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Venturelab is a Budapest based investment management company focusing on search fund investing and investment advisory related to venture capital and private equity transactions.
Besides being an active member of the investor community, our long-term goal is to put Hungary on the map of the search fund ecosystem by establishing and fostering a strong search fund community.
Our venture capitalist background ensures that our focus is always on talent. We encourage experienced managers to take the entrepreneurial path to become CEOs of small and medium-sized enterprises that have a strong foundation and clear potential for growth. Their talent together with our network and resources make them unstoppable.
Meet the Team
As the founder of Venturelab, I am an adviser to early-stage and growth investments. My long-term goal is to establish and foster the search fund community in Hungary, using this up-and-coming investment logic to encourage seasoned managers to develop into a new generation of entrepreneurs.
I graduated from the Corvinus University of Budapest with an MSc in Finance and Management and later earned an MBA at INSEAD in Singapore. In the last year of my university studies, I joined the Institutional Client Group of Citibank Hungary, where I worked with top-tier corporations, financial institutions and government entities on their corporate and investment banking needs. This experience gave me valuable insight into the world of finance, with all the tools and solutions it offers for enterprises.
Seeking to move closer to entrepreneurs and management teams, I joined the world of venture capital at Euroventures in Spring 2012. As an investment analyst and later as investment manager, I was actively involved in numerous IT and biotech investments and successful exits. In learning the trade at Euroventures - one of Central Europe’s best-established private equity and venture capital firms - I fell in love with venture capital. Working with Euroventures’ two dozen portfolio companies gave me insight into corporate development, business strategy and equity financing. After completing my MBA, I worked for PortfoLion, the venture capital and private equity arm of OTP Group between 2018 and 2020. As investment director of PortfoLion, I designed the revised investment and regional go-to-market strategy of the OTP Digital Private Equity Fund and led multiple early-stage and growth investments. The OTP Digital Private Equity Fund is now on track to become one of the most successful early-stage funds in the region.
I am currently interning at Venturelab, focusing on deal sourcing, investment analysis and market intelligence in the search fund and management buy-in space.
Before joining, I have worked at McKinsey & Company for more than 3.5 years, taking on several intern roles. Being my first serious workplace, I learned many of my skills there and my mentality will probably always reflect the core values of this firm. During those years, I had the opportunity to meet and work with exceptional people and, therefore, I realised that every great company is built on talent.
Besides my work, I am completing my bachelor’s degree at Corvinus University of Budapest in International Business in English, a study programme that is much closer to the philosophy and methodology of Western universities than the other business programmes in Hungary.
As for my hobbies, I am passionate about value investing and beach volleyball. Currently, I am a player participating in the national tour in Hungary and I am planning to try myself out in some international events later down the road.
We are building an international portfolio of search funds paying special attention to Central Eastern Europe. While all the searchers we back are different, there are a few things in common: they are all exceptionally talented, learn fast and have the management skills to become trusted leaders in unchartered waters.
Started in 2021
Search location: Czechia and Slovakia
Started in 2021
Search location: Spain
Started in 2020
Search Location: Brasil
What is a Search Fund?
Search funds are investment vehicles formed by one or two individuals (principals or searchers) and a group of investors who work together in the hopes of finding, acquiring, growing and finally exiting a business.
Originally popular by freshly graduated MBA students, the search fund model is starting to gain interest among mid-level executives who are interested in the challenges of growing a business.
Why become a searcher?
Search funds offer two main motivations for the principal willing to embark on the search fund path: firstly, the personal fulfilment of owning, building and managing a company and, secondly, the above average financial upside which a successful search fund can provide.
Thanks to the initially raised search capital, the searcher's life expenses are covered, which mitigates some of the uncertainty and financial strain that comes with other entrepreneurial paths, for example startups.
The other part of the economic benefits for the searcher comes from receiving a part of the equity known as the principal's earned equity. The equity is typically received in three stages:
I. at acquisition,
II. vested over a period as long as the searcher is employed at the acquired company and
III. vested based on performance benchmarks at the time of exit.
Depending on the equity structure and the company’s performance under the guidance of the principal, the equity stake for the searcher is around 15-30%. These incentives align the interests of the principal and the investors.
Search Fund lifecycle
The typical process of a search fund consists of four main stages: (1)establishment of the search fund and raising the initial capital, (2) search for an ideal company to be acquired and raising the acquisition capital to complete the deal, (3)operating and value adding stage, where the searchers act as CEOs of the acquired company and finally the last stage: (4) Exiting the business and realising returns.
At Venturelab, we adhere to the Environmental, Social and Governmental (ESG) standards for our portfolio companies and during our own operations. We revisit and update our ESG policy frequently in order to ensure that it continually reflects our values and meets the demands of the regulatory and industrial environment.
We address and promote change regarding wasteful and outdated practices and technologies for our portfolio companies and our acquisition targets. We recognise the value adding potential of doing business in a sustainable and responsible way.
We ensure proper working and labour conditions and we safeguard our employees’ safety and well-being at our portfolio companies and Venturelab.
We require that our portfolio companies comply with the relevant government regulations and best practices. We know that maintaining a transparent corporate environment where any form of unfair business practices is dismissed can reduce the possibility of government intervention and thus achieve greater strategic freedom and obtain government support.
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I. Forming the Search Fund
The first step of the search fund process is to prepare the PPM (Private Placement Memorandum) to outline the specifics of the search fund. The PPM is presented to potential investors to give a detailed overview of the investment opportunity and to help the searcher start the initial conversations and the fund-raising process.
Capital in a search fund model is usually raised in two stages: in the first stage, the search capital is raised with the purpose of covering the searcher’s salary, admin and other expenses during the search period. Once the target company is identified and the deal is negotiated, the second round of capital called acquisition capital is raised to purchase the target company. The investors, who committed in the initial round, have the right of first refusal to provide the funds for the acquisition.
It is important that the funds are raised from investors who have the risk appetite and capacity for both investment rounds.
The capital is raised with units usually between $20,000 and $50,000 that can be purchased by investors and, on average, totals an initial capital of $400,000-$500,000.
II. Search and Acquisition
During the search phase, the searchers look for acquisition opportunities in their selected industries. Ideally, the searchers maximise their chances by creating a systematic approach for finding and analysing deal opportunities. The search and acquisition process is around 2 years, but searchers often need to find an opportunity sooner, since the negotiations can take up to 6 months.
It is vital for acquiring a business to determine the key characteristics of the preferred industries.
Ideally, the industry is growing and sizeable with low complexity.
Within the preferred industry, companies need to be further evaluated and analysed based on some key characteristics to find the best opportunity possible.
The targeted company should be healthy and profitable. Turn-around opportunities should be avoided.
Once the target company is identified, the searchers perform some tasks which are necessary to finalise the deal: due diligence, negotiation of the company purchase with the sellers and the acquisition capital with the investors, arrange debt if necessary, plan the transition of the management, etc.
III. Operating and growing the business
After closing the deal, the search funders will take on the role of Chief Executive Officer (CEO) and start to operate the acquired business. Ideally, the search funders make rather few changes to the existing business and they use the early stages to gain a deep understanding of the company’s operations. After the “learning phase”, searchers make changes to create value and to grow the business. Some selected investors serve as members of the Board of Directors in order to help the work of the searcher.
Investors and searchers share the desire to realise returns. Therefore, a liquidity event will occur at some point in the life of the acquired company. Investors will receive a preferred return before the searcher receives the carried interest.