Vlerick Expertise in Entrepreneurship

The image of entrepreneurship in Flanders could be a great deal better, especially in comparison with neighbouring countries. This is why the Flemish government agency Flanders Innovation & Entrepreneurship, with the support of Flanders DC, Voka, and Unizo, is starting a multi-annual campaign to show that Flemish entrepreneurs have diverse and palpable motivations. What’s more, they often go into business to make a positive impact on their own living environments, or on society as a whole. The campaign is based on the first scientific study into the social aspects of entrepreneurship in Flanders

The majority of all scale-ups in Belgium today were founded by a team, usually composed of two people who know one another well. Often, they hold a C-level position in which the directorship of the company is shared between the two. Their remuneration consists primarily of shares and cash, with shares as the primary form of remuneration, particularly in the first few years. Only two in five founders of young scale-ups actually pay themselves a salary, while only about half of all scale-ups conclude dynamic share purchase agreements from the start about the course of action to be taken should one of the founders leave the company or take up another position.

While we are bombarded with negative news on banks, insurers and tech producers, Belgian growth companies appear to be keeping the Belgian economy afloat. They may account for a fraction of all Belgian companies with a minimum of ten employees, but they generate exponential growth in employment and productivity. This has emerged from the ‘Belgian High-Growth Monitor’, a study that analyses the evolution and characteristics of growth companies in Belgium.

2015 and the beginning of 2016 were characterised by a pronounced increase in the number of transactions in the Belgian mergers and acquisitions market. Demand is greater than supply, stimulated by easy and cheap access to finance and greater availability of financial resources to investment companies. Furthermore, the persistently low interest rate environment means there is increased interest from family investors, wealthy individuals and foreign private equity funds in Belgian medium-size enterprises. It is therefore not surprising that the prices paid are increasing across all sectors and business sizes. These are the findings from a survey of 142 Belgian mergers and acquisitions experts into their experiences over the past year.

In contrast to the Flemish television news, the newspaper De Tijd pays more attention to entrepreneurship. Most items are of a financial and economic nature, just like on the television news. However, the way in which De Tijd considers entrepreneurship from a broad social perspective is notable. In almost half of the articles, entrepreneurship is seen as part of life in society. No fewer than 10% of the entrepreneurship ¬articles are about ethics and sustainability. In comparison with the television news, civil society is significantly less active in the interpretation of the news and De Tijd also pays noticeably more attention to the international context in its reports. This was shown in a study, which looks at how entrepreneurship in all its forms is covered in the Flemish newspaper De Tijd.

It is something you often read: ‘Entrepreneurship is the key to fighting poverty’. But despite all of our good intentions, projects to stimulate entrepreneurship in more impoverished areas do not always deliver the results hoped for. Of what do the people initiating these projects, such as microcredit providers, NGOs and multinationals, need to be aware? As part of his doctoral research, Jacob Vermeire went to South Africa for 12 months. He believes the answer lies in the ability to place poverty and entrepreneurship within a broader perspective.

Recent research by Veroniek Collewaert, Professor of Entrepreneurship, has shown that entrepreneurs’ over-optimism towards a possible investor cannot always be put down to an ‘enthusiastic belief in their business’. Sometimes prognoses are deliberately presented in an excessively rosy light. Peter Maenhout, the Head Connected Consumer at our Chair Partner Gimv, the regional investment company in Flanders, explains: ‘Just give us the “raw data” of an entrepreneur who knows his market.’

Theoretical and empirical studies agree that passion is a critical factor influencing entrepreneurial behaviour and performance. Some have suggested that this passion may change over time. However, empirical evidence for this claim is at best ambiguous. Moreover, research has so far given little attention to the factors influencing entrepreneurial passion. Professor Veroniek Collewaert: “Prior research has considered an entrepreneur’s passion for founding as a given and as something entrepreneurs have to make the best of. Our findings point to a key role entrepreneurs play in keeping their own fire burning.”

‘Keep it in the family.’ The time-honoured motto of family companies has applied less and less in recent years, and that includes their funding. All around us we see increasing transparency and openness to the outside world, and family companies today are not immune to this. Recent research in cooperation with our Chair Partner Gimv provides a nuanced picture of family companies and their attitude to private equity.

How do unlisted companies – starters and rapidly growing businesses – finance their growth? How are their potential transfers or buyouts financed? And what impact do financing choices have on their continued development? At the request of the Belgian Federal Science Policy Office, a team of researchers from a number of different universities has been examining these questions. Professor Sophie Manigart was the project leader. Below, she comments on the key results that emerged from the study.