3.9 Start-up funding for young entrepreneurs
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Young Entrepreneurs Association Hungary (FIVOSZ)
One of the most significant advocates of start-up supporters is the National Association of Young Entrepreneurs [Fiatal Vállalkozók Országos Szövetsége (referred hereinafter to as FIVOSZ)], which provides information on government and private opportunities on its website. (For more information on the FIVOSZ, see sub-chapter 3.2 Administration and governance)
The main coordinator for public opportunities is Design Terminal, a non-profit organisation, dealing with business and cultural talent management. Its operations are funded by government grants and company partnerships. State grants are provided by the form of a public service contract signed with the Ministry of Human Capacities (Emberi Erőforrások Minisztériuma) of the Government of Hungary. As such, Design Terminal is required to provide a regular reporting, including the submission of annual, and project-based financial statements.
Their activities include:
- a Mentoring Program for start-ups,
- Professional guidance, networking possibilities, funding for space industry entrepreneurs,
- the digitalization of the start-up sector, in cooperation with the Hungarian Chamber of Agriculture,
- running a start-up scholarship programme,
- support start-ups to become a 'Fintech'.
Start-up Leadership & Management
Another private opportunity worth mentioning is the meet-up sequent called Startup Leadership & Management, which entails workshops organised on a regular basis about the challenges of the start-up world and possible solutions. A new initiative is the 'MVM Edison Light Up!' (MVM Magyar Villamos Művek Zrt. Edison - Light Up!) which is an innovation tender and a start-up contest for supporting start-ups.
'The programme aims to embrace innovative ideas in the field of energy, which can offer solutions to real problems, can make everyday life easier for users and can make the operation of the energy sector more efficient. The MVM Group believes that Hungary’s start-up community is one of the most important drivers of solutions making progress in the field of energy.'
Youth entrepreneurship programme (EDIOP 5.2.2, 5.2.3, 5.1.9 and 5.2.7, 'Start a Business at Home, Youngster!' and CCHOP 8.3.1)
The aim of the measure is to prepare young people, aged 18-25 and registered unemployed aged 25-30 interested in business and planning to start a new individual or micro enterprise to start their own enterprise and to offer them non-refundable financial support to cover their initial costs. The organisations implementing the programme are
- Széchenyi Programme Office (Széchenyi Programiroda),
- FIVOSZ - National Association of Young Entrepreneurs (Fiatal Vállalkozók Országos Szövetsége),
- Hungarian Enterprise Development Foundation (Magyar Vállalkozásfejlesztési Alapítvány),
- Budapest Polytechnics Foundation (Budapesti Polytechnikum Alapítvány) and
- National Employment Public Non-Profit Limited Association (Országos Foglalkoztatási Alapítvány Nkft, OFA).
Within the programme, the organisations provide young people a training, where they can obtain the required competencies and knowledge on how to become an entrepreneur, on the operation of a business. They can also receive assistance in preparing a business plan, advice and mentoring.
Young people who successfully completed the training and have an approved business plan may submit an application for support of up to HUF 3 million (about EUR 9 594), in the form of non-repayable support, to launch their business and to supplement the funding of their costs associated with the start of the operation, with 10% own funds. (In the case of the programme EDIOP 5.2.7 own funds are not required.) Support is provided for the establishment of approximately 6 600 new enterprises within the framework of the programme until 2021.
'Enter the market!' programme ('Lépj piacra!')
The 'Enter the market!' programme ('Lépj piacra!' program) is implemented by the National Employment Public Non-Profit Limited Association (Országos Foglalkoztatási Alapítvány Nkft, OFA) and supports the business creation of young people under 35 (people between 25-30 without a tertiary education and people between 30-35 with tertiary education) in two stages, following the same method as the above-mentioned Youth entrepreneurship programmes.
The programme provides e-learning to help the participants in acquiring knowledge about how to become an entrepreneur and how to operate a business. They can also receive support in creating a business plan, advice and mentoring. In the second phase, those who have successfully completed the training and have an approved business plan can apply for non-repayable support of a maximum of HUF 2 million (about EUR 6 396), with 20% of the funds coming from their own resources. The total budget of the programme is HUF 479 million (about EUR 1.53 million) financed from national funds.
National Research, Development and Innovation Office
The mission of the National Research, Development and Innovation Office (Nemzeti Kutatási, Fejlesztési és Innovációs Hivatal) is:
'With responsible and trustworthy contribution of our excellent colleagues we support the scientific and innovation ecosystem to build a competitive Hungary.'
The Office also supports business innovation and market-oriented research&development activities, partly carried out in business-academia cooperation, through programmes with an investor approach.
One of the biggest funding organisations is Hiventures.
'Hiventures' mission is to support innovative ideas of the present and future and to foster a sustainable and value-generating ecosystem of start-ups, SMEs and large enterprises in Hungary.'
The Fund is a state-owned venture capital company which aims to provide financing solutions to Hungarian entrepreneurs with capital using their own and EU resources. The National Research, Development and Innovation Office (Nemzeti Kutatási, Fejlesztési és Innovációs Hivatal) and the Hungarian Development Bank is their professional supervisor. Their target group includes SME and large companies and their aim is to establish a long-term strategic cooperation with them. They have a mentor network also and the companies have the opportunity to receive professional support for the ventures in the 'pre-seed phase'.
The Széchenyi Funds (Széchenyi Alapok) is less important in terms of start-ups because it has a much wider portfolio: '12% of the portfolio of companies is less than one-year-old, 35% is between two and five years.'
'Széchenyi Funds Ltd. is a 100 percent state-owned company with the Ministry of Finance as the legal owner. It invests in companies with promising growth potential with the aim of developing businesses and setting them on a long-term growth path. Széchenyi Funds are a leading capital investment partner for domestic enterprises. We aim to improve the competitiveness of the Hungarian economy, to help develop innovative industries, to enable domestic SMEs to go public, and to achieve economic development goals.'
Budapest Enterprise Agency Public Foundation
'The two pillars of the activity of the Agency are innovative SME development and non-profit microfinancing. BEA is one of the few European SME development organizations that provide both low-amount (below 32 000 EUR) financial services for micro entrepreneurs and non-financial, business development services to SMEs. Women and young entrepreneurs are emphasized target groups of the services of the BEA.'
Foundation for Small Enterprise Economic Development (SEED)
The Foundation for Small Enterprise Economic Development [Kisvállalkozás-Fejlesztési Alapítvány (SEED alapítvány)] supports the competitiveness of small enterprises by the development of entrepreneurial knowledge, by the reinforcement of the non-profit sector, and by pursuing activities in the field of equal treatment.