The fund managers of Innovation Industries. Second from right Kees van Ast, former member of the WUR executive board. ©Innovation Industries
The investment fund Innovation Industries is supported by the four technical universities in Delft, Eindhoven, Twente and Wageningen as well as by the TO2-institutes, including TNO, ECN and Wageningen Research. WUR, two TUs and TNO will each invest 1.5 million euros in the fund. As a result of their contribution, the European Investment Bank has decided to invest another 25 million in the fund. There are also private investors, such as the Pension Fund for Metal and Electronics and a group of investors from Twente.
Technology
The fund is designated for high-tech knowledge companies that have developed a distinctive technology and that are now ready to manufacture and market their product. At this stage of the process, these companies often need a production facility, which means that they incur large investment costs. They try to raise the necessary money via loans or by issuing shares. Banks often find these investments too risky. The new fund wants to help these technology companies to scale-up and it plans to invest between 1 and 10 million euros per company.
Scaling-up
Although this is a national investment fund, knowledge companies in Wageningen are eligible, explained Sebastiaan Berendse, the director of Value Creation at WUR. As examples, he mentions startups like Cerescon, which has designed a robot to pick asparagus, Solynta, which develops potatoes from seeds and Plant-E, which harvests electricity from plants. Each of these companies has a distinctive technology, but they have to upscale their technology, production and company so that buyers can purchase them. ‘The companies must want to be a leader in the market and to have plans for international expansion and they must also be scalable so that their production can easily grow,’ said Berendse. InventoryBut the director of Value Creation doesn’t know if these companies will contact the fund. Together with the business developers of WUR, director Jan Meiling of StartLife will make an inventory of which knowledge companies need financing. Once a month, Meiling will meet with his colleagues from the TUs and TNO, who have also made an inventory of the need for financial help. Berendse thinks that these meetings will have extra value because the fund prefers to finance companies that combine a number of technologies. In the end, the fund manager, Innovation Industries, will determine who receives the money.
Shares
The companies won’t be given the financing for free. The investors want shares in the company in exchange for their financial support, assuming that the shares will increase in value. According to Berendse, the choice for shares means that the investors will commit themselves to the knowledge company for a longer period – five to ten years. After that period, the fund will sell its interest in the company so that the investments will bring returns.
Opportunities for growth
The new fund is a result of the collaboration between WUR and the three technical universities in the 4TU-federation after they decided last year on a mutual strategy in the area of knowledge valorization. WUR will invest 1.5 million in the fund ‘because we want to offer opportunities for growth to young companies who develop products with our knowledge,’ Berendse stated. The advantages of such a large fund are that it attracts more money and the knowledge companies receive professional supervision. Berendse is also very positive about the collaboration with the TUs and TNO because many innovations occur on the interface between various fields of knowledge.