EIT Digital Accelerator – Scaling up throughout Europe · PDF fileEIT Digital...

Delivering Europe’s Digital Transformation

EIT Digital Accelerator –Scaling up throughout Europe

Dolf Wittkamper – Head of the EIT Digital AcceleratorMarch 21, 2017


Head of the EIT Digital Accelerator• Access to Market• Access to Finance • EIT Digital Challenge

Former: Design Director, Research Director, Startup CEO, Business Consultant, Account Director, Venture Manager

IntroducingDolf Wittkamper

@ Philips Lifestyle Incubator


From Incubators to Scaleup Accelerators

EIT Digital Accelerator

Access to Market

Corporate Venturing

Contents

Sherry Coutu Serial entrepreneur, former CEO, Angel investor and Non-executive director

Author of the report:

The Scale-Up Report on UK Economic growth, 2014

“Competitive advantage doesn’t go to the nations that focus on creating companies.

It goes to nations that focus on scaling companies.”


Impact on Jobs

Source: bloomberg.com, you-re-not-a-startup-we-can-t-help-you, 2016 and OECD

Scaleups2% - 6%

of companies:

Rest94% - 98%of companies:


Source: WEF_EuropeCompetitiveness_InnovationDrivenEntrepreneurship_Report_2014.pdf


Source: WEF_EuropeCompetitiveness_InnovationDrivenEntrepreneurship_Report_2014.pdf

Incubators Startup Accelerators Scaleup Accelerators


Source: WEF_EuropeCompetitiveness_InnovationDrivenEntrepreneurship_Report_2014.pdf and EIT Digital

Incubators Startup Accelerators Scaleup Accelerators

worldwide: > 2000 worldwide : < 50


Scaleup AcceleratorsA growing New Category

Source: Innovation Accelerators: Defining Characteristics Among Startup Assistance Organizations, C. Scott Dempwolf et al, 2014

StartupAccelerators

ScaleupAccelerator

Competitive application in cohorts

Open Application, when needed

Pre seed investment, Equity exchange

Fixed & Success fees, Delayed payment

limited time, e.g. 3 months 1-3 years support

Part-time mentors Full-time experts

National reach International

Startup Accelerator characteristics as defined in literature


EIT Digital countries withCo Location Centres

Eligible EU countries withincubator partners

Dedicated team since 2012EIT Digital Accelerator


From Startups to Scaleups

From Free to Sustainable

A double challenge

TextText


EIT Digital Accelerator: Flexible support plan

Access to Ecosystem Services

Access to Market Access to Finance

• Corporate matchmaking• Business development• Awareness & Sales Events• PR & Launch

A2M Success fees within 3 years

• Investor readiness• Meeting Investors

A2F success fee

Entry fee within 3 years

• Strategic coaching• Business communities• Acceleration planning• Brand endorsement

• Innovation & Talent network• EU Office space• Open Innovation projects

TextText


Access to Market (A2M) program

Acce

ss to

Mar

ket S

uppo

rt

PHASE 1

Market Readiness

PHASE 2

Meeting Customers

Transaction finalization• A2M is not involved in sales negotiations between

Buyer and Scaleup, nor in legal/contracts

• Review Business Plan• Go-to-market strategy, Acceleration planning• Target market/Customers/Country selection

Many to One Many to Many

One to One One to Many

Many Scaleups

1 Scaleup

1 cu

stom

er

Man

y cu

stom

ers

A2M Quadrant

TextText





Many Scaleups

1 Scaleup

1 cu

stom

er

Man

y cu

stom

ers

A2M Quadrant

TextText



One to One O

1 Scaleup

1 cu

stom

er

A2M Quadrant

Business DevelopmentNetwork & Ecosystem

- Team Networks- Partner networks- National/Node networks- Scaleup networks- Other networks

Opening the doors to international customers

Introducing Leads with high upfront certainty

TextText



One to Many

1 Scaleup

Man

y cu

stom

ers

A2M Quadrant

s Developmentk & Ecosystem

PR & LaunchInternational Targeted

presence

• Media coverage to Increase Reputation and brand awareness.

• Launch event in a country of choice: media and customers

TextText



Many to Many

One to Many

Many Scaleups

Man

y cu

stom

ers

A2M Quadrant

s Developmentk & Ecosystem


presence

Promotional and matchmaking events

Tradeshows

• Business Community events for each Action Line

TextText



Many to One

One to One

Many Scaleups

1 cu

stom

er

A2M Quadrant


PR & LaunInternational Ta

presence

Promotiona matchmaking

Tradeshow

Corp. MatchmakingPartners & non Partners

• Corporate Matchmaking performed in various settings: Proximus, KBC, Kone, Siemens, Deutsche Bank, …

• EIT Digital will further invest in the Industrial Engagement Program

• Growth area

Introducing Leads planned upfront

TextText





Many Scaleups

1 Scaleup

1 cu

stom

er

Man

y cu

stom

ers

A2M Quadrant

Business Development

Network & Ecosystem


presence


Tradeshows

Corp. MatchmakingPartners & non

Partners

TextText





Many Scaleups

1 Scaleup

1 cu

stom

er

Man

y cu

stom

ers

A2M Quadrant

Business Development

Network & Ecosystem


presence


Tradeshows

Corp. MatchmakingPartners & non

Partners Target countries Leads Deals

TextText


Proven results working with hundreds of ventures

TextText


Proven results working with hundreds of ventures

€14mClosed & Follow up

Deals


Mapping the 2016 Access to Market results

EIT Digital Supported,

Destinationcountries

Sourcingcountries


Mapping the 2016 Access to Market results

EIT Digital Supported


Sourcingcountries

Delivering Europe’s Digital TransformationDestination

countriesSourcingcountries

Target countries International leads Lead/deal journeys Closed + follow up deals

EIT Digital Supported, Excluding National

Delivering Europe’s Digital TransformationEIT Digital Supported,

Excluding National


Sourcingcountries

Target countries International leads Lead


Excluding National


Sourcingcountries

es International leads Lead/deal journeys Closed


Excluding National


Sourcingcountries

ads Lead/deal journeys Closed + follow up deals


Excluding National


Sourcingcountries

Target countries International leads Lead/deal journeys Closed + follow up deals


Italian Wellbeing companyFinnish Wellbeing company

EIT Digital Supported, Excluding National A2M


Sourcingcountries

InternationalLead/deal journeys

InternationalClosed + follow up deals

TextText


Corporate VenturingMany to One Many

One to One One to

Many Scaleups

1 Scaleup

1 cu

stom

er

A2M Quadrant


PR & LaunchInternational Target

presence

Promotional and matchmaking even

Tradeshows

Corp. MatchmakingPartners & non Partners


More than 71% of all startups surveyed agree that collaboration with corporates is necessary forsuccess.

Collaboration between Corporates and Startups

And as much as 88% of all corporates surveyed are of the opinion that they must collaborate with startups in order to innovate.

Source: KMPG New Horizons study 2014

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Source: KPMG

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Source: wired.co.uk/article/narry-singh-accenture-startups, Nov 2016

TextText


Corporate Venturing

Source: Corporate Venturing, Managing the innovation family in a dynamic world, C. Kuiper et al., 2015

Historic waves of Corporate Venturing

TextText


Corporate Venturing (CV)


Some key CV choices: • Internal versus external• Early stage versus later stage• Direct versus indirect

Definition:“All of the entrepreneurial activities aimed at setting up new businesses within or in close co-operation with a large corporate organization”

More than onlyCorporate Venturing Capital (CVC)

TextText


CV Strategy

Research confirms :(Campbell and Birkinshaw, 2003): “Only companies with clear objectives and a focused business model, underpinning their corporate venturing activities, are successful.“

Corporate Venturing business models:• Ecosystem Venturing, e.g. IBM• Innovation Venturing, e.g. Shell• Harvest Venturing, e.g. TNO

Instruments


TextText


CV Framework / Support Philips Lifestyle Incubator case

U-Design

2006 pre seed2007 founded

2009 team of 90

2012 divested, HQ to USA2015 D-round of 30 M€

TextText


TextText


Source: Harvard Business Review, 2013


EIT Digital Accelerator –Scaling up throughout Europe

Daniel Michel – Head of Access to FinanceMarch 21, 2017


Venture Capital in EuropeMain Market Trends


Venture Capital Trends in Europe 2006 - 2016

VC investments reached second highest total in decade

• 11+ billion € invested in 2016 – 3,000+ transactions

• Sharp decline in deal flow across all stages of the lifecycle

• 2015 was an exceptionally good year for venture capital


Venture CapitalUS-EU comparison

Source : Pitchbook 2017

905

1,2811,425 1,461

1,951

2,464

2,969

3,776

4,407

4,056

3,045

3.0

€

5.0

€

4.7

€

3.9

€

5.9

€

6.1

€

7.2

€

7.7

€

10.5

€

15.2

€

11.2

€

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

European VC Activity - 2006-2016

Total Deal Value (€ billions) # of Deals closed

3,301

4,2924,707 4,558

5,411

6,671

7,987

9,326

10,550 10,468

8,136

$29.

1

$35.

5

$37.

2

$26.

5

$31.

2

$44.

3

$40.

4

$44.

8

$68.

9

$79.

3

$69.

1

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US VC Activity - 2006-2016

Total Deal Value ($ billions) # of deals closed


Venture CapitalTrends in the Corporate Venture Capital segment

Global Corporate Venture investments stable in 2016

• Corporate venture capital activity decreased 14% in 2016, but number of transactions fell by 21% in Q4 2016.

• Intel Capital and Google Ventures were the most active Corporate Venture investors globally in 2016

• Most active Corporate Ventures since 2010: Intel, GV, Qualcomm Ventures, Salesforce, Softbank, Caixa Capital, GE Ventures, Comcast, Cisco, Samsung

Quaterly Global CVC Financing Trend: Q1’2012 – Q4’2016


Venture CapitalEuropean Trends per investment stage (1/2)

Angel/seed transactions declining sharply in 2016

• Total number of investment rounds declined by over 1,000 from 2015 to 2016

• Angel/ seed transactions declined the most (-740)

• Sharp decline in the number of funds below €50 million since 2013 (by 80%). Only 13 such funds closed in 2016


Venture Capital MarketEuropean Trends per investment stage (2/2)

First time financings fail to reach 1,000 completed deals during 2016

• First time financings fell to a seven-year low in 2016: less than 1,000 transactions in 2016


Corporate Venture CapitalDifferent investors follow different objectives

Corporate growthStrategic investment

Economic developmentFinancial return National Funds

CorporateVenture

Venture Capital ‘Industry’

Wealth management, Passion, conviction

Venture CapitalFirms

Business AngelsFamily Offices


European Venture Capital – a very rich scene of investors

Venture CapitalFirms

National Funds

Corporate Venture

Business AngelsFamily Offices


What is Corporate Venture Capital?


Why setting-up Corporate Venture activities ?

❶ Identify new business opportunities

❷ Identify innovative technologies

❸ Identify entrepreneurial teams


Corporates making Equity investments, into external startup companies

• Different models to invest into startups:

o Corporate/ Direct Investments (own balance sheet)

o Internal dedicated fund (“GP model”)

o External Fund (“LP model”)

• … being a ‘paying’ customer of a startup is also ‘investing’ in the future of new players, and potential partners

Corporate Venture CapitalWhat is Corporate Venture Capital?


Corporate venture capital investments cover different stages in the development cycle

• Very often Corporate Venture investors like to syndicate with traditional VCs

• Corporate Venture performance and success rest on both strategic and financial metrics

• Having a corporate venture investor in the shareholder structure is often seen as a sign of technical credibility

Corporate Venture CapitalA essential component for corporate development

Equity Capital Markets

Founders/ Friends/ Family

Financingsources

Business support

Seed Early Late Growth Mature Consolidate

Incubators

Venture Capital

Private Equity

Corporate Venture Capital

AcceleratorsAccelerator

Business Angels

Crowdfunding

Business Stage


SOURCE: Volans report ; Investing in Breakthrough Corporate Venture Capital

Corporate Venture CapitalThe Players

Corporate Venture teams bridge the gap between the corporate …… and the ecosystem of innovative startups

Executive teams Research and develpment teams Strategy teams Corporate development teams

Startups Accelerators Academics Other CVC and VCs Governmental organizations


SiloedOnly in itsown sector

ConstructorBuild on top

ExplorerIdentify

innovativebusiness models

ConglomerateDiversification

Corporate Venture CapitalDifferent investment styles

CommercialExploit own

network


• Access to financial resources

• Ideal to complete or start a funding round

• Provides technical endorsement

• To some extend, access to the network of the corporate

Corporate Venture CapitalBenefits for the startups


• Commitment for the long term (5 to 10 years)

• Critical mass: 5+m€/ year

• Limited or no interference with management decisions, only recommendations

• Accept a higher risk profile

• Competitive exit

Corporate Venture CapitalPlay by the rules


How is EIT Digital Accelerator supporting startups in their fundraising ?


What investors likeKey considerations for a successful fundraising

ONE PRODUCT

• Appropriate: solves a problem

• Finalized (not on PPT)

• High-tech : barrier to entry

ONE MARKET

• Market opportunity : a problem to be solved

• Defined : niche and specialization is better

• Size and trends

ONE TEAM

• Complementarity

• Trust

• Relevant past experience


What do investors like above all ?Key considerations for a successful fundraising

ONE PRODUCT




ONE MARKET



• Size and trends

ONE TEAM

• Complementarity

• Trust


+ Cash Flows


What investors like – different approaches in Europe and USAKey considerations for a successful fundraising

ONE PRODUCT




ONE MARKET



• Size and trends

ONE TEAM

• Complementarity

• Trust


European approach

US approach


Overview of the Access to Finance ProgramFocused support matching CEOs needs

a

• a

Acce

ss to

Fin

ance

Sup

port PHASE 1

Investment Readiness

PHASE 2

Meeting Investors

• Investors events

• Introduction to investors

• Fundraising Strategy

• Review Fundraising Documentation

• Coaching of the CEO/founders


VC Market trends – increased corporate venturing activityFocus is on international fundraising rounds, with corporate venture investors

Fundraising rounds are getting more difficult to complete …

• Seed and early stage rounds get more difficult to complete

• Venture capital funds are not sufficient to finance the numerous startups emerging in Europe

… hence a focus on corporate venture funds and international investors

Thank you#eitdigital17


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