Download Venture capital as driver for Growth and Employment

Investeren in radicale innovatie:
rol voor private sector en voor de overheid
Alex Brabers
Executive Vice-President Gimv
19 April 2010
Venture capital as driver for Growth and Employment
• Josh Lerner, Professor Harvard:
• only 15% of economic growth stems from increased input. 85% is due
to productivity increases, i.e. innovation.
• New ventures play a key role in innovation, more than innovation at
established corporates.
• Venture capital is a more efficient screening process of innovation,
more than corporate research and government.
• Venture backed companies perform better than other similar
companies.
• EVCA:
• “Studies show that between 2000 and 2004 European private equity
and venture capital financed companies created 1 million new jobs,
which translates to a compound annual growth rate of 5.4% per year
(eight times the EU25 total employment rate of 0.7%). Between 1997
and 2004, the average employment growth in buyout-financed
companies was 2.4%, compared to 30.5% for venture-backed
companies.”
Presentation Main Title
14-04-2009
p. 2
Key success factor for VC-centra in the US:
a buoyant ecosystem in Boston and the Valley
• Venture capitalists
• Supply of money
• Support the development
• Role models
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VC backed companies
Successful entrepreneurs
CTO’s, developpers
Stock options
Knowledge of the VC model
•Service providers
• Headhunters
• Auditors
• Lawyers
•Presence of Corporates
• Suppliers
• Customers
• Acquirers
Presentation Main Title
14-04-2009
p. 3
Houston, we have a problem
Presentation Main Title
14-04-2009
p. 4
Houston, we have a problem
Uncertainty avoidance index
120
100
80
60
40
20
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Fr
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Sp
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Hu n
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0
Hofstede: cultural dimensions
Presentation Main Title
14-04-2009
p. 5
VC in Europe:
shortage of money or rather shortage of return ?
European Venture 3-,5-,10-Year Rolling IRRs
30
25
20
10-year
IRR
5-year IRR
3-year IRR
10
5
0
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Rolling IRRs (%)
15
-5
-10
-15
Presentation Main Title
14-04-2009
p. 6
Government policy can make a difference
• Israel
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Technology driven growth
Incubators
Yozma (1992): a 100 mio USD fund-of-fund
International funding
The Chief Scientist
Tax policy
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Same GDP in 1965
Infrastructure, education, corruption-free, open economy
Encourage entrepreneurship in targeted sectors
Awards for failed entrepreneurs
• Singapore (versus Jamaica)
• The origin of US venture capital
• Government contracts
• University funding
• Small business investment companies: SBIC’s
Presentation Main Title
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p. 7
Government policy can make a difference
• Flanders Technology
• Micro-electronics:
• IMEC
• Biotech:
• VIB
• Biotech fonds Vlaanderen
• PGS, Innogenetics, Ablynx, Cropdesign, Devgen,…
• (New materials)
• Telenet
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•
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Breaking into the Belgacom monopoly
Leveraging European liberalisation
Stimulating the private sector
Creating one of the highest broadband penetrations in the OECD
Presentation Main Title
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p. 8
Key success factors for VC in Flanders
• Reputable R&D centers
• Internationally compatible legal system
• Tax efficient incentives
• Sustained, matching government funds
• Critical mass / government choices
• Innovative government procurement
• From research to spin-out
• Access to international entrepreneurs
Presentation Main Title
14-04-2009
p. 9
Suggestions
• Critical mass in the eco-system
• Define strategic axes, implicating some negative choices
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Healthcare
Biotech
Cleantech
…
• Sustained efforts
• Finance incubation, private VC’s will not yet support this
• Transition from R&D to company
• Support existing tech transfer centers
• Vinnof-like approach
Presentation Main Title
14-04-2009
p. 10