Due to the coronavirus crisis, some investors have reconsidered their investment plans and begun to focus on lower-risk investments. According to the Global Investors Study published by British company Schroders in June of this year, up to a quarter of investors have done so. By contrast, approximately 20% of investors see the crisis as an opportunity and are wagering on high-risk investments. However, most investors are optimistic and, despite the negative economic outlook, agree that the effects of the pandemic should not have a significant impact on expected returns in the long run.
Investing during difficult times can contribute to innovation and help society to restart and diversify the economy. Issues relating to social responsibility (including sustainability, scientific progress and research, and the resolution of social issues) are coming to the fore, while capital is being allocated to projects focused on supporting the domestic economy. This presents an opportunity for young startups, as they have the ability to adapt quickly and initiate change. However, startups are considered to be a higher-risk segment, and the current passivity of private investors does not benefit them. Some market players are postponing investment decisions and waiting to see how the situation develops. Such an approach can thwart or slow down restart efforts.
A solution lies in support from private investors, supplemented with capital from public sources. The model that is common in Western Europe gives experienced managers space to manage venture-capital funds from European sources when financing startups. An advantage of professional venture-capital and private-equity firms is that they possess an extensive network of contacts and an ecosystem that entails not only the necessary know-how, but also contacts and professional support. It is a way to create value for the future growth and development of young companies under current conditions. An example is the recent investment in the Slovak information and analytic digital-assets platform altFINS, which has recently attracted the attention of the foreign media.
Through its subsidiary CB Investment Management, the investment platform Crowdberry manages part of the state package aimed at supporting young startups. It agreed with altFINS on the investment in conjunction with a private investor. According to Crowdberry, altFINS has global potential, as it is bringing an exceptional tool to the growing digital-assets market. Due to the absence of a capital market in Slovakia and the growing pressure for liquidity in traditional venture-capital companies (capital from private investors) caused by the coronavirus pandemic, the co-financing model of combined public and private capital is proving to be effective in the post-coronavirus world.
CB Investment Management
CB Investment Management is a wholly owned subsidiary of Crowdberry, the largest alternative investment platform in Slovakia and the Czech Republic.
It manages an investment fund worth EUR 23.2 million financed with funding from Slovak Investment Holding as well as its own funding. The fund invests in Slovak startups (three to five years in operation) with an international profile.
Targets can receive investments ranging from several hundred thousand to 1.6 million Euros. In addition, they can obtain so-called “smart capital” in the form of knowledge, experience, and access to Crowdberry’s ecosystem of 3,000 private investors.
A number of companies in the early phases of business, such as Akular, Nitroterra Technology, Artzenal, iERP, Airlogy Labs, and altFINS, have received investments.
CB Investment Management is a partner of various accelerator programs, including Challenger and HealthcareLab, where it is involved in evaluation processes and mentoring.
The article was written for an investment and business series of the economic daily paper Hospodárske noviny: https://hnonline.sk/hn-special/2208969-v-prenajme-lodi-su-svetovi