Pre-seed schemes results: Confidence in Twente startups growing
Positive employment prospects for innovative high-tech companies
The results of the Pre-seed Companies Monitor of the University of Twente were presented in December. The developments of three schemes for start-ups are included in the monitor. Proof of Concept (PoC), TOP, and TOP-light, which offer financial support ranging from € 10,000 to € 250,000 and business development to innovative start-ups within Kennispark Twente. The most striking difference compared to previous years is that companies have raised more follow-up funding. Investors have confidence in the start-ups. The start-ups have become more mature, have a higher survival rate and show signs of growth in terms of employees and turnover. Kennispark Twente expects this trend will continue and employment within the pre-seed companies will rise to a level of 700 full-time jobs.
More follow-up funding, a higher survival rate, more sales and more FTEs for startup companies. These are the main conclusions from the Pre-seed Companies Monitor 2016. The Monitor has been conducted three times since 2011, since the TOP scheme has been administered by Kennispark Twente. Besides the TOP programme, the PoC and TOP-light schemes have been included in the Monitor for the first time this year.
More jobs and increased follow-up funding
Partly due to the pre-seed schemes, to date more than 175 full-time jobs have been created by the 48 companies. As Coordinator Pre-seed Funding, Erwin Holtland of Kennispark Twente (now: Remon van der Woude) is in contact with all companies. “175 FTE comes down to an average of 3.6 FTE per company, only slightly short of target. But as companies grow and investors are in line we expect that employment will continue to rise. The companies are in full swing and we expect the number of jobs in the foreseeable future will grow to 500 or 700 FTEs”, says Holtland.
For the TOP programme, with a maximum loan of € 40,000, the average number of FTEs increased from 3.8 FTE in 2015 to 5.7 FTEs per operating company. This is higher than for similar startup accelerators. The 39 TOP companies have jointly received €1,300,000 in loans. The follow-up funding they received amounts to € 23,592,000. This is more than 18 times the loans received by the TOP companies. This means a growth of nearly € 14 million in the past year and a half.
Multiplier of 18,1
“A multiplier of 18.1 is an excellent result. Raising follow-up funding is very important to high-tech companies. The relatively small loan amount that we make available through the schemes is just the beginning. To grow and to create jobs, additional capital will have to be raised. The fact that eighty percent of this is private capital shows that investors have confidence in companies that participate in our pre-seed schemes. Investors view the schemes as a kind of seal of approval,” said Holtland.
Of the 39 TOP companies that have been registered since 2011, 31 companies are still operational. This means a scheme survival rate of 79 percent, which is far above the national average of 52 percent, the rate recorded by the Chamber of Commerce in 2014. “The high survival rate is due to the sharp selection for admission to the pre-seed schemes and the intensive support given to entrepreneurs as part of the various pre-seed schemes. Contact and support of the assessment committee is very important in this respect. The committee consists of entrepreneurs who know from personal experience how challenging starting a business can be and the pitfalls to be aware of. Founders of companies such as DEMCON, Xsens and PNO help entrepreneurs on the road to success,” Holtland said.
About the pre-seed schemes
The PoC, TOP and TOP-Light pre-seed schemes form part of the United Twente Innovation B.V., a subsidiary of the University of Twente. The UT considers entrepreneurship of paramount importance and through UTI B.V. aims to contribute to supporting starting entrepreneurs. It does this, for example, through UTI B.V. in collaboration with Kennispark Twente and financiers such as Regio Twente, Rabobank, Province of Overijssel and the RVO [Netherlands Enterprise Agency]. The UT has been offering financial support to startups with innovative ideas for more than thirty years, primarily from the University and Saxion, that want to start their business.
Companies that qualify for TOP-Light receive a loan of € 10,000. TOP companies receive a maximum of € 40,000 and PoC companies receive up to € 250,000 to further develop and market their idea or product. In addition to financial support, companies also have access to various forms of support and advice.
An example of a company that received a Proof of Concept loan is Eye on Air. The company was established by two former employees of the UT and develops technology for detecting very small concentrations of chemical substances in the air. The main focus of the start-up is the detection of explosives for aviation industry safety.
Examples of companies that have made use of TOP include: Clear Flight Solutions, Xsens, DEMCON, 4Silence and Booking.com. A recent example of a TOP company that received a loan of € 40,000 is the start-up Triboform from Enschede. They were recently acquired by the Swiss company AutoForm.