What's Nf.wS Issue 11 December 1997 organization 19 that we are not a philanthropic cause; this a pure, profit-making capitalist nterprise.' Bert Steketee, a former Rabobanker who is now one of Gilde's five executive directors, expands on this theme: 'It is important to understand that we run much greater risks than would be considered acceptable in a strictly banking context. The companies in which we invest must have extremely good potential to justify these risks. The key criteria in our investment selection is the potential for very high returns, which means that, in nine out of ten cases, we have to decline an investment opportunity.' CRITERIA AT ODDS Because the criteria that drive the banker (or lender) and the venture capitalist (or equity provider) are so often at odds, Gilde's posit- ion of independence outside the Rabobank ^roup is seen as prerequisite to the mainten- ance of its high level of growth. Having made these points, however, both Steketee and van Driel point out that four out of the seven deals finalized by Gilde Participaties since last year have been directly linked to middle-market customers of Rabobank. A GLOSSARY OF VENTURE CAPITAL TERMS Venture capital and banking call for a related but very different mentality in terms of entrepreneurial outlook, profit expectations, and a willingness (and ability) to assume high levels of risk. Sometimes, similar terms are used to describe somewhat different things. Here are some of the 'buzzwords'that apply in the world of venture capital. Venture Capital hare capital that is provided to privately-owned or unlisted companies with the aim of realizing capital gains either by contributing to their growth or increase in value. More restrictively.the term is also used to describe expansion growth capital (as distinguished from capital for buy- outs/buy-ins). Buy-Out Acquisition of a privately-held or unlisted company. MBO Acquisition of a company or a corporate division by its existing management; thus,a 'management buy-out.' Due Diligence The sometimes exhaustive process of analyzing the prospects and financial position of a potential investment candidate. Upside Potential The opportunity for capital appreciation through an application of financial resources and management skills in order to enhance strategies, improve asset utilization,orexpand a company's business. Minority Position Venture investments of less than 5 percent of a company's share capital. Portfolio The companies backed by a venture capital firm orfund. Follow-up financing Venture capitalists rarely expect that their first injection of funds will fully meet a company's needs. A second or even third round of funding will almost certainly be needed later as the business grows or if unforeseen problems should arise. A syndication strategy is often preferred at this stage. Syndication Investments involving a group (or syndicate) of capital providers. Exit The means by which capital gains on investments are actually realized at the end of the investment period.They include a public share issue or corporate acquisition. IPO Initial Public Offeringithe process whereby the shares of a company are listed on an official stock exchange. EUROPEAN WINDOW Gilde's cross-border investment perspective provides the raison d'être for its fourth existing fund called Strategie Situations, which is capitalized at NLG 300 million. This fund is designed to invest in other funds and venture capital firms, and in the process to cement cross-border relationships with like-minded capitalists and institutional investors in markets like the US. It has been noted that many potential American Iinvestors lack entrée and a window into the |uropean marketplace. They need local experts to inspire their EU investments and manage any resulting equity stakes. Hence, this fund could be a potential candidate for substantial expansion in the foreseeable future. Finally, for the past half-year, Gilde has been carefully contemplating the possibility of setting up either a Food Agri or a Health Care investment fund. As it happens, circumstances decided the final outcome. 'A few opportunities unexpectedly arose in the F&A area,' explains van Driel. 'These opportunities, combined with Rabobank's existing forte in this field, triggered us into a decision to launch the Food initiative.' FOOD FUND The Gilde Food Fund, managed by a dedicated team within Gilde Investments, and capitalized at an estimated NLG 150 million, will be set up this year and will focus on the technology component of the food cycle. The target group includes European and US companies that develop techniques or specific equipment for food processing, water purification, and similar tech-driven capabilities. A related Regional Fund will be set up at a somewhat later date. It will be incorporated by Gilde, and financed by other (potentially Asian) participants. Its focus will be on high- potential niche markets that add value to the food chain - for instance companies that use food processing technology, companies focused on quality control and quality labeling of foods, and so forth. 'The Food and Agri industry is on the eve of enormous changes, marked by a worldwide process of rationalization and a radical increase in efficiency,' remarks Van Driel. 'We believe that each of the world's major regions - having their own characteristics - will become part of this process of change. In order to capture some of the resulting business, we will gradually set up funds in Asia, South America, South Africa, possibly North America, and Eastern Europe.' DRIVING FORWARD The decision to drive forward with these F&A-related funds implies that a Health Care initiative will have to be placed on the back burner. Given the uncertainties associated with rapid cycles of technologically-driven change, Van Driel and Steketee are both adamant to make the point that Gilde must husband its energies at this important phase in its growth. 'Picking up Health Care at this stage would require such a dilution of our attention that it would be irresponsible,' Steketee points out. 'There is only so much that we can do at any given time; like Rabobank, we realize that in order to maintain a high level of expansion, one needs to concentrate.'

Rabobank Bronnenarchief

blad 'What's news' (EN) | 1997 | | pagina 19