August 21, 2017

Interview with Silke Horakova, CEO of the Czech Private Equity & Venture Capital Association

The Czech Private Equity and Venture Capital Association offers alternative sources of funding. They are oriented for innovative projects with rapid growth potential, especially firms with innovative products, processes or technology. More about their work in Czech Republic in an interview with Silke Horakova, CEO of the Czech Private Equity & Venture Capital Association.

What is your connection to EVPA? How did you connect with EVPA?

As the CEO of the Czech Private Equity & Venture Capital Association and a Ashoka support network member, I have been closely following the activities of Valores Foundation in Poland. Since Ewa Konczal, the former CEO of Valores Foundation, joined EVPA, we have been meeting regularly on regional social impact events and I have been hearing about all the EVPA activities. We started to work closer with EVPA in 2015, when we organised together a social impact breakfast in Prague. By that time, I had also heard for the first time about the EVPA CEE Fund Support Program.

What are the main challenges you notice in the CEE region?

I have been involved closely in the Czech social sector and particularly in  building the impact investment eco-system. The social sector, and I think this is true for the entire region, is still largely financed by grants  – but with an increasing awareness for the need to be more sustainable (and independent from public financing). However, impact investment is very much at the beginning – both on the demand and the supply side. On the one side, most of the social enterprises are still in a very early stage,lacking business expertise and scalable business models. On the other side, we also miss a solid infrastructure for financing social enterprises – impact investors with proper expertise. If I compare the situation with Austria and Germany (not to speak about the UK, the most developed social impact market in Europe), then I would add another observation: most of the social enterprises are developed within NGOs, we still lack social entrepreneurs in the region, people with an entrepreneurial spirit (and ideally with business background) willing and able to build a social enterprise.

Why do you think we need to create a social investment movement in the region? What is the potential of the region?

I’m convinced that social impact investment is the right answer for solving societal problems in a sustainable way, with scalable business models which increase social impact as they grow. The CEE region has a huge untapped potential in this respect. There are many powerful NGOs tackling important social problems. In the Czech Republic, we have about 5-6 social accelerator programs, supporting the best social start ups; there is a close cooperation of the main actors in the sector as well as support from the government. The Social Banking Unit of Ceska Sporitelna (part of Erste Group) has tested financial instruments in the social sector and the Czech NESsT Partnership has piloted a venture philanthropy approach since 2016.

What is the reasoning behind building a VP/SI Fund in Czech Republic? What do you expect to accomplish?

The main reason for initiating the first impact investment fund is to demonstrate how effective business models can help to grow social enterprises, make them sustainable and scale their impact. The founders and executives of the fund combine the expertise of the private equity sector with long term experience in the social sector. Most of them worked also together in the Czech NESsT Partnership – a venture philanthropy program connecting the expertise and resources of four private equity professionals with the experience of NESsT. So, we are well prepared to help early stage social enterprises to shape their business model for growth.

Moreover, we would like to prove that successful social companies are able to return investors’ patient capital –although the fund will have an “impact first” focus.

 Last, but not least, we want to increase awareness for the sector and I’m convinced this will attract more successful entrepreneurs to the social sector.

What do think it’s the added value EVPA brings to develop this VP/SI funds and to the social investment space? How do you see EVPA involvement and contribution?

The CEE Fund Support Program can effectively support first time social impact funds, both with financial and non-financial ressources. The market is not yet developed and allows only for reasonable investment of relatively small funds with a  high  proportion of necessary management and transaction costs measured by venture capital industry standards. Therefore, the matching funds are of enormous importance to complement the capital of some “pioneer”, patient social investors. But I think, EVPA’s added value is much higher than that: we need to learn from other funds in more developed markets, from best practice in the sector and to connect with the EVPA community.

Moreover, the recent initiative of EVPA to establish the CEE Social Investment Taskforce is of great importance for the sector. This should help to set some standards for the VP/SI sector in the region, especially in dialogue with the governments, spread best practice and promote a closer cooperation of the actors in the CEE countries. This will be essential for creating an effective eco-system in the CEE social investment sector: investment ready social enterprises as well as a qualified investment infrastructure with the support of the governments.

Find out more about our work the the CEE region!

Rsz Silke

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