Entrepreneur envisions building internet investment fund company
A Vienna-based high-tech entrepreneur is shaping a holding company investment fund that will give Western investors a vehicle for putting money into Central and Eastern European internet firms.
He's also looking hard for a Polish IT company to buy. He has come close, but the companies he was interested in decided to do initial public offerings (IPO) on the Warsaw Stock Exchange (WSE) instead.
"The biggest rival for us is the WSE. Those who got $20 million from the WSE were not looking at us," said Thomas Streimelweger, whose company S&T System Integration and Technology Distribution has worked in 11 companies in the region since 1989.
Last November, he put $2 million into founding East-Europe.com. Between now and April, he is looking for investors to put in as much as $20 million in exchange for one-third equity shares in the new company. "And by 2001 I think we'd go to the NASDAQ and could raise between $80 million-$100 million. And that would allow us to be dominant in this region," Streimelweger said.
His model is last year's "China.com" holding investment company where owners built on "an existing network, significant capital, a systems-integration background" to swiftly build a commanding IT investment company for a huge market, he said.
Streimelweger, who was in town to speak at an e-commerce conference in early February, has negotiations underway for "seven to eight" web businesses and says "our top priority is to get into Poland. It's a bit embarrassing because everyone wants into Poland. We're a bit late," he said.
He's not looking for internet cafes. But almost everything else is on the table: net search portals; financial and web consulting services; advertising companies to put up local-language net banner ads.
Streimelweger listed S&T on the Brussels-based EASDAQ technology market several years ago and its value soared to $175 million but then fell hard after the Russian crisis, due to its dominant investment there. Last year it had 70% growth to $50 million and Streimelweger predicts that "the Russian market will be back." But for his new dot-com company, "I have to put Poland and Hungary first," he said.
As a holding company, it could be "a huge magnet for a large-scale Western investor who wants to sign up for EE internet companies. You're not only exposed to one market, but to all of them. And they'd have the Austrian legal system to use against the management if we make any mistakes," Streimelweger said.
Slovenia is the most advanced internet country in the region but gets short shrift because it is only 2 million people, he said. He puts Hungary, Poland and the Czech Republic "pretty much on the same level regarding IT development. And people are very knowledgeable, very hungry for the latest technology," he said.
Streimelweger has plenty of in-country competition for IT companies. Suddenly, there is a explosion of internet business, with listed companies such as Elektrim, Optimus and Agora announcing internet ventures and fueling a stock market boom. And there are lots of newcomers.
Copernicus, the Polish affiliate of Advent International, and Dutch development finance company FMO just bought 55% of Hogart, a software consultant and supplier for such internet giants as Oracle and Sun Systems. In addition to offering a $10 million investment plan for Hogart acquisitions, Copernicus will also have payroll and human-resource outsourcing services here, in a joint venture with U.S. giant ADP.
Hogart is led by Janusz Fortuna, Marcin Penczerk and Janusz Przyklang. It recently added Mirek Subczynski as CEO. "We're just helping them keep up with the growth," said Copernicus/Hogart IT specialist Greg Stangl, with the Polish IT market growing 20-30% a year and IT services at an even faster clip. Copernicus earlier invested in @Entertainment and in Euronet.
And Hogart has challengers, too. These include heavyweights such as the mega-financial advisory firms.
Most of them are forming internet teams and offering their own e-commerce "how to do it" advisory services and software tools. PricewaterhouseCoopers (PWC) held a first-time e-commerce seminar for Polish companies Jan. 18 along with XOR Solutions, headed by Tomasz Mazurek. The half-day seminar called "E-Business: the Polish Way" was in Polish, for Polish business executives, from consumer goods producers to manufacturers. Among the issues explored were the legal questions, which in the very legalistic and document-oriented Poland can be stumbling blocks in themselves if an "electronic signature" on the internet is seen as too risky.
