News – Venture Capital & Private Equity practice
30 March 2015
Start-ups and growth companies are once again the ‘talk of the town’ in the investment community. In a period of six months nearly 200 million euro has been raised among wealthy Belgians. If all goes well, half a billion euro will be available for aspiring entrepreneurs after the summer. ‘The difficult years are behind us’, says one relieved industry player.
Journalists: Stijn Demeester and Jan De Schamphelaere – De Tijd – March 28, 2015
The amounts that have been recently raised by venture capital funds are unprecedented for Flanders. A survey of De Tijd shows that in the course of the past six months approximately 200 million euro was raised by venture capital funds focused on start-ups and growth companies. Wealthy families and successful entrepreneurs are waiting in line to fulfill the financial needs of start-ups.
One of these funds is Smartfin Capital, the fund of Jurgen Ingels who sold his payments company Clear2Pay for 375 million euro last year. With his fund, Ingels focuses on promising start-ups in financial technology and has already raised 51 million euro in the past months. He expects a final closing of 75 million euro and is already dreaming out loud of a second fund.
Ingels is also investor and founder of Volta Ventures, the fund of ‘tech stars’ such as Peter Hinssen (Across), Jonas Dhaenens (Combell), Alain De Taeye (TomTom) and Jan Vorstermans (formerly COO of Telenet). This week it became clear that Marc Coucke has made a multi million investment in Volta. Volta has already secured 45 million euro to invest in emerging software and internet companies.
It is a constant trend that successful entrepreneurs are reinvesting their capital in start-ups. The investor list of Hummingbird Opportunity Fund of Barend Van den Brande reads like a who’s who of the Flemish entrepreneurial community. At the end of October Van den Brande raised 25 million dollar (23 million euro) in ten days from investors such as Wouter Vandenhaute and Erik Watté of Woestijnvis, Michel Delbaere (Crop's), the family Vangheluwe (Winsol) and Guido Van Der Schueren (ex-Artwork Systems). The fund will invest in Turkish and Flemish internet start-ups.
Investments at universities are also flourishing. Capital-E, a fund manager closely associated with research center IMEC, closed its second fund at 56 million euro at the beginning of this month. The team, specialized in micro and nano electronics, has already invested in three companies.
Qbic is the last in line to raise millions. The intra-university fund of biotech veteran Marc Zabeau and Martin De Prycker (formerly head of Barco) increased its capital this week with one third to 41 million euro. The fresh funds are provided by institutional investors and one private investor. ‘We have never actively searched for private funds, but several private investors have approached us’. In order to meet this demand, Zabeau and De Prycker are already planning a second fund targeted at high net worth individuals and family offices.
And this is not the end. Today, three additional large funds are underway to raise capital during the next months. Two of them are biotech funds, the Fund+ of Desiré Collen and Chris Buyse (ex-Thrombogenics) and Valiance of the London-resident Belgian Jan Pensaert, and VenturWise, a venture capital fund of (again) Jan Vorstermans. Together they are planning to raise an additional 250 million euro. If all goes well, half a billion euro will be available after the summer to invest in start-ups. And this number is probably an underestimation. Several initiatives remain under the radar screen and wealthy families can also opt for direct investments.
‘Venture capital is booming again’ concludes Jos Peeters of Capricorn, which raised an additional 7.6 million euro for its e-health fund in October. ‘Every week, newspapers write about new start-ups, while there was no interest at all a couple of years ago. In addition, there is no denying that investors are getting tired of the low interest rate environment. This also leads to investments.’
The low interest rate environment is of course also relevant for small investors. However, those are largely absent from the venture capital scene, which appears to be the exclusive playground of institutional investors, wealthy families and ‘high networth individuals’. Why?
‘Venture capital is too risky for small investors’, says Frank Maene of Volta Ventures. ‘Contrary to private equity, we do not invest in cash flow generating enterprises. By definition we invest in companies that are often lossmaking, have little or no turnover, or do not even have a product ready. It should not be forgotten that one could lose everything with venture capital. You cannot do this to small investors.’
‘It should also be noted that historical venture capital returns are lower than investments in real estate or equity’, adds Sam Desimpel. He co-manages the assets of family Desimpel and is founder of Princip.al, a network gathering about 100 Belgian family offices. ‘Why then do wealthy families and entrepreneurs invest in venture capital? It is often based on passion and conviction’, says Desimpel. ‘Also, one should not forget that sector expertise offers an advantage. Persons like Rudy Mariën or Jurgen Ingels have deep sector-specific expertise. Also, their network offers a myriad of opportunities. Such a track record is often indispensable to convince their network”.
Although venture capital funds are mushrooming nowadays, Jan Vorstermans is of the opinion that there cannot be too many. ‘There still is an enormous financing gap between early stage investments and private equity funding. The lack of such funds is the reason why so few local start-ups grow into world players.’ ‘Investors are cooperating well’, concludes Marc Zabeau. ‘In Flanders, the need for funds is still larger than what is available.’