Peter Wennink emphasises the importance of credibility. Left: Rob van Gijzel.

Of course you need money. A lot of money. Because a high-tech start-up developing hardware cannot live off spare change. They need millions. But even more importantly, they need credibility. Because without credibility there aren’t any investors anyway.

And that’s exactly the problem when starting a company: you have plenty to do just to prove what you can accomplish. And that applies to a hardware company in the tech-sector to an even greater extent: there aren’t any specialists who can determine the true value of such a company.

The chicken and the egg

When it comes to funding, many start-ups suffer from a serial chicken-and-the-egg-situation. No investor wants to take the leap first, and rightly so, as they have little affinity with the technology in which they are investing their money. Months go by in the search for potential investors and they hear the same story over and over again from investor after investor: “Yes, I’d be confident about getting involved if someone else was also investing. As it is I’d rather wait a while.”

Infuriating. That’s how participants describe this phenomenon as the third round of Startup Bootcamp High Tech XL kicks off. An exciting discussion is held at the High Tech Campus. Who will crack the chicken-and-the-egg-discussion? Should there be a fund with tens of millions of start-up capital? Or is something else needed? The Mayor of Eindhoven, Rob van Gijzel, and the CEO of ASML, Peter Wennink, actively participated in the debate.

Wennink touched a sore spot: “There are enough financiers. But as a region we need to boost the credibility of the promising start-ups, so that those financiers actually dare invest their money.”

20150410_140838In short, if start-ups are too young to be able to enhance their credibility themselves and their products are too under-developed for lenders, the established companies in the region should help them. Philips and ASML could help Eindhoven start-ups like Effect Photonics or Avular gain investors. This will ultimately benefit the region because products can be manufactured more quickly, which will also produce the envisaged effects more quickly. For the companies themselves of course, but certainly also for their clients.

Over the course of the discussion it is explained that the concrete help could take place both incidentally and structurally. Wennink suggests the establishment of a permanent advisory board of specialists in the region, from academics to entrepreneurs. After a positive assessment of a start-up, an advisory board like this could then take all the necessary actions to crack the credibility problem. Whether it’s the chicken or the egg, it’s all for the best results.

Guus Frericks shows the Startup Bootcamp ambitions: 2500 new jobs in the next five years
Guus Frericks shows the Startup Bootcamp ambitions: 2500 new jobs in the next five years

Avular is a team of TU/e and Tilburg University alumni. Their integrator system for “Unmanned Aerial Systems (UAS)” has specific capabilities in the areas of control systems and mechanic design. Together with industry experts in the field of industrial inspection, Avular supplies market-specific vertical integration of UAS, sensor and data storage systems.

EFFECT Photonics is a TU/e spin-out and leader in the design and development of optical components. The technology is based on “Photonic Integrated Circuits” and can be used in mobile networks and data centres.

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Author profile picture Bart Brouwers is co-founder and co-owner of Media52 BV, the publisher of innovationorigins.com.