Raising finance for Europe s small & medium-sized businesses Belgian and Dutch Supplement Association for Financial Markets in Europe www.afme.eu
Disclaimer This guide should not be relied upon as legal, financial, regulatory or other professional advice. Users of the guide are encouraged to seek appropriate independent advice before entering into any kind of financing transaction. While the information contained in this is taken from sources believed to be reliable, AFME does not represent or warrant that it is accurate or complete and AFME and its employees and consultants shall not have any liability arising from, or relating to, the use of this guide or its contents. January 2016 Page ii
Introduction Introduction This document is an addition to the AFME Guide to Raising finance for Europe s small & medium-sized businesses published by AFME in September 2015. The Guide provides an overview of the financing options available and helps identify the right type of funding at any stage of an SME life, including practical tips and how to access it. This Guide is available on AFME s website (www.afme.eu) in Dutch, English, French, German, Italian and Spanish. The document provides practical information for entrepreneurs and SMEs looking to raise finance in Belgium and the Netherlands. Page 1
Useful links for SMEs 1: Useful links for SMEs The list below is a non-exhaustive list of pan-european, Belgian and Dutch organisations which may be helpful to SMEs looking for loans, debt or equity funding. PAN-EUROPEAN EIB - European Investment Bank EIF - European Investment Fund EIF financial intermediaries Access to European Commission finance COSME Guide to EU funding, opportunities for research and innovation Programme for research-performing SMEs EEN - Enterprise Europe Network AFME - Association for Financial Markets in Europe ICMA - International Capital Markets Association EBF - European Banking Federation FESE - Federation of European Securities Exchanges FEE European Accountancy Association EVCA - European Venture Capital Association European Business Angels Network European Crowdfunding Network Business Angels Europe Leaseurope - European Leasing Association European Issuers Business Europe UEAPME - European Association of Craft, Small and Medium-sized Enterprises EFB - European Family Business Association CECIMO - European Association of Machine Tool Industries EBC - European Builders Confederation CECIMO - European Association of Machine Tool Industries EBC - European Builders Confederation www.eib.org www.eif.org www.eif.org/what_we_do/where/index.htm http://access2eufinance.ec.europa.eu http://ec.europa.eu/enterprise/initiatives/cosme/index_en.htm http://ec.europa.eu/research/participants/data/ref/fp7/204008/practicalguide-rev3_en.pdf www.eurostars-eureka.eu http://een.ec.europa.eu www.afme.eu www.icmagroup.org www.ebf-fbe.eu/ www.fese.eu/ www.fee.be www.evca.eu www.eban.org http://www.crowdfundingnetwork.eu www.businessangelseurope.com www.leaseurope.org www.europeanissuers.eu www.businesseurope.eu www.ueapme.com www.europeanfamilybusinesses.eu www.cecimo.eu www.ebc-construction.eu www.cecimo.eu www.ebc-construction.eu BELGIUM Febelfin - Banking Association OECCBB Accounting Association IPCF - Accounting Association IEC-IAB- Accounting Association Business Angels Network www.febelfin.be www.oeccbb.be www.ipcf.be www.iec-iab.be www.ban.be Page 2
Useful links for SMEs Business Angels Association Venture Capital and Private Equity Association BCF - Belgiun Crowdfunding Association Euronext stock exchange BBA - Business Association Chambers of Commerce Enterprise Flanders Government agency Information on various finance in Belgium Ministry of Economy, Sciences and Innovation Portal SME creation Wallonia Sowalfin - Société wallonne de Financement et de Garantie des petites et moyennes Entreprises Wallonia Information on financial support in Wallonia Information on financial support in Brussels Garantees for Brussels region SMEs - Fonds Bruxellois de Garantie Société régionale d Investissement de Bruxelles (SRIB) ParticipatieMaatschappij Vlaanderen Flanders www.beangels.eu www.bva.be www.belgischecrowdfundingfederatie.be www.euronext.com www.belgianbusinessassociation.be www.belgianchambers.be www.agentschapondernemen.be http://www.belgium.be/fr/economie/entreprise/financement/moyens_ exterieurs/ www.ewi-vlaanderen.be www.creation-pme.wallonie.be www.sowalfin.be www.infos-entreprises.be www.abe-bao.be www.fondsbruxelloisdegarantie.be www.srib.be www.vlaanderen.be NETHERLANDS Netherlands Enterprise Agency Rijksdienst voor Ondernemend Nederland RVO s loans and equity - Innovatiefonds MKB+ RVO s Guarantee - Borgstelling MKB Kredieten (BMKB) RVO s Groeifaciliteit NVB - Dutch Banking Association Business angels Association NVP - Venture Capital and Private Equity Association MKB - Entrepreneurs association IDW - Accountancy Association VNO-NCW - Business Association KVK Chambers of Commerce Dutch Venture Initiative Dutch Good growth Fund for doing business in emerging markets Qredits microcredit foundation for entrepreneurs and SMEs cofinanced by the EU Euronext - stock exchange http://www.rvo.nl/ http://www.rvo.nl/onderwerpen/innovatief-ondernemen/ innovatiefinanciering/innovatiefonds-mkb http://www.rvo.nl/subsidies-regelingen/borgstelling-mkb-kredieten-bmkb http://www.rvo.nl/subsidies-regelingen/groeifaciliteit www.nvb.nl www.bannederland.nl www.nvp.nl www.mkb.nl www.idw.de www.vno-ncw.nl www.kvk.nl http://www.eif.org/what_we_do/resources/dvi/ www.rvo.nl/dggf https://qredits.nl/ www.aex.nl Page 3
Overview of pan-european and national SME assistance programmes 2: Overview of pan-european and national SME assistance programmes The table below sets out the SME finance support programmes provided by pan-european bodies and the Belgium and Netherlands national programmes. Additional funding has also been made available through the European Fund for Strategic Investment (EFSI). More information about the EFSI is available in Section 6 of AFME s original Guide to raising finance. Type of funding SME Profile Belgium Start Loan (Flanders, vlaanderen.be): Loan up to 100,000 for start-ups less than 4 years old Cofinancement Sowalfin: Loan of between 25,000 and 350,000 (up to 40% of total loan) Expresse micro-finance (Fonds Bruxellois de Garantie): Up to 25,000 for companies with less than 2 million in revenues Seed / Start-up Brusoc (finance.brussels): Up to 95,000 for small companies Brupart (finance.brussels): Up to 200k in the form of Microfinance (Prêt BOOSTME) for individuals and small companies less than 4 years old Waarborgregeling, Vlaanderen (Guarantee scheme Flanders): Guarantee of up to 75% of a bank loan. Up to 750,000 but could be higher for specific cases Loans Kmo-cofinanciering (Flanders, vlaanderen.be): Loan up to 350k for existing companies Expresse verte (Fonds Bruxellois de Garantie): Up to 80% guarantee on loans of maximum 250,000 for companies with green activities Expresse classique (Fonds Bruxellois de Garantie): Guarantee up to 80% for loans of between 20,000 and 50,000 Growth Brucofin (finance.brussels): Up to 2m for SMEs Equity Tax incentives Seed / Start-up Growth SRIB-GIMB (finance.brussels): Up to 5m for companies with expansion plans Brupart (finance.brussels): Up to 200k in the form of cofinancing with Prêt BRUFIN for individuals and medium companies already implemented (together with the bank) Brustart (finance.brussels): Up to 250k for innovative companies INVESTS (Wallonia): 9 funds which provide capital risk, convertibles bonds: Nivelinvest, WapInvest, Invest Borinage Centre, Sambrinvest, Meusinvest, Ostbegieninvest, Investsud, Luxembourg Développement, Namur Invest TINA Flemish Transformation Fund: Investment funds that offers equity capital or subordinated loans (up to 20m). SRIB-GIMB (finance.brussels): Up to 5m for companies with expansion plans in form of equity or convertibles Reduced corporate income tax to SMEs with profit of less than 322,500 (24.98%). The reduced rates apply only if the company pays annual remuneration of at least 36,000 to at least one director Young innovative companies can benefit from a partial exemption on paid salaries. R&D expenses of those companies must also amount to 15 percent or more of their total costs of the previous taxable period. The exemption is fixed at 75%. National interest deduction: Belgian companies and foreign companies with a Belgian permanent establishment or real estate in Belgium may benefit from a tax deduction equal to a percentage of the risk capital. The rate of the notional interest deduction is determined each year and is linked to the 10-year government bonds. The notional interest deduction rate is capped at 3% (3.5% for small company). Win-Win loan incentive: Friend or family member who grant a Win-Win loan to a start-up company receives an annual tax discount of 2.5% on the amount of the loan. The loan can be up to 100,000 and must run over eight years. If the borrower is unable to repay the loan, the lender gets 30% of the amount owed back via a one-off tax credit. Page 4
Overview of pan-european and national SME assistance programmes Netherlands Innovation fund SME+ (Innovatiefonds MKB+): credit of at least 150,000 and up to 5m for high risk innovative activities to develop products, processes or services with high growth prospects. SMEs can receive funding of up to 35% of the total investment and non-smes can receive funding of up to 25% of the total investment. The project should be completed within four years. Qredits: Microcredit foundation for entrepreneurs and SMEs providing loans to start-up and existing companies which are not able to obtain a bank loan (up to 50,000). Qredits also provides SME loans of 50-150,000 Borgstelling MKB Kredieten (Guarantee SME loans): Guarantees of up to 1m for SMEs as defined by the EU. Pan-European COSME Loan Guarantee Facility: Fund guarantees for financial intermediaries to help them provide loan and lease finance to SMEs. Structural Funds: European Regional Development Fund, European Social Fund, Cohesion Fund, Rural Development Fund, European Fisheries Fund. Eurostars-Eureka: Support for SMEs, with a focus on R&D. European Investment Fund: EIF indirectly supports SMEs through financial intermediaries. Microfinance: EIF provides bank the capacity to lend up to 25,000. EIF also provides loans, guarantees and equity through financial intermediaries. Groeifaciliteit (growth facility): Provides a guarantee of up to 50% to participating lenders on risk capital provided to businesses. Innovation fund SME+ (Innovatiefonds MKB+): seed capital to technology businesses and creative start-ups. It also provides funding for SMEs through private equity funds - Dutch Venture Initiative (DVI) in cooperation with with the EIF/EIB. Innovation box: Innovative companies may receive a tax discount on profits achieved through innovation: corporate income tax at a rate of 5%. Innovation box employee benefits: significant wage tax subsidies are available for employers with employees engaged in certain specified R&D activities for which the R&D Declaration is obtained. Income tax incentive: An increase of the profit exemption for small and medium-size businesses from 1.5% to 12%. In addition, entrepreneurs will no longer have to devote a minimum period of time to their business in order to qualify for the measure, enabling individuals to carry on a business alongside salaried employment. R&D deduction: The lump-sum deduction for an entrepreneur who performs R&D activities is 12,310 or 18,467 for the first five years of an enterprise s life. Page 5
The Netherlands and Belgium SME finance markets 3. The Netherlands and Belgium SME finance markets a. Business angels equity More than 250,000 business angels have invested an estimated 5.5bn in 33,430 deals throughout Europe. 1 The main sector of investment is technology (32%), followed by biotech & life sciences (10%), mobile communications (10%) and manufacturing (10%). The majority of the targeted companies (87%) are in early stages, notably startup, seed and pre-seed stages. Despite the existence of many international investment networks, cross-border investment remains marginal with 96% of the deals taking place in the investor s home nation. 2 b. Venture capital In 2014, Belgian companies received almost 1bn from venture capital and private equity funds of which 114m (12%) were invested in 110 seed companies, startups or later-stage ventures. Growth capital funds invested in 87 Belgium-based companies for 210m. In the Netherlands, venture capital funds invested 169m in 226 Dutch startups, representing 5.4% of total investments from venture capital and private equity funds ( 3.1bn). c. Other sources Alternative finance providers including peer-to-peer lending, reward-based crowdfunding, or equity crowdfunding have helped Dutch SMEs raise 78m in 2014 (+70% compared to 46m in 2013) and 2.5m in Belgium compared to 140m in Germany, 154m in France and 2.337bn in the UK. 1 Source: European Business Angel Networks, as end of 2013. It includes the reported transactions ( 554m) and the estimated non-visible market ( 5bn).These figures are not representative of the entire European market. 2 Source: European Business Angels Network (EBAN), 2013. Page 6
The Netherlands and Belgium SME finance markets Crowdfunding platforms in the Netherlands and Belgium include: Name of the platform Country Type Costs Angel.me Belgium and Netherlands Donations and equity 6.5% success fee BoleroCrowdfunding Belgium and Netherlands Debt 6% success fee CrowdAboutNow Netherlands Debt, equity and donations Debt: 1%+2% yearly success rate Equity: 1% + 5% one time success rate Donation: 1% + 3% one time success rate Geldvoorelkaar Netherlands Debt 2-5% success fee Greencrowd Netherlands Debt, equity and donations Fee of 100 + 3% of financing Kickstarter Belgium and Netherlands Donations 5% one time success rate Look & Fin Belgium Debt Set-up fee of 2,000 and 4% success fee MyMicroInvest Belgium Equity and debt n/a OnePlanetCrowd Netherlands Rewards, loans and convertible loans Placement fee: 200 + success fee: 7% Seedrs Belgium Equity n/a Seeds Belgium Donations Share2Start Netherlands Debt and donations Joining fee: 300 + 5% success fee (min. 2,500) Donation: 3% success fee Debt: 5% success fee Symbid Netherlands Equity 5% success feev Wekomenerwel Netherlands Bonds, equity, convertible bonds Join fee: 250 + success fee: 4% Source: Dutch Impact Investors, Business Angels Europe, AFME, compilation from authors Page 7
The Netherlands and Belgium SME finance markets d. Public offerings and private placements through a stock exchange Both exchanges in Belgium and the Netherlands are operated by the stock exchange Euronext (Euronext Brussels and Euronext Amsterdam). Capital raised on Belgium and the Netherlands exchanges main markets (public offerings of companies of less than 500m), 2007-2015 Country Belgium Netherlands Exchange Euronext Euronext Number of IPOs 29 14 Total equity raised ( m) 1.4bn 2.8bn Median of equity raised ( m) 41.7m 257m Minimum of equity raised ( m) 250,000 23m Maximum of equity raised ( m) 203m 491m Source: Dealogic Capital raised in Europe s main Junior markets Country Belgium Netherlands France Germany Italy Spain UK Exchange Euronext Alternext Euronext Alternext Euronext Alternext Deutsche Börse Entry Market AIM Italia BME MAB AIM Number of IPOs 5 n/a 62 45 39 21 492 Total ( m) 44 n/a 575 2,080 388 92 17,486 Median ( m) 6.5 n/a 7.4 6 5.4 4.4 14.1 Minimum ( m) 5 n/a 2.5 0.5 0.87 2 0.09 Maximum ( m) 15 n/a 37 1,403 50 12 382 Source: Dealogic, IPOs on Alternext, AIM Italia, BME MAB and AIM London Page 8
Stock exchange requirements for equities in Belgium and Netherlands 4. Stock exchange requirements for equities in Belgium and Netherlands The tables below show the requirements during admission and life of a listing for both equities in the junior markets (i.e. markets directed towards small and mid caps). 3 UK Italy France Belgium Netherlands Portugal Germany 3 Spain Operator LSE LSE LSE (Borsa Italiana) Euronext Deutsche Boerse BME Market Listing Advisor High Growth Segment Key Advisor required AIM AIM Italia-MAC Alternext Entry Standard Mercado Alternativo Bursatil (MAB) Admission criterea Required Required for Public Offerings Required Required Min. operating history 3 years or such shorter period n/a 2 years 1 year (exemptions possible) 3 years or such shorter period Min free-float 10% - 2.5M - 2M Financials 20% CAGR in revenues over 3 year historic period Sufficient of working capital for the next 12 months The company has to be profitable (except for Biotechs). At the discretion of the Exchange - Min Equity capital 30m - - 250,000 - Prospectus European directives EU Prospectus for Public Offerings Information document approved by the Exchange for Private Placements Market Abuse Directive applicable Transparency Directive non applicable Reporting accounting standard National GAAP or EU IFRS or other approved GAAPs for non-eea and Channel Island issuers or national GAAP with reconciliation to one of the approved standards EEA company: IFRS or national GAAP Non EEA company: IFRS or equivalent GAAP National GAAP or IAS/IFRS IFRS, national GAAP or US GAAP Listing Fee Depends on the initial market cap(1) Depends on the initial market cap(2) Depends on the initial market cap (3) 1,500 6,000 +0.005% of the market value Ongoing obligations Ongoing Publications Annual financial reports are published within 6 months of the year end and half-year reports within 3 months of the reporting period end. Annual financial reports are published within 6 months of the year end and half-year reports within 3 months of the reporting period end Price sensitive information Financial reporting: Audited annual and unaudited semiannual financial statements Price sensitive information Annual financial reports: not later than 6 months after end of reporting period. Half-year reports not later than three months after end of reporting period Price sensitive information Audited annual and unaudited semiannual financial statements. Price sensitive information Annual Fee From 5,000 to 50,000 depending on market capitalisation 6,050 From 2,800 to 50,000 obtained according to the number of equities securities listed and the market capitalization of the issuer. 5,000 6,000 3 Other regional exchanges are available to raise capital: www.boerse-stuttgart.de, www.maccess.de, www.dermittelstandsmarkt.de. Page 9
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Contacts Contacts Rick Watson Managing Director, Capital Markets Rick.Watson@afme.eu +44 (0)20 3828 2737 Robert Fergusson Managing Director, Institutional and Corporate Relationships Robert.Fergusson@afme.eu +44 (0)20 3828 2688 Cédric Pacheco Associate, Growth Cedric.Pacheco@afme.eu +44 (0)20 3828 2718 Page 12
About AFME The Association for Financial Markets in Europe (AFME) is the voice of Europe s wholesale financial markets. We represent the leading global and European banks and other significant capital market players. We believe that liquid capital markets and a well-functioning banking system are central to any successful modern economy. We advocate stable, competitive, sustainable European financial markets that support economic growth and benefit society. Focus on a wide range of market, business and prudential issues Expertise deep policy and technical skills Strong relationships with European and global policymakers Breadth broad global and European membership Pan-European organisation and perspective Global reach via the Global Financial Markets Association (GFMA) Page 13
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