Belgium does not have any startup that raised more than €100M to grow further. This needs to be better. Three areas need to be improved upon to deliver a better solution. Only then we can expect more.
“Luckily, the government is now working on a super fund, the so-called ‘Growth Fund-of Funds’ that supports the ecosystem of scale-ups.
— Jurgen Ingels, co-founder of B-Hive and founder of Scale-Ups.eu
Scalers are scale-ups that have raised more than €100M and prove to have a competitive business model. In Europe, there are 86 ICT scalers in total. Our neighbors France has 11 and Germany has 15, but Belgium has 0 to date.
Even if these countries are much bigger in size, countries that are of comparable size do better: Sweden has 7, The Netherlands has 3 and Luxembourg has 1. At this moment, Belgium has no scaler. How can we do better?
I see three areas that are waiting for a more pragmatic approach:
Area 1: The Comfort Zone Mentality
Belgians are rather conservative and risk-averse by nature. This low level of ambition is a problem, because it hinders them from growth.
According to the yearly ‘Rising Star Monitor’ of Vlerick Business School and Deloitte, Belgians companies lack ambition. Half of the respondents, mostly IT companies, mention that growth is not in their current planning. Companies with less ambition think that they can hire 2 FTEs within a year and that their revenue will rise with €1,9M. Companies with more growth ambitions plan to hire 29 new FTEs and are aiming for a sales growth of €8,7M.
This lack of ambition is more dangerous than it seems. In Belgium, mostly three or four companies are competing with each other. That’s a shame, as their prices and margins will drop as a result of the competition. Startups in other countries have their mindset on going international from Day 1. This way, they can grow faster and push away their (foreign) competitors. Belgian startups should combine forces and scale up internationally, instead of competing against each other. The incubators should also be aware of this, as well, so they can look at the bigger picture.
Area 2: The Ecosystem
The lack of no successful Belgian scalers has another reason. There is no wide and diverse ecosystem where startups can grow further. The lack of ‘second generation entrepreneurs’ slow down the growth process, as well. Having direct access to entrepreneurs who have scaled their business successfully can prevent you from making the same mistakes and can save you a lot of time. That’s important because an experienced network contributes to the success of companies through time reduction.
A startup founder that only has access to the local bank director can lose weeks or months compared to someone who can pitch his/her product directly in front of the director of a big bank.
This is also one of the reasons for slowing down growth that’s mentioned in the Rising Star Monitor: Regardless of whether or not a company has growth ambition, the success is still largely up to the founders and their team. This influences your financing, as anyone who has contacts with fund partners will have it much easier than someone who needs to pass all the company levels.
If you want to set up your business international or want to pump up your sales, having access to experienced entrepreneurs and investors can save you a lot of time. Scale-ups sometimes lose half a year, if their sales team in China or the USA do not know what to do. The avoidance of hiring the wrong people make the difference between success or failure.
Area 3: Venture Capital Funds
Companies in Belgium have limited access to resources, not that there is any shortage of active funds. On the contrary, even. However, they are too small to help scale-ups gain an extra push. Most venture capitals only have 75 to 100 million while the amount that a scale-up needs to grow is much more compared to a startup (about 5 to 30 million), which means that their risk is too large to invest in just one to two companies.
If a British fund writes a check of 50M, you as an entrepreneur would be crazy to keep the decision makers in Belgium. This is how our country ‘lost’ successful scale-ups like Silverfin and Collibra to London.
Luckily, the government is now working a super fund, the so called ‘Growth Fund-of-Funds’ that supports the ecosystem of scale-ups. This is already a good step forward in creating scalers. Ideally by then, we will have powerful capital investment funds that are managing hundreds of millions.
In the end: A lot of Belgian start-ups cuddled to death in an artificial environment, while they are missing the reflex to go international. Therefore, my call to the Belgian startups: When raising your first capital round, look internationally to expand your business and be part of an ecosystem.