There’s also no such thing as a too-high valuation as long as there’s enough runway for businesses to grow and create more value for all involved, argues Sander Arts.
A little over a week ago, I read the following headline in the Dutch newspaper Het Financieele Dagblad: “Tech investor finds companies too expensive and returns investment to lenders.”
The essence of the story is that Dutch VC Prime Ventures is returning its funds to its source(s) because it believes companies’ valuations are too high. I left that article open in one of my browser tabs and kept coming back to it, wondering what had happened here. Did I miss something? Did I have an entirely different perspective? And why? After all, I’m speaking to many startups and scale-ups in Europe and here, in Silicon Valley, and I asked myself: am I the only one who doesn’t quite understand this news?
Feedback from my network of US investors tells a completely different story. From an American perspective, Dutch (and, more generally, European) companies are certainly not “too expensive.” In fact, every month, I come across companies in Europe that are fantastic and US investors get excited about their valuations.
In my opinion, there’s also no such thing as a high valuation as long as there’s enough runway for these businesses to grow and create more value for all involved. There’s a clear journey for Dutch and European companies to spread their wings and become successful in their own country and the US. The ‘only’ thing needed is a clear commercial path toward higher revenue and profits. A focus on the US can accelerate the journey. As such, as a result of expansion strategies in the US, valuations are getting higher here in America, and Dutch investors can (also) benefit. That may sound simplistic, but the recipe really is that simple, if you ask me.
There’s no shortage of examples of successful startups with European roots. IntrinsicID was recently acquired by Synopsys. Belgian medical-software startup KLUE was bought by Medtronic. Axelera is only at the beginning of its journey to become a European AI superpower, as are dozens of integrated-photonics companies in the Netherlands in their respective fields. Eindhoven-based Sandgrain and Antennex are good examples too.
DeeptechXL incubated and funded many companies that are worth investing in and that’s just one of the places in the Netherlands where innovation, entrepreneurship and good vision can create a lot of value. I have a longer list of nice ‘targets’ for those in the Netherlands who want to take some risk and earn something.
The fastest way to heaven is a steep curve to more revenue and the creation of value. The Teleport initiative here in Silicon Valley can give companies a landing place in the US, after which we can create value together. As much as all this is hard, it’s also relatively straightforward. It requires like-minded people, a good strategy, determination, a crazy focus on execution and a can-do attitude. And an ‘American’ profile – a face so to speak. Also there, Axelera is a great example. PR coverage you’ll find when you Google them shows that they appeal to markets on both sides of the pond. And what about Swave Photonics? It raised 28 million in what is, probably, the largest Series A by a Belgian company. They were smart enough to hire a US-based CEO who is well-connected and has combined grit and hard work with Swave’s amazing tech from Europe to build a rocket ship.
It can be done.
