ECSEL JU Symposium 2018 ¦ Electronics: a vision and how to get thereLessons learned from study on access-to-finance conditionsBrussels, June 19 2018

2 | © 2018 Deloitte Tax & Consulting

50 companies, financing providers and industry participants interviewed to evaluate access-to-finance conditions in the Electronics sectors

Lessons learned from study on access-to-finance conditions in Electronics

5 national agencies

10 VC firms

25 innovating Electronics

SMEs

10 large corporates

Clusters and industry

associations

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Funding gaps identified, mainly at early stage and growth stage

Lessons learned from study on access-to-finance conditions in Electronics

Source: ECSEL JU, feedback from stakeholder interviews

Basic principles observed

Technology concept

formulated

Experimental proof of concept

Technology validation in lab

Technology validation in relevant envt

Demonstration in relevant

environment

Demonstration in operational environment

System complete and

qualified

Successful mission

operations

High-volume production

Research & development Product design and prototyping Production

Company funding needs

Size

R&D

Device and product design

Pilot lines

Medium and high-volume production

Commercialization

€ € € € € €

Risk Extremely high Very high High

Key funding gap Key funding gap

Key funding sources

Business Angels

Growth funds

VCs

Venture debt

Banks

Early stage

• Risk extremely high, mainly due to tech risk

• Investment requirements begin to rise (typically around

1-5 million euros) to finance product design and

validation and early prototyping

Key funding gaps

Growth stage

• Risk remain high due to tech and market risk

• Industrialization of production and commercialization

require much larger investments (potentially above 10

EUR million)

Grants

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Complexity and investment characteristics of Electronics identified as key specific challenges

Lessons learned from study on access-to-finance conditions in Electronics

Source: Feedback from stakeholder interviews

Complexity High risk

Capital intensiveness

Long lead-times

Specific factors creating challenging financing

conditions in Electronics

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The case for targeted funding in favor of Electronics

Lessons learned from study on access-to-finance conditions in Electronics

Address specific

challenges

Lack of private

financing focus and expertise

Leverage on inter-national

experience

Develop European

champions

Leverage prior EIB

experience

Strategic importance for Europe

Why targeted funding for Electronics?

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Targeted indirect financing levers would help address current shortage of venture capital to Electronics sectors

Lessons learned from study on access-to-finance conditions in Electronics

Exposure of European VC sector to ElectronicsNeed for tailored approach to encourage indirect

financing in Electronics – Yozma example

Lowered risk for private investors

Pre-determined

exit conditions

No government

control

Funds established with private

partners

Value-added post

investment

18(2%)

Total VC funds in Europe

Previous investment

in Electronics

Specialized in Electronics

154(14%)

~1.100(100%)

Number of VC funds and exposure to Electronics

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Key takeaways

Lessons learned from study on access-to-finance conditions in Electronics

ELECTRONICS KEY CONTRIBUTOR TO EUROPEAN INNOVATION AND ECONOMY

1 FINANCING EXTREMELY CHALLENGING OWING TO SPECIFICITIES OF SECTORS

2

A THEMATIC FUNDING APPROACH WOULD HELP ADDRESS FUNDING GAP

3 INDIRECT FINANCING TOOLS ALSO NEEDED TO ENCOURAGE PRIVATE INVESTMENT

4

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