Erzsebet Birman runs a venture capital fund - of sorts - in communist Hungary. She is director of the Innovation Fund, set up by the National Bank of Hungary in 1980 with 600 million forints ($13.6 million) in capital to bring good product ideas to market.
This pioneer activity for the Soviet bloc was dreamed up by Miss Birman while she was head of the National Bank's department that grants loans to exporters. Some university researchers, she noticed, had good ideas for projects but were not ready for loans. They needed risk capital that would make a profit if the venture succeeded; that could be lost if it failed.
She talked the bank into providing capital and has since being trying to nurse new projects of individuals, small industrial cooperatives, or technical institutes through the states of patenting, testing, prototype development, market research and promotion, and early production. The Innovation Fund doesn't finance research and development, which is the task of enterprises or government ministries.
Since the end of the fund's first year, when, with the help of a semi-monthly television program, it became better known, some 100 to 150 projects land at its doorstep each year, Miss Birman noted in an interview. About one-third get thrown out on the first look. Others take longer to reject. At the moment, the fund's staff of eight has nearly 70 projects under consideration and more than 20 others in various stages of testing. Some 25 others are being producted and marketed.
The fund's most profitable project so far has been a group of cosmetics, such as cream and lotion, based on the stalk of sunflowers. Billed as a natural product, they are selling well in Hungary. Plans are afoot to introduce them to the West. ''Everyone wants to use something that is natural,'' said Miss Birman.
Other successful products include a chocolate milk powder soluble in water; a protein-rich snack powder made from milk powder with spices and mineral salts added; candied vegetables and fruit; and a greenhouse covered with a double sheet of plastic and water running between those layers for heating and cooling.
But not all projects have succeeded. ''You can't be clever enough to always choose the best projects,'' she notes.
One toy seemed destined for success. It was a 12-sided successor to the Rubik's Cube, which was invented by a Hungarian and was, in a way, one of the rationales for the Innovation Fund. But a similar product made in the Far East flooded the Western markets before the Hungarian version was ready.
''Nothing came out of it,'' lamented Miss Birman. ''And those molds were not cheap.'' Production of the toy was stopped.
Moreover, sometimes she finds it difficult or impossible to work with the inventors. ''It seems to be a good idea, but they can't work with other people, '' she said.
Since the Innovation Fund was started, several other venture capital funds have been launched by ministries, including those of agriculture, construction, and industry; cooperatives, and foreign-trade organizations.
So far the Innovation Fund has used about half its 600 million forints of capital and earned about 80 million ($1.7 million). A new goal is for the fund to become independent of the National Bank by the end of the year, financing its own operation and becoming a separate bank. Miss Birman will then become a banker as well as a venture capitalist.