Seed financing needs disruptive innovation
You can’t discover new oceans unless you lose
sight of the shore
Source: Clean Economy Living Planet, Roland Berger Strategy Consultants
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Clean Energy Technology (CET) is a growth market that is expected to reach EUR 1.6 trillion by 2020 and thus is an attractive business opportunity
Investment market (I)Cleantech market
Source: Cleantech Market Insights Database
There were 154 cleantech M&A deals in 3Q10 totaling $4.5 billion. While the volume of deals in 3Q10 declined, there is reason to believe that the buoyancy being seen in the wider M&A market may begin to show through during upcoming quarters.
Cleantech predicts a full-year total for 2010 of about $7.3 billion, which would be the second largest annual total ever. The deal number does however look set to exceed 650, a new annual record.
Industry sale
Investment market (II)Transaction market
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Source: Cleantech Market Insights Database
Private Equity
Regional Focus
European and Israeli companies raised $381 million in 66 VC rounds, down 22% from 2Q10 in terms of amount invested but up 12% in terms of deals done. This underlines the capital-efficient nature of European cleantech venture investing
Source: Cleantech Market Insights Database4
Start Grants / “soft loans’
Banks
Finish?
Seed funds
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Startup financing cycle
2006 Year
Value
2010
Contribution to economic activity
Contribution to economic activity
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Realized a turnover of EUR 16 million in 2009;
Employment for 92 employees, a growth of 80% since the start;
Development of 35 new, innovative products;
13 new patents & 6 unique IPR positions on IT development;
Additional € 7 million bank loan / financing facilities achieved
Start Green Venture CapitalEconomic development
• The technology roadmap: think big, start small and upscale quickly• IPR policy based on PMC’s (product market combinations)• Strong guidance & monitoring on finance, business focus and team
development• New management after 2-4 years• Realize economics of scale (gross margin improvement)• Start directly with strategic alliances with strong partners• Built companies; IPR exits are second bests
Lessons of eco-innovationFrom a Venture Capital perspective
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• The entrepreneurs (United States versus European Union)• Strong market resistance (institutionalized, overregulated, 110% reliability) • Clean Tech innovation is capital intensive prove new end products not a application (e.g ICT)• Level playing field necessary• Growth equity gap (€2-5 million)• Corporations don’t innovate, they consume innovation• Universities seldom develop commercial IPR, but we need lots of research….
Barriers (I)For cleantech startups
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Technology Commercialization Funnel
SuccessfulExit(1)
SuccessfulExit(1)
Independently commercialized
(founders, angels, seed, grant) (500- 1000)
Independently commercialized
(founders, angels, seed, grant) (500- 1000)
VC candidates
(100)
VC candidates
(100)VC invested
(3)
VC invested (3)
Research(government, university,
corporate, other)(X000s)
Research(government, university,
corporate, other)(X000s)
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• Overall scarcity of liquidity: fundraising takes 2-3 years• Regular finance engine’s for Venture Capital / Private Equity are hesitating: Bank/
insurers and pension funds• And If interested: only big tickets (> 50 mio EUR)• VC- Incentive programs are structured nationally: with non or small options for
investments abroad (SEED facility NL, Arcimedes BE, ……GE, e.g.)• Trend to harmonize EU finance regulation for PE to VC sector
Barriers (II)For Venture Capital Funds
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• EU regulation (almost comparable): harmonize certification• Create entrepreneurs-hub, entrepreneurs for entrepreneurs (in EU) knowledge
center/Exchange• Feed-in (or ‘omslagstelsel’) • Create cleantech consumer market (low VAT)• Level playing field, account environmental costs (pollution) into products!
Institutional changesEU opportunities
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Start Green Venture Capital Flevolaan 41 1411 KC Naarden The Netherlands
Telephone: +31 (0)35 6958 110
Fax: +31 (0)35 6958 120
Email: [email protected]: www.startgreen.nl
Contact
Consumer products
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Bridges & support structures
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Generation
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Start Green Investment portfolio
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