Waarom Birdhouse inzet op eigen investeringsfonds: “We mikken op de groeifase waar weinig institutionele beleggers durven instappen”

“We are aiming for the growth phase where few institutional investors dare to enter”

From left to right: Jan-Willem Callebaut, Alexandra Buekens and Pablo Oeyen

Start-up accelerator Birdhouse is launching its own investment fund with Birdhouse Ventures, good for 20 million euros in committed capital – which will ideally increase to 25 million this year. The new fund aims to support start-ups in their international growth ambitions and, in addition to a sector-agnostic approach in Flanders and Brussels, to make a name for itself in the AgeTech domain at European level. We ask why at Birdhouse founder Jan-Willem Callebaut and fund partner Alexandra Buekens, with more than 25 years of experience in private equity.

Jan-Willem Callebaut founded Birdhouse seven years ago, when he joined a Ghent University spin-off company after his engineering studies and established that there was still a gap to be filled in terms of mentorship for starting entrepreneurs. Today, the Belgian accelerator has grown into a community of 160 mentors, who have already guided a total of 153 companies. Of those, 64 percent raised funding within six months of the program.

Now Birdhouse thought it was time for one own investment fund: Birdhouse Ventures raised 20 million euros from around 60 business angels from the network and from institutional investors such as the Leuven Center for the Support of Digital Innovation (COI), SFPIM Relaunch, PMV and Finance & Invest Brussels. But in recent years, investment funds and capital levers have already been added – just think of Angelwise, Pitchdrive and Seeder Fund – with the same early stage-focus. So what was the motivation for another fund, according to the founders?

Previously on track

We have established in recent years that the lion’s share of pre-seed until seed capital is provided by business angels”, says Callebaut. “Of course, banks and investment companies also play a role, but that is more about loans and smaller amounts. As a result, we also wanted to focus on business angels for our fund.”

“Another difference: compared to the other new funds, we still position ourselves as an accelerator fund something earlier in the process and we link the ticket of 100,000 euros for the twenty selected companies to four months of intensive Birdhouse guidance as standard. Those tickets are relatively small, but we do that deliberately in order to be able to provide follow-up capital after the guidance, if the potential is there. This can also serve as a quality label for other potential investors,” says Callebaut.

Industry agnostic

Birdhouse says it has been ‘sector-agnostic’ since the start, but a year and a half ago it set up a thematic accelerator around AgeTech: technological solutions aimed at the rapidly growing market of seniors. We want to know whether this will also be the focus of the new investment fund. “Certainly in the Flanders-Brussels scope, we do not want to limit ourselves to one niche, purely because it is not geographically large enough to offer a deal flow to create a high quality product”, replies the Birdhouse founder.

“That is why we welcome growth companies from a wide range of sectors, as long as they are ambitious enough to graft onto our risk model – otherwise we would never have seen success stories like TechWolf, Beerselect and Hoplr in the past.”

(©Tine Schoemaker)

“That being said, the AgeTech vertical has enormous potential and offers us the unique opportunity to position Belgium as the hotspot for AgeTech in Europe – especially as we have already guided ten companies outside Belgium. As far as that European scope is concerned, AgeTech will well form the spearhead. We aspire to other verticals in the future, but we will do that step by step because we want to make maximum use of AgeTech’s potential and there is a lot involved in setting up such a vertical: developing a network of partners, determining a strategy,…”

The AgeTech vertical has enormous potential and offers us the unique opportunity to position Belgium as the hotspot for AgeTech in Europe

More positive than negative

But you may still have a sophisticated strategy and an extensive network, the reality also tells us that we live in a period of high energy prices, imminent recession, war for talent, high labor costs, geopolitical tensions,… In short, perhaps not the best time to pump money into start-ups. Or do the partners within Birdhouse Ventures see it differently? “I think this is just a very good time to invest”, counters Alexandra Buekens, who is a partner of Birdhouse Ventures and has over 25 years of experience as an investor, including at KBC Private Equity and PMV.

The past few years have been less interesting for investors in terms of valuations, because they were simply too high. Those expectations have now been tempered somewhat, making it better from the side of investors to take the step. There is less greed in the market, so to speak, and more pickiness and caution: because of all those rising prices, people are now looking much more at cash, at break-even and at a sustainable model in the long term.”

“For the same reason, it is becoming a lot more difficult for start-ups, although not, because the many redundancies at large tech companies as a result of rising wage costs mean that many interesting technological profiles are now entering the market again. In other words, I am more positive than negative about the momentum for our fund.”

Out of the comfort zone

Jan-Willem Callebaut agrees that these are challenging times, especially for start-up entrepreneurs. “From our contacts with Birdhouse alumni, we can conclude that the it is more difficult for ambitious start-ups today to fill their capital rounds. The main reason is the effort it takes to find a suitable one lead investor to find. There are plenty of parties out there commitment want to enter into, but hardly anyone is willing to lead and work out the deals with other companies, negotiate the terms,…”

“Is is capital available, too early stage companies, but also a lot of unfamiliarity to take the first step. Money enough to follow, but too little to lead. And that, of course, has everything to do with these uncertain economic times, in which it is more comfortable to follow where others have gone before. A few years ago, investment parties stepped out of their comfort zone a lot more easily. With this fund, we hope to make a real difference for the companies that come out of our accelerator, by giving them every possible access to knowledge and network to find these lead investors,” says Callebaut.

There is capital available, also for early stage companies, but also a lot of unfamiliarity with taking the first step. Money enough to follow, but too little to lead

“Our fund is actually intended for entry at a time when few or no institutional parties (funds) dare to enter. By adding guidance through the accelerator program and by being a partner in the follow-up financing, we offer enormous added value for the start-ups.”

Another factor is that funds that already have a certain portfolio will have to review their allocation”, adds Buekens. “Two years ago, for example, various funds reasoned that the companies in their portfolio would be ready for an exit today, which is not the case for many of them, which means that they have to be held longer in the portfolio. But if they are not cash flow positive, additional resources must also be provided for them. This allocation may also limit the scope for new portfolio companies. Fortunately, we do not have any problems with Birdhouse Ventures as we do not yet have any portfolio companies (laughs).”

(©Tine Schoemaker)

‘Growth is sacred’ mantra

The fact that Agoria recently announced that companies raised a record amount of 1.37 billion euros in venture capital in 2022 – even more than the 1.33 billion euros from record year 2021 – proves Jan-Willem Callebaut’s statement that there is enough money in the market. “But the storytelling has changed,” he explains. “Today more than ever, a company must be able to prove that it is break-even within the foreseeable future. In the recent past, there has been much more emphasis on how much growth the company is achieving on a monthly basis, with the approach of ‘the faster the growth, the better’. The mindset of constantly striving to break even could even be one dealbreaker could have been if this hindered growth.”

Today, more than ever, a company must be able to prove that it is break-even within the foreseeable future

I personally think that shift is a good thing. Don’t get me wrong: growth is super important, but the danger is that the focus only is still on it. While it mainly comes down to being able to demonstrate that a model can be sustainable and profitable in the long term. Because this is not possible from minute one, there is a need for venture capital.”

“It’s good that we’re moving away from the ‘growth is sacred’ mantra,” says Buekens. “Of bottomline must be healthy growth. There is nothing wrong with taking on debts, but they must be repaid at a certain time. In that respect, the financial ratio was sometimes somewhat lost: many companies were already leveraged before they broke even. It is good that more attention is being paid to healthy growth today. It is also healthier for the entrepreneur himself, who in this way does not succumb to unrealistic expectations.”

The new investment fund provides a musical chair within the management of Birdhouse: Jan-Willem Callebaut passes the torch of CEO to Pablo Oeyen, who became a partner of the Belgian accelerator two years ago. Catalina Daniels will become chairman of the Board of Directors, following in the footsteps of Wilfried Van Assche, who in turn will chair the supervisory committee of Birdhouse Ventures.

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