The Twente Technology Fund will be a so-called seed investment fund, a professionally managed fund that invests in companies at an early stage. Most of these companies will be UT spin-offs, but external businesses will be eligible as well. When entrepreneurs are still trying to enter the market, the risk of investment is very high. In contrast, when the investment takes off, it could be extremely lucrative for investors.
Aside from the UT, banks and large investment parties, such as pension funds, plan to participate in the fund. Groups of private investors can also take part in the fund, says Kees Eijkel, the director of Kennispark Twente. Over the next couple of years, the aim is to generate fifteen to twenty million euros in this fund of which investments will be made in three to four businesses a year to a total of ten to fifteen companies.
The fund is mostly intended for young companies that need to make a big investment to start up their company. Eijkel points to spin-offs in the biotechnology and nanotechnology areas as good examples. Companies can also apply for funds at a bank, but they need certain guarantees that a young business simply cannot offer. Eijkel: `And with the current financial crisis, banks are not easily willing to invest.'
On account of the considerably high risks involved for investors in the Twente Technology Fund, the TTF will only invest in companies that are expected to show substantial growth in the coming years. `We will concentrate on businesses that will grow and not settle for an eight, but strive for a ten,' says Eijkel. For that, entrepreneurs need a good business plan and a sound management team. The fund will support entrepreneurs to make their ambitions come true, for instance, to grow from five to fifty, or to even five hundred employees. In exchange for the investment, the fund will receive a part of the shares in the company through a share exchange construction. Micronit is an example of a successful UT-spin-off whose development fits the criteria of the TTF. This company has recently opened a branch in the U.S.
At present, a final round of talks with investors is still taking place. The intention is for the first companies to be able to apply in the summer for funding through the Twente Technology Fund.
