Only 38% of entrepreneurs starting high potential ventures also have high growth ambitions

Veroniek Collewaert

By Veroniek Collewaert

Professor of Entrepreneurship

26 November 2020

The 2020 Rising Star Monitor reveals that about one in two high-growth ventures are entirely internally funded. Over 90 percent of young, high-potential ventures which had not used external funding did not even apply for it. About three in four ventures do not do so because they believe they do not need it. Beyond that, entrepreneurs don’t apply for bank financing because they don’t think they have enough financial history, they see the application process for subsidies as too cumbersome, fear losing control with venture capitalists and angels, and they consider crowdfunding as too time consuming.


The insights in the fifth edition of the Rising Star Monitor, a study by Vlerick Business School and Deloitte Belgium, are based on data gathered from 168 young, high-potential Belgian ventures in a wide cross-section of industries with an average age of 2.7 years and 279 founders.

In light of the COVID-19 crisis, this year’s edition addresses venture financing as it is an important core business resource and fuel for venture growth.

Sam Sluismans, Partner at Deloitte Belgium: “Each year the Rising Star Monitor provides great insights into the trends and challenges faced by young, high-potential ventures in Belgium. This year, the COVID-19 pandemic is of course a focus, but so is venture financing to ensure continued growth. Interestingly, the fact that we are in a deep health and economic crisis has not significantly impacted the growth ambitions of the ventures. Yet, the analysis shows that there is an opportunity for them to make more and better use of external funding. A lack of knowledge or misunderstandings are the key reasons why the high-potential ventures often fail to take advantage of venture financing.”

COVID-19 has not significantly impacted growth ambitions

Our Rising Star Monitors have shown that a majority of high-potential ventures do not have high growth ambitions. In 2020, only 38 percent have high growth ambitions, while the majority prefer to keep their business at a size that they can manage themselves.

In five years, high growth ventures want to employ an additional 33 employees (versus only 2.6 for low growth ventures), which is five less than last year. When it comes to sales, however, they want to grow with 9.4M EUR (compared to 5.8M last year).

Veroniek Collewaert, Professor of Entrepreneurship and Partner at Vlerick Business School: “As we see elsewhere, facing COVID-19, scale-ups are temporarily delaying their growth ambitions when it comes to their hiring. This makes sense as they are trying to reduce operational costs to deal with the crisis. However, this does not translate into their sales growth ambitions, which shows their high hopes for the future.”

One in two high-potential ventures are entirely internally funded

Despite popular fundraising stories, only one in two high-potential ventures has raised money from at least one external financing source, including sources such as family and friends. The most frequently used external financing source is bank debt (35 percent of high growth ventures), followed by government subsidies (31 percent). One in four high potential ventures raised external equity financing. In all of this, Belgian scale-ups are comparable to their European counterparts.

For those ventures that have used external financing, the average amount raised is highest for venture capital (€938,000), followed by corporate/strategic investors (€492,000), business angels (€419,000), subsidies (€348,000), bank debt (€230,000), other external sources (€169,000), crowdfunding (€106,000) and accelerators or incubators (€19,000).

Not used means not applied for

Over 90 percent of young, high potential ventures which had not used external funding did not even apply for it. About three in four ventures did not do so because they believe they do not need it.

The main other reasons to not apply depended on the funding source considered: for bank financing it was a lack of financial history, for subsidies the process was considered too cumbersome, for angels and venture capitalists it was a fear of losing control, and crowdfunding was considered too complicated and time consuming.

Two out of three high growth ventures aim to raise external financing in the future, with most aiming for bank debt. On average, about half of ventures aspire to raise between €100,000 and €500,000.

Entrepreneurs have good financial knowledge, but with room for improvement

While most entrepreneurs indicate knowing about the existence of different financing sources, about 15 percent of low growth ventures and 7 percent of high growth ventures do not understand basic financial concepts such as compounded interest.

Veroniek Collewaert: “The good news here is that the vast majority of entrepreneurs luckily does get very basic financial concepts. However, if up to 15% of entrepreneurs does not know what compounded interest means, we need to be worried about the popularity of debt. It means they do not fully understand the implications of taking on debt.”

Founders of high growth ventures have a higher level of knowledge of financial management, competencies that increase the probability of wanting to raise external equity financing in the future.

Seventy-two percent of young, high-potential ventures had at least some sort of a social tie to a finance professional before founding, complementing their know-how.

The amount of base pay is low

At founding, founders pay themselves on average around €34,000 per year. Interestingly, low growth venture founders pay themselves more, around €44,000 (median: €25,000), while high growth venture founders receive around €23,000 (median: €0).

For founders of both, the minimum base pay is €0, while the maximum base pay is higher for the low growth venture founders (€600,000) than for the high growth venture founders (€190,000).

The Rising Star Monitor is part of the Centre for Excellence in Scale-ups. With this initiative, Vlerick Business School and Deloitte Belgium want to gain vital knowledge about the main difficulties that young companies with growth potential face in Belgium. The Scale-up Masterclass programme is part of this initiative as well.

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Veroniek Collewaert

Veroniek Collewaert

Professor of Entrepreneurship/Partner