EUROPE PRIVATE EQUITY special paper EUROPEANEUROPEAN TECHNOLOGYTECHNOLOGY SUCCESSSUCCESS STORIESSTORIES Sponsored by EUROPEAN TECHNOLOGY SUCCESS STORIES October 1999 Sponsored by EUROPEAN TECHNOLOGY SUCCESS STORIES 1 CONTENTS Page FOREWORD 5 SPONSOR’S NOTE 7 BROKAT INFOSYSTEMS AG 9 CADCENTRE GROUP PLC 11 CHIROSCIENCE 13 COMPEX N.V. 15 DELTRON ELECTRONICS LTD 17 DR SOLOMON’S GROUP PLC 19 ELECTRO OPTICAL SYSTEMS GMBH (EOS) 21 FLOMERICS GROUP PLC 23 FLASHNET 25 GENSET S.A. 27 INNOGENETICS N.V. 29 INNOMAT OY 31 INTERSHOP COMMUNICATIONS AG 33 LERNOUT AND HAUSPIE N.V. 37 LEXIQUEST 39 MEDI-CULT A/S 41 MICRONAS SEMICONDUCTOR HOLDING AG 43 MOBILCOM AG 45 NEUROTECH S.A. 49 OXFORD MOLECULAR GROUP PLC 51 PEPTIDE THERAPEUTICS GROUP PLC 53 PNA DIAGNOSTICS A/S 55 PPL THERAPEUTICS PLC 57 PPU MACONOMY A/S 59 QIAGEN N.V. 61 RHEIN BIOTECH 63 SCM MICROSYSTEMS, INC. 65 SEAGULL HOLDING B.V. 67 S.O.I.TEC SILICON ON INSULATOR TECHNOLOGIES 69 TAKEFIVE SOFTWARE GMBH 71 UNIPALM (UUNET PIPEX) 73 UNITRONICS COMUNICACIONES S.A. 75 VISION IQ 77 VOCALIS LIMITED 79 XEIKON N.V. 81 XPEDITE SYSTEMS INC. 83 EUROPEAN TECHNOLOGY SUCCESS STORIES 3 FOREWORD This is the second EVCA Special Paper on Technology Success Stories. Although we often look for models elsewhere, it is useful to remember that Europe produces numer- ous examples of entrepreneurial success. Such successful companies are essential to Europe’s dynamism. Often started from scratch, they have turned into generators of wealth and employment and will hopefully continue to develop further in the coming years. This paper does not aim to produce an exhaustive list of "successful" companies. Indeed, the ques- tion arises as to how one defines success: Return to investors? Job creation? Capacity to bring an original idea to life? Progress in a certain field? Establishment of a leadership position? All of the examples presented hereafter are success stories in at least one and often in many ways. All of the companies profiled in this Special Paper have been venture backed. Without private equity and venture capital and the support of venture capitalists, which in most cases goes far beyond pure financial support, many of these success stories would have developed much more slowly or might not even have happened at all. The European Private Equity and Venture Capital Association (EVCA) believes that much remains to be done to fully develop Europe’s entrepreneurial potential. Policy makers should facilitate the creation of an entrepreneurial environment in numerous ways: • More entrepreneurial-related education • Harmonisation of registration of intellectual property and licensing rights • More flexible labour and entrepreneurship environments (for instance, less bureaucracy for company formation, adapted bankruptcy laws,…) • Favourable treatment of stock options for those who choose to work in smaller, non-listed companies The European private equity and venture capital industry has demonstrated its capacity to foster the emergence of European technology success stories and will continue to support many more such successes in the years to come. We would like to thank the members of EVCA’s High-Tech Committee who have given their valuable input to this project under the leadership of Erkki Kariola (SFK) and Jim Martin (3i). We would also like to thank Marie Helsmoortel who conducted this project on behalf of EVCA. Last, but certainly not least, we would like to address our special thanks to all the entrepreneurs and fund managers who have taken the time to share their stories with us. October 1999 Emile van der Burg Serge Raicher EVCA Chairman EVCA Secretary General EUROPEAN TECHNOLOGY SUCCESS STORIES FOREWORD 5 SPONSOR’S NOTE LGT Capital Management is pleased to be the Several factors have influenced LGT’s decision sponsor of this European Technology Success to dedicate substantial resources to private Stories paper. LGT Capital Management serves equity investments in Europe, particularly: as a family office investor on behalf of the Princely Family of Liechtenstein, clients of LGT 1. Europe will play a leading role in the rapid Bank in Liechtenstein and selected third par- development of global technology markets ties. Currently over US$1.2 billion is invested in 2. European governments’ growing recogni- alternative assets on a worldwide basis and is tion that a vibrant and successful private managed by a dedicated team of alternative equity market is a catalyst to economic (private equity and hedge fund) investment pro- growth and leadership fessionals. 3. A new wave of young talent and entrepre- neurs looking to access capital in Europe LGT Capital Management is one of Europe’s 4. Corporate restructuring has only just begun leading private equity investors and fund-of- and will set free new market forces and fund managers. The investments are primarily opportunities made for the portfolio of the Princely Family as 5. New financing and exit routes such as the well as for Castle Private Equity, a Swiss invest- Neuer Markt, EASDAQ and others will fur- ment company whose shares are traded in ther help to establish venture capital and pri- Swiss francs on the Zurich stock exchange and vate equity as a more traditional asset class. in US$ on the Luxemburg stock exchange. LGT Capital Management, as a leading Castle Private Equity has committed over provider of capital and know-how, believes US$500 million to leading private equity funds strongly in the future of European private equity located mainly in the US and Europe. Castle and is dedicated to playing a leading role as an provides institutional and private investors with active partner. access to the asset class, which was previous- ly hampered by high minimum investment requirements, difficult access to top-performing partnerships, lack of liquidity and long lock-up periods. LGT Capital Management is also active in the acquisition of secondary positions in existing Dr. Roberto Paganoni partnerships and has a reputation as an active LGT Capital Management co-investor able to source transactions in Herrengasse 12 Continental Europe for selected partnerships FL- 9490 Vaduz thanks to its well-established network. The co-investment program is complemented by a Tel: +423 235 25 25 direct investment pool on behalf of the Princely Fax: +423 235 25 00 Family. EUROPEAN TECHNOLOGY SUCCESS STORIES SPONSOR’S NOTE 7 BROKAT INFOSYSTEMS AG Business: Software for Internet business and commerce Company established: 1994 Venture backers: Technologieholding, Vertex, TBG Website: www.brokat.de rokat was founded in Böblingen (Stuttgart) banking over videotext. AOL Bertelsmann's Bin September 1994 by five partners that choice of Twister in 1996 for its AOL Banking decided to ride the Internet wave by developing System was a major breakthrough for Brokat. A and marketing software enabling Internet busi- second major breakthrough was the launch, by ness and commerce. Deutsche Bank's Bank 24, of the world's first highly secure Java Internet banking solution Twister is the core Brokat product on which all based on Twister. other solutions are based. It is a platform offer- ing a highly modern, proven applications tech- Very quickly, Brokat decided to expand interna- nology. Twister allows companies to offer cus- tionally since they saw that a global presence tomers integrated, secure and simple electron- would be essential to secure future market ic services using a variety of channels, including share. The variety of retail banking systems in the Internet, videotext systems and mobile tele- Europe required an integrated product. The phony. Twister provides users with a highly need to address this requirement gave Twister secure, scaleable and robust platform on which and Brokat a head start. If you are trading they can build integrated but distinct electronic stocks on the Internet or buying theatre tickets distributions systems. Brokat thus provides the using a personal code entered in a mobile basis for an electronic front office. phone, there is a very good chance, particular- ly in Europe, that you are using software devel- Many services today are produced within an IT oped by Brokat. Today, over 2000 companies infrastructure and then distributed traditionally, worldwide successfully use Brokat solutions. that is non-electronically. The Web allows the production and distribution of a whole variety of When Brokat was established in 1994, the services that are conceivable only electronically founders came to the conclusion that venture at a lower cost, in less time and at a better capital was not readily available in Germany quality. Brokat's vision is to establish Twister as and decided to fund the business through the standard in this new category of "e-services existing software development and consulting platforms" and to make sure that services are contracts. That was more difficult, but the final not only produced but also delivered electroni- result is that the founders and their family still cally. When America Online (AOL) came to hold more than 50% of the company. However, Europe, they found that in order to compete at the end of 1996, Technologieholding took a with the proprietary videotext systems, they major stake in the company; Vertex and TBG needed more than their usual "edutainment" invested a year later. All three firms are entitled offering. In essence, they needed banking to a seat on the company's supervisory board, because millions of users were doing electronic which is chaired by Falk Strascheg of EUROPEAN TECHNOLOGY SUCCESS STORIES BROKAT INFOSYSTEMS AG 9 Technologieholding. Just before the September Atlanta, Georgia to provide software to meet 1998 initial public offering, Technologieholding, the needs of the North American financial ser- TBG and Vertex held 19.7%, 5.5% and 8.2% vices community. It will concentrate on the respectively of Brokat's capital, for a total of development, marketing and servicing of finan- 33.4%. The remaining shares are held by the cial services software for full service corporate founders and their families.