“Boundaries hamper growing businesses”

Professor Sophie Manigart from Ghent calls for the creation of international clusters

Source: Het Financieele Dagblad (09/04/2015); Author: Henk Snyders

Why is Europe failing to launch innovative successes along the lines of Amazon and Apple? According to Sophie Manigart, Professor at both Ghent University and Vlerick Business School, the reason lies with each European country focusing on its own version of Silicon Valley. Consequently, different ecosystems are developed across Europe that are hampered by fragmented knowhow, financial resources and partnerships, according to the famous Flemish professor. These business clusters, such as Brainport in Eindhoven, the Netherlands, are often too small to compete with their American counterparts, the Entrepreneurial Finance Professor explains. “One of the problems is that Europe simply is not able to choose.”

National policies block the way forward

Manigart has just returned from a seminar in the Dutch town of Loosdrecht, where she informed some fifty CEOs, managers and owners of medium to large companies on business financing strategies. Her conclusion? The national policies in the EU Member States often hamper the development of strong European companies. “In Europe, it is difficult to support the development of a hub – a European Silicon Valley – in France, Germany and the United Kingdom, but not in the Netherlands and Belgium, for example. There is no way you can get that done. The result is that you cannot gather the necessary critical mass of resources, like the United States has managed to do, with Asia now following suit, for example in Singapore.”

The time has come to launch a cross-border approach

Manigart stresses the need for a cross-border approach, with Europe facilitating cross-border collaboration. “Today, a Dutch company that wants to do business in various member states needs to draft a different prospectus for each country. What on earth are we hoping to achieve that way?’, she says with indignation.

However, this is only one of the obstacles we need to tackle. Public organisations, such as the Brabant Development Agency, must be given the opportunity to invest in hubs in Germany or Belgium too. That, says Manigart, is the ultimate form of cross-border collaboration.

Let’s bridge the gaps

“We need to develop a European financial area which would allow an Italian company to request support from the Brabant Development Agency, for example. At the moment, this is a very complex issue, but it could be extremely beneficial for an Italian company looking to export to the Netherlands to have Dutch financing. It would be a way to build networks and tap into knowledge. Likewise, it could be interesting for the development agency to invest in an English company looking to establish relevant links with the Netherlands. In a nutshell, let’s get rid of these obstacles, bridge gaps and create hubs.”

Manigart holds a Civil Engineering degree and earned her PhD in the 1980s with research into the financing of technological innovations. She founded the first network of private investors in Belgium, Vlerick BAN. Through mergers with several smaller players, this network of business angels evolved into ‘Vlaanderen BAN’, the Flanders Business Angels Network, which now has 300 wealthy members who invest in non-listed companies.

Major growth

Following the seminar organised by Business Leaders, a group of 400 entrepreneurs, Manigart observed that the venture capital market is experiencing major growth. She believes business angels are adopting an increasingly professional approach to investing. What started with entrepreneurs who had sold their company investing in smaller companies as a hobby has evolved into a network of partners, including many private individuals, who have set up an investment fund managed by professional managers. These modern business angels jointly invest in up to fifty different companies. “This results in a perfect match between wealthy individuals seeking investment opportunities and growth-oriented entrepreneurs who cannot obtain financing from banks,” Manigart explains.

“You also see very rich families setting up their own investment fund. An example in Belgium is the Colruyt family – major retailers whose fund is strongly focused on sustainability. They are not investing for fun. Their aim is very clearly to make money, but they are prepared to sacrifice financial gains for sustainable projects.”

A different approach by The Body Shop

Manigart gives another example, a club of about eight rich industrialists, including Belgians, whose investment fund targets medium to large companies. Their investments focus heavily on long-term projects. “This is the perfect solution for companies that need eight to ten years to develop. These initiatives further differentiate the venture capital market, allowing businesses to rely on a mix of financing sources, making them less dependent on banks”, the Flemish expert explains.

Manigart refuses to bring up yet another horror story about companies attracting venture capital. “On the contrary, there are many success stories, such as The Body Shop, which developed into a major chain thanks to financing, with the business angel and the entrepreneur remaining partners until the latter listed the company on the stock exchange.”


When asked what the pitfalls of business financing are, Professor Manigart points out that business angels may “run off with an activity or have the sole purpose of keeping competitors’ products off the market, so my main advice is always that, just as the financier carries out a due diligence survey on the entrepreneur, the entrepreneur should do the same on the financier.”

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