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The Brainport region is an important growth engine of the Dutch economy. It is therefore very important, both for the region itself and for the country, to further strengthen this position. The fact that this not only increases the earning capacity but also makes it possible to tackle numerous societal challenges, makes that goal all the more relevant. In a series of 12 articles, Innovation Origins looks at the most striking issues within this endeavor. In this, we are guided by the research report ‘Brainport at the top‘ that Rabobank published in collaboration with Strategy Unit. Today, the second article in this series, in which we focus on the availability of capital. It is a theme that – according to the 5.7 Rabobank’s research group – could use a boost.

Many of those involved in the Brainport ecosystem see the availability and distribution of capital as one of the biggest challenges at the moment.

If you look at the accessibility of capital for the high-tech manufacturing industry within Brainport Eindhoven, you run the risk of hearing two seemingly contradictory stories. On the one hand, there is the constant, loudly expressed need to get more money available for the development of high-tech scaleups. But on the other hand, there are the facts that show that investments are being made more than ever, even in difficult Corona times. How about that?

Nard Sintenie

Nard Sintenie, a partner at Innovation Industries, hears a lot of “parrot talk” around the theme of capital. “Sometimes you get the impression that there is no money at all, but the opposite is true. More is being invested than ever before, although that does not mean that there are no sectors that are still struggling to raise sufficient capital”. There are plenty of business opportunities for start-ups, says Sintenie. And the more established high-tech companies are also doing well. “But for a scale-up that needs 20 to 30 million to build a machine, doesn’t yet generate turnover and has yet to wait and see what the market will do in the near future, it’s indeed a lot more difficult.”

SMART Photonics

The example of SMART Photonics proves that it can also go well. A Dutch consortium led by Innovation Industries decided last summer to invest 35 million euros in the Eindhoven photonics scale-up. Remarkably, in addition to the BOM, Rabobank, PhotonDelta, and KPN Ventures, the Dutch state also made a substantial contribution. SMART Photonics wants to use the money to increase its production capacity of wafers. With the investment, it was possible to prevent a foreign party from acquiring SMART Photonics.

But we don’t just see success stories. Besides the need for more venture capital, regular financing is also needed to keep the region at the top. In general, OEMs seem to be able to attract capital more easily, but this is less true for (tier 2 & 3) suppliers. Pre-financing stock (like semi-manufactured products) is particularly challenging. The difficulty for many scale-ups is that they often work with new and innovative technologies. There is no end product yet, no turnover, the market phase is still far away, so venture capital is needed to scale up. “This phase is called the “valley of death“, says Marin Boon, Director Corporate Clients at Rabobank. “Due to capital shortages, many of them do not survive this phase. There is a danger that they will be forced to stop or will be acquired by foreign parties and thus disappear from the region. This is not desirable, because these companies are essential. They often work on building the future knowledge base of the region.”

Time to market

Marin Boon

Marin Boon often sees the examples of this trend among ‘mission-driven’ innovators: companies active in areas such as MedTech, food technology, the energy transition, and circularity. Boon: “They contribute to important transitions. Means to bridge the time to market are hard to find. Machines have to be built and talents have to be brought in. That doesn’t happen by itself, everyone can see that. But as a society we do need these companies; they are the ones who can take the big steps in these transitions. They are also the companies that invest in key technologies such as photonics, nanotechnology, and smart industry. As a bank, we are very aware of that.”

With an investable capital of around €250 million – partly thanks to fund investment by Rabobank – Innovation Industries’ team of specialists from the tech industry is well-prepared to help the scale-ups get through this phase. “Our background and network enable us to assess whether a company is capable of realizing its ambitions,” says Sintenie. “We are not a bank, we are part of the ecosystem. But even there, the risks are still great: of the ten companies, there’s always a number that does not make it to the finish line. As a provider of risk capital, we, therefore, have to earn our money back a number of times with the companies that are successful. With that requirement in mind, we look at the market.”

The bank also wants to take steps to expand the support possibilities, says Boon. “The Rabo innovation loan works fine for start-ups, but not for scale-ups. We would like to develop specific products for that group; in addition, we look on a case-by-case basis to see what could best help a company in a certain situation.” In many cases, this means compound financing, as was done for SMART Photonics, but also for IME Medical Electrospinning (Medtech) and Peel Pioneers (Foodtech), for example. “It’s often a complex puzzle; by linking investment to a loan and sometimes a subsidy, you can solve it. In any case, it is a tailor-made solution. In spite of the complexity, we are taking the steps that are needed, and with our dedicated start-up and scale-up team in Eindhoven, we are getting better and better at helping these companies.”


Sintenie is thinking of a variation to this theme: a matching fund that enables an investor to get across. “If you, as a venture capitalist, know that the government, for example, wants to match investment with a loan, this can provide just the leverage you need. It’s a system that we’ve seen many times and that has also been used with SMART Photonics, for example, but which could have an even greater impact.”

Apart from these opportunities, Sintenie wants to add another nuance. “From the perspective of a company, it is logical that you do everything you can to find the capital you want, but if you look at it from a somewhat greater distance, it is good to also find some scarcity. Imagine if all companies were financed. In that case, our scarce talents would also work on the less successful projects and the top companies would have less chance of really breaking through. We need scarcity to make sure that some companies don’t make it and that talent does end up in the right place.”

Read the other articles published so far in this 12-part series.