New Dutch 'corporate venturing' fund seeks tech startups

Icos Capital, a new Dutch fund manager with industrial and government backing, is raising €15 million to €20 million to finance technology start-ups in the food, energy and waste sectors.

Dutch Technology Fund I has an unusual strategy — acting partly as a corporate venturing fund on behalf of a group of industrial companies that contribute capital in hopes of finding new technologies for their businesses. Corporate venturing is common at the world's largest multinationals, but the companies involved so far in the new Icos-managed fund "are a bit smaller, so we create a vehicle for them" to invest, said Peter van Gelderen, Icos partner, in an interview.

"Their interest is strategic. They want to see what is happening in the (technology) market," he said. Icos calls its approach a "lighthouse strategy" — with the fund acting as a beacon to attract new start-ups and technologies to the strategic investors.

Three Dutch companies are backing the fund so far: CSM, one of the world's largest providers of bakery supplies, lactic acid and sugar; Imtech, a technical-services company; and Farm Frites, a privately owned supplier of potato products.

CSM and Imvest said they are each contributing €2 million to the fund. In addition, the Dutch government's TechnoPartner initiative, promoting technology start-ups, is providing a loan of up to €4 million under a formula that gives the private investors first crack at any profits from the 10-year fund. Icos said it is raising additional capital in two stages: in a round closing Sept. 15, and in a second round closing at the end of this year. Van Gelderen said Icos is seeking additional industrial investors for the fund, including non-Dutch multionationals.

Van Gelderen said the fund already has a prospect list of 80 start-ups, of which it will probably select one or two. The aim, he said, is to commit between €100,000 and €2.5 million in each successful start-up, focusing on the seed and first two investment rounds — that is, the earliest stages of financing a new company. Target companies must be Dutch, or want to relocate to the Netherlands. He said the managers aim to look at a few hundred possible investments a year, and of those select five for investment.

Icos is a new Dutch fund management company. It was co-founded by Managing Director Nityen Lal, a former consultant and investor for AlpInvest and Deloitte; partner Fred van Efferink, an experienced private-equity specialist; and van Gelderen, a former Philips researcher and Deloitte consultant.