When Holding Is No Longer Enough: An Investment Fund as a Platform for Entrepreneurs and Investors
When Holding Is No Longer Enough: An Investment Fund as a Platform for Entrepreneurs and Investors
Authors: Ivan Kovář – BDO Fund Administration a.s., Vít Bozděch – TILLER investment comany a.s.
How qualified investor funds can help entrepreneurs finance further growth without losing control of the company
Why CIFs are becoming a tool for restructuring business groups, generational renewal and raising long-term capital
What role the fund administrator plays in ensuring transparency, investor confidence and the regulatory sound functioning of the entire structure
Czech business groups often reach a stage where the original ownership and financial arrangement is not sufficient for their further ambitions. Growth, acquisitions, generational renewal, and the need for long-term capital require a structure that is transparent, professional, and understandable to founders and investors alike. A qualified investor fund (QIF) can be just such a tool – not just a legal framework, but a platform for further business development.
Restructuring as a natural phase of growth
Over time, every successful business group reaches a point where the original ownership and financial arrangement ceases to correspond to its ambitions. The group is growing, investment opportunities are more capital-intensive and risk management is more complex than when it was a few companies or projects. In such a situation, it is often not enough to increase bank loans or invite one strategic partner. The founder needs a structure that allows for further growth, maintains its strategic influence, and at the same time offers a regulated and understandable environment to external investors. A typical example can be an entrepreneur who, after years of building an industrial group, deals with the financing of further development, acquisitions or long-term projects. Instead of selling part of the assets or the entry of a one-time investor, it can concentrate selected assets or investment opportunities in an investment fund and open it to qualified investors.
The idea is simple: the founder does not step out of his business, but invites investors to invest with him.
The fund as a bridge between entrepreneurs and investors
QIF can be a suitable solution where there is a clear investment strategy, a long-term horizon and the need for capital for further growth. Unlike a conventional holding structure, it creates a standardized environment for the entry of a larger number of investors.For the founder, such an arrangement has several major advantages. It allows the business and investment planes to be separated: the founder can further determine the strategy and develop the selected assets, while the fund creates a clearly defined return framework for investors.
At the same time, the fund brings a higher level of transparency. Investors do not enter a confusing group of companies, but a regulated structure with clear rules, statutes, administrators, managers, depositaries, market valuations of assets and regular reporting.
The founder usually remains economically interested in the success of the strategy. It is therefore not a matter of simply selling the past, but of growing together in the future: the founder puts in know-how and opportunities, investors capital and long-term trust.
The fund also creates a platform that can be further developed – with additional investors, new classes of investment shares or other projects. This is different from a one-off transaction, which often addresses only one specific capital need.
Administrator role: the infrastructure that determines trust
One of the key partners of the fund is the administrator. His role is usually less visible on the outside than that of the founder, manager or investment manager, but in practice it is absolutely crucial.The administrator provides the operational and regulatory backbone of the fund. It participates in keeping records of investors, calculating the value of fund capital, accounting, reporting, fulfilling selected regulatory obligations and coordinating processes that must work accurately, repeatedly and controllably.
In the case of a fund that is created as part of a broader business restructuring, the role of the administrator is even more important. They must understand that the fund is part of a broader economic set-up where business logic, regulatory framework, accounting and tax contexts, and investor expectations meet.
This is where the involvement of an administrator with a strong professional background can be beneficial. BDO Fund Administration a.s. combines the administration of the fund with the BDO Group's broader know-how in the areas of accounting, taxes, auditing, valuation and regulatory consulting. For the fund's founders, this means the ability to base the operational setup on a partner who perceives administration in the context of the entire investment and business arrangement, which is especially important when setting valuation rules, preparing reporting for investors, coordinating with the auditor, setting up processes for subscriptions and redemptions, or when dealing with transactions with related parties. Minor procedural errors could quickly turn into a reputational or regulatory problem in these areas.
What the fund brings to the founder
From the perspective of the fund's founder, the main benefit is a combination of control, capital and trustworthiness.The fund allows the founder to open up selected investment opportunities to external qualified investors without necessarily having to sell control of the entire business group. At the same time, it creates a regulated framework that is more understandable to investors than an individual entry into a holding company or a non-public joint venture agreement.
This gives the founder a long-term financing instrument. If set up correctly, the fund can repeatedly raise capital for new projects, acquisitions or development of existing assets. Thus, a one-time transaction becomes an investment platform.
In addition to growth financing, the QIF can also serve as one of the tools for organizing a family business and preparing for generational handover. This is not necessarily the main reason for its creation, but for larger business groups, the fund structure can help separate strategic asset management from the economic rights of individual family members, set more transparent wealth management rules, and create a framework that is more readable for the successor generation, investors and financing institutions.
No less important is the reputation effect. The creation of the fund, the involvement of regulated partners and the setting up of standardized processes send a signal to the market that the entrepreneur is moving from a purely private model of capital management to a more institutional phase.
What the fund brings to investors
For qualified investors, such a structure can be interesting in that it allows them to participate in opportunities that would otherwise be difficult for them to access. Private industrial projects, restructurings, acquisition opportunities or growth investments are usually not normally accessible to individual investors in a professionally managed form.The fund offers them entry into a regulated environment where the rules of the investment strategy are defined in advance. This does not mean eliminating risk. Investing in CIFs remains intended for investors who understand risks, lower liquidity and a long-term investment horizon.
However, it is essential that the investor does not only enter an isolated financial product. It enters a structure whose economic logic is often built on real assets, a specific business story and the experience of the founder.
The fund as the next stage of business
FKI is not a universal solution for every business group. However, if there is a strong founder, a clear investment strategy, quality assets and ambition to invite long-term capital, it can be a very effective tool.Its purpose is not just to raise money. The real value lies in the fact that it creates a professional platform for further growth, sets the rules for cooperation between the founder and investors, and moves the business into a more institutional form. In this context, the role of the administrator is essential. It helps ensure that the investment story is not only based on trust in the founder, but also on quality infrastructure, transparent processes and the regulatory correct operation of the fund.
In this context, the role of the administrator is essential. It is the administrator who helps ensure that the investment story is not only based on trust in the founder, but also on quality infrastructure, transparent processes and the regulatory-correct operation of the fund.
For entrepreneurs, the establishment of a CIF can be a natural outcome of a long-term restructuring and professionalization of the group. For investors, it is an opportunity to participate in further growth together with the founder, who remains in the game with his own capital, experience and long-term vision.
Case study: CE Industries & Aerospace Fund
A practical example of the use of a qualified investor fund as a tool for long-term financing of business growth is the CE INDUSTRIES & AEROSPACE SICAV a.s. fund. The fund was created as an investment platform focused on industrial, aerospace and technology assets with long-term growth potential and is intended for qualified investors.The fund builds on industrial and technological projects built around the CE Industries and Helicopter Alliance groups. Its main investor and sponsor is the Czech entrepreneur and industrial investor Jaroslav Strnad. The fund aims to create a professional and regulated environment in which qualified investors can participate in selected investment opportunities linked to industrial, aerospace, technology, defence and security projects that are not otherwise commonly available to them.
The administration of the fund is provided by BDO Fund Administration a.s. For the BDO advisory group, to which the joint-stock company belongs, this is an important milestone following several years of preparations, building professional, regulatory and technological background and obtaining a CNB license.
BDO Fund Administration brings to the project professional background in the field of fund administration, accounting, reporting, regulatory processes, compliance and AML. The fund manager is TILLER, a Czech boutique investment company focusing on the management of the CIFs and especially on projects with higher transaction and professional complexity. The depository is Česká spořitelna, a.s.
This collaboration well illustrates the broader trend described in the article: an entrepreneur is not just creating another holding company, but a regulated investment platform with clearly divided roles, professional administration, expert management, depository supervision and a transparent framework for qualified investors.
The CE Industries & Aerospace Fund thus represents a concrete example of how business vision, long-term capital and institutional fund infrastructure can be connected through CIFs.
More information about this fund can be found at: CE Industries & Aerospace SICAV - Homepage