Europe’s tech scene is diversifying. No longer is it confined to a handful of cities and regions. And little Belgium is evidencing that more than most nations.
The country, which is home to the EU Parliament, boasts some startling statistics. Belgium ranks fifth in Europe for its number of fintech deals (six—behind the UK, Germany, France and Sweden respectively). In Imec and KULeuven the country also boasts two of the continent’s top nine universities for tech spin-outs.
Last year Belgium’s tech companies raised a combined €150 million ($168m) across 41 deals. That may not seem much compared to the UK or Germany. But the scene is gathering apace: this year €106m ($119m) has already been raised, across 56 rounds.
Most of that cash has been awarded to early-stage firms. By the end of H1 2016, 60% of investments were smaller than €5m ($5.6m). The lion’s share was invested in a trio of fast-scaling brands: The largest ‘peaks’ in Belgium’s tech investment landscape of the last year were driven by three big deals north of $20 million: Collibra ($23m, September 2015); Showpad ($50m, May 2016) and Auro Technologies ($28m, June 2016).
“Although it’s true that Belgium is still far away from the numbers shown by Europe’s main technology ecosystems, there’s no denying that the country’s tech scene is developing rapidly,” Startups.be founder Frederik Tibau told Red Herring. “Great tech companies can increasingly come from anywhere, and Belgium is just one example of this kind of decentralization trend.”
Like Sweden, which has an outsized tech industry considering its modest 9.6m population, Belgium, with just 11m citizens, has found its size and unique demographics to be a big advantage in the tech world. As a centre of regional politics Belgians often speak great English, as well as French and Flemish, the two national languages.
Similarly this divide between French-speaking Wallonia, and Flanders, Belgium’s Flemish region, has created a tech industry that’s not just centered on Brussels, the country’s historic capital. Gent in particular has become a hotbed of activity thanks largely to a raft of well-known startups. The most conspicuous of these is probably open source CMS giant Drupal (others include Showpad and Tele Atlas).
Flanders has been busy putting money into its own companies. Flanders Investment was a key investor for NGDATA, a Gent-based customer experience software creator. The company’s Molly Galetto told Red Herring that tech activity has “really increased with new entrepreneurs, policy makers and the overall evolution of technology,” in the past four or five years.
Liege-based Fleye have created one of Belgium’s most striking tech products, the ‘world’s safest drone’. It has raised almost $370,000 to date. But Fleye is an exception to Belgium’s B2B rule: three quarters of the country’s startups are B2B, one of the highest ratios in Europe.
That’s chiefly to do with Belgium’s small size: companies have to look outside the country’s borders almost immediately to scale a successful regional firm. But, with a greater number of VCs, incubators, events and ecosystems to hand, plenty are making that small size an advantage.
Tom Vandendooren, chief business development officer at Antwerp-headquartered ambient intelligence firm Sentience, points to a number of initiatives including the European Investment Fund (EIF), and the Belgian government’s “proactive” attitudes to startups.
“A specific tax regime has been developed for business angels and personnel tax incentives are provided for both first employees as well as dedicated R&D personnel,” he added.
Deputy prime minister Alexander de Croo, an economist and former businessman, has been outspoken in his pursuit of a successful Belgian digital economy, opening a host of projects to aid the scene. His ‘Startup Plan 2015’ helped create a tax shelter for reductions between 30% and 45%. The Belgian Startup Manifesto is a movement by some of the country’s leading entrepreneurs, to make the creation of startups easier. “At present,” it claims, “it’s too hard to create and grow a startup in Belgium.”
“All this is moving in the right direction, but there is still a lot of work to be done with very high social security costs and taxes,” said Walter Van Uytven, CEO of Gent-based software firm Awingu.
“Personally speaking, I would say reduce taxes and social security and increase capital spending in startups, not only foreign, but also national,” he added. “They should continue investing in platforms such as BelCham (Belgian American Chamber of Commerce) and FIT (Flanders Investment and Trade) to introduce Belgian companies at the right level internationally.”
Does the presence of the EU in Brussels, too, help local tech businesses? Van Uytven thinks so, claiming that a mass of talented people is helping push the industry. So does Galetto, who said that the EU “definitely adds to the visibility here, and also extends grant programs here and all over Europe.”
Many of Belgium’s top tech startups, however, aren’t looking at Europe at all but the US. One example is Brussels’ Collibra, a year into its $23m investment led by Geneva-based Index Ventures. Looking stateside from the off “may seem counter-intuitive,” said co-founder and CEO Felix Van de Maele, “but we felt that as a software company, it was most effective for us to target the US instead of trying to conquer Europe country by country.
“We should look at Israel as a good role model,” he added. “We have a lot of great technologists, but we need help in bringing it to market. Having R&D in Belgium and scaling sales and marketing in the US makes a lot of sense to me. We should celebrate the fact that Belgian startups become active in the US and we shouldn’t see it as a negative.”
At the end of the day, said Van Uytven, it is success, more than anything else, that will breed more success—and investment. It’s looking good right now for one of Europe’s smaller countries to join the continent’s big players: “Success for Belgium entrepreneurs just triggers more startups, which is growing the tech scene organically.”