Half of all Belgian media and entertainment start-ups don’t grow fast enough

Half of all Belgian media and entertainment start-ups don’t grow fast enough

A conservative investor landscape, the gap with corporates and a lack of ambition among start-ups all affect growth

Brussels, Tuesday, December 19, 2017 - While a growing number of Belgian start-ups are very successful in Belgium and abroad, a study conducted by Telenet and Startups.be revealed that half of all media and entertainment start-ups don’t grow fast enough. This can be explained by the fact that raising large amounts of seed capital continues to be difficult and the gulf between start-ups and corporates is too large. The lack of an international mindset is also an obstacle for plenty of start-ups.

Belgium has a solid track record when it comes to start-ups. In 2016, a whopping 89,777 new entrepreneurs hit the ground running. The number of tech start-ups that raised the required seed capital and successfully spread their wings internationally has also increased in recent years. Examples that come to mind include Showpad, Collibra, NGData and Playpass. Compared with five years ago, the number of growth companies in Belgium has increased significantly.

Whereas our ecosystem has become stronger, sustainable growth continues to be a major challenge for a substantial group of Belgian start-ups however. The reason for this? Start-ups that lack ambition, combined with conservative investors and the fact that the gulf between start-ups on the one hand and corporates and governments on the other is still too large.

Achieving 100% growth per year

A new survey by Telenet and Startups.be among 74 start-ups in the telecom, media and entertainment industry revealed that one in four start-ups (24%) in the media and entertainment industry grows less than 10% per annum. Eighteen percent grow by only 10 to 20% a year, while a start-up should grow at a rate of 100% or more a year to be viable. Just under 30% of all companies effectively post such growth figures.

Moreover, almost half of the start-ups surveyed (46%) generate an annual turnover of less than 100,000 euros, another indicator that our start-ups are not growing very fast. Only 5% of the surveyed companies post a turnover of more than a million euros.

Most start-ups in our country are also very small, working with teams of no more than 5 employees (63%). Just under half of the companies (46%) indicate that they hope to hire one to three additional employees in the next year. This rises to three and even five additional employees in 26% of the companies. While almost 60% of the start-ups have international ambitions or have already deployed international activities, 37% indicate they have no international source of income.

Belgian start-ups need to break into international markets to be able to grow and survive. But Belgium’s fragmented market is simply too small and many of our start-ups have insufficient recurring sources of revenue. Attracting the right profile has also proven problematic for our companies. Finding developers is difficult, but talented sales and marketing professionals are equally scarce. And while there is plenty of money available on the market, raising larger investment funds continues to be difficult.” Frederik Tibau, Content Director Startups.be

Gap with investors and corporates

According to our start-ups, there is also a big gulf between start-ups and large companies or the corporates.  They speak a different language and therefore have trouble meeting in the middle, an issue that manifested itself in the in-depth interviews we conducted with nine starting entrepreneurs and during the round-table with decision-makers and experts in the start-up community that Telenet and Startups.be organised afterwards.

Start-ups find Belgian investors too conservative. They feel that they bank on certainty too much, and are afraid of taking risks as a result. If start-ups want to raise more capital, they have no choice but to go abroad. Corporates, meanwhile, find that our start-ups lack the ambition and an international mindset. They fail to sufficiently understand the needs of corporates or have no idea how to pitch their idea or product. Telenet, which sets aside budget every year for supporting start-ups, has also noticed this.

“We often notice that we are not yet on the same wavelength. Start-ups often flounder during pitches or fail to cater to our company’s needs. At the same time, they feel equally frustrated about the slow decision-making process of large companies for example when it comes to investing. Obviously this is something we need to work on. We want to develop a closer collaboration with start-ups as part of Telenet Kickstart to ensure we speak the same language more often We want to involve them even more in our company’s innovation process offering them the opportunity to develop concepts together and test services in our new innovation centre.” Erik Vervloet, Vice-President New Business & Start-up Acceleration Telenet

An international reputation

Telenet and Startups.be want to help start-ups increase their chances of growth by offering them more guidance, with an increased focus on growth and internationalisation. Belgian start-ups should also be thrust into the spotlight more often. International investors often don’t know our companies well enough, according to young entrepreneurs and specialists.

“We have already taken steps in the right direction. Our start-up community has grown significantly in just a few years and plenty of companies are posting a solid performance, including on the international level. The time has come, however, to take measures to give those other smaller companies, which are lagging slightly behind, an international nudge. Portugal, the Netherlands and Finland have succeeded in positioning their start-ups and ecosystem on the international level with various initiatives. So why can't we do the same in Belgium?” Frederik Tibau, Content Director Startups.be

You can find a summary of the results of the survey by Telenet and Startups.be below.

Startups.be is the one-stop-shop for Belgian tech entrepreneurship. We partner with startups to achieve their global ambition, facilitate joint innovation with business partners worldwide, and are the independent reference center of excellence in the startup ecosystem.

Telenet Kickstart boosts the Belgian start-up community. Through structural partnerships with leading incubators and accelerators, we provide mentoring and coaching to early stage (digital) entrepreneurs, teaching them how to turn their innovative ideas into scalable and market-ready businesses. In addition, we organise international start-up trips and networking events.

TME Startup Study 2017

Frederik Tibau
Erik Vervloet