Do your job and we will take care of the rest
Silicon Valley in the United States is the birthplace of the world’s leading high tech companies like Apple, Yahoo and Google. For ambitious European companies, the San Francisco Bay Area remains a strategic development point with access to funding and world-class expertise. PwC’s Accelerator has been created in Luxembourg to help European companies reach this goal and also to help US companies settle down in Europe. In a first “Local to Global” Expo, PwC Luxembourg presented 25 fast-growing companies to an audience of 50 institutional investors from around the world.
The featured companies have been selected based on the uniqueness of their technology, the quality of their management and their ambition to grow internationally. PwC’s Accelerator supports technological companies from the digital media, voice and data communication, clean tech and semiconductor industries. Laurent Probst is Partner at PwC Luxembourg and Leader in R&D and Innovation.
He says that PwC is operating in an unrivalled field. “Usually, help is offered in the incubation phase, meaning at the early stage, of a company. We are the only ones in Europe intervening in the acceleration period, where the challenge is to make an already successful start-up progress to a global level. We review, for instance, the business plan of a company and find out that they ideally need 10 million euros rather than the 3-5 million they originally thought they needed.”
PwC’s Accelerator is a one-stop shop and the service offered is two-fold. The first phase includes training programmes, coaching, business plan assistance and real estate needs; the second phase consists of fund raising and business development assistance. “In the acceleration period, the lack of resources is a real problem for companies. It is essential that the management focuses on its core business and we take care of the rest”, Alexandre Rhea, Partner and CEO of PwC’s Accelerator, explains.
He shows a lot of respect to entrepreneurs because they take a lot of risk by creating a company. But often they don’t realise how important it is to build a team with a winning mentality, because nobody ever told them. “If you want to win the football World Cup you need great players on every position in order to succeed”, he adds.
The Valley of Hope
Conscious that Silicon Valley presents a unique ecosystem, PwC’s Accelerator has formed a partnership with Plug and Play, a Silicon Valley based platform that helps fast growing companies go global. The Plug and Play technology centre houses a community of more than 330 start-ups from seed stage (2-3 employees) to later stage companies with over 90 employees.
According to Alexandre Rhea, it is essential for any European company that wants to go international to be present in Silicon Valley. There are several reasons for that. “If you want to be top class, you need to compete with the best players in your field. It is in Silicon Valley where investors’ pockets are deepest. In this technology stronghold, you can find more than 180 venture capital funds; one in three manages over a billion dollars. In Europe, there is no tech fund managing more than 400 million dollars.” Alexandre Rhea knows what he is talking about. Before joining PwC, he had 17 years of international private equity experience.
An American in Europe
Alternatively, many innovative American firms are looking to enter the European market, which is perceived as time consuming and costly. PwC, through its extensive network around the globe, can help these companies to speed things up. Laurent Probst and Alexandre Rhea from PwC both underline that Europe remains a very important market for US firms despite the trouble Eurozone countries face right now. The European market is important to US managers but it scares them off because of their lack of knowledge.
Laurent Probst explains how this problem is solved. “From the moment a company wants to come to Europe and the moment when the management finally decides to go through with it, there is typically a period of 12-18 months. During that period of time you have to educate and inform US managers on how to “attack” the European market with all its different languages and fiscal and jurisdictional systems. This approach is not limited to US companies settling in Europe. The same is true for a European company wishing to enter the Russian market, for instance.”
The beautiful ones
PwC’s Accelerator’s first objective is to provide successful companies with the necessary advice, expertise and network to enter the European market and accelerate their development. Laurent Probst stresses that, of course, the goal is also to position Luxembourg as a European hub to welcome companies from all over the world.” If the deal flow is better in Luxembourg than in Paris or Brussels, companies will stay here. This is also good news for the Luxembourg financial centre and its fund industry, which is second in the world after the US”.
In terms of branding, international investors will not be impressed by messages that Luxembourg is the best and most beautiful country in the world. But they will certainly be intrigued by a toolbox that shows that the Grand Duchy has a lot to offer. This goes from the quality of Internet infrastructures and high-level data centres to investment structures and a qualified, multilingual workforce. The two PwC Partners agree that Luxembourg will be in a good position if it meets investors’ demands.
Alexandre Rhea concludes that the country’s assets will not fall on deaf ears. US companies and investors have lived some painful experiences when doing business in Ireland, a country that has plunged into recession again. That’s why they are ready to invest in a more stable country like Luxembourg with a better-organised economic system. CW