A Guide to Investing in “Brainport” – Europe’s Hidden Hardware Haven

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The name “Brainport” may attract images of wild-haired scientists and tech enthusiasts exporting boatloads of knowledge. And you’re not entirely wrong.

This small region in the province of Brabant in the Netherlands teams up with engineers, researchers and entrepreneurs focused on developing cutting-edge high-tech applications in the fields of medicine, mobility, energy and nutrition.

Concentrated within a radius of just 40 kilometers, you can find the meeting point of global technology companies and research institutes including: Philips, DAF, ASML, TomTom, Eindhoven University of Technology, TNO Industries and Technique and High Tech Campus Eindhoven .

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This environment has created a natural incubator for tech startups with its research centers providing highly skilled talent wishing to transition from academia to startup life. Meanwhile, partnerships with major global players are within reach.

It’s the birthplace of the lithography machine, which today produces chips for 80% of the world’s smartphones, electron microscopes that have led to groundbreaking breakthroughs in cancer research, and it’s here that the robotic device used in the the world’s first super-microsurgical procedure with “robot hands” was made.

So what do investors need to know to invest in this innovation-rich region? We have your guide here.

More is more

The Brainport area is small — very small. Home to only 750,000 people and 400,000 workers. However, despite its size, it has managed to attract a flood of highly skilled scientists, researchers, engineers and technological talent.

This is partly thanks to the region’s leading engineering university – Eindhoven University of Technology, a public technical university that consistently ranks among the top 200 universities in the world.

This emphasis on R&D and technical education has meant great things for startups in the region; according to DealroomBrabant has the fourth largest pool of startup jobs in the Netherlands, with over 16,000 tech workers at over 700 startups.

It also has one of the highest number of registered patents per capita. “The innovative character of our region is backed by facts”, Rob van Gijzel, Mayor of Eindhoven and President of the Brainport Foundation wrote.

Companies based in Brainport Eindhoven receive four patents a day; that’s more than half (55%) of the total number of patents filed nationwide. Nowhere else in the Netherlands will you see as much private investment in R&D as in this region.

While Amsterdam is known for its software, Eindhoven is quickly becoming known as a hardware capital, which is helped by its proximity to big state-owned tech companies like Philips and semiconductor supplier ASML. This means that budding entrepreneurs have access to a large pool of tech pioneers who can provide mentorship.

“There is a large mentor base here,” said Betsy Lindsey, CFO of Eindhoven-based Aircision.

Hardware is not a game for youngsters – you need a lot of experience and knowledge to get there.

But van Gijzel is quick to point out that startups are the real backbone of the region’s technology industry.

There is a widely held opinion that Eindhoven is all about Philips, or the other big companies operating out of the city. Although each company generates an annual turnover of more than 4 billion euros, there is more. The Brainport Eindhoven region is the base for many successful, smaller and lesser-known businesses. The ecosystem has a deep and broad base in electronics, computing, materials, manufacturing, and smart, creative design.

A growing number of startups also provide a driving force behind the region’s innovation; “Industry in the Eindhoven region derives 28% of its turnover from innovation. This means that 28% of the total turnover of these companies is actually generated by new products. Products that didn’t even exist three years ago”, van Gijzel said. “The figure for the whole Dutch industry is only 9%.”

Players to watch

The most well-known sector in the Brainport region is deeptech, again thanks to its proximity to researchers and large companies.

“We’re working on some incredibly sexy things here,” said Karl McGoldrick, CEO of Brainport-based battery manufacturer LionVolt.

Whether it’s solar, photonics, semiconductors, quantum or hyperloop, some of the world’s most exciting breakthrough innovations can be found in the Netherlands.

A TechCrunch Poll of Eindhoven-based investors see robotics, medical devices and high-tech systems as other assets in the ecosystem.

Some of the biggest players to watch include:

  • Prodrive Technologies
  • Smart Photonics
  • Photonic EFFECT
  • Leo Volt
  • Light year
  • DENS
  • Morphotonics
  • Cooling
  • Vault
  • fruit punch

And it’s not just startups that make the strength of the local ecosystem. The Brainport region is also home to several innovation hubs and accelerators that support it, including:

  • nomenclature
  • bravery
  • Brainport Development
  • NWT
  • LUMO Laboratories
  • HighTechXL
  • High-tech campus

Funding Barriers

Although full of patents and innovations, the Brainport region is not immune to some of the problems plaguing the rest of the nation’s startups, namely lack of funding.

“Eindhoven is great for hardware, but not for hardware funding,” says Robert Dingemanse of PalV.

“If I’m in Silicon Valley, I can walk down Sand Hill Road, where all the [prominent] VCs are [gathered] together. We don’t have them on the same level here,” LionVolt’s McGoldrick told Sifted. “You are more likely to find the VCs in Amsterdam. Maybe we just haven’t generated enough enthusiasm and success.

The Sifted report also revealed that the few investors in Eindhoven typically skip early stages of funding and instead move into Series A and beyond.

“It’s low on seed investment,” says Han Dirkx, CEO and co-founder of AlphaBeats.

“There’s not a lot of capital for early-stage high-tech companies. You can try to get grants or other public funds, but it’s long and uncertain for startups,” echoes John Bell, CEO of HighTechXL.

But the region is not without success – last year 3D printing company Shapeways listed on the New York Stock Exchange and LionVolt raised $5 million for its battery technology.

Small but mighty is perhaps the best way to describe the Dutch tech scene, but nowhere is that truer than Brainport.

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