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Government & big investors work on a superfund for scale-ups
Belgium has to grow more tech companies with a worldwide potential. Currently, a lot of ambitious companies do not find funding to get past the start-up phase and move abroad. Minister of Finance Johan Van Overtveldt wants to break this evolution. His cabinet works on a ‘superfund’ that is going to invest in Belgian private funds who invest in scale-ups. As such, Van Overtveldt wants to expand the venture capital sector in Belgium by giving them more power. At the moment, Belgium does not have a lot of investment funds that can handle big tickets. ‘Scale-ups used to get an injection of 5 million euros in their second capital round, now it’s 10-15 million euros.’
Entrepreneurs such as Ducko Sickinghe (ex-CEO Telenet) and Jürgen Ingels (ex-Clear2Pay) recently launched new funds specialized in bigger capital rounds. Van Overtveldt want to enlarge their firepower and those of other Belgian venture capitalists by giving them each several dozens of millions of euros. The project is still in an early stage, but the foundation is clear. Yesterday on the New Year’s Ceremony of Euronext, Van Overtveldt talked about a capital that can go up to 400 million euros. Other parties talk about 200 to 300 million euros.
This money will come from institutional investors like insurance companies and pension funds as well as from the government. The FPIM, the financial branch of the federal government, would get a role as facilitator to empower the capital of the fund. Also other public investors, such as the Flemish PMV or the Walloon SRIW, can invest. The grow fund is inspired on a similar model in Denmark, the Danish Growth Fund.
The idea for the superfund for letting tech companies grow locally and keeping them here was designed by a team where amongst others Max Jadot (CEO BNP Paribas Fortis) and Jürgen Ingels are a part of. Law firm Baker McKenzie takes care of the legal part. Van Overtveldt also wants to expand the taxshelter, the fiscal favor regime for investments in scale-ups.
Money and network have to prevent scale-ups from leaving
More money and a good ‘ecosystem' have to help our technological companies to grow on world scale
Despite the boom of financing start-ups, our country is still struggling to keep ‘scale-ups’ – tech companies that want to grow internationally – here. Our country counted between 2010 and 2016 around 90 tech companies that already gathered more than 1 million euros of capital. Belgium is with this number, according to the data of consultant SEP Monitor, good for only 0.2 percent of the 4200 European scale-ups. Also the total amount of 600 million dollar disappears into nothing compared to the total European amount of 58 billion dollar.
In the biggest list of capital injections of more than 100 million euros our country does not appear on the European ranking. The Netherlands and Sweden each have 3 scale-ups, mini-state Luxemburg and Iceland both have one. Belgium has also not delivered any unicorn yet, a private company with an estimated value of 1 billion dollar.
The lack of such scale-ups with worldwide potential has several reasons. The lack of big local venture capital funds is one of them. ‘There is local capital, but it is also fragmented. Rounds of 10 to 50 million euros are too difficult for our country’, says Minister of Finance Van Overtveldt.
That is the reason why a lot of big tech companies move abroad when the need of capital becomes bigger. Notorious examples of these tech companies are Collibra and Silverfin who moved to the USA and the UK. Other promising companies, such as the Ghent based mobile cash deck producer Posios, got sold to foreign companies.
More local capital should anchor such companies in our country, until they are so big they won’t go abroad anymore, says the government. An important measurement to reach that goal is the creation of a new ‘fund of funds’ for scale-ups. The fund is still in a design stage, but essentially it is a vehicle that is being financed with money from the government and money from institutional investors, which invests in private venture capital funds itself.
Van Overtveldt talked during New Year’s Ceremony of Euronext about a capital that can go up to 400 million euros. In a few years follow-up funds can be established, if the concept catches on.
It is not the only measurement Van Overtveldt wants to implement. He also wants to expand the taxshelter, the fiscal favor regime for investments in scale-ups. For investments up to 0.5 million euros there will be a fiscal benefit of 25 percent, with the condition that the company has ten or more employees and a yearly growth rate of 10 percent in revenues or personnel.
Money is not the only way that can help Belgian scale-ups reach the the top of the world. Growing companies also feel the need of a network and knowledge that helps them scale. With that goal Jürgen Ingels, the famous tech entrepreneur, founded Scale-Ups.eu. It connects scale-ups with investors, governments, the academic world and the big companies.
‘Time is raw material that scale-ups lack’, Ingels says. ‘We want to help them squeeze time by connecting them with the right people, giving them the right answer to their questions and finding the right talent for their company.’
At the moment the organization is preparing several management trajectories for scale-ups. The absolute highlight of this ‘scale-up year’ will be the tech conference SuperNova in Antwerp.
SuperNova puts Belgium in the spotlight
To put our country on the map as a haven for scale-ups, Scale-Ups.eu is preparing the tech conference SuperNova. It takes place from th 27th until the 30th of September at ‘het Eilandje’ in Antwerp. Flanders DC, the organization for entrepreneurs in the creative industry, is co-organizer.
Initiative taker Jürgen Ingels sees it big. Thirty years after the technology fair Flanders Technology in Ghent, SuperNova has to put our country back on the map as a technological hotspot for international venture capitalists and companies, he says. To reach that goal, Ingels is working together with big European Venture Capital funds like Columbia Lake Partners and Summit Partners. In their own region they are going to select a total of 55 hidden gems, European scale stories that have stayed under the radar. Those companies can pitch in Antwerp to a public of plus 200 international VCs. The selection of 15 Benelux-companies will be done by Smartfin Capital, Fortino, Volta and HPE.
The festival will also have a free part for the big public, they will discover digital technology.