Weather in June/July

For those of you that have never visited eastern Europe, the weather can be a very interesting topic. While many people tend to compare the summer months in Eastern Europe to the summer months on the East Coast, there are some small differences.

On occasion, the weather in Eastern Europe mirrors the hot humid temperature of the East Coast, but this is very rare. It tends not to reach the high levels of humidity that characterize many East Coast states. Rather, the weather usually falls into 2 categories: hot and sunny or overcast and chilly. Sometimes its a mix. Nonetheless, it rarely gets as hot and humid as the East Coast and if it does, it lasts for a much shorter period of time.

Perhaps one of the most unique things about the weather in Eastern Europe is day length. Because many Eastern European countries are so far north, the sun doesn’t go down until after 10pm. Madrid is at about the same latitude as Philadelphia. In most of the U.S., the sun tends to go down around 8pm in the summer months.  Thus, many Eastern Europeans don’t go out for dinner until 11pm while some Americans may already be in bed.  This promotes a very unique and active nightlife for many Eastern Europeans. I remember on one occasion, having been clubbing all night, emerging from a club around 4am to find that the sun was already out.

This unique weather pattern allows for some down time after work and before dinner. It adds a more laidback element to the culture of Eastern Europeans. While many Americans are equated to a “rush rush rush” mentality, the length of day allows Eastern Europeans more hours in a day, and perhaps more time to relax and enjoy the sunshine after a long day at work.

Reconnecting in Prague

To start off, it’s been a LONG time since we’ve posted anything on here. For any loyal readers, we sincerely apologize.

This post is going to focus on my return to Prague in 2007 and my experiences while I was there. In 2007, I returned to Prague for the first time since leaving Europe in 2001. The opportunity arose to visit following a conference for the Licensing Executive Society International in Zurich. The purpose of my visit was to reconnect with colleagues I had known whilst doing business there who were either Czech or had remained in Prague over the years, in furtherance of my international corporate law practice.

Upon arriving in Prague, I checked into the Hilton. Back in the day, the Hilton was called the Atrium. It is now the Hilton Atrium Hotel. Once I had checked into my room, my first stop was to see whether one of my favorite pubs was still in business. The restaurant was called V Jama, a Czech pub a few hundred yards from Wenceslas Square near the first McDonald’s in Prague.  The pub started right around the time I was trying to get my own American Bar and Grill off the ground in Prague. This American succeeded.

To my everlasting joy, V Jama is still in business. Today, the restaurant serves a wide variety of foods including a mixture of Tex Mex, traditional Czech and contemporary American dishes. The choices range from fried chicken wings to spicy burritos. I went into the familiar restaurant, sat at the bar, and ordered a Czech beer. I properly worshipped this half liter of wonderful beer before drinking it. After a few more, I realized that I was sitting right next to the owner of the bar. After a little while, we recognized each other and began to reminisce over several other people I knew from the days I lived there. It was a wonderful beginning to what turned out to be a great visit to Prague.

Sources of Financing Part 2 – IFC

B.Sun

The IFC is a member of the World Bank Group that focuses on promoting sustainable private sector development. Established in 1956, the IFC is a profit oriented institution and finances private sector enterprises. Services provided include direct financing and advisory services. To qualify for IFC funding a project must: 1) be located in a developing country that is a member of IFC; 2) be in the private sector; 3) be technically sound; 4) have good prospects of being profitable; 5) benefit the local economy; and 6) be environmentally and socially sound. There are 179 member countries belonging to the IFC, including the majority of CEE countries. The IFC sets a ceiling on new projects at 25% of the total estimated project cost and 35% for exceptionally small projects. A list of countries and corresponding IFC investments are listed below as reference:

Poland joined the IFC in 1987 and has been the recipient of $279 million in direct financing from the IFC and an additional $67 million from other banks. 32 projects have received financing from a wide range of sectors. A list of publicly disclosed projects for Poland can be found at http://www.ifc.org/ifcext/eca.nsf/Content/Poland_InvestmentProjects.

Belarus joined the IFC in 1992 and has been the recipient of $71.5 million in direct financing. A total of eight projects have been funded in the financial and agribusiness sectors. IFC advisory services have also been at work in Belarus since 1993, where the IFC has been a significant catalyst for the privatization of small businesses.
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Croatia joined the IFC in 1993 and has been the recipient of $353 million in direct financing from the IFC and an additional $97 million from other banks. The IFC has focused mainly on building up financial markets; two financial institution projects have received close to $150 million already in direct financing.

Additional information for most CEE countries can be found at http://www.ifc.org/ifcext/eca.nsf/.

An informational page on how to get financing is provided by the IFC at http://www.ifc.org/ifcext/about.nsf/Content/How_Apply_Financing. To apply for financing, an entrepreneur or company must submit an investment proposal with the IFC either through the coordinating department, regional department, or nearest field office. Guidelines for writing an investment proposal can be found at http://www.ifc.org/ifcext/about.nsf/Content/Investment_Proposals.

Sources of Financing Part 1 – SEAF

B.Sun

SEAF (Small Enterprise Assistance Funds) is an international tax-exempt investment organization that sponsors and manages for-profit investment funds that target small businesses in 23 countries, many of them in CEE. Founded in 1989, SEAF currently has $180 million invested in small enterprises in Europe, Latin America and Asia. SEAF provides direct financing ranging between $1 – $5 million, drawn from 23 funds it manages for its investors. Investors in SEAF include the EBRD, International Finance Corporation and U.S. Agency for International Development.

SEAF operates on a commercial basis and requires a rigorous standard of financial capability, corporate governance and visionary leadership. Its investment activities focus specifically on nations with emerging markets and/or markets that have problems securing capital for reasons such as size of investment, location or fragmentation. A list of criteria establishing whether a business qualifies as an investment target can be found at http://www.seaf.com/policies.htm.

SEAF funds are invested through structured equity participations in partnership with local entrepreneurs and senior management. Investments also generally include exit rights due to SEAF’s for-profit nature. Funds can be self-liquidating for certain businesses or used to obtain majority ownership rights in a business. Currently, 85 companies are actively managed by SEAF. While the company does not disclose performance reports to the public, investment performance reports for the totality of SEAF’s funds are available at http://seaf.com/SEAF_glance.htm. SEAF has enjoyed a 1.6x rate of return on its investments in portfolio companies. SEAF has disbursed $131 million and grown the net worth of these companies to $209 million.

SEAF has also published a comprehensive report of SME’s impact on emerging markets and global economies. Volume 1 of the report can be found at http://seaf.com/SEAF%20Dev%20Impact%20Vol%201.pdf. Volume 2 is a compilation of case studies and can be found at http://seaf.com/SEAF%20Dev%20Impact%20Vol%202%20-%20Case%20Studies.pdf. These reports provide excellent insight drawn from SEAF’s 18 years of experience investing and growing SME’s in developing countries.

To apply for funding, contact the appropriate office in your country from http://www.seaf.com/offices.htm.

More on the EBRD

B.Sun

Since the EBRD’s formation, many CEE countries have benefited from their involvement. Listed below are a few nations that have flourished as a result of receiving direct support from the EBRD:

In the Czech Republic, the EBRD has financed over 100 projects and invested over €1 billion in the Czech Republic since 1992, resulting in a total project value amounting to nearly €5 billion. This result reflects a remarkable transition to a modern market economy making the Czech Republic one of the most competitive economies in the EU. The Czech Republic is also slated to be the first of eight EBRD countries that joined the EU in 2007 to graduate from the EBRD’s program.

In Hungary, the EBRD has financed nearly 100 projects and invested €1.85 billion in Hungary. The EBRD has helped Hungary emerge as one of the most advanced countries in the EU. Ninety percent of economic activity is conducted through private enterprise. Furthermore, an open channel of foreign investment and an open foreign trade regime have been established.

In Romania, the EBRD has financed 127 projects totaling €3.6 billion. The EBRD has also effected significant privatization and enterprise restructuring, resulting in Romania’s acceptance into the EU in 2007. Monetary and fiscal challenges still pose an issue in Romania, but the EBRD has published strategies for combating the slow in economy growth and monetary fragility that may arise.

 

For more information including comprehensive case studies, a list of approved projects for each country and current updates please visit www.ebrd.com.

EBRD in CEE

B.Sun

The fall of the Berlin Wall in 1989 served as the impetus for the formation of the EBRD in 1991, when communist regimes gave way to democracy and private industry. It is under this backdrop that the EBRD’s mandate was established. To qualify for EBRD support, a prospective country must demonstrate that it is committed to democratic principles. For example, the Czech Republic is a multi-party parliamentary representative democratic republic.

Another interesting facet is that although the EBRD is owned by public sector shareholders, it invests mainly in private enterprise. Over 60 countries own shares in the EBRD, with the US possessing about 1/10 of these shares. The EBRD possesses a €30 billion bankroll with which to select and diversify its projects and has attracted, through co-financing, over €65 billion from outside investors. While the EBRD does invest a nominal amount of money in public institutions, the objective is usually to reform infrastructure in order to promote private enterprise.

EBRD project funds are available for most sectors, including agribusiness, energy efficiency, financial institutions, manufacturing and telecommunications. A full list can be found at www.ebrd.com. Their website also provides a list of each country in which projects have been or are being conducted, as well as comprehensive project summary documents detailing the strategy behind each project and the current progress attained.

Additional background information as well as a report on the EBRD’s cooperation with the Council of Europe may be found at http://assembly.coe.int/Main.asp?link=/Documents/WorkingDocs/Doc06/EDOC10950.htm.

Zurich in June

R.Epstein

At the front of my Central/Eastern European swing, I was in Zurich for a meeting of the Licensing Executive Society International, as its name implies, an international licensing organization. If interested, check it out at www.les.org. This was my first visit to Zurich ever and I was pleasantly surprised by the city.

The weather was changable to say the least. When I arrived is was raining very hard. That was a Friday. Over the weekend, the sun came out and it was surprisingly hot and humid. Zurich does not sit at a particularly high altitude, so suffers most Central European weather. But I was able to get out and about the city easily and the conference had events around as well making it quite an enjoyable stay.

The City itself is a pretty place. One can always find a seedier side of a city even Zurich. But it is not as big or as easily found as in other places. All in all, Zurich in June was a pleasant if not exciting place.

Global Connect

R.Epstein

When I left San Diego in 1992 for Prague, it was a very different place than it is today. In 1992, San Diego was “enjoying” the peace dividend which caused the virtual destruction of the defense industry there and less military spending in a town very dependent economically on the presence of the Navy and Marines. The recession of the early ’90’s caused the tourist industry to slow and the exodus of the defense industry workers caused a demographic shift which caused real estate to lose 30 to 50% of its value by around 1995. And that was about all there was. But that was then.

Now, San Diego enjoys a very diverse ecomony that simply did not exist in 1992. There is a vibrant telecom segment which has spilled over into sofware development and internet companies. There is the second or third most important biotech cluster in the world. And then the military presence, the comeback of the defense industry as a result of 9/11 and tourism is stronger than ever. But where did all of this come from?

UCSD Connect, now known as simply Connect, with its offshoot of Global Connect. For more information about the current organization, go to www.connect.org. Historically, UCSD Connect, with its ability to tap into the creative genius of the faculty of UCSD and bring professional service providers and venture capital around them, it was able to become a catalyst for the growth of both of the technology communities. Through Global Connect, www.globalconnect.ucsd.edu, the Connect concept is being successfully spread around the world. A very good thing in the author’s humble opinion.

Networking in Central/Eastern Europe

R.Epstein

As in most places, your rolladex often proves the difference between success and failure. The old adage, “It’s not what you know but who you know” is as true in CEE as it is anywhere else in the world. Perhaps even more so. So buliding a network in CEE is one of the keys to success here.

I’ve been blessed with a relatively outgoing personality which allows me to go out and meet people without too much trouble. Everyone gets tired of this eventually, even me! Bu the critical aspect of this is to do it in an efficient way so that you put yourself in the best position possible to make the kinds of contacts that can really add value to whatever you’re doing. Again, this is true universally and I dare say I’d be surprised if anyone were to disagree.

So in CEE, where to do you go even if you happen to be an outgoing dynamo. This was the problem back in the early 90’s because there simply wasn’t anywhere. Today there are many organizations that hold regular mixers and other educational events that are great places to network. The commerical sections of the many embassies, the chambers of commerce of many countries and the local Lions Clubs or Rotary Clubs exist and usually welcome foreigners. Socially, one of the best way to get to know the funnest group of people in a city is the Hash House Harriers, better known as a drinkers club with a running problem. Check out www.gthhh.com and have fun!

American Bar & Grill in Prague – Part 5

R.Epstein

During our first 9 months in Prague, we had and lost at least three different groups who had committed to finance the project. The last group was led by a Czech who owned an import/export company and convinced us he was prepared to put up the 300,000 USD we thought would get the reconstruction done and six months into the business. Sounds crazy now, but this was my partners project and I was following his lead. Such were the fast times in Prague in 1993.

The truth was never made clear to us. Either he didn’t have the money or just got cold feet when it came time to pay. These many years later I am still convinced that it was a winning concept. Whether or not we could have executed is another story entirely. To a certain level I’m sure, but given how my partner conducted himself in our telecom business, we definitely would have reached a limit if we didn’t bring in other talent. But now we’ll never know.

By the summer of 1993, we had gotten under construction, expended the little money we had saved before coming to Europe and reached a decision point. We could afford to give the bar and grill concept another four months or so, and if nothing broke, we would be and probably would have had to return to the US. We decided to put the project on hold indefinitely and begin seeking out clients to consult with and interestingly found a few rather quickly. My partners hotel experience came in very handy as he landed a few hotel consulting jobs. By September the telecom business began to hit so suddenly things didn’t look so dire. At least not for a while!