European High-Tech Companies With High Demand For Venture Capital

5 Oct

Technology startups and growth companies are essential for Europe’s high-technology regions. They activate their eco-systems with new inventions and clever solutions and make a significant economic contribution for employment and wealth of a region. And their potential is not even used to the fullest. There are way more public financial means for fundamental research than there is venture capital for marketing products. In comparison to the US and Asia Europe significantly lacks venture capital from seed to later stage financing especially for complex and capital-intensive technology products. Since 2007 an average of 2,500 new European startups per year received seed funding, only 50 per cent of them even got follow-up financing. In Germany 75 per cent of the founding and growth companies are solely financed by equity capital. On 15 per cent of them receives financial support by venture capital companies.

Europe’s Biggest Platform For Capital Seeking High-Tech Companies
In order for Europe’s startup scene in knowledge- and capital-intensive key enabling technology industries to not loose their drive and strong momentum, a better risk capital and growth financing needs to be guaranteed for high-tech ventures and startups. The European HIGHTECH VENTURE DAYS, organized by HighTech Startbahn, make an important contribution to that goal. From October 5 till 6, the international investor platform offers the opportunity for 40 technology companies to present themselves in a closed environment to more than 70 international investors from Europe, the US, and Asia, in order to raise venture capital for product development and growth. Subsequently, another 24 young companies will present themselves publicly to investors, more than 6,000 experts, and about 400 exhibitors at SEMICON Europa. In addition to exhibition space in the SEMI Innovation Village the founders are getting the opportunity to make contact with industry experts from the semiconductor industry. This way, this year’s cooperation of HighTech Startbahn and Semi Europe created the biggest matching event for high-tech companies in Europe.

64 Selected Startups And Growth Companies Seek About 378 Million Euro of Venture Capital 
The start of the cooperation of HighTech Startbahn and SEMI was marked by a Europe-wide tendering procedure for projects in March 2015. In total, 109 promising technology ventures from 18 countries applied for invitation. Overall, these 109 companies are looking for 470 million Euro of venture capital. The spectrum includes innovative products and services for fields like vehicle safety, production increase in industry and agriculture, energy and resource efficiency as well as new, effective treatment approaches for severe illnesses. 64 attractive startups and growth companies have been chosen, all active in the six key enabling technologies: micro-, nano-, information and communications technology (ICT), environmental and energy technology, automotive, material sciences, plant and mechanical engineering, and medical technology and life sciences. “34 of these companies are from the research-intensive regions in Eastern Germany alone. Overall, they are looking for about 143 million Euro. The 23 Saxon companies alone are seeking for 88 million Euro in the current investment round”, Bettina Voßberg, Chairwoman of the Board of HighTech Startbahn Network e.V., says. “These companies are looking for venture capital to master the market entry, to grow or to intensify international market activities”, Bettina Voßberg adds. The other 30 companies are based in Western Germany, Finland, France, Ireland, Israel, Italy, Croatia, Poland, Russia, Slovenia, Sweden, and Hungary. Even a US company with a development office in Dresden wants to seize the presented opportunity.

High Demand For Private Risk Capital
The current demand also reflects the challenge the statistics of the German Venture Capital Association e.V. (BVK) show: In 2013, about 19 million Euro were invested in 79 capital seeking companies from Saxony. In 2014, there were 25 million for 79 companies. “The Saxon numbers clearly point out the gap between supply and demand”, Bettina Voßberg says. Especially in the Eastern part of Germany the discrepancy between potential and financial needs on the one hand and investments on the other hand is striking. Leaving Berlin aside that got 241 million Euro and therefore the largest share of the about 650 million Euro venture capital invested in 2014, only 67 million Euro of venture capital was invested in 158 Eastern German ventures of the total of 712 German startups.

But other European regions are facing a similar situation: This year, even companies from Israel, on of the global stronghold of venture capital investments, applied to the HIGHTECH VENTURE DAYS, because the local investments there are also mainly made in the fields of Internet, Mobile and Telecom. Max Ruffo, founder and CEO of Terrabee, a French startup developing new sensors for autonomous navigation of robots and drones, shares this experience: “The majority of venture capital invested in Europe goes to app and e-commerce businesses. We are looking for investors that know the hardware market. That is where the US is clearly in the lead”, the entrepreneur who is looking for 2 million Euro for the development of his company says.

National And International Investors
“More than 70 national and international investors are coming to Dresden for two or three days,”, Bettina Voßberg, head of the investor congress, knows. “That presents a huge opportunity for startups and growth companies. Of the companies taking part in our investor and venture event in 2013 and 2014 30 per cent were in negotiations with investors. Seven of them were receiving financing, that is about 10 per cent. That is the first important step in the right direction, but there is still a lot to be done until we can say we significantly improved the financing of innovative startup and growth companies in Europe”, Bettina Voßberg says.

Among the investors there are representatives of venture capital funds investing in high-tech such as TVM and CAPITAL-E, investing family offices and SMEs as well as Business Angels and representatives of banks. Pascal Vanluchene, co-founder of CAPITAL-E, a venture capitalist for semiconductors and advanced materials from Belgium, states: “Many venture capitalists in Europe diverted their focus in the last few years to internet and social media startups – those (few) that take off usually require high amounts of investments to scale to create company value. Some VCs forgot that hardware development for hot topics such as Internet of Things, wearables, autonomous vehicles and robotics are relatively capital light in direct comparison. One of many good reasons to refocus on high-tech ventures.” Dr Peter Neubeck, Venture Partner at TVM, a funds focused on life sciences, agrees: “Europe is strong in life science research, but not in translating it into products and spin-offs. The biggest challenge is the lack of venture capital in the early stage.”

How important venture capital for high-tech companies is, shows the example of the Dresden based Novaled GmbH, a 2001 spin-off of TU Dresden. “For our product development and positioning we had little time but a high demand of financial resources. In this situation, only venture capital can help”, Dr Jan Blochwitz-Nimoth, co-founder and CTO of Novaled summarizes. In 2013, the Korean electronics group Samsung acquired the OLED specialist for about 260 million Euro.

Focus On High-Tech And Real Economy
HIGHTECH VENTURE DAYS are solely addressing high-tech ventures. All of the 64 companies are ventures with time and sometimes also capital-intensive development programs, high-tech with a real value chain (no e-commerce or apps). Among them are 49 startups (up to five years) as well as 15 growth companies. A lot of the pitching companies are active in international niche markets. “The HIGHTECH VENTURE DAYS in combination with SEMICON Europa are a great opportunity both for Saxon startups to present their unique technologies or services, and for national and international investors to learn more about Saxony’s high-tech economy”, Dr Harmut Mangold, State Secretary at the Saxon State Ministry for Economic Affairs, Labor and Transport.

HIGHTECH VENTURE DAYS is the Europe-wide extension of the investors’ congress ‘Innovationswerkstatt Kapital’ 2013 and 2014, organized by HighTech Startbahn. In 2015, firstly 40 selected capital seeking high-tech startups and growth companies from the six key technology fields will present their companies to national and international investors including business angels, venture capitalists, corporate VCs, banks, and the ‘investing middle class’ with 10-minute pitches and a subsequent Q/A in a private atmosphere, then another 27 ventures will present themselves in the attached public area of the Innovation Village at the SEMICON Europa. 35 companies seized the opportunity to individually train for their pitches and improve their professional presentation with HighTech Startbahn.

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