Syndicate One, Bain & Company and Sofina have joined forces to conduct data-driven and qualitative research into Belgium’s maturing technology startup and investment ecosystems.
The first result, the inaugural ‘State of Belgian Tech Report 2024’, combines insights from current data with results from a recent survey of 130+ startup founders, as well as a series of in-depth interviews with leading entrepreneurs and investors from across the country.
The report offers several encouraging signs that the Belgian start-up and investment ecosystem is expanding in a healthy and sustainable way. It also offers actionable areas for improvement, meaning that this is a report that is actually useful rather than just another piece of research to sit in someone's download folder.
Let's dig into just some of the key findings:
Q1 off to a promising start
While 2024 has not been easy for many startup regions, in H1 2024, the total amount invested into 8 Belgian tech start-ups is close to surpassing €500 million, compared to €424 million in the full year 2023, setting up the ecosystem for a potential record year.
Surprise, surprise... AI dominates Belgian software investment
Zooming in on the type of Belgian tech companies attracting funding in recent years, 52 per cent fall into the software category, compared to 48 per cent for hardware (slightly more exposed to the latter in comparison to Europe).
AI companies accounted for more than 70 per cent of the capital invested in the first half of 2024.
4 Unicorns and exits on the rise
As signs of a gradually maturing ecosystem, four ‘unicorns’ (companies with a $1 billion valuation or higher) have emerged in Belgium: team.blue, Collibra, Odoo, and Deliverect.
Unicorn offer a fertile breeding ground for the next wave of startups and entrepreneurs in Belgium, supplying skills, jobs, and services to the local economy.
The number of exits remains small, but has steadily grown from only 13 in 2018 to 31 in 2022, 36 in 2023. In the first half of 2024, 22 exits were recorded.
Belgian VC landscape set to grow the rest of 4 with €400M fundraising goal in sight
In the year to date, Belgian VCs have raised more than €200 million in new funds, compared to around €360 million in total on average in 2020, 2021 and 2023.
The report predicts that Belgian VCs are currently on track to raise more than €400 million by the end of this year (extrapolating the data for H1 2024). Also in terms of the number of funds raised, there’s been a noticeable and steady upward trend. While only two VC funds were raised in 2018, eight funds were raised in just the first half of 2024 alone, foreboding a record- breaking year.
Sustained fund raises by Belgian VCs and a continued inflow of foreign capital is a cause for optimism.
According to the respondents of the Syndicate One survey, around 49 per cent indicated one of their funding rounds was participated in by business angels, and another 34 per cent by ‘friends & family’. Consequently, a significant portion of capital in the early start-up stages is provided by non-institutional investors.
Consistent with the prevalence of early-stage investment within the Belgian Tech ecosystem, there has been a notable increase in the number and activity of business angels on the one hand, and accelerators/incubators on the other hand, albeit both more pronounced in Flanders and Brussels compared to the Wallonia region.
The report really celebrates the fact that Belgium is seeing an unmistakable rise in value-adding angel investors, incubators, accelerators, startup studios, physical hubs, industry events, network initiatives, support programs, sector-specific communities, ambassadors, and more.
Early-stage funding drives Belgian tech growth
Dealroom data indicates that capital invested per round have steadily increased in the period 2018 to 2024 to date, with tripling at seed stage and more than doubling at Series A stage.
According to Olivier Rousseaux, Director of Venture Development, Imec:
"When we first ventured into the deep tech scene in Belgium, the funding landscape was extremely limited. Raising just €1-3 million for a seed round was the norm, far below what was needed for success.
Today, we’re seeing a significant shift, with seed rounds now attracting €10-15 million, which is a crucial step towards building successful deep tech ventures."
However while experiencing unmistakable growth, the Belgian Tech ecosystem is still firmly in its early maturation phase. Over the last six years, early-stage financing rounds accounted for around 77 per cent of capital raised by Belgian tech start-ups, compared to 42 per cent in Europe over the same period.
Talent shortages and ESOPs limit Belgian founders
The startup founder survey reveals that Talent and ESOP schemes are the main pain points of Belgian founders: both have a negative impact on founders’ ability to scale their business and the latter limits the reinvestment power of opera- tors in successful start-ups.
All startups need experienced staff to grow and scale, especially who've done it before. The rport highlights a shortage of local serial entrpreneurs and staff personnel with vital experience scaling a company.
Further, attracting senior talent abroad is necessary, confirms Adrien Roose, CEO and co-founder of Cowboy. Whilst Belgium has a high standard of living and a strategic location, it’s is not always the first choice destination of foreign talent:
“For our CMO and CFO roles, we were able to secure great candidates from overseas who believed in our proposition and flexible working; they spend a lot of time in Belgium but haven’t relocated.”
Thoralf Gutierrez co-founder and CEO, Sirona Technologies, shared:
“Brussels is often seen as a second-tier city by international talent when compared to London, Paris or Berlin, increasing the difficulty to convince people to relocate."
ESOPs (Employee Stock Ownership Plans) generally give employees the right to purchase company stock at a predetermined strike price after a certain period of time, which aims to foster a culture of ownership and enhanced engagement as employees share in the company’s success, and provide significant financial benefits for both employees and employers.
The current social and fiscal approach in Belgium increases the risk for employees and companies and the administrative regulation puts Belgian companies at a disadvantage.The significant challenges for the implementation of ESOPs were raised by many entrepreneurs and investors interviewed for this report.
Willem Delbare, CTO & founder, Aikido shared:
"The current system is suboptimal, with a lot of elements creating friction: short exercise windows, uncertainty at the moment of exit, limited information, upfront payment which can force people to take loans, ... it’s a lose-lose-lose.
While having employees benefit from company growth, results in more people reinvesting in the ecosystem, creating an additional growth driver."
Accoring to Laurens De Poorter, Founder of Syndicate One:
“Pushing the Belgian tech ecosystem further to the next level is Syndicate One’s raison d’être. Besides strengthening the connective tissue in our ecosystem by uniting existing players and investing in new ones, we provide tools for anyone who aims to improve it.
We believe this report can be a map of the ecosystem for entrepreneurs, investors and policymakers to make better, more informed decisions. We are honored to partner with Sofina and Bain & Company to present it to you.”
Overall, the report provides valuable data-driven and first-hand personal insights into the Belgian tech ecosystem.
While smaller start-up and investment ecosystems, including Belgium’s, require more time, forward-looking policymaking, exits, increased media attention and other elements to reach the next level, there is a growing appetite in startup investment from business angels, incubators, accelerators and early-stage VC funds alike, along with deepened and broadened access to government subsidies and other types of support.
By strengthening the support structures neccessary , Belgium can further solidify its position as a thriving tech hub in Europe.
Download the report today.
Lead image: Yaroslav Danylchenko.
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