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SDCF Funds

Funds of USD 20,5 million have been invested until now by the SDCF Venture Management. There is clear need for more funds on the market at this time in their economic development and the time is right for new investors to the region.

Geographic Region Opportunities

We focus on the region of Southeast Europe. Our primary targets are the countries of Slovenia, Croatia and Serbia. Secondary region includes FYR Macedonia, Kosovo, Montenegro, Bosnia and Herzegovina and Albania.

Current economic downturn, underdeveloped capital market and weak bank lending are keeping company valuations at historically low levels. There is a once-in-a-decade opportunity to benefit from the business cycle due to very low valuations in the region and a number holdings and governments selling their assets.

Additionally, there are very few venture capital (as well as private equity) players operating in the region. There were very few successfully investments in the region and almost none targeting smaller SMEs.

Some governments, including Slovenia’s and Macedonian’s, are creating a favourable legal, tax and business environment to boost equity investments in the region, encouraged also by matching funds programs (Slovenian and Croatian; possibly others in future).

Investment Strategy

SDCF Fund is focusing on investments into growing small- and medium-sized companies (SMEs) with the targeted investment size between EUR 2 – 6 million. We will invest into a handful of investments with no more than 15 % of fund’s value in a single investment at a time.

Our investment targets are:
• Private SMEs
• Companies in transition
o Moving from entrepreneur-run to professionally managed
o Including companies that have stumbled in making this transition

• Companies with a clear competitive advantage
o Better market position, marketing skill, technology, etc.

Potential investments need to present a regional or global market potential within niche markets. They need to have technically competent management that can benefit from professional business expertise. We will help them growth through the expansion phase (especially performing regional roll ups).

During the time of investment, we use the hands-on approach to our investees:
• Active role
• Board seat
• Advise on strategy, implementation plans
• Monitor success of plans
• Focused operational involvement as required in exceptional cases (problems; high potential returns)
• Emphasize business ethics

As the SEE countries are too small for a sectoral approach, we seek targets of opportunity in whatever sector we might find them. We focus on the quality of a company’s management and its business prospects. We do not eschew trendy sectors but are happy to invest in unassuming but profitable businesses.

We plan the exit at the beginning of each transaction. The following exits are most likely in this region:
• Trade sale
o The most likely route, at least in the near future
• Stock market
o As regional stock markets develop and consolidate, this becomes more feasible
o Owners/management will from time-to-time wish to buy back our investments in their companies. MBIs are also possible.
• Sale to financial investor
o Onward sales of investees by one fund to another are becoming increasingly common
o Because we will grow SMEs into companies large enough to interest bigger PE funds, we believe that this exit will be increasingly feasible

SDCF, družba tveganega kapitala d.o.o.

Trdinova ulica 4 1000 Ljubljana Slovenia

Phone: +386 1 432 40 38
Mobile: +386 41 63 98 16
Fax: +386 1 231 35 27