2021: Active Year for Venture Capital, Private Equity

Last year, domestic and foreign investors invested a total of EUR 225.3 million in venture and private capital in 241 transactions in companies based in Hungary, while the number of companies decreased by 0.4% compared to 2020, while the amount invested increased by 5%, resulting in a slight increase in the average investment amount, approaching one million euros (EUR 937,000), the Hungarian Venture Capital and Private Equity Association (HVCA) told the state news agency MTI.

Similar to the previous year, most investments were made at the seed stage; 131 out of 248. In the start-up phase, 69 were recorded. The proportion of funds invested was balanced, with 26% going to start-ups, 15% to seed stage, 29% to growth stage and 16% to late stage.

The two sectors most favored by venture capital and private equity investment in 2021 were consumer goods manufacturing and services and information technology and communications (ICT). Firms in these two sectors received 64% of the capital invested by location of the firms, and 58% of the firms that received funds came from these two sectors.

The largest individual transactions in Hungary were in the energy and chemicals sectors, with an average value of EUR 1.8 million and EUR 1.5 million respectively.

Domestic and foreign investors exited 41 Hungarian companies in 2021, with the value of exits at the time of investment reaching EUR 40 million. The most commonly chosen exit method for Hungarian companies was management buy-outs, which took place in 19 companies in 2021. The second most common exit was a write-off following an unsuccessful investment, for ten firms. There were six transactions where the buyer was a professional investor. In terms of value at the time of investment, these transactions accounted for a quarter of all transactions.

Fund managers in Hungary raised a total of EUR 466 million in new funds in 2021, significantly higher than the EUR 156 million raised in 2020. 99% of the capital was raised from institutional savers in the CEE region and domestic institutional savers, which is significantly higher than in other countries in the region. In 2021, much less public money was channeled into Hungarian funds than in the previous year, but foundations, large corporations and the banking sector played a much more dominant role in raising funds, according to the HVCA summary.