Access to Finance Agorada 2016 Pieter Waasdorp SME

Access to Finance Agorada 2016 Pieter Waasdorp SME Envoy The Netherlands 19/03/2018

Global Entrepreneurship Monitor 2015 Entrepreneurship and ambition in the Netherlands Total early-stage Entrepreneurial Activity (TEA): top 10 EU en Nederland, 2015 Growth expectation early-stage entrepreneurial activity: relative prevalence, EU-lidstaten, 2015 Letland Roemenië Estland Ierland Roemenië Letland Luxemburg Hongarije Slowakije Kroatië Portugal Estland Ierland Polen België Hongarije Slowakije Kroatië Polen Nederland 0. 0 2 2. 0 4. 0 6. 0 8. 0 10. 0 12. 0 14. 0 21 0 5 10 15 20 25 30 35 40 45

Entrepreneurship in the Netherlands… Two trends: 1. To an entrepreneurial economy 2. Industrial renaissance And: • Nearly 1 in 8 persons of the working population is entrepreneur • A lot of (new) entrepreneurs

Fintech 4 Alternative Finance 19/03/2018

Development of alternative finance market Size of alternative finance market in the EU since 2012. 2014 data on BA is not yet available and is not included in this graph (BA market is approximately € 5 -6 bn). Sources: EY Moving Mainstream: The European Alternative Finance Benchmarking Report, Feb. 2015, p. 13; EBAN, Statistics Compendium 2014, p. 7; and EVCA, EVCA Yearbook - 2015 European Private Equity Activity: European Private Equity Activity Data 2007 -2015, forthcoming. 5 Alternative Finance 19/03/2018

Developments on three topics Alternative Finance 6 Awareness Alternative Finance 19/03/2018 Governmental Action

Developments in SME Finance Association for Financial Markets in Europe (AFME), "Bridging the growth gap", February 2015, p. 9; 29, figure sources SAFE analytical report, 2013, FRBNY Survey 2013/2014 7 Alternative Finance 19/03/2018

Developments in Alternative Finance (1) • The amount of alternative finance has been increasing in recent years. • Angel investing, later stage venture capital and crowdfunding are increasing rapidly. For the purpose of this discussion, we define alternative finance as all non-banking finance Angel investment market in the EU Crowdfunding market in the EU 6000 4000 Venture capital market in the EU 3000 2000 0 1000 2011 2012 2013 2014 3900 3700 3500 3300 3100 2900 2011 2012 2013 2014 Amount invested in € mn. 2011 CF data and 2014 BA data is not available. EY Moving Mainstream: The European Alternative Finance Benchmarking Report, Feb. 2015, p. 13; EBAN, Statistics Compendium 2014, p. 7; and EVCA, EVCA Yearbook - 2015 European Private Equity Activity: European Private Equity Activity Data 2007 -2015, forthcoming. 8 Alternative Finance 19/03/2018

m co no le ia ur ne re ep En tr r fo rs s le lie ru pp e su tiv al ric n st itio Re rad T y Drivers of the Alternative Finance market Development of the Alternative Finance Market s ie og ol Aw pa are rt ne ic s ip s at an io d n hn ec lt ia nc na Fi Offers alternatives for traditional bank lending and growth opportunities when using combinations of (alternative) finance. 9 Alternative Finance 19/03/2018

Developments in Awareness Lack of awareness of possibilities 10 Lack of knowledge of the use and the requirements of these sources Alternative Finance 19/03/2018 Lack of skill to use alternative finance

Developments in the role of the government • All Member States have initiatives to support and stimulate alternative finance. • A lot of Member States are also working on legislation and regulation of alternative finance. • The one-stop-shop for businesses initiative. • The Green Paper on building a Capital Markets Union is developed by the European Commission. • Initiatives to raise awareness 11 Alternative Finance 19/03/2018

Challenges regarding our finance market 12 Alternative Finance 19/03/2018

Challenges on the demand side of alternative finance Panteia, 'Survey on the access to finance of enterprises (SAFE)', November 2014, p. 12 • Decrease the reliance of banks for finance. • Cover all investment stages. 13 Alternative Finance 19/03/2018

Challenges on the supply side of alternative finance Association for Financial Markets in Europe (AFME), "Bridging the growth gap", February 2015, p. 8 • Increase the quality and quantity of deal flow for parties on the supply side of capital. • Increase the financial literacy and decrease the lack of awareness among entrepreneur. 14 Alternative Finance 19/03/2018

Opportunities for action 15 Alternative Finance 19/03/2018

Opportunities Challenges A (too) high reliance on banks Directions Creating diversification; greater variety of suppliers of finance for all SME's and opportunities for multiple source finance. Not all investment stages are covered Harmonization; stimulating capital at all stages Stimulating cross border finance Shortage on work capital Need for prompt payments and asset based, supply chain finance Financial illiteracy Creating ambitious business environment hubs/ecosystems is an example which can be used to improve literacy, transparency, knowledge on alternative forms and options, financial management skills and investment readiness. Regulatory and legal barriers Be a frontrunner on alternative finance Regulatory reforms 16 Alternative Finance 19/03/2018

Embrace the differences • Given the different situations in the Member States, the challenges regarding alternative finance encountered by each Member State differ as well. • In order to deal with these problems, countries with similar characteristics or challenges could share knowledge and good practices. 17 Alternative Finance 19/03/2018

Dutch Venture Initiative

Dutch VC market Peer group comparison Total VC investments “Plenty of room for further VC market development” Source: Invest Europe

Why DVI? Insufficient access to risk capital for SMEs Adapt to changing financial landscape, increase number of ‘Gazelles’ Well matured market place for VC/PE Diversified in terms of investment style and sector focus Dutch GPs benefit from an excellent reputation and track record Number of funds increasing, significant transaction volumes Large PE, but average VC market size “A Fund-of-Funds structure was the main solution to bridge the funding gap”

Investment Focus SEED CAPITAL SUPPORT Pre-Seed Tech. Transfer Start-Up MARKET SUPPORT VC Main challenges Proposition to be developed Low scale production Upscale production Financial profile n. a. High R&D costs Use of resources GROWTH Buy-Out From local to a national champ Stable cash flows High capex Capex gets opex Low opex Loss making Break-even result Margin increase Stable results “Proof of Concept” Start production Sales development Working capital Debt reduction Product development Explore markets Recruiting people Export Blue chip clients Focus on sales and Launching customer growth of customers Organic growth combined with buy- Efficiency and-build Int. expansion

DVI-I main characteristics Key facts Fund-of-funds investing in VC/PE funds focussing on • innovative and fast growing Dutch SMEs Sectors (‘Topsectoren’): LS, HTSM, Cleantech, Agro-food, …. Fund size of over 200 m Complementary to other products of DMEA (i. e. Seed Capital, Innovation Credit, Qredits, etc. ) Target portfolio of 12 -15 fund investments Advised by EIF Strategic partners Dutch Ministry of Economic Affairs PPM Oost BOM

DVI-I’s first 30 months “A flying start for the Dutch Venture Initiative” First closing on 12 Aug 2013 for EUR 150 m 54 Funds have EUR 148. 5 m been screened, of which 17 have been approved committed capital to a total of 13 different funds EUR 31 m capital 45 companies in First successes: called up to date the underlying portfolio of which 22 (49%) in the Netherlands Status : January 2016 5 exits and 1 IPO Further EUR 45 m commitments to European Angels Fund initiative Fully invested within 30 months. Working on DVI-II

DVI-I Fund Portfolio Prime Ventures IV Karmijn Kapitaal Fund I Gilde Healthcare III Newion Investments II Aglaia Oncology Fund II Life Sciences Partners V Forbion Capital Fund III Gilde Healthcare Services II hen. Q III ENDEIT Fund II HPE Fund II Keen Venture Partners SET Fund II

Why DVI-II? DVI-I is fully invested within 30 months DVI-I demonstrates performance and success Similar Investment Strategy Good visibility on further deals and transactions Similar underlying successor funds to be expected Now open to selected Institutional Investors “plenty of opportunities for DVI-II”

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Contact Pieter Waasdorp Director Entrepreneurship – DG Entrepreneurship and Innovation p. m. waasdorp@minez. nl +31 70 379 6841 19 maart 2018