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Dexel
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  • The shapes of the new Innovation landscape are changed in two ways: organizational and policy wise. First organisational
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    • 1. Hungary – EU - Israel Workshop on Start-Ups and Innovation Impact of innovation policy in the Dutch venture capital market Developments on industrial policy and the venture capital market in The Netherlands Tel Aviv 30th May 2011 Jan Dexel Directorate General Enterprise & Innovation Dutch Ministry of Economic Affairs, Agriculture and Innovation
    • 2. The new Dutch Innovation and Industrial policy landscape
      • Organizational changes
        • Ministry of Economic Affairs, Agriculture and Innovation
      • Policy changes
        • Shift in financial approach;
              • Budget cuts
              • From subsidies to loans and risk capital
              • More emphasis on tax measures: corporate tax reductions and WBSO (wage tax reduction for R&D)
        • Shift in focus of research and innovation, focus on 9 top sectors and development of revolving innovation fund.
    • 3. Economic Top sectors
      • Focus on the nine economic top sectors of the Dutch economy
      • Water
      • Food
      • Horticulture
      • High tech
      • Life sciences
      • Chemistry
      • Energy
      • Logistics
      • Creative industry
    • 4. Economic added value Technical risk Typical forms of finance “ grants” / subsidies subordinated/soft loans garantees/mezzanine finance/vc - pe Conceptual framework of revolving innovation fund (1) high low Development Science Research Fundamental research Industrial research Experimental development Market introduction Sales Growth Phases of “maturity”: Innovation
    • 5. Economic added value low high Conceptual framework of revolving innovation fund (2)
      • Direct co-finance of companies in innovation projects
      • Range in revolving phenomena 60 – 100 %
      3. Finance through garantees financial intermediaries Range in revolving phenomena 60 – 100 % Project finance Company finance 2. Finance through co-funding of investment funds for innovative companies Range in revolving phenomena 80 – 120 % Aiming at early and later stage venture capital market Development Science Research Fundamental research Industrial research Experimental development Market introduction Sales / Economic growth Phases in innovation proces Innovation 4. Co-finance /garantee schemes at market introduction Range rev. 90 – 110 %
    • 6.
      • Don’t disturb the market.
      • Only in case of a real market or system failure, public intervention is acceptable. Aim at creating a supportive business climate for companies and finance sector, including the regulatory and fiscal environment.
      • The intervention must be market oriented.
      • The market selects and is the lead investor. Follow the ‘market economy investor principles’.
      • Intervention requires an integrated approach.
      • A balanced mix of policies/instruments covering access to finance, R&D support, investment readiness, stimulating business angels, use of incubators, etc. is key to improve the success rate of companies and the governmental operations.
      Public intervention: basic principles and constraints (1)
    • 7.
      • Stimulate access to finance.
      • E.g. by improving the risk-return profile for early stage venture capital funds.
      • Avoid getting involved in subsidising management fees.
      • Reduce risk by scheme structure and exit strategy.
      • E.g. the fund-of-fund approach with professional private venture capital funds has a better risk-return profile. Define the exit strategy in advance !
      • Broaden scope cross-border if possible.
      • National initiatives are often limited to operate within a national context. This constraints the market conform business model of venture funds. Stimulating pan-European approaches could tackle this constraint.
      Public intervention: basic principles and constraints (2)
    • 8. Developments of the Dutch venture capital market
    • 9. Schematic representation of the equity gap among early stage high-tech SME´s and fast growing companies.
    • 10. Developments of the Dutch venture capital market
    • 11. Afbakening en begrippenkader Developments in the Dutch venture capital market for early stage high-tech SME’s. New early stage venture capital funds BA-pledge funds “ Side-car” funds of later stage funds New boutique funds and CV
    • 12. Generated funds Raised capital Investments Developments of the Dutch venture capital market: the impact of the seed capital scheme
    • 13. Some examples of limited partners joining the Dutch seed capital funds
    • 14. Some portfolio companies Jan 29, 2010 Merus closes EUR 21.7 million Series B financing and enters option agreement with the Novartis Option Fund. Layar maker of augmented reaility applications
    • 15. Thank you for your attention !
    • 16. Developments of the Dutch venture capital market New challenges ...... early and later stage.
    • 17.
      • Don’t disturb the market.
      • Only in case of a real market or system failure, public intervention is acceptable. Aim at creating a supportive business climate for companies and finance sector, including the regulatory and fiscal environment.
      • The intervention must be market oriented.
      • The market selects and is the lead investor. Follow the ‘market economy investor principles’.
      • Intervention requires an integrated approach.
      • A balanced mix of policies/instruments covering access to finance, R&D support, investment readiness, stimulating business angels, use of incubators, etc. is key to improve the success rate of companies and the governmental operations.
      Public intervention: basic principles and constraints (1)
    • 18.
      • Stimulate access to finance.
      • E.g. by improving the risk-return profile for early stage venture capital funds.
      • Avoid getting involved in subsidising management fees.
      • Reduce risk by scheme structure and exit strategy.
      • E.g. the fund-of-fund approach with professional private venture capital funds has a better risk-return profile. Define the exit strategy in advance !
      • Broaden scope cross-border if possible.
      • National initiatives are often limited to operate within a national context. This constraints the market conform business model of venture funds. Stimulating pan-European approaches could tackle this constraint.
      Public intervention: basic principles and constraints (2)
    • 19. Global set-up of the Dutch Seed Capital Scheme fund-of-funds structure External Due Diligence of fund by Advisory Committee TechnoPartner Seed Capital fund Techno- starter Techno- starter Techno- starter Techno- starter Techno- starter Techno- starter Techno- starter Private investors Risk capital Management costs Government ‘ loan’/co- investment Cash flow share Investments through equity or mezzanine. Cash flow share
    • 20. Seed Capital Financial Engineering Pay back ratio´s Period A Period B Period C in [%] - Private limited partners 80 % 50 % 80 % - Government 20 % 50 % 20 % ‘ Cash in’ ∑ cash flow [mln€] ∑ Cash flow Nederlandse staat ∑ Cash flow to private limited partners 5 ‘ Cash flow based risk sharing approach’ - maximum of 50 % government funding - simple example of a € 8 mln fund - € 4 mln from private limited partners and € 4 mln from government 0 4 ∑ Cash flow [mln €] 1 ∑ Cash flow to Government 11 7
    • 21. Thank you for your attention !

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