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 mall, technology-based companies find it particularly hard to finance innovation," says Wolfgang Gessner of IRC North Germany. "The returns on product development are too long-term and too uncertain for debt financing, and until recently equity capital was simply not available to them. Now, the European venture capital industry is developing rapidly. Funds are being established in most Member States, and many have a sectoral rather than a national focus - they will consider investments anywhere in Europe." Problems remain. There is no easy way for specialist investors and specialist companies to identify one another. And when they do meet, the gap between their expectations may be so wide that a deal is impossible. In particular, technology-oriented entrepreneurs often lack the skills to develop an attractive business plan, to present it convincingly, and to negotiate an appropriate deal.
Faster Finance Gessner sees a real opportunity to speed up the flow of capital into European innovation by bringing well-prepared companies together with carefully matched investors, within a framework of professional support. His confidence is based on experience. VDI/VDE-IT, the IRC's host organisation, has already organised 15 investment forums, many in the area of information technology. "National or regional events have a success rate of 15-20%," he says. "If 20 companies attend, three or four will conclude deals with investors. An international forum, focusing on a specific technological area, produces twice as many signed contracts."
The IRC Innovation Financing initiative was conceived by IRC North Germany, but has already attracted wider interest. The consortium behind the first Biotechnology Investment Forum, to be held in spring 1999, includes a total of six IRCs.
"IRCs are well equipped to bring investors and companies together," says Gessner. "They use similar brokerage and negotiating skills to establish collaborative technology transfer and research projects, and many have already been involved in investment forums, so they understand the concerns of the investment community as well. The Thematic Groups also give the network unique transnational access to companies in specific technological areas - we are using the members of the Biotechnology Group, for example, to help us pick 35 companies for the forum. In the long term, the idea could be extended to other fields, such as the environment and automotive sectors."
IRCs - Key Players The forum will employ the proven methods developed by VDI/VDE-IT - companies will be selected with care, and will receive intensive coaching to prepare for their meetings with potential investors. Support will continue after the event, with assistance in the negotiation process available if required. The aim is to secure investment contracts for 14 innovative companies. The consortium will run an advisory session for some of the selected companies at the First European Forum for Innovative Companies in Vienna, on 12-13 November. This will serve two purposes, says Gessner. "It will give participants in the biotech event an additional opportunity to prepare. But it will also give the IRC network real visibility as a key player in the area of innovation financing."
Contact:
- W. Gessner, IRC North Germany, VDI/VDE-IT
Tl. +49 332 8435 173
Fx. +49 332 8435 216
E-m. gessner@vdivde-it.de |
F I N A N C I N G I N N O V A T I O N
