.