Investor Sentiment in the Brussels Tech Ecosystem

A recent survey of five investors within the Brussels, Belgium tech landscape revealed a generally optimistic outlook.

Key Investment Areas

Currently, investors are prioritizing companies operating in areas such as smart living, life sciences – considered a particularly promising sector for Belgium – B2B, industry 4.0, fintech, mobility, health tech, and music tech.

Conversely, the food tech sector is perceived as being somewhat saturated.

One investor highlighted a strategic shift reinforced by the COVID-19 pandemic, emphasizing a focus on local companies and sectors including smart living, life science, and technology.

The Belgian Health Sector

Belgium boasts a vibrant and interconnected health ecosystem.

This network comprises biotech firms, universities, and both startups and scaleups.

Investors actively monitor the #BeHealth initiative, which serves to unify the diverse components of Belgium’s health sector.

Market Considerations

Belgium is generally not viewed as an ideal market for direct-to-consumer (B2C) startups.

This is attributed to its relatively small size and inherent complexity stemming from its diverse regions, cultures, and languages.

Investment strategies are therefore often focused on Belgium alongside neighboring countries.

Funding Challenges

Despite the positive sentiment, securing funding remains a challenge for startups.

A key obstacle is the limited availability of scale capital needed for later-stage funding rounds.

Brussels as an Investment Hub

Brussels offers a compelling environment for investment due to its highly educated, multicultural, and multilingual population.

The ecosystem is dynamic and presents significant opportunities.

While valuations may typically be lower compared to other European hubs, substantial capital is accessible within the market.

Geographic Advantages

Brussels’ central location provides excellent connectivity to both Europe and international markets.

This multicultural and multilingual environment encourages startups to pursue international expansion, often beginning with France or the Netherlands.

Investors seeking opportunities in Belgium should recognize the inherent international growth potential of Belgian startups.

Founder Distribution

Belgium’s small size and high population density contribute to a geographically dispersed founder base.

Financial Prudence

Investors have been advising portfolio companies to ensure sufficient cash reserves to navigate at least through the end of 2021.

Investors Consulted

The following individuals contributed to this assessment:

• Pauline Brunel, partner, BlackFin
• Xavier de Villepin, partner, TheClubDeal
• Frederic Convent, partner, TheClubDeal
• Alexandre Dutoit, partner, Scale Fund
• Olivier de Duve, partner, Inventures Investment Partners

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Pauline Brunel, Partner at BlackFin

Generally speaking, which investment trends currently generate the most enthusiasm for you? The areas of Fintech and Insurtech are particularly compelling.

What key characteristics define your ideal investment prospect? A truly exceptional team and a substantial market opportunity are paramount.

Focus on Key Investment Criteria

The presence of a strong, capable team is considered essential. This team must demonstrate a clear vision and the ability to execute effectively.

Alongside team quality, a significant market opportunity is crucial. Investments are prioritized where substantial growth potential exists.

Areas of Investment Interest

Fintech remains a key area of focus for potential investments. This includes companies innovating in financial services.

Similarly, Insurtech is viewed as a promising sector. Companies disrupting the insurance industry are actively sought.

Prioritizing Investment Decisions

Investment decisions are heavily influenced by the quality of the leadership team. A proven track record and strong leadership skills are highly valued.

The size and potential of the market opportunity are also critical factors. Investments are targeted towards areas with significant growth prospects.

Xavier de Villepin, Partner at TheClubDeal

Regarding general investment trends, which areas currently generate the most enthusiasm? We are particularly interested in opportunities within smart living, the life sciences, and the technology sector.

Could you detail your most recent and compelling investment? Our latest investment is in Univercells, participating in their Series C funding round.

Are there specific types of startups you'd like to see emerge within the industry, or are there currently undervalued opportunities? A greater number of startups focused on the smart living space are needed. Generally, we seek companies with global aspirations that also prioritize maintaining employment opportunities within their local communities.

What key characteristics define your ideal investment prospect? We prioritize identifying bold and innovative entrepreneurs operating within expanding markets.

Which sectors appear overly competitive or present significant barriers to entry for new startups? Are there particular products or services that raise concerns? We currently exercise caution regarding investments in blockchain technology and cryptocurrencies.

To what extent does your investment focus prioritize your local ecosystem versus broader startup hubs? Is it more or less than 50%? Over 50% of our investments are directed towards our local ecosystem.

How do you assess the long-term viability of industries within your city and region? Which companies, regardless of portfolio affiliation, and founders inspire confidence? The life sciences sector, including biotechnology, demonstrates substantial promise for Belgium. Conversely, Belgium presents challenges for business-to-consumer (B2C) startups due to its small size and complex interplay of regional differences in culture and language.

What advice would you offer to investors considering the investment landscape and opportunities within your city? Brussels is perceived as a key technology hub within Belgium. However, a fully developed private equity and risk-taking investment mindset is still evolving, making securing funding for startups a continuing challenge.

Do you anticipate a growing influx of founders originating from areas outside major cities in the coming years? Could established startup hubs experience a decline due to the pandemic and the increasing appeal of remote work? We don't foresee a significant shift in this regard, as many startups had already embraced remote work and flexible scheduling arrangements.

Within your investment portfolio, which industry segments appear most vulnerable or susceptible to changes in consumer and business behavior resulting from COVID-19? The travel and hospitality sectors, which fall under the umbrella of smart living, were undeniably impacted. However, this presents a favorable moment for investment, offering startups the chance to reassess their business models and challenge conventional thinking.

How has the COVID-19 pandemic influenced your investment strategy? What are the primary concerns expressed by the founders within your portfolio? What guidance are you currently providing to these startups? The pandemic validated our existing strategy – concentrating on fostering local competitiveness within the foundational pillars of our economy: smart living, life sciences, and technology. However, the impact varies across companies, necessitating a case-by-case evaluation and thorough due diligence. We advise startups to anticipate a continuation of the current environment for at least another year and to meticulously manage their cash flow.

Can you share a recent experience that has instilled optimism, either professionally, personally, or a combination of both? The easing of restrictions during the recent lockdown, allowing companies to maintain operations, and observing their adaptability in adjusting work practices to remain functional was particularly encouraging.

Frederic Convent, Partner at TheClubDeal

What investment trends currently generate the most enthusiasm for you? Generally, I am particularly interested in advancements within smart living, the life sciences sector, and technology.

Could you describe your most recent and compelling investment? Our recent investment is in Univercells, specifically during their Series C funding round.

What characteristics define your ideal next investment opportunity? We are actively seeking companies operating within the realms of smart living, life sciences, and technology.

Are there any areas that appear overly crowded or present significant competitive challenges for new startups? What products or services cause you concern? We are currently cautious regarding investments in blockchain technology and cryptocurrencies.

To what extent does your investment focus prioritize your local ecosystem versus broader startup hubs, or a global approach? Is it more or less than 50%? Approximately 50% of our investments are focused within our local ecosystem.

Which industries within your city and region appear poised for long-term success, and which face potential challenges? Are there specific companies or founders that particularly excite you, regardless of portfolio affiliation? Fintech is currently thriving in Brussels. We are impressed by Oper, a B2B mortgage fintech company based in Antwerp.

What advice would you offer to investors in other cities regarding the investment climate and opportunities present in your city? Consider Brussels as a highly educated, multicultural, and multilingual environment.

Do you anticipate a growing trend of founders originating from areas outside major cities in the coming years? Could startup hubs experience a decline in talent due to the pandemic, remote work opportunities, and related concerns? The widespread adoption of remote work within startups has lessened the impact on established hubs, as both they and their clients have demonstrated the ability to operate effectively from various locations.

Which of your investment sectors appear most vulnerable or susceptible to changes in consumer and business behavior as a result of COVID-19? The travel and hospitality industries are expected to experience significant difficulties due to the ongoing COVID-19 crisis. Conversely, life sciences are well-positioned to contribute to solutions addressing the crisis.

How has the COVID-19 pandemic influenced your investment strategy? What are the primary concerns expressed by the founders within your portfolio? What guidance are you currently providing to startups in your portfolio? The pandemic has reinforced our strategy of investing in local companies with a focused approach on smart living, life sciences, and technology.

Are you observing any positive indicators, such as revenue growth, improved retention rates, or other positive momentum within your portfolio companies as they adapt to the pandemic? Within the medtech sector, companies providing essential medical interventions are experiencing some positive developments as a result of the crisis.

Can you share a recent experience or observation that has instilled a sense of optimism? This could relate to professional achievements, personal experiences, or a combination of both. The recent lockdowns prompted companies to adapt their business models and concentrate on navigating the new circumstances.

Alexandre Dutoit, Partner at ScaleFund

What general investment trends currently generate the most enthusiasm for you?
Our focus lies in addressing the funding gap that exists between seed funding stages and Series A investments.

Could you describe your most recent and compelling investment?
We recently invested in Kaspard, a company focused on the silver economy, which has pioneered innovative fall-detection technology.

What types of startups are you hoping to encounter that are currently underrepresented in the industry? Are there any currently undervalued opportunities?
We generally favor B2B ventures. In our assessment, there's a relative scarcity of Industry 4.0-focused investment opportunities.

What key attributes are you prioritizing when considering a new investment?
First and foremost, we seek exceptional teams. Following this, demonstrable commercial progress, such as Proofs of Concept or initial contracts, is essential.

Which sectors appear overly competitive or present significant barriers to entry for new startups? What product or service categories cause you concern?
The food technology sector seems particularly crowded to us. Many B2C entrepreneurs are pursuing largely similar concepts.

To what extent is your investment strategy geographically focused? Do you prioritize your local ecosystem, or do you consider startups from various hubs (or globally)? Is it more than 50% local?
Our investment activities are primarily concentrated in Belgium and its neighboring countries.

Which industries within your city and region appear poised for long-term success, and which face challenges? Which companies, whether in your portfolio or not, and founders do you find particularly promising?
Biotechnology is experiencing significant growth in Belgium. The fintech and music tech sectors are also demonstrating positive momentum.

How should investors in other cities perceive the investment landscape and potential opportunities within your city?
The local ecosystem is remarkably vibrant, offering substantial opportunities. While valuations tend to be more conservative compared to other European hubs, a considerable amount of capital is readily available.

Do you anticipate a future increase in founders originating from areas outside major cities? Could the pandemic and the rise of remote work lead to a decline in startup activity in traditional hubs?
I don't foresee this occurring, as entrepreneurs generally benefit from networking, sharing experiences, and operating within a competitive environment.

Which of your investment areas appear most vulnerable or susceptible to changes in consumer and business behavior due to COVID-19? What opportunities might startups be able to capitalize on during these unprecedented times?

Very few, as strong teams demonstrate adaptability. A company within our portfolio, previously reliant on events, successfully pivoted its business model and is now exceeding its pre-crisis profitability. Furthermore, businesses facilitating remote work or offering remote services are poised for short-term gains.

How has COVID-19 influenced your investment approach? What are the primary concerns expressed by the founders in your portfolio? What guidance are you currently providing to these startups?
COVID-19 has not altered our core strategy. Entrepreneurs are understandably anxious about uncertainty and a lack of clear future prospects. We advise them to prepare for emerging opportunities and to focus on technological advancements and process improvements, while assuring them of continued financial support.

Are you observing positive indicators, such as revenue growth or improved retention rates, within your portfolio companies as they adapt to the pandemic?
Utopix, a startup operating in the event industry, successfully reinvented its business model after experiencing declining sales. Subsequently, they achieved their most successful month to date.

Can you share a recent experience that has instilled optimism in you? This could be professional, personal, or a combination of both.
I observed a resurgence of optimism following the summer months, as businesses were eager to resume operations. However, this positive trend proved to be short-lived. We are committed to maintaining a positive outlook and concentrating on essential priorities.

Do you have any additional insights to share with TechCrunch readers?
Brussels is an expanding startup hub, exceptionally well-connected to both Europe and the international community.

Olivier de Duve, Partner at Inventures Investment Partners

Regarding investment trends, what currently excites you?
Inventures focuses on startups demonstrating both robust financial returns and positive social and environmental impact. As we look ahead to 2021, we are particularly enthusiastic about opportunities within the mobility sector, HR technology, the blue economy – specifically technologies focused on water and ocean health – and the circular economy. These areas are experiencing significant growth across Europe, and we anticipate identifying compelling investment prospects in the coming year.

Could you detail your most recent and exciting investment?
We recently led a funding round for MySkillCamp, a Belgian HR tech firm. This company provides adaptable learning platforms for both small and medium-sized enterprises, as well as larger corporations. MySkillCamp’s impressive growth, even amidst the challenges of the pandemic, underscores the critical need for solutions that facilitate employee upskilling and reskilling.

Are there specific types of startups you’d like to see emerge, or overlooked opportunities in the market?
From an investor’s perspective, we would welcome a greater presence of impact venture capital firms operating at the Series B stage and beyond within Europe. Currently, the majority of larger impact VCs are based in the United States. Establishing a stronger presence of such capital sources in locations like Brussels or neighboring ecosystems would empower earlier-stage European VCs to further scale their portfolio companies through later funding rounds, fostering a more sustainable ecosystem.

What key characteristics define your ideal investment target?
Our investment strategy centers on identifying startups that exhibit financial strength and address at least one of the 17 United Nations Sustainable Development Goals (SDGs). This typically translates to companies operating in areas such as health, mobility, renewable energy, and climate solutions. As we finalize our second fund, we seek investments that demonstrate clear commercial traction, a highly capable team, and well-defined plans for international expansion.

Which markets appear oversaturated, or present excessive competitive challenges for new entrants? What products or services cause you concern?
Certain markets, such as shared light vehicle scooters and telemedicine solutions, are becoming increasingly saturated. The direct-to-consumer medical device market also presents significant barriers to entry. Furthermore, startups operating in the recreational sector, including tourism and sports, are currently facing heightened challenges due to the ongoing pandemic. Any products or services lacking a digital component demonstrate reduced resilience and require swift adaptation.

To what extent do you prioritize investments within your local ecosystem versus broader startup hubs? Is it more than 50%?
Approximately half of our portfolio companies originate from Belgium. While we have historically invested in the U.K., France, the Netherlands, and Luxembourg, we maintain an open approach to investments throughout the European Union.

Which industries in your city and region appear best positioned for long-term success, and which face challenges? Which companies and founders are you particularly impressed by?
The mobility and health sectors stand out as particularly promising. Belgium’s excellent connectivity makes it an ideal location for mobility startups focused on sustainable and efficient transportation solutions. The Belgian health ecosystem is also dynamic, encompassing biotech firms, universities, and both startups and scaleups. We actively follow the #BeHealth initiative, which unites the various stakeholders within the Belgian health sector. Citizen Lab, a digital democracy platform facilitating local government voting and participatory budgeting, is a noteworthy example, with founders Wietse Van Ransbeeck and Aline Muylaert driving innovation.

What advice would you offer to investors considering opportunities in your city?
Belgium’s multicultural and multilingual environment naturally positions startups for international expansion, whether initially targeting France, the Netherlands, or other markets. Investors evaluating opportunities in Belgium should recognize the international readiness of Belgian startups and consider their potential role in facilitating access to new markets.

Do you anticipate a shift towards more founders originating from outside major cities in the coming years, driven by pandemic-related factors and the rise of remote work?
Belgium, being a small and densely populated country, already exhibits a geographically diverse founder landscape. Brussels’ Co.Station hosts numerous startups, but we also observe strong innovation emerging from cities like Leuven, Ghent, Antwerp, and Liège – all within a two-hour train ride. Our recent investment in MySkillCamp, for instance, is based in Tournai, with an additional office in Brussels.

Which industry segments within your investment portfolio appear most vulnerable to shifts in consumer and business behavior due to COVID-19? What opportunities might startups capitalize on during these unprecedented times?
Our portfolio companies have demonstrated considerable resilience, largely due to their focus on addressing critical societal issues such as health, climate, and energy. SaaS companies and other digital services have also proven less susceptible to disruption, highlighting the importance of digitalization for survival. Companies heavily reliant on large governmental contracts may face increased exposure to shifts in spending patterns resulting from the pandemic.

How has COVID-19 influenced your investment approach? What are the primary concerns of the founders within your portfolio? What guidance are you providing to your portfolio companies?
COVID-19 has primarily impacted our post-investment strategy. Since the pandemic’s onset, we’ve dedicated ourselves to supporting our portfolio companies in navigating the challenges – from facilitating new fundraising efforts to exploring new markets and assisting with strategic growth initiatives. We’re advising companies to ensure sufficient cash reserves to sustain operations through at least the end of 2021. We’ve observed that contract negotiations are taking longer, particularly for companies seeking partnerships with governments facing budgetary constraints.

Are you witnessing positive momentum – such as revenue growth or improved retention – within your portfolio as companies adapt to the pandemic?
Absolutely! At the ecosystem level, we’ve seen a surge in fundraising activity over the past six months, particularly within the health and biotech sectors – Belgium-based Univercells is a prime example. Within our portfolio, tools serving governments and the transition to a more digital economy have created substantial opportunities for our B2B and B2G companies to thrive.

Can you share a recent moment that has inspired optimism?
Several events in 2020 have been encouraging. The racial reckoning in the U.S. sparked important conversations in Europe regarding justice and diversity & inclusion, highlighting the potential role of the venture capital and startup sectors in fostering a more equitable society. Initiatives like Diversity VC are contributing to this effort. Additionally, the growing number of startups focused on climate solutions – from cultured meat to sustainable packaging – demonstrates the financial viability and increasing demand for sustainable alternatives.

Do you have any final thoughts to share with TechCrunch readers?
Belgium boasts a dynamic, active, and rapidly expanding startup ecosystem!