January 25, 2021 | By Sonja Zigic
Fil Rouge Capital, a venture capital investment fund targeted at young innovative entrepreneurs, startups, and scale-up companies, has made 50 investments in the domestic market in less than a year.
There is no lack of interest in funding, even despite the restrictions imposed due to coronavirus, which is best illustrated by as many as 350 applications for the third accelerator program, which starts in less than a month.
The 45m-euro fund, given the bulk of the financial injection by the European Investment Fund (EIF) and accompanied by the Croatian Bank for Reconstruction and Development (HBOR), is investing in promising entrepreneurial ideas and young businesses through three channels.
Through the Startup School, the branch of investment is 10,000 euros, through the accelerator program, entrepreneurs have up to 50,000 euros at their disposal, and a more generous amount of investment can be invested; two million euros through the growth program.
“The coronavirus situation was unprecedented, so we were initially slightly worried about implementing the accelerator program that included three months of mentoring, but after the first program was ‘physical’, we did the second virtually via Zoom conferences,” says the accelerator program manager and spokeswoman of Fil Rouge Capital Sonja Žigić referring to the popular video conferencing platform. Mentoring, among other things, includes ‘Founder’s dinners’ events where prominent entrepreneurs and CEOs share their experiences, the obstacles they encountered on the road to success and how they overcame them. “In the end, it turned out to be a pleasant surprise because when people were not physically limited, the response was even higher, and the conversations went smoothly. We had a lot of work during the whole ‘lockdown’ ”, our interlocutor continues.
And about 50 completed investments certainly shake the common perception that domestic entrepreneurship lacks innovation potential. Research, such as the Global Entrepreneurship Monitor led by Professor Slavica Singer, shows that in Croatia, people usually decide to enter the entrepreneurial waters out of necessity, when they lose their job and their existence is endangered, instead of a business opportunity. Fil Rouge’s portfolio, on the other hand, is a wide array of innovative ideas: like Floornap’s low-cost search platform looking for a niche market in the ‘couch surfing’ segment uninteresting to giants like Airbnb, Mediately’s pharmaceutical database available in seven countries, online software platform Nom Nom intended for restaurants to improve the service, to the banking platform in the ‘cloud’ Oradian…
What most start-up entrepreneurs have in common is the problem of access to finance because they are not (and cannot be) natural clients to banks on account of a lack of collateral. This is where venture capital funds come into play, such as Fil Rouge Capital, who, in addition to capital, provides mentoring and education with the aim of making the idea (no matter how ingenious its creator) withstand the brutal test of the market and real life. Mentoring, of course, is not a guarantee of success because statistics say that at best seven out of ten startups fail, but knowing how to “think in a suit” certainly reduces the risk of failure.
“There are great ideas in Croatia and the region, but so far there has been no structured capital and support. Therefore, young entrepreneurs were forced to search abroad for financing or abandon their idea by agreeing to a ‘9-5’ job to survive given the socio-economic situation, but now things are changing rapidly. It took us three programs to get the snowball effect, but we are glad to see these changes, to be at the source where young people are passionately working on their ideas and are working hard to make their innovations come to life, “said Žigić.
Fil Rouge Capital began operations in the summer of 2019, and the first program began in September. It was established partly from ESIF funds through cooperation between the EIF and the Ministry of Regional Development and EU funds. In addition to the EIF and private investors’ money, one of the investors is a domestic development bank. The total size of the fund is 45 million euros, with 50 million euros set as the upper limit of the fund. According to the Fil Rouge statute, that money must be fully invested in the development of startups and ‘scale up’ companies (those who want to increase capacity and / or expand their business) by the end of 2023. Companies must have their headquarters or branch in Croatia.
“The fact that we have so far successfully invested in 50 startups clearly testifies to the strong position that Fil Rouge Capital has on the Croatian and regional startup scene. We invite startups to apply for and join the world of investment with us. Even if you don’t need an investment at the moment, we are here to talk and mentor you, ”says Stevica Kuharski, the fund’s principal.