Syndicate One, Bain & Company, and Sofina collaborated to conduct a data-driven qualitative study of Belgium’s mature technology startup and investment ecosystem.
The first result, the first Belgian State of Technology Report 2024, combines insights from current data and results from a recent survey of more than 130 startup founders, as well as key entrepreneurs from all over the country. and a series of in-depth interviews with investors. country.
The report shows some encouraging signs that Belgium’s startup and investment ecosystem is expanding in a healthy and sustainable way. It also provides actionable areas for improvement. This means that this is a real, useful report, not just some research that ends up in someone’s downloads folder.
Let’s take a closer look at some of the key findings.
Q1 gets off to a good start
2024 has not been easy for many startup regions, but in the first half of 2024, total investment in eight Belgian tech startups is set to exceed 500 million euros, with total investment in 2023 reaching 400 million euros. With 24 million euros, an ecosystem is being built. Potential record year.
Surprise, surprise…AI dominates software investment in Belgium
Looking at the types of Belgian high-tech companies that have attracted funding in recent years, 52% are in the software sector, compared to 48% in the hardware sector (slightly more in the latter than in Europe).
AI companies accounted for more than 70% of the invested capital in the first half of 2024.
4 Unicorn companies and exits are on the rise
In a sign of a gradually maturing ecosystem, Belgium has seen the emergence of four “unicorns” (companies valued at over $1 billion): team.blue, Collibra, Odoo and Deliverect.
Unicorns provide a fertile breeding ground for the next wave of startups and entrepreneurs in Belgium, providing skills, jobs and services to the local economy.
While the number of evictions remains low, it has steadily increased from just 13 in 2018 to 31 in 2022 and 36 in 2023. In the first half of 2024, 22 evictions were recorded.
Belgian venture capital landscape grows remaining four, with EUR 400 million funding target in sight
Belgian venture capital firms have raised more than €200 million in new funding since the start of the year, with an average total of around €360 million in 2020, 2021 and 2023.
The report predicts that Belgian VCs are currently on track to raise over €400 million by the end of this year (estimated data for the first half of 2024). There is also a noticeable and steady upward trend in terms of the number of funds raised. In 2018, only two VC funds were raised, but in the first half of 2024 alone, eight funds were raised, giving the impression that it would be a record year.
Continued funding by Belgian venture capital and continued inflow of foreign capital are reasons for optimism.
According to Syndicate One survey respondents, approximately 49% said a business angel participated in one of their funding rounds, and an additional 34% said a “friend or family member” participated. As a result, a significant portion of the capital is provided by non-institutional investors in the early startup stages.
Consistent with the prevalence of early-stage investments within the Belgian high-tech ecosystem, there has been a noticeable increase in the number and activity of business angels on the one hand and accelerators/incubators on the other, but the trend is more pronounced in Flanders and Flanders. It is more noticeable in rural areas. Comparison of Brussels and Wallonia.
The report highlights the undeniable growth in angel investors, incubators, accelerators, startup studios, physical hubs, industry events, networking initiatives, support programs, sector-specific communities, ambassadors and more that add value in Belgium. I admire the fact that it exists.
Early-stage funding fuels Belgian tech growth
According to Deal Room data, invested capital per round has steadily increased from 2018 to 2024 to date, tripling at the seed stage and more than doubling at the Series A stage.
Olivier Rousseau, Venture Development Director at Imec, said:
“When we first entered the Belgian deep tech scene, the funding environment was very limited. It was common to raise only €1 million to €3 million in a seed round, which meant we needed to be successful. It was far below funding.
We are currently seeing a significant change with a seed round of funding of 10-15 million euros raised, but this is an important step towards the success of deep tech ventures. ”
However, while Belgium’s high-tech ecosystem is experiencing undeniable growth, it is still in its early stages of maturity. Over the past six years, early-stage funding rounds accounted for around 77% of the money raised by Belgian tech startups, compared to 42% in Europe during the same period.
Talent shortage and ESOP limit Belgian founders
A survey of startup founders revealed that talent and the ESOP system are the main pain points for Belgian founders. Both negatively impact founders’ ability to expand, and the latter limits managers’ ability to reinvest in successful startups.
All startups need experienced staff, especially those with previous experience, to grow and expand. The report highlights the lack of local serial entrepreneurs and staff with the critical experience to scale their companies.
We also need to attract top talent from overseas, admits Cowboy CEO and co-founder Adrian Roos. Although Belgium has a high standard of living and a strategic location, it is not necessarily the first choice destination for foreign talent.
“For our CMO and CFO roles, we have been able to secure excellent candidates from abroad who believe in our proposition and flexible working arrangements, even though they spend much of their time in Belgium. , I have never immigrated.”
“Brussels is often seen as a second-tier city by international talent when compared to London, Paris and Berlin, making it difficult to convince people to move there.”
An ESOP (Employee Stock Ownership Plan) typically gives employees the right to purchase company stock at a predetermined exercise price after a certain period of time. It aims to enable employees to share in the company’s success, promote a culture of ownership, and strengthen engagement. It brings economic benefits to both employees and employers.
The current socio-financial approach in Belgium increases risks for employees and companies, and administrative regulations place Belgian companies at a disadvantage. Significant challenges to ESOP implementation were raised by many entrepreneurs and investors interviewed for this report.
Willem Delbare, CTO and Founder of Aikido, said:
“The current system is less than optimal, with many factors creating friction, including short exercise periods, uncertainty at termination, limited information, and upfront payments that can force people into taking out loans. ,…it’s a lose-lose-lose situation.
While employees benefit from the company’s growth, more people reinvest in the ecosystem, creating further growth drivers. ”
Laurence de Poulter, founder of Syndicate One, said:
“It is Syndicate One’s raison d’être to take the Belgian technology ecosystem to the next level. We not only strengthen the connective tissue within the ecosystem by integrating existing players and investing in new ones. We provide tools for anyone looking to improve their ecosystem.
We believe this report maps the ecosystem to help entrepreneurs, investors, and policy makers make better-informed decisions. We are proud to partner with Sofina and Bain & Company to bring you this product. ”
Overall, this report provides valuable data-driven, first-hand, personal insights into the Belgian technology ecosystem.
Small startups and investment ecosystems, including those in Belgium, will need more time, forward-looking policymaking, exits, increased media attention, and other factors to reach the next level; Business angels, incubators, and accelerators are increasingly interested in investing in startups. Similarly, early-stage VC funds have become available as well, and access to government grants and other types of support has also been strengthened and expanded.
By strengthening the necessary support structures, Belgium can further strengthen its position as a thriving technology hub in Europe.
Download the report now.
Lead image: Yaroslav Danilchenko.
