Gimv continues the successful expansion of its European ICT team with 3 new additions to the team.

After the opening of its French office last year, Gimv ICT has now hired Hansjörg Sage to expand its activities into the German speaking countries.  Simultaneously two Investment Associates reinforce Gimv’s presence in France and the vertical sector knowledge in electronics and telecommunication.

 

Hansjörg Sage was formerly a Director in 3i’s global Venture Capital team where he focused on hardware-related early- and late-stage investments in European technology start-ups, mainly in the electronics, semiconductor and cleantech sectors.

 

Gimv has already a track record of investments in the German market with companies such as Coreoptics and DIS.  The German market is not as mature as the French or UK market.  A lot of new initiatives are being developed at this moment.  This makes it an interesting time for Gimv to enter the German market. Moreover, this supports our strategy to provide to the best European start-ups an international investment offering with a presence in Belgium, The Netherlands, France and Germany.

 

The GIMV ICT Team

3i closes early-stage Venture Capital

Last week it was officially announced that 3i leaves early stage venture capital and limits its technology investments to high ticket late stage investments as part of the growth capital activity. By closing the VC activity, 3i abandons an activity which is characterised by cyclical returns and it will focus more on the buy-out activities in which substantial amounts of money can be deployed. Returns in the buy-out segment were significant over the last few years given the benign credit market, increasing multiples and a growing economy.
 
Given its investment experience over the last 28 years Gimv is aware of the cyclicality of the different asset classes and therefore prefers a sustained exposure in each of its segments. Gimv ICT has proven to be a substantial profit contributor for Gimv, even during the difficult technology years. Furthermore, the withdrawal of venture capital players in Europe might create opportunities for the remaining ones, especially for those who have the means to take advantage of this consolidating market. Indeed, Gimv continuous to allocate the required capital towards venture capital. Moreover Gimv intends to further grow the ICT team in order to strengthen its position as a truly pan-european player.
 
The GIMV ICT Team

Human motion capture on the verge of mass market adoption

Just before Christmas, we finalized an investment of € 3M in the company Movea. Movea is a spin off from CEA Leti, a worldwide leading research center in microelectronics based in Grenoble, France. Movea develops and commercializes mobile, wireless, cost and energy effective solutions for human motion capture and measurement. With its motion sensors modules Movea focuses both on the consumer electronics market, including pointing devices, media center remote controls and mobile phones, and the healthcare market, including monitoring of physical activity and physical therapy.  

 

 

The market for motion gesture control is taking up very rapidly.  Nintendo paved the way with the Wii and its motion-sensing wireless controller: a breakout hit. Many consumer electronics players are taking up the idea. We believe that soon you will be able to control computers, television sets, even cell phones with hand gestures. At the CES 2008 in Las Vegas, it was interesting to see several companies are developing products with motion capture inside. For instance the Apple iPhone has some motion detection. The future Windows Mobile 7 will process motion capture. JVC demonstrated a prototype TV with controls based on snaps and gesture. Sony unveiled the new Z555 phone with handy gesture control, letting you manage calls “with a wave of your hand”. We believe that future user interfaces will become more and more intuitive and that human gesture sensing will be part of it.  

 

 

Movea is a very early stage opportunity. It was founded in March 2007 by a team of experienced managers and researchers. We were initially interested by this very early stage opportunity for several reasons, among which:

·     We knew the CEO. We had met him in the past in another venture and had the pleasure of working with him. We strongly believe that he has the right skills to make it a success.

·     It is a spin-off from CEA Leti with a very solid technical team and a unique, patented technology developed at the Leti over a period of several years

·     It focuses on a solid healthcare market but also on the very promising and fast growing gesture control consumer market.

  Movea became an even more interesting opportunity when, after some work and discussions, we identified that it had the opportunity to acquire the company Gyration, the US leader in motion capture enabled consumer devices. Gyration has focused on solutions for the converged technologies market for more than 16 years. It is today a well-known established player on the consumer market, which, like Movea, enables intuitive cursor control from a couch or across a room by tracking natural hand motion. The acquisition was only made possible with the concomitant investment of the VCs iSource and GIMV. As a result, the deal moved from straightforward very early stage opportunity to a later stage deal based on a company acquisition to build an international player with offices in the US and France. Although it adds complexity, the benefit of the acquisition was very clear:

·     From day one, leadership on the consumer market  (position of Gyration today)

·     Technological complementarity (Gyroscopes, magnetometers and accelerometers)

·     Geographical complementarity (Europe and US)

·     Cultural complementarity (Europe and US)

·     Marketing complementarity (Consumer and Healthcare)

 

 With the financing and the acquisition behind us, we believe that Movea-Gyration is now very well positioned to become the worldwide leading provider of high precision, low power consuming and low cost motion capture solutions. A key success factor for the future is the proper integration of both teams to add the strengths of each and make one plus one greater than two.

 

 

Geoffroy

 

 

 

 

Aiming for Sequoias, not Bonzais

Many of you asked us to share Alex’ presentation on the Sequoia vs Bonzai approach.  The bottom line of the presentation is that entrepreneurs should build a company on their vision and not taking into account the (financial) limitations of the market.  eg in Belgium we have many funds that can invest a maximum of 1,5 Mio Euro a year, so guess what, many of the Belgian business plans that we see have a cash need of … 1,5 Mio Euro !  And for some this might be enough, but for most of the companies this will not help them to realise their vision.   So if your financial plan shows a cash need of 5 Mio Euro over the next 2 years to realise your vision, then raise that money (even internationally if needed) instead of giving in on your ambition or vision.

Steven

No correlation between Success and having a Serial entrepreneur as CEO

Like all VCs, we are continuously in search to invest in companies that become huge successes.  The most important factor leading to success and at the same time, the most important investment criterion, is management. So, I tried to find out if there was a relationship between success and having a serial entrepreneur as CEO.

My approach: I defined success as an exit with a price/sales (based on last 12 months) multiple of more than 3,5 x. I searched for these deals on a worldwide basis in the M&A database of the analyst company the451group for the last 2 years and divided them in software, semicon and internet deals.  Having found the deals, I then checked the CEO; Was it a serial entrepreneur or a first time CEO with a relevant industry experience?

The results?  There is no correlation between success and having a serial entrepreneur as CEO.
In internet, only 15% of the successful exits were done by serial entrepreneurs. In semicon, only 6% and in software 30%. In all categories, first time CEOs with a relevant industry experience were the majority.  Some other proof: Amazon, Apple, Dell, Yahoo, Google, Microsoft, Oracle and Ebay were all founded by first time CEOs. Facebook was even created by teenagers.

Also, in our own portfolio; our biggest successes (FICS, Option, Metris, …) were founded by first time CEOs. Some thoughts with this; First of all, this concerns only the deals were the price/sales multiple was available and for most deals, this is not the case. Yet, I do think the results would not change a lot if we had all the multiples, simply because the number of companies founded by serial entrepreneurs is not a majority. Secondly, in Europe we find less serial entrepreneurs than in the US (they tend to retire instead of doing it again), which again makes the population smaller. Thirdly, while having a serial entrepreneur is not a guarantee for success, the rate of failure is ca. 75% lower (according to a Harvard study).

Eline

Creating critical mass in early stage ventures

One of the elements of a successful technology venture is the ability to scale the business and become a truly international player. This is often not easy for start up companies. On the one hand they need to focus on offering a unique proposition while on the other hand their offering should be sufficiently broad to grow into a sizeable business.   Moreover there is the day to day reality of limitation to financial and human/management resources available for execution. For software companies focus is usually translated in addressing big enough niche markets and keeping from the start an eye on a buy-and-build strategy. Clear2pay, metris and more recently Mentum, are good examples of software companies out of our portfolio that adopted this strategy.  

Also in other technology ventures we are more and more supporting merger and acquisition opportunities, even in a very early phase of the company’s development. Last month GreenPeak Technologies, ultralow power and low cost wireless chips for sense and control networks, has been officially launched in the market. GreenPeak is the new name for Xanadu Wireless (Utrecht, NL) after the merger with Ubiwave (Zele, BE). Both companies were still early stage and in early market development. Founded end 2005, Xanadu Wireless has developed an industry leading IC and Ubiwave has developed a full suite of software for these low power chips. Besides obvious synergies such as reduced overhead, combined sales effort and more credibility at customers/partners, the combination of the two brings in significant other advantages.   Not only does the combined entity offer a complete system solution that captures a larger part of the value chain, it also addresses a wider range of markets and enables earlier market entry opportunities. The latter implies a significant risk reduction for the venture in terms of early revenue opportunities and early valid market feedback which help the company to further focus its development efforts.  In the case of Xanadu and Ubiwave an additional advantage was the geographic proximity of the two operations which are both located in the Benelux. We encounter more and more opportunities where critical mass can be created much faster: increasing the scalability of the offering and inherent success rate.

The Gimv ICT team is actively pursuing this type of opportunities in the Benelux region but also in neighbouring countries besides the more standard type of deals. So encourage entrepreneurs who identify these opportunities for their own technology venture or in their markets to contact us.

Elderd

GIMV ICT Portfolio Event

  

On October 3rd GIMV ICT organized its portfolio event where top management of our portfolio companies as well as some service providers and technology corporates were invited.  Roughly 100 people joined us in an old brewery in Mechelen, Belgium, coming from all over Europe . After 2 keynote speeches, the first on Option, one of our top exits, and the second on the Israeli Venture Capital scene, other topics like recruiting, exit, product marketing, partnering, non-equity financing, outsourcing and off-shoring were discussed during different break-out sessions. This kind of event is the perfect opportunity for networking, knowledge sharing and eventually, identifying synergies.

For a VC it is fascinating to gather its portfolio companies which are very different but all have one thing in common: the ambition of becoming a global leader in their field through technological innovation.  It is pleasing to see how lively the CEO’s of these companies share experience on their business models, customer feedback and interaction with their shareholders.  The old brewery was filled with a pleasant buzz reflecting their entrepreneurial drive and energy level.  In the session on recruitment, a simple one-liner was thrown into the audience: “A-people recruit A-people, B-people recruit C-people.”  We do believe that our CEO’s make part of the first camp, a requirement to build top-class companies.

Think global, act local

With offices in Belgium, the Netherlands and France, GIMV ICT is one of the few venture capital players to establish a true international network to adress the needs of start-ups. Very few European venture capitalists have foreign offices. Most of them address Europe and even sometimes the world from one location only. However, by looking at the actual figures, Venture Capital is mostly a local business. In 2005, out of a total of 346 VC deals made in the UK, France and Germany, 68% on average were financed by a syndication of only local investors. Data show that by having a local office in one of these 3 countries, international VCs increased on average by 46% their number of deals made in the given country. Although it highly depends on each country and each local office (size, network, people…), it is still significant. Presumably, it is even more so if you are an early stage investor such as ourselves. Over the past 16 months, GIMV ICT has invested in 9 new deals out of which 6 were pre-revenue companies. This active early stage investment activity has required direct and constant contacts with entrepreneurs, innovations, technology centres and corporations. Early stage investing is by nature, an activity which relies on local networking and needs a full involvement in the ecosystems for innovations. With a presence in France, we are now in a perfect position to take advantage of the French local ecosystem. We should significantly develop our deal flow in the country and therefore finance more French deals. But France is not new for GIMV. GIMV ICT has been active in France for more than 10 years. Since 1997, we have financed five French companies: Emme Interactive, Maximiles, CTS, Inside Contactless and Tinubu Square. We have been quite successful. Emme Interactive, a publisher of interactive multimedia content, went IPO on Euronext C (Nouveau Marché) in 2000. Maximiles, a direct marketing and loyalty services provider, went IPO on Alternext in 2005. Moreover, our portfolio of French private companies, Inside Contactless, CTS and Tinubu Square, seems very promising. By strengthening our presence and opening an office in France, we expect to grow the opportunity. We will not only do more deals, we will also help our portfolio companies work more actively with French players. We want to help them be more successful in France and in Europe.  Geoffroy   

Virtual LAN server – Nomadesk

Lot’s of high-tech start-up companies struggle to explain their product in simple words.  Check this funny movie from Nomadesk of how it can be done with a simple movie in 3 minutes  my-IT-nightmare ! 

Web 2.0, a bubble or not?

As the leading Venture Capital company of Benelux, we are often questioning ourselves whether we should invest (or should have already invested) in Web 2.0 companies.

Up until now, we didn’t invest in any of the social networking sites, blogs, wikis, podcasting, web-based communities… Yet, the attention these sites are getting from leading VCs is enormous and not only in the US, but also in Europe. So, are we laggards or are we relying on our common sense?

Of course, there are successes; just think of Youtube, Myspace, Facebook, ….

Yet, there are so many web 2.0 sites (have a look at http://www.go2web20.net/), that the chance of picking the successful ones seems very small to us.

Then, what is success? Web 2.0 companies often have the same business models as found during the internet bubble. Visitors, page views, time spent on a web site… count and money will be made through advertising and small fees for extra services. It is true; internet advertising has taken a big flight and most companies now (also the web 2.0 ones) are much more cost efficient, so these business models are possible.

But many web 2.0 companies have one thing in common; they don’t have revenues ‘yet’. Some will certainly succeed, but how do you know what will work or not?

Furthermore, being a technology investor, we are used to think in terms of competitiveness and barrier of entry. For us this is a problem, as web 2.0 companies seem very easy to copy.

However, web 2.0 sites do have their merits. Most of them are very easy to use (even intuitive) and do respond to a market need. I would summarize this market need as people loving to communicate, whether it is to share hobbies, photos, career info, opinions…

Web 2.0 companies bring you into contact with people you would never have contacted before and in this way can create big communities generating the interest of advertisers and there you have a successful company.

So, like all successful investments; it all depends on execution, which is of course dependent on the management team.

You might think; so what is the conclusion? Well, my conclusion is that when valuation is right and we do believe in the management team and the business model, we should invest in web 2.0 companies as it will become (and is already) part of our daily lives.

I would love to read your thoughts, Eline