With its new fund focused on digital, deep tech and cleantech, ScaleFund aims to fill a gap in the market for financing growth companies.
And then there were three... At the beginning of the summer, ScaleFund announced the launch of its third venture capital fund to support companies active in digitalisation, deep tech and cleantech. The stated objective is to endow this new fund with €30 million by next year, while its two predecessors amounted to €2.5 million and €10 million respectively. ‘The investment strategy remains fairly similar, but this size should allow us to invest in 15 or 20 additional companies,’ explains Claire Munck, Managing Partner of ScaleFund. Munck, who is also CEO of the BeAngels investor network, further emphasises that ScaleFund III will focus particularly on digital transformation, deep tech and cleantech.
While ScaleFund III, like versions I and II, is largely intended for pre-Series A financing, this new instrument includes two additional compartments. In the early stages, a ‘seed’ compartment will allow investment tickets in companies that are less advanced in their development but led by experienced entrepreneurs. A Series A compartment will be aimed at more mature companies, to which the high-quality network built up by the fund since its creation will also be able to contribute its expertise.
How do you view the pre-Series A investments of this new fund?
Claire Munck: "We're talking about tickets between €400,000 and €500,000 on fundraisings between €1 million and €3 million. We systematically take minority stakes in companies that have found their product-market fit and are already generating revenue. They want to move beyond the artisanal phase, become more professional and accelerate their commercial deployment. We love getting involved in these projects as the first structured investment fund on board because, beyond the capital, we can maximise our contribution of experience in all aspects of preparing for growth, including governance."
Why these additional investment compartments?
"We want to keep pace with developments in the ecosystem. Over the past four or five years, with BeAngels, we have seen an acceleration. More and more entrepreneurs who have made their first exit are joining the investor community or embarking on a new venture. They often reinvest the funds from their initial successes in their new businesses and take different paths from the traditional ones of business angels and then venture capital. We wanted to be able to support such projects as well."
Deep tech companies are groundbreaking businesses with strong scientific roots. Does investing in such players require specific expertise?
"Yes, which is why Scale III surrounds itself with venture partners, professionals who have invested in the fund or are closely associated with it and have very specific skills or entrepreneurial experience in cutting-edge sectors. This is the case, for example, with François Torche, the founder of CluePoints. We can also draw on the vast professional expertise of the BeAngels network, whose 600 members help us evaluate the potential of the applications we receive."
What is the purpose of Agoria, Invest.BW and Wallonie Entreprendre's participation in the fund?
"As with Scale II, the geographical scope includes Belgium, Luxembourg and France, and possibly the Netherlands and Switzerland, where we also have good networks. Investors understand that when we invest in a French company, we have the capacity to accelerate its development in Belgium and Luxembourg, with the potential for establishing a headquarters and creating jobs. Furthermore, while seed capital is still relatively easy to find, venture capital funds, which now prioritise returns over growth, have moved up the chain. They sometimes require €2 million in recurring revenue before investing. ScaleFund therefore usefully fills a current gap in the financing market, which is appreciated by these institutional investors.
What size of stake are you looking for?
"We invest as a minority shareholder, but we have the capacity to act as lead investor in various transactions, i.e. to conduct in-depth analysis of projects and structure the financing round. Often, companies that need one to three million euros receive a favourable response from large funds, but the latter do not have the time to take the lead on projects they consider too small. Here again, both parties are happy with our involvement, which generates a ripple effect."
What is the impact of AI on your industry?
"It has led investors to question their portfolio's exposure to the disruptions it brings. This has created a great deal of uncertainty, further exacerbated in Belgium by the chaotic context of innovation support, from copyright reform to capital gains taxation. For the rest, on a day-to-day basis, AI enriches and accelerates the analysis process, whether it be studying a market, its depth, the level of competition, etc. AI also assists us in sourcing, preparing questions for entrepreneurs and managing files. But as elsewhere, we must be careful that it does not reinforce biases. Ultimately, the strength of a project lies above all in the quality of the team. Our profession remains fundamentally human."
Meet other entrepreneurs and expand your network at Good Morning 500, Beci’s Thursday morning gathering!