While a growing number of Belgian startups are successful in Belgium and abroad, a new study conducted by Telenet and Startups.be reveals that half of the media and entertainment startups in our country don’t grow fast enough. The companies mention insufficient recurring revenue and a serious funding gap, but also the divide between startups and corporates and the lack of an international mindset hinder sustainable growth.
Belgium boosts an ever more solid track record when it comes to startups. In 2016, a whopping 89,777 entrepreneurs started their business. The number of tech startups that raised a decent amount of money and successfully spread their wings internationally has also increased in recent years. Examples that come to mind include Showpad, Collibra, Teamleader, NGData and Playpass, to name just a few. 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. Why? Several reasons pop up. A conservative investor landscape, a lack in recurring revenue, startups and corporates that speak another language and the lack of an international mindset all hinder sustainable growth.
100% growth per year
A new large scale study by Telenet and Startups.be among 74 startups in the telecom, media and entertainment industry (in combination with 9 in depth founder-interviews and a round table with 9 Belgian startup specialists) reveals that one in four startups (24%) in the media and entertainment space grows with less than 10% per annum. Eighteen percent grows by only 10 to 20% a year, while digital startups should grow at a rate of 100% or more a year. The good news is that 30% of all companies that took part in the study, effectively post such growth figures.
Moreover, almost half of the startups surveyed (46%) generate an annual turnover of less than 100,000 euros, another indicator that a large part of our startups is not growing fast enough. Only 5% of the surveyed companies mention a turnover of more than a million euros.
Most startups in media and entertainment 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. The number rises to five additional employees for 26% of the companies. While almost 60% of the startups have international ambitions or have already deployed some international activities, 37% indicate they have no international source of income at all.
"Belgian startups need to break into international markets as soon as possible to be able to grow and survive", explains Frederik Tibau of Startups.be. "Belgium’s fragmented market is too small and many of our startups have insufficient recurring revenue sources. Attracting the right profiles also proves to be 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 investments continues to be a challenge.”
Gap with investors and corporates
According to our startups, there is also a big divide between startups, the public sector and corporates. All three speak a different language and it's often difficult to meet in the middle. This is an issue that manifested itself in the in-depth interviews we conducted with nine founders and during the round-table with decision-makers and experts in the Belgian start -up community.
"Startups and corporates speak another language"
It should not come as a surprise that our startups in media & entertainment find Belgian investors too conservative. They feel that the VC-community banks on certainty too much, and are afraid of taking risks as a result. If startups want to raise large amounts more of money, they have no choice but to go abroad. Corporates, meanwhile, touch upon the fact that a lot of our startups lack ambition and an international mindset. They fail to efficiently understand the needs of corporates or have no idea how to pitch their idea or product. Our partner for this study, Telenet, has also noticed this.
“We often see that we are not yet on the same wavelength", says vice president New Business & Startup Acceleration Erik Vervloet of Telenet. "Startups 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 startups as part of Telenet Kickstart to ensure we speak the same language more often."
An international reputation
Telenet and Startups.be want to help startups increase their chances of growth by offering them more guidance, with an increased focus on growth and internationalization. Belgian startups could also be put in 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", adds Frederik Tibau from Startups.be. "Our startup community has grown significantly in just a few years and plenty of companies are posting a solid performance, also on an international level. The time has come, however, to take measures to give the other smaller companies, which are lagging slightly behind, a boost and an international nudge. Portugal, the Netherlands and Finland have succeeded in positioning their startups and ecosystem on an international level with various initiatives. Why can't we do the same in Belgium?”
Do you want more details about our study? You can find the presentation right here!