CITD Seminar : Doing Business in Europe Welcome

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CITD Seminar Doing Business in EuropeWelcome

• San Francisco Sept 21st 2004
• Jacques Putzeys
• jputzeys_at_n2euro.com

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Discussion points

• Europe
• Funding trends
• Investor mindset
• Challenges
• Who we are

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European market

• Initially, the EU1 consisted of just six
  countries Belgium, Germany, France, Italy,
  Luxembourg and the Netherlands. Denmark, Ireland
  and the United Kingdom joined in 1973, Greece in
  1981, Spain and Portugal in 1986, Austria,
  Finland and Sweden in 1995.
• In 2004 the biggest ever enlargement takes place
  with 10 new countries joining These new countries
  are Estonia, Latvia, Lithuania, Poland, Czech
  Republic, Hungary, Slovakia, Slovenia Cyprus and
  Malta.
• This new EU-25 market counts more than 425
  millions inhabitants and his 2001 GDP is reaching
  an astonishing 10.000 billion.
• Furthermore the 10 new countries (P10) are fast
  growing markets with on average a 3 GDP annual
  growth.

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Europe

• US companies also prefer to expand to Europe in
  first instance because of
• The short travel distances between EU countries
  
• The vast majority of EU countries are in the
  same time zone
• Good connectivity between capitals and economic
  centers
• Tax incentives from local, regional, national
  or European authorities
• Most of the time US companies consider Europe as
  being the natural gateway to the Middle East and
  Africa.

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Risks

• Some of the common risk factors noted in
  regulatory filings
• Cultural differences
• Longer payment cycles
• Laws favoring local competitors
• Credit risk and higher levels of payment fraud
• Legal and regulatory restrictions
• Currency exchange rate fluctuations
• Higher costs
• Diverting management attention.

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European economic freedom

• Some European countries ranking in worlds most
  economically free nations (1)
• Ranking Country
• 3 USA
• 3 Switzerland
• 3 UK
• 9 Ireland
• 11 Estonia
• 18 Belgium
• 22 Germany
• 22 Hungary
• 36 Latvia
• 41 Czech Rep
• 44 France
• (1) Source Fraser Institute, July 2004

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Europe, local markets

• Local markets
• are still dominated by national incumbents
• have their own tax and VAT regulations
• have different regulations even if the European
  Commission tends to impose harmony in the
  regulation and standardization of the market
• As result of these particular situations, many
  US companies have wasted enormous amounts of time
  and money by trying to enter the Single European
  market.

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European Commission

• Role
• Recent Microsoft ruling
• Focus on
• Technology transfer
• Funding of technology companies
• Harmonization

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Funding trends

• Since 2002, the Biotechnology Healthcare
  category has been the dominant leader in
  receiving venture capital investment in Europe
  (2002 30 of total 2003 39 and 2004 to date
  36).
• Equally consistently, for the last two years
• Software has followed in a secure second place,
  trailed by
• Communications in third place, with
• Computers Electronics coming in fourth.

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Funding trends

• 2004 VC investments to-date
• Software 18
• Computers Electronics 16
• Communications 23
• Bio and Healthcare 36
• Average weekly investment 50 M

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Funding trends ctd

• 2004 the funding of Communications companies
  is catching up with Software it is now only
  lagging 3 behind.
• The wireless applications sector received by far
  the biggest proportion of the funding in the
  category with 50.2 of all investment secured to
  date. This is followed by wireless hardware at
  25 and fixed communications at 12.3.
• With 41 companies netting 191 million, Q1 2004
  was the largest quarter for Communications
  funding since Q4 2002.).

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Venture capital activity

• The private-equity firms that help seed new
  companies have plenty of capital available, but
  theyre just not seeing a tremendous amount of
  good companies to invest in.
• The feeling is that theres somewhere between
  60 and 110 billion of non-invested venture
  capital that will at some point be looking for a
  home.
• Venture capitalists are concentrating on
  over-due diligence and look for product that is
  deployed if possible, revenues if possible, good
  brand-name customers if possible, and outstanding
  management teams and track record

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Valuations

• As growth in the U.S. inevitably slows,
  companies increasingly have to expand
  internationally to support their valuations. Each
  company, however, will face unique hurdlesand
  needs to be innovative as to how and at what
  cost.

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Challenges

• TIME ZONES
• CUSTOMER TRACTION
• BUILDING TEAMS AND
• PARTNERS

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Challenges

•  
• How to preserve valuation and net equity position
• Traditional way to expand into Europe at least
  2 M
• If financed from net equity position impact on
  valuation
• Liability build up
•  
•  
•  

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N2Euro concept

• Europe 425 million inhabitants in 25
  countries one of the most important markets of
  the world economy.
• Legal, economic and cultural barriers Europe is
  one of the most difficult markets to penetrate.
• Thinking globally, but acting locally,
• N2Euro understands this and offers you
• - ready-to-use and cost-effective assistance
• - your European company and performance-based
  operator
• - our company-in-residence services
• - no liability build up

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Easy Package
An Easy Package / Tool To Bring Your
Funding Capital Access Financing Needs
Corporate Structuring
Sales Building The Best Sales Channels And
Achieving Sales Growth
Company From USA To Europe
Management Team Building A Team Of Locally
Based Managers
Logistics Providing Easy Logistics
Company From USA To Europe
An Easy Package / Tool To Bring Your
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Doing Business in Europe

• Financial and other incentives for setting up a
  business in Europe
• a real life example from Europe

San Francisco September 21st 2004 Freddy
Nurski fnurski_at_n2euro.com
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Knowledge-Regions Competition

• 80 countries 400 knowledge regions
• US
• Silicon Valley, Route 128, North Carolina
  Research Triangle
• Medical Alley, Biomed Mountains, Rolling Silicon
  Hills, Laser Lane, Medical Mile, Ceramics
  Corridor, Champaign Software Prairie, San Diego
  Bio-Valley
• Asia
• Hong Kong, Shanghai, Kuala Lumpur, Inchon,
  Hsinchu, Kyoto, Bangalore
• Europe
• Sophia Antipoles, Oulu, Tampere, Alba Centre,
  Silicon Fen, Munchen, Lyon, Leiden, Tel Aviv,
• Leuven ?

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An example Leuven Clusterpolicy
Mechatronica
E-security
Feed food - health
L-SEC
Leuven.Inc
DSP-Valley
Telematica Communicatie
Life sciences
Micro-elektronica Nanotechnologie
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Definition Cluster

• Clusters represent the driving force for economic
  development in many countries (regions).
• They are concentrations of innovative,
• interdependent enterprises (co-competitors) ,
• working in the same field,
• localized in a specific geographic area,
• in close proximity to centers for research
  development.

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Telematica-communicatie
Terayon Comm. Systems
Altaline Technologies
X-Plane SIMAC Able
QMedit
Sitelcom Spacechecker
Agilent Technologies
Q Star Test Micro Matic
Telindus
Easics
Reymen Data Center Ardatis
Mind Linux Solutions Acunia
Eyetronics
Arcadiz Telecom Topcom Weidmuller
Medicim Orban Microwave Products
Septentrio
Hypervision EMD Better Access
Adelante Technologies Windriver
ICOS
FillFactory
Delta Design Netsize
Opikanoba Telraam
Resonext
CDM
Tomoton AnSem
Option International
Philips
Tyco Electronics Xplanation
Xentec Loft33 Smash
Uitgeverij Averbode
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Micro-elektronica - nanotechnologie
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Life sciences
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Feed-food-health
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Clusterpolicy
2004 2010 (est.)
N of companies gt300 400
Turn-over 4.5 bi 8 bi Growth 10
Jobs 15.500 20.000
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IWT The Flemish Institute for the Promotion of
Scientific and Technological Research in Industry

• Flemish government institution which promotes,
  supports and stimulates industrial research in
  Flemish industry
• IWT manages the funds available for promising
  research projects
• Financial incentives
• up to 50-60 of research costs
• low interest loans
• up to 25-35 for prototype projects
• feasibility studies
• Information
• The applicant does not have to be Flemish, but
  should be established in the Flemish Region
• Budget approximately US100 million a year

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