Cédric Van Nevel is a partner at Qbic, an early-stage venture fund that invests in the spinouts of its 16 partners throughout Belgium. Van Nevel joins us to chat about the fund’s origins, why it’s such a strength to work with teams pre-incorporation and why Qbic is happy to keep focusing on the local ecosystem rather than expand internationally.
He also ponders what makes Belgium such an entrepreneurial country and looks back at his own career, which brought him to Qbic in 2019 after earlier stops in corporate venturing for Bekaert, overseeing gas transport and storage infrastructure projects for Fluxys, and advising clients in the logistics sector for Boston Consulting Group.
Please note that the intro and outro have been omitted.
Cédric, welcome to the podcast.
Hi Thierry. Thanks for having me.
I look forward to talking with you. To start with, can you give me an overview of Qbic with some headline figures?
Sure. So, Qbic, we are actually in the third fund already, meaning that obviously there has been a Qbic I and the Qbic II as well. Qbic actually originated from a number of different Belgian universities, which came together and tried to bundle forces, bundle their internal minor VC funds, I would say. And bundle forces, both in having the funds managed independently and also leveraging their own financial means with also public and private means and collecting public and private investors.
So, the first Qbic fund actually originated from the Universities of Ghent, Brussels, Antwerp, and then VITO, which is a big knowledge institution or research centre here in Belgium. For the second fund, which started five years later, a number of additional universities joined and also a cluster of innovative hospitals. Now recently, earlier this year in March, we launched the third Qbic fund, again assembling a number of leading Belgian universities, the originating universities of Ghent, Brussels, Antwerp, knowledge institutions and research like VITO and Imec, a number of universities which already were there in the second fund, like the University of Hasselt, Liège, and then also again grouping a number of very innovative hospitals.
Qbic I basically started off as a €40m fund, Qbic II became an almost €60m fund, and now for the third fund, we had our first closing at €50m, but obviously we have the intention to go for a second or maybe third closing as well.
Amazing. Do you have a specific sector focus or is it just anything out of Belgium out of your partner institutions?
It is anything out of our partner institutions, obviously with the VC mindset. So, no service-oriented businesses, for example, and always very early stage. So, it typically invests the first days or weeks after initial incorporation for most of the investments we do, but across sector, so deep tech, software, life science, biotech, a bit of all.
That leads me onto my next question as well. How do you source deals? Do you work with the teams before they incorporate?
Yes, we do. So basically, we have an agreement with all our partner knowledge institutions, so it is rather than just universities basically sit together with tech transfer offices on a quarterly basis, have a look at what is in their portfolio, which team’s projects are looking for a potential VC path or potential incorporation, and then we sit together and meet with those teams.
I think if you look back at the second fund, sometimes we had interactions with those teams 12 to 18 months prior to actual incorporation. So, challenging them on the business plan, on their go to market strategy, on their IP strategy, trying to help them build a solid investible project and investible company.
Do you do that for all your portfolio companies or are there some that you meet later on?
It is very much dependent. It is not necessary for us to do so. What we do see is that for a lot of those younger teams, it is very useful for them. It is also useful for us because we get to know the team while working together already. Some of the teams, some of the companies, we see them a bit more late-stage because they have developed more internally or because there is maybe an external team that was already working on it or already joined the project team at the university prior to the first discussion.
That makes sense. Do you have investment rights or rights or first refusal in your partner’s spinouts?
We have a preferred partnership in the sense that as we see the deals very early on, for a lot of them, we see the projects before they are actually ready to go to market, before there is an investment pitch or before the business plan is solid enough to go to investors.
Do you invest in line with any ESG criteria or SDGs?
If you look at the portfolio we have built, you will see that most of the companies indeed fit at least a number of ESG criteria or the SDGs. I think for us, it is not very difficult to do so if you look at whatever research is happening within the universities, it is typically driven by a more sustainable future, working towards renewable energy, working towards better health issues or a more equitable society.
I think that for ESG typically what we bring is the experience of setting solid governance because it is that early stage, we start from scratch, and I think that is where we can add quite some value as well for those companies. If you look at the sustainable development goals, again, that is rather easy for us to comply with them given the research that is actually happening within the universities.
This is a fairly big question. What are the opportunities in Belgium’s ecosystem?
It is indeed a fairly big question. I think some of the opportunities in our space, or our sector specifically, there is quite some research happening within the Belgian ecosystem. There are quite some also EU funds or funding that is available to the Belgian universities.
So, there is quite some output of that research, which can be translated into economically viable companies. I think one of the advantages as well we have in Belgium is also that there is quite a solid ecosystem of clinical trials. A lot of clinical trials are happening here in our university and non-university hospitals, which also gives us quite some access to more life science and MedTech type of companies.
From the outside, it has always looked like there is a lot of stuff going on in Belgium. You have obviously Qbic yourself, you have Theodorus, you have imec.xpand. Where does this culture come from? Have you always been an entrepreneurial country?
That is not an easy question. I think we have always had a lot of different institutions. I think if you compare us to other countries, we have more universities that are doing their own development, less of a top one, top two, top three tier type of university. I think within the VC landscape, having these different universities also translates and having these different funds. I think Qbic is the one fund combining multiple universities and multiple research centres. I
think if you look at xpand, for example, they have a very strong focus on the Imec deals. We also see a number of Imec deals, but maybe not all of them, and not all, let us say, the very big deals, which they are more focusing on. Theodorus, Gemma Frisius are very similar to Qbic, but then have a specific partnership with one other Belgium university where we try to combine a number of universities within the fund.
Are you planning to stay focused on Belgium? Just because I know for example, Theodorus has opened an office in Canada as well, which is obviously quite far away, so, maybe not that far, but would you expand elsewhere into Europe at this stage?
Our focus is primarily in Belgium because we invest that early, we see that having a proximity, being close to the teams, being easily available also for face to face meetings makes our and their lives a lot easier sometimes. So, I think that is the geographical proximity, certainly in the early phases, we consider that as quite important, venturing into other countries might make sense in the future, but if so, then probably it would be for the nearer opportunities, say in the south of The Netherlands, north of France, rather than venturing across the Atlantic, for example. But at this stage we primarily have that Belgian focus.
This is another big question. What are the challenges in Belgium’s ecosystem?
To be honest, it is quite difficult to give a very broad statement on that. I do not think there are a lot of challenges that are very, I do not really have a suitable answer to that. There are some quite specific ones, but I would not call them very typical for the Belgian ecosystem in that sense.
There is no lack of management or lack of money for your companies. Well, I guess there could always be more.
Yes, there could always be more and maybe the big corporate VCs. We do not have a lot of big VC funds that have an office in Belgium for example, that have a geographical proximity. On the other hand, for that early, very early stage, that is maybe not as necessary neither. I think at later stages of companies do well. They do get access to those types of funds as well.
Do your companies usually stay in Belgium or do they go elsewhere once they reach the growth stages?
CVN: So far, in terms of headquarters, all of our companies still are in Belgium. Obviously, they do have a focus to have international business or to do business on an international scale and international level as well. Some of our companies have already done maybe a minor acquisition abroad, set up an office abroad, set up typically sales offices abroad, quite some collaborations with international players as well.
But so far, the headquarters have remained in Belgium, although that is not a requirement as such for us. I think it makes sense in the early stage to remain in Belgium also to keep that link with the university for future development as well. But going forwards, we obviously encourage them to go abroad and to reach out for a bigger market than just the Belgian one because that is fairly quickly … you’re around the Belgian market otherwise.
How easy is it to find investment professionals in Belgium?
Given our fund size, we have not been recruiting very heavily over the last year. So, we have made some additions to the team. It has not been extremely difficult I would say to find people to join our team. We are also quite happy with people who join our team, obviously. What you do see is that given the smaller ecosystem that there are people. It is a small world, so you typically come across the same people in different deals, sometimes jumping from one fund to another, makes it easier to get to know or to know most of the players. But I guess that that is common for a smaller country like Belgium as well.
Is your staff mostly Belgians then?
Well, within the fund, we are a team of five, so within our team, we are all Belgians. If you look at our portfolio companies, there we see that there is quite a mix, also representative I guess, for on the one hand, researchers at the universities, which is also quite an international mix and then also as companies expand, as companies do go out and do more business internationally, they also attract more international profiles as well.
Speaking of the makeup of your portfolio. How does your engagement fare when it comes to women and founders from a minority background?
I guess we are doing quite well. It is not a metric that we proactively were keeping track of, but when we started our fundraising for the third fund, we made the balance as well. And actually, we were a bit surprised ourselves. Out of the 18 companies in which the second fund invested, six of them are led by women, which for our space, the earlier stage VC, deep tech companies quite often, is I think quite a good metric.
We did not proactively look for women just to have a good metric on that, on the contrary. But we do see within the researchers’ community, there is quite a nice ratio of women who are willing to take that leap and to start and found a company. So, we did not proactively scout or recruit for, to have a good metric there, but by coincidence, we had one. Maybe the fact that our own team is also quite balanced, men and women also helps for that. But again, that is just a guess. We just see the outcome now, which is quite good given the type of companies in which we invest.
You do not plan on creating any programmes to attract more diversity then?
As such, we have not done so. I do not think we have seen the need neither. I think also we should look at, let us say, the scale of different nationalities working within our different portfolio companies, also there, we see that it is quite mixed without proactively targeting specific groups or specific international backgrounds.
That is really interesting. I wonder if that is because you do go in quite early, and it takes away this fear of a VC.
It might be. So, what we also do, I think out of the 18 there are 16 who have a first time CEO. So, it also means we try to give young teams and young people the opportunity to try at least, or at the start to be the CEO, to be the one responsible for the company.
It also means that you have a broader pool of people out of which you can recruit or who can make that jump. If you go only for the serial entrepreneurs, you are already more in a limited pool, which might be maybe more dominated by male than female candidates. So being that early, giving the chance to younger teams probably also helps to boost that ratio.
My next question is one that we mostly touched on already, which was, Qbic has grown to 16 partners, all of them in Belgium. I think originally, I asked you if you planned to maintain this local focus, which I think you have answered. So, I am going to rephrase the question a little bit. Would you look for any European partners, purely for the financials, say the European Investment Fund or someone, a bank from France or Belgium, rather than only focusing on Belgium?
So, the 16 partners, that is what we call our knowledge partners. So, I think for them, we like to keep this local focus, I think in terms of investors, our broader LP base, obviously there it is the 16 partners who invested a bit in the fund, but the bulk of our LPs and the bulk of the funding is coming from other partners, which are institutional private investors. Obviously, there we are not limited to Belgium. We are open to funding or to investors coming from abroad as well.
That explains why I met you in London as well.
Is there enough government support in Belgium for funds like Qbic?
It is also a difficult question without stepping on toes. There could obviously always be more, I think that is fair to say. We do have institutional investors, governmental, regional investors as well. So, the regional, the Belgian national wealth fund are also investors in Qbic. So, in that sense, we cannot complain. We also see them sometimes as co-investors in some of our portfolio deals. So, they are active in the early-stage scene as well, but obviously it can always be more.
Is there a good regulatory framework for a fund like yourself to operate?
I guess there is. There are obviously quite some more administrative burdens, but as a regular, and yet we are organised as a regular VC fund. We have our specific focus and our quite targeted investment scope. But apart from that, we are regulated and set up like most VC funds in Belgium for which there is a framework to which we can adhere and apart from some of the administrative hurdles, it is rather straightforward to implement.
I think the administrative hurdles are something that everyone struggles with, whether they are in the US or in Belgium.
Yes, indeed. And they just keep on growing, like anti-money laundering regulations, GDPR and all those things. Just adding on without adding a lot of value for a fund like ours.
Is there any support that you wish the government did offer?
Well, there are quite some schemes in terms of grants and subsidies which are available. I think what sometimes is not very easy and it is more on the portfolio level of things, is to really have a clear view on what is available in terms of subsidies, how to apply for it. Sometimes the mix of what is government or subsidised, and what a grant can cover versus which type of private investment is still needed is not always that straightforward as well. So having sometimes better visibility on the scale of opportunities there are, I think could be quite helpful.
I want to look at your own career as well. You worked for Boston Consulting Group, energy infrastructure group Fluxys. You were in corporate venturing for Bekaert before joining Qbic. What convinced you to join Qbic?
I think what pleases me the most, and what makes Qbic unique as well, is the very big diversity of deals we see, and portfolio companies and deal flow we see. It is very broad sector-wise. It is working with young teams typically almost from scratch, apart from obviously the big part of research, which they already did, but in terms of building a company, setting up business plans, it is starting from scratch, and it is having hands on impact as from day one.
I think comparing it to working for the bigger companies where you are always a smaller piece in a very big machine. That is something which appeals me most within a fund like Qbic, to be very involved, to be able to be very hands on as well, and have a very broad diversity of projects, which should be managed or which you look after.
Is there anything that you would say to someone who is starting out in this area today in university venture capital?
I think it is a very interesting, challenging ecosystem. I think it is also challenging in the sense that you are somewhere on the edge between the more, let us say, bureaucratic sometimes way of thinking, the way of doing research or typically there is more time, or the end goal can be more fuzzy just because it is research, and then translating that into an economically viable project is not that straightforward.
And I think you have to have a good understanding of both worlds, both the role of academia and the role of research and how people are meant to operate within such a role. And also, the more business side of things, what a customer, a company, a partner would expect from you. So, in a lot of discussions and a lot of the projects we see, it is also, sometimes it just takes time to get the teams to the way of thinking of a corporate or vice versa to get a corporate who understands why certain developments still need to be done, but you do already need or want to be involved at an early stage. So, I guess a lot of the work is also being a bit of a translator between different roles, which makes it challenging, but it also makes it that you need quite some patience as well sometimes.
Is there something that you would change about how university venturing is done?
It is quite a broad question. I think what we see working with a number of different universities, they all have a very different DNA in terms of how they value their knowledge, in terms of how they want to be remunerated for the knowledge they contribute to the different companies. I guess it would be easy if there would be a standard framework of how to valorise IP, for example, or how to just contribute IP. Again, on the other side, if there would be frameworks for everything, then probably my life would not be as interesting, or the projects would not be as exciting as they are today.
So, does that mean that when you have portfolio companies, they tend to just come out of one institution rather than two?
We have some that are, let us say, coming out of a single institution. More and more universities and institutions are working together as well. So typically, the IP has multiple fathers and mothers. What we do see, however, and that is something which I think has certainly improved, is that for most of those multi-university or a multi-partner projects, there are clear agreements in place on who will be taking the lead in negotiations, who is responsible for the, let’s say, doing the facing towards investors and who is more following from the background.
So, it is probably a lot of difficult discussions which also take place without us having to be involved, for example, so I think that is something where we also see it as this collaboration has become a lot more mature over the years.
That does lead me on to my next question, which was, can you give me some examples of portfolio companies?
Sure. We have a lot of them, so we have a lot of interesting ones. I guess maybe some of the ones in which I am involved. I think QustomDot for example, is one of the companies which still today is in relatively early stage. The company is developing quantum dots, which can be used for colour conversion in this place, computer displays, but in the future, probably also the microLED based displays. It is a company developing new material, which in the end will need to be brought to the market for which there still is quite some way to go to in the end, end up in devices, in consumer devices as well, which we will all be using. I think it holds great potential.
They are they are one of the few companies today, which is able to make these quantum dots without any cadmium inside, so, it is one of the products. But it is one of those companies where you see the whole development trajectory, and then also the getting specs in the final applications does take quite some time. But apart from them, we are also invested in companies like Sentea, which is making fibre optic interrogators at a significantly lower price points than more bulky systems which are around today. So, applications in wind energy, in machine monitoring, bearings or large infrastructure. I think more maybe on the MedTech, life science side, we have companies in our portfolio like Indigo developing an implantable device for continuous glucose monitoring, which could improve or help a lot of diabetes patients to get a better view on their glucose levels without having to wear any externally visible device.
We have companies active in the water segment as well, like Blue Foot Membranes, making membranes which are back washable. So, in the end will have a much lower total cost of ownership. And that is one of the companies where I think passed these first growth stages, which is this company, which is now selling in larger projects also abroad and seeing already quite some installations being active throughout the world.
So, that is one of the companies I would say more advanced in our Qbic II portfolio. Maybe a last one. It is maybe the one which is more open for imagination. The first investment we recently completed in our third fund is in a company called Swave Photonics, which is actually developing a specific holographic chip, which will enable true holography. It will be the chip and the algorithms around it that will be developed. But I guess the end-product, which you can imagine working with true holography without the need for specific glasses and all these things are also quite interesting.
Swave Photonics, I came across. Is Imec and Ghent University. Is it those two?
Imec and University of Brussels.
I remember seeing Tom Vanhoutte, he was singing their praises.
It took quite some time to get that to the closing of that file, but glad we made it.
I can only imagine. That brings us almost to the end. Is there anything else we have not talked about you want people to know?
I have thought about that question before, but I think this pretty much covers most things.
Awesome. No call to action. Well, I guess you are still raising money, so if there are any investors out there.
Yes, sure. That is always welcome. Anybody interested in the Belgian landscape or the Belgian university scene, they are obviously welcome to reach out.
Amazing. Cédric, thank you so much for talking to me today. It has been a real pleasure.
No problem, pleasure was mine. Thanks, Thierry.