CITD Seminar : Doing Business in Europe Welcome

1. CITD Seminar : Doing Business in EuropeWelcome San Francisco Sept 21st 2004 Jacques Putzeys jputzeys@n2euro.com

2. Discussion points Europe Funding trends Investor mindset Challenges Who we are

3. European market Initially, the EU1 consisted of just six countries: Belgium, Germany, France, Italy, Luxembourg and the Netherlands. Denmark, Ireland and the United Kingdom joined in 1973, Greece in 1981, Spain and Portugal in 1986, Austria, Finland and Sweden in 1995. In 2004 the biggest ever enlargement takes place with 10 new countries joining These new countries are Estonia, Latvia, Lithuania, Poland, Czech Republic, Hungary, Slovakia, Slovenia Cyprus and Malta. This new EU-25 market counts more than 425 millions inhabitants and his 2001 GDP is reaching an astonishing $10.000 billion. Furthermore the 10 new countries (P10) are fast growing markets with on average a 3% GDP annual growth.

4. Europe US companies also prefer to expand to Europe in first instance because of: • The short travel distances between EU countries • The vast majority of EU countries are in the same time zone • Good connectivity between capitals and economic centers • Tax incentives from local, regional, national or European authorities Most of the time US companies consider Europe as being the natural gateway to the Middle East and Africa.

5. Risks Some of the common risk factors noted in regulatory filings: Cultural differences; Longer payment cycles; Laws favoring local competitors; Credit risk and higher levels of payment fraud; Legal and regulatory restrictions; Currency exchange rate fluctuations; Higher costs; Diverting management attention.

6. European economic freedom Some European countries ranking in world’s most economically free nations (1): RankingCountry 3 USA 3 Switzerland 3 UK 9 Ireland 11 Estonia 18 Belgium 22 Germany 22 Hungary 36 Latvia 41 Czech Rep 44 France (1) Source : Fraser Institute, July 2004

7. Europe, local markets Local markets : • are still dominated by national incumbents • have their own tax and VAT regulations • have different regulations even if the European Commission tends to impose harmony in the regulation and standardization of the market As result of these particular situations, many US companies have wasted enormous amounts of time and money by trying to enter the Single European market.

8. European Commission Role Recent Microsoft ruling Focus on : Technology transfer Funding of technology companies Harmonization

9. Funding trends Since 2002, the Biotechnology & Healthcare category has been the dominant leader in receiving venture capital investment in Europe (2002: 30% of total; 2003: 39% and 2004 to date: 36%). Equally consistently, for the last two years Software has followed in a secure second place, trailed by Communications in third place, with Computers & Electronics coming in fourth.

10. Funding trends 2004 VC investments to-date : Software 18% Computers & Electronics 16% Communications 23% Bio and Healthcare 36% Average weekly investment : € 50 M

11. Funding trends – ct’d 2004 : the funding of Communications companies is catching up with Software – it is now only lagging 3% behind. The wireless applications sector received by far the biggest proportion of the funding in the category with 50.2% of all investment secured to date. This is followed by wireless hardware at 25% and fixed communications at 12.3%. With 41 companies netting €191 million, Q1 2004 was the largest quarter for Communications funding since Q4 2002.).

12. Venture capital activity The private-equity firms that help seed new companies have plenty of capital available, but they’re just not seeing a tremendous amount of good companies to invest in. The feeling is that there’s somewhere between $60 and $110 billion of non-invested venture capital that will at some point be looking for a home. Venture capitalists are concentrating on over-due diligence and look for product that is deployed if possible, revenues if possible, good brand-name customers if possible, and outstanding management teams and track record

13. Valuations As growth in the U.S. inevitably slows, companies increasingly have to expand internationally to support their valuations. Each company, however, will face unique hurdlesand needs to be innovative as to how and at what cost.

14. Challenges TIME ZONES CUSTOMER TRACTION BUILDING TEAMS AND PARTNERS

15. Challenges How to preserve valuation and net equity position Traditional way to expand into Europe : at least € 2 M If financed from net equity position : impact on valuation Liability build up

16. N2Euro concept • Europe : 425 million inhabitants in 25 countries one of the most important markets of the world economy. • Legal, economic and cultural barriers : Europe is one of the most difficult markets to penetrate. • “Thinking globally, but acting locally”, N2Euro understands this and offers you - ready-to-use and cost-effective assistance - your European company and performance-based operator - our company-in-residence services - no liability build up

17. Easy Package An Easy Package / Tool To Bring Your Funding & Capital Access Financing Needs & Corporate Structuring Sales Building The Best Sales Channels And Achieving Sales Growth Company From USA To Europe Management & Team Building A Team Of Locally Based Managers Logistics Providing Easy Logistics Company From USA To Europe An Easy Package / Tool To Bring Your

18. Doing Business in Europe Financial and other incentives for setting up a business in Europe a real life example from Europe San Francisco September 21st 2004 Freddy Nurski fnurski@n2euro.com

19. Knowledge-Regions Competition • 80 countries – 400 knowledge regions • US: • Silicon Valley, Route 128, North Carolina Research Triangle • Medical Alley, Biomed Mountains, Rolling Silicon Hills, Laser Lane, Medical Mile, Ceramics Corridor, Champaign Software Prairie, San Diego Bio-Valley • Asia: • Hong Kong, Shanghai, Kuala Lumpur, Inchon, Hsinchu, Kyoto, Bangalore • Europe • Sophia Antipoles, Oulu, Tampere, Alba Centre, Silicon Fen, Munchen, Lyon, Leiden, Tel Aviv,… • Leuven ?

20. An example : Leuven : Clusterpolicy Mechatronica E-security Feed – food - health L-SEC Leuven.Inc DSP-Valley Telematica Communicatie Life sciences Micro-elektronica Nanotechnologie

21. Definition Cluster • Clusters represent the driving force for economic development in many countries (regions). • They are concentrations of innovative, interdependent enterprises (co-competitors) , working in the same field, localized in a specific geographic area, in close proximity to centers for research & development.

22. Knowledge centres Centers of excellence K.U.Leuven 4 Research groups IMEC KULeuven IMEC Wireless & multimedia platform Pure innovative companies Mixed innovative companies Telematica-communicatie Terayon Comm. Systems Altaline Technologies X-Plane SIMAC Able QMedit Sitelcom Spacechecker Agilent Technologies Q Star Test Micro Matic Easics Telindus Reymen Data Center Ardatis Mind Linux Solutions Acunia Eyetronics Arcadiz Telecom Topcom Weidmuller Medicim Orban Microwave Products Septentrio Hypervision EMD Better Access Adelante Technologies Windriver ICOS FillFactory Delta Design Netsize Opikanoba Telraam Resonext Tomoton AnSem CDM Option International Philips Tyco Electronics Xplanation Xentec Loft33 Smash Uitgeverij Averbode

23. Eyetronics Telindus Knowledge centres B.E.S.T. Tyco Electronics Newfrom A.C.S. Belgium Option International Resonext Centers of excellence Cypress Semi ARM Eonic Systems Luciad FillFactory Assurcard Vivactiss K.U.Leuven Lab Photochemistry & Spectroscopy Lab of Solid-state Physics & Magnetism STM Tomoton ICOS Vision Systems Agilent Techn. JSR Electronics J.W.Lemmens KULeuven IMEC Micro Matic Vector International IPCOS Photovoltec Philips ITCL Xenics IMEC Sub-45nm research facility Nanotechnology Platform Design platform Septentrio Delcomp Oligosense ASM Belgium Krypton Epiq Sensor Nite Pure innovative companies Target Compiler Techn. Data4S Soltech AnSem Easics CoWare Mind Linux Solutions LMS Mixed innovative companies Micro-elektronica - nanotechnologie

24. E.S.R.I. Deckers Div Biotest Seralco Benelux Knowledge centres Dermat Thromb-X Norgine reMYND Tigenix Centers of excellence Dakocytomation RNA-TEC 4AZA Biosciences Terumo Europe Cochlear Medvision Benelux Algonomics Univ hospitals K.U.Leuven Rega Institute CEHA Lab of Exp. Genetics & Transgenese M-Elect Autocyte Europe Vivactiss PatientWeb KULeuven IVIA QMedit Custom8 PharmaDM VIB VIGOUR @Medical Techn. Conti BPC Data4S Malaise&co MXS Pure innovative companies New Standard Eng. Ortec Medicim Materialise VWR International Centocor Mixed innovative companies Life sciences

25. GC Europe Interbrew Belgium Knowledge centres Citrique Belg Proefbedrijf voor witloof Remy Industr Bodemkundige dienst België Centers of excellence Engelhard Belgium SES Europe GE Betz Sensient Flavors Centrum Toegep. Biol. K.U.Leuven/VIB Center of Microbiol & Plant Gen. Lab Molecular Cell Biology ICI-Europe Pure Global Water Techn Toxicon Europe B.R.I.S.K. KULeuven Cargill Frisk Intll Aveve Lochow-Petkus Belgium Hercules Europe K.U.Leuven 6 centers of excell. 3E Omni Scala Better3Fruit Sodiaal Benelux Tiense Suiker Quomak Pure innovative companies Intern. Aquatreat Belgium B.E.S.T. Orafti Group Kon. Belg. Inst. tot Verbetering vd Biet Barco Elbicon SST Food Machinery Mixed innovative companies Feed-food-health

26. Clusterpolicy

27. IWT : The Flemish Institute for the Promotion of Scientific and Technological Research in Industry • Flemish government institution which promotes, supports and stimulates industrial research in Flemish industry • IWT manages the funds available for promising research projects • Financial incentives • up to 50-60% of research costs • low interest loans • up to 25-35% for prototype projects • feasibility studies • Information • The applicant does not have to be Flemish, but should be established in the Flemish Region • Budget: approximately US$100 million a year 160219