Belgian web startup barometer executive summary
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First ever survey of Belgian web-startups, what are their expectations of the future, how do they find investments, what are the bottlenecks for their growth ambitions? Invaluable for startups, VCs ...

First ever survey of Belgian web-startups, what are their expectations of the future, how do they find investments, what are the bottlenecks for their growth ambitions? Invaluable for startups, VCs and governmental institutions...

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Belgian web startup barometer executive summary Document Transcript

  • 1. Organized by:
  • 2. Belgian Web Startups Barometer 2012© institute for future insights. All rights reserved. Reproduction prohibited without writtenpermission. 2
  • 3. Partners:3 Belgian Web Startups Barometer 2012
  • 4. Content: Foreword by the organizers Foreword by Filip Tack, founder of Nomadesk, President of Carambla List of participating start-ups 1. Executive summary 2. Respondent’s demographics 3. Current investments and future investment needs 4. Financial and headcount projections 5. The barometer: how confident are these startups to reach their objectives? 6. Conclusions About the organizers Belgian Web Startups Barometer 2012 4
  • 5. Foreword by the organizersDear reader,Since you acquired these findings of the first survey for Belgian web-entrepreneurs, youprobably have some stake in this market. Perhaps you are a potential investor looking for anoverview of the market in which you would like to invest. Perhaps you are a governmentalorganization looking for ways to assess whether programs to stimulate entrepreneurship arefruitful or not. Or maybe you are a startup yourself, looking for a mean to benchmark yoursuccesses and future expectations with your peers.Regardless of your purpose, this document should help you out. First we will investigate theroad the 61 participants to the survey have travelled so far. How quickly did they turn theirideas into a business? Where did they get their idea from? How did they find the capital tostart their business? We will then investigate the future expectations of these startups. Howmuch additional investment do they need for their ambitions? How much do they expect togrow in terms of turnover and headcount? Last but not least, we will look at how thesestartups envision their future. How confident are they to reach their objectives? What arethey most afraid of? What do they need in order to meet their aspirations?This is a starting point of what we hope will be a long journey. The value of this initiative willundoubtedly increase over time, as more startups join this survey and as throughout theyears we will be able to add a time-dimension to this analysis as well: is the morale of thestartups increasing or declining? Do they find new investment sources? Are their projectionsof future revenues and headcount changing –and, if so, why? These are all question we aimto answer as we organize this survey on a yearly basis.As we do this, we hope to maximize the value of this survey for the startup community, butwe will also track a small but exponentially growing part of the Belgian economy. As moreand more innovative youngsters have less and less barriers to chase their own dreams andcreate their own startup, there is little doubt that this market will grow in importance andstrategic relevance in the near future. This survey aims to track this trend, and eventuallyserve as a funnel through which this market can let its voice be heard to a broader audience.It will be a journey, and we are extremely proud to be a part of it. Belgian Web Startups Barometer 2012Frederic De Meyer Marnik D’HooreFounder Founderi4fi Bloovi 5
  • 6. Foreword by Filip Tack, founder ofNomadesk, President of CaramblaFull disclosure here: I am involved in two web-based companies, Nomadesk and Carambla (agenuine web startup) and really no expert at statistics1, barometers, etc. Therefore, mycontribution here is very much opinionated and no analytical thesis at all. Hence those whomind “profane” language – however subtle – should probably read no further .Upon my first perusing through the results of this first edition of the Belgian Web StartupsBarometer, I was hit by an encouraging vibe. I was absolutely, positively surprised that theeditors had managed to gather responses from 61 Belgian web startups, all of which did noteven exist three years ago.This means that currently 61 teams of “go-getters” are frantically working their butts off toget something going and make a difference – in spite of the lingering economic turmoil, andbeing in Belgium for that matter. Granted, there is no better time to spur entrepreneurshipand innovation than in an economic downturn, and maybe we are witnessing some of thattoo, after all: “Why waste a good crisis?” Yet, I like to believe there is truly somethingbrewing, in witness thereof this “Gang of 61”.Of course, kudos to all surveyed companies for raising over 5 million Euro in FFFF2 funding(a.k.a. “Love Money”) already, an inspiring number which is likely skewed by the few luckybastards that were able to sell their ten-million-Euro-idea to an early-stage venture fund; thisbeing no small feat neither. With over 225 billion Euro parked on Belgian savings accounts(March 2012), there is a vast untapped Love Money potential still – although it is highlyunlikely we see any of that being mobilized for this purpose anytime soon.Upon my second reading though, I got slightly concerned, most notably with regard of thefunding. Though it is normal that companies kick-off undercapitalized (“barren soil nurturesthe strongest teams”, a business angel once told me – he’s right!), it does hamper theircredibility to do business with the big guys, and therefore to become successful and obtainthe level of funding to become a world-class player. It’s the classic Catch-223 logic. Nosurprise that nearly all surveyed web startups expect to raise more money soon. But 25 Belgian Web Startups Barometer 2012million Euro, all together – really? That seems off by a couple of millions, on the low side. Ifanything, this might very well be the amount needed for a single company to becomesuccessful.Why aren’t these Web Startups more ambitious? Is it really the lack of sufficient funding –due to a scattered investor landscape more than anything else – that makes them reducetheir funding needs accordingly4? Startups should be cautioned that it requires the same1 Lies, lies, damn lies and… statistics!2 Founder – Friend – Fools –Family in no particular order.3 http://en.wikipedia.org/wiki/Catch-224 Been there, done that, bought the t-shirt 6
  • 7. effort, and de-focus, to raise 100 thousand Euro as it requires to raise 5 million Euro.Moreover, receiving early-stage funding is extremely uncertain. One can literally not affordto bet the house on it, and therefore it should not be a startup’s primary focus.Fortunately, there is a real certainty that money follows success. One caveat: in Europe suchsuccess needs to be substantiated the old-fashioned way. So, here is a warm plea to theWeb Startups: Focus on what constitutes business success and what is required for an 18months survival plan; the latter should not be venture capital – bootstrap!Work extremely hard at substantiating your business model as soon as possible (beg, stealand borrow – all proverbial), before even thinking about raising money (sweat equity andFFFF excluded). When the time is right, be bullish and phase.Clearly, all of the above is far easier “Foreworded” than done, especially for anundercapitalized Web Startup that lacks all credibility to play in the major league. Therefore,I need to extend my plea to the large corporations and governments too: give startups abreak and forego the Dun and Bradstreet5 reports for once. Simply do business; you neverknow the startup ethos might inspire your company or department. Become a customer, orbetter yet a strategic partner, that propels startup companies into major success.European governments should think hard about putting Small Business Investment Company(SBIC)6 programs in place, that require governments to include startup businesses in theirtenders, or give corporations tax breaks for doing business with the startups. My gut tells methat it’s going to yield better results than setting up co-investment schemes with banks orfunds.A final word to the editors: I hope that you can turn this Barometer into a Monitor thatregularly checks in with the “Gang of 61”, through good and bad times. I personally doubtthe relevance or value of a repeated survey with different subjects. Dare to take a “Guineapig” approach – no disrespect – and try to distill what constitutes success and failure in this“Gang of 61”.Thanks,Filip (@ftack) Belgian Web Startups Barometer 20125 Disclaimer: I have nothing against credit checking companies.6 http://www.sba.gov/inv 7
  • 8. 8 Belgian Web Startups Barometer 2012
  • 9. 1. Executive summary61 companies participated in this first edition of the Belgian Web-Startup Barometer.To participate, these companies had to have (mobile) internet as major component oftheir business model. Nevertheless, the survey respondents represent a very diverseset of activities, which we grouped in 7 specific areas.The majority of respondentsare active in ‘Services’ (which Distribution of type ofincludes consultancy, hosting business (N = 61)and the development of Video Web shop Retail 5% 3%efficiency enhancing corporate 5% Services Mediatools) and Web Tools (tools (content) 28%that improve the efficiency of 8%online activities of individuals other/ naand companies). Together they 11%accounted for more than halfof the respondents. 65,5% of Mobile app 12% Web toolthe startups in the survey were © i4fi & Bloovi 28%created in or after 2011. 52%of them are currently in the ‘early growth’ phase of development.Funding obtained vs. funding neededAlmost half of the survey respondents collected funding of less than 10.000 euro fortheir startup. Two third of the respondents obtained the funding from their ownmoney.Taken together, these 61startups have collected 5,5 funds obtained/needed (M€, N = 61)million euro in funding so far, 30but their expected funding 25 Belgian Web Startups Barometer 2012needs are anticipated to grow 20360% to reach 25,3M in 2015. 15The major purposes for the 10additional funding need areinternational expansion and 5product development. 0 2012 2013 2014 201549% of the startups would © i4fi & Bloovineed additional funding of above 250.000 euro in the next three years in order toreach their objectives. 9
  • 10. Turnover and headcount expectations50% of the respondents generated a turnover of less than 10.000 euro. This applies toall the activity areas described above, except in Services where the average turnoveris about 360.000 euro.In terms of profitability, 38% of the respondents claim to be break-even already. Anadditional 10% expect to be so this year, and another additional 26% expect to bebreak-even by next year. Unsurprisingly, the older the startup, the more likely it is tobe break-even already. On average, it takes the startups 21/5 years to turn break-even.In terms of growth, the startups collectively expected to grow their turnover from8,9M€ in 2011 to 74,9M€ in 2013, a growth of 736%7. Projected to the whole Web-startup industry (assuming the survey respondents account for 5% of the actualamount of web-startups in Belgium, and assuming that the number of web-startupswouldn’t grow in the meantime), the weight of this industry in the Belgian GDP wouldgrow from 0,05% in 2011 to Projected number of full-time0,41% in 2013. employees (N = 61)In 2011 the 61 startups that 1.200 # full-time employeesparticipated in this survey 1.000employed a total of 316 800employees, an average of 5,2 600 optimisticper startup. 92% of the 400 pessimisticworkforce was employed in 200Belgium, and about 61% were -full-time employees. 2012 2013 2014 2015 © i4fi & BlooviBy 2015 the amount of full-time employees is expected to grow to either 558 (pessimistic scenario, whichrepresents a CAGR of 42%) or 1.128 (optimistic scenario, representing a CAGR of80%). Reasons for considering movingFuture prospects and abroad (N = 55, multiple selections possible) Belgian Web Startups Barometer 2012confidence Proximity to investors Find skillsWhile 44% of the respondents Legal purposeshad no intention or plans to Proximity to partnersmove abroad, 25% indicated Bigger marketto have such plans. Amongst Dynamic startup scene Fiscalthe most cited reasons for Weathersuch a move, the proximity to Better Payment Systems(potential) investors and the 0 4 8 12 16availability of specific skills © i4fi & Bloovi7 Two answers that looked awkward were ‘normalized’ to calculate the Total and averages. 1 0
  • 11. were most frequently mentioned. When asked about their preferred destination fortheir startup, 52% indicated the United States.Asked about their confidence to reach their one year objective, 69% of the startupsin the survey claimed to be confident or very confident (4 and 5 on a scale of 5).When asked about their confidence on a three year timeframe, the level ofconfidence declines to 59% (4 and 5 on a scale of 5).The economic climate was mentioned the most as the major hurdle for these startupsto reach their objectives.ConclusionsAs this survey shows, the prospects are bright for the Belgian web-startupcommunity. With an anticipated turnover growth of over 700% in the next two yearsand with almost 74% of the startups from the survey turning profitable by the end of2013, most of them seem in very healthy shape.However, these prospects might be jeopardized. Most of these companies aredependent on a stable economic climate, which is arguably not something that canbe guaranteed for the immediate (or foreseeable) future. But besides the economicclimate, these startups clearly distinguish three areas in which they need support inorder to reach their growth objectives:  Many of these startups are struggling with what could be perceived as sales and marketing issues. Finding the first ‘flagship’ customer, turning (free) users into paying clients, hiring the perfect sales people, these are all issues that are crucial for turning an early idea into growth mode.  Finding and retaining the right skills. With ‘skills’ they mean sales and marketing skills as much as ‘developers’, programming skills. These apparently come in short supply in Belgium.  The third issue is about finding additional investments. The major purposes for the funding needs are international expansion and product development. Both obviously are critical for realizing the growth potential of these startups, but as Belgian Web Startups Barometer 2012 the report shows they are finding it very hard to find these investments.Tackling these three issues will be of vital importance to realize the full potential ofthis small but growing portion of the Belgian economy. 1 1
  • 12. Visit www.belgianwebstartups.be for the full report Belgian Web Startups Barometer 2012 1 2
  • 13. About the organizers:The Institute for Future Insights (i4fi) was created in September 2011 by businessstrategy advisor Frederic De Meyer. The mission of i4fi is to help companiesunderstand and anticipate long-term trends as a basis for innovation, strategyrefinement and competitive positioning improvement.To keep informed of our research of long-term trends keep track of the blogwww.fredericdemeyer.com, or follow us on twitter (@fdemeyer) or facebook(facebook/instituteforfutureinsights).For more information about the services of i4fi please visit the website www.i4fi.comor send us an email frederic@i4fi.com.Publications:“The impact of megatrends on your business” (English, available on Amazon.com)“De impact van megatrends op uw business” (Dutch, available at Die Keure)“Jong ondernemend Vlaanderen” (Dutch, available at Die Keure) Belgian Web Startups Barometer 2012Bloovi helps the Belgian web scene to shape en grow by informing them, inspirethem and communicate with them. We share knowledge on a daily base, through ourwebsite (www.bloovi.be), social channels, conferences and workshops. We also createa connection between the online and offline channels. Transparency and knowledge-sharing are essential components in this process.Bloovi’s slogan is "News, Knowledge, Inspiration & More". 1 3