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Strong HCs
Regional HCs
Start-ups with
emerging competitive
advantage
As growth and development require additional funds, a
closer look at how CEE’s hidden champions address the
challenge of nancing further growth and development is
insightful (Figure 2). A clear pattern here is that counting
Financial strategy dilemma of hidden champions attempts
to explain why neither debt nor external equity (including
private and public equity) are
“
suitable
”
sources of financing
for most of them. Financial strategy dilemma is the choices
that hidden champions must make when considering how
to nance their business. While nancial investors require
transparency and expect businesses to outline nancial,
Tangible
assets
Social capital
and technology
Knowledge and
innovation
Privatisation of assets at a
symbolic price (mainly before
early 1990s, rarely
Amount of these assets is
insignificant for the HCs
originated in this decade
… – 1990
1990 – 2000
2000 – …
Capturing technology,
monetising and
commercialising social
capital and technology
(mainly mid 1990s – 2000s,
rarely early 1990s)
Amount of these assets is
insignificant for the HCs originated
in this decade
Self-finance, no big initial
investments required;
Trade finance from a big
customer
Amount of these assets is
insignificant for the HCs
originated in this decade
Fig. 1 How hidden
champions from CEE
initially obtained funds
on themselves proves to be the most effective financing
strategy, while external debt and equity financing seems to
be rather an exception than a rule.
strategic, and business model issues explicitly, which may
act to commoditise and devalue key success factors of a
mainly intangible nature, strategic investors require their
share of control, reducing and thus devaluing the initial
owner’s leadership and personality roles. Either way, a very
important strategic advantage is being destroyed.
For many hidden champions seeking the right financial
sources, rethinking their approach to management may be-
come crucial, requiring a focus on formalisation of strategic
process, risk management, and implementation of sound
corporate reporting practices. Learning how the language of
globalised financial markets will influence the functioning of
these unique companies is worth further study.
Yes
Yes
Yes
Self-financing
Yes
Yes
Yes
Trade financing
and partnerships
Yes
Rare
Exceptionally rare
Debt financing
(Loans)
Exceptionally rare
Exceptionally rare
No
External equity
financing
Rare
Exceptionally rare
No
Debt financing
(Bonds)
Fig. 2 How hidden
champions in Central
and Eastern Europe
finance their growth
MAIN TYPE OF
Assets of certain type initially financed by
Period of company origination
TYPE OF HC
