European Success Stories

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European Technology Success Stories

Special PaperSpecial PaperAn EVCA High-Tech Committee Paper

The European Private Equity and Venture Capital Association (EVCA) exists to represent the European private equity sector. With over 980 members throughout Europe, EVCA's many roles include providing information services for members, creating networking opportunities, acting as a lobbying and campaigning organisation and working to promote the asset class both within Europe and throughout the world. EVCA's activities cover the whole range of private equity; venture capital, from seed and start-up to development capital; buyouts and buyins, and the flotation of private equity-backed companies.

Technology Success StoriesThis paper aims to present a selection of venture-backed European technology companies and to explain not only their success, but the involvement of the venture capitalist in helping the company grow to where it is today.

September 2002

ForewordForewordEVCA is delighted to be publishing this third update to its regular document, European Technology Success Stories. With the recent turbulence experienced by the technology markets, it is easy to forget that the best companies have continued to grow. While not immune to the effects of difficult markets, well-managed technology businesses have shown that they can survive and in many cases prosper in times of adversity. The aim of Technology Success Stories is to feature a selection of venture-backed companies and illustrate the role that venture capital investment played in their development. The company profiles are based on interviews with both the entrepreneurs and the venture capitalist(s) involved in each business. Reading the company profiles, it is striking how often entrepreneurs consider the primary contribution of the venture capital investors to be other than financial. Assistance with recruitment, financial planning, strategic partnering, and complex negotiations, are all mentioned as important contributions made by venture capitalists. The European companies profiled in this publication operate within a broad range of industries, illustrate a breadth of entrepreneurial characteristics and management styles and cover a pan-European geographic spread. These businesses are a testimony to the breadth of opportunity available to European entrepreneurs today. Entrepreneurs are drivers of European innovation, of job creation and of economic development. Entrepreneurship should be advocated and supported, not only by the venture capital community, but by the entire business world. While Europe continues to develop the service infrastructure on which to build entrepreneurial companies, there remains much to be done: The bureaucracy associated with creating and managing a

small business needs to be reduced The tax treatment of stock options and capital gains will

require continued reform so that adequate incentives exist for entrepreneurs and their investors Labour laws need to take into account the needs and limitations of small businesses The strong record of European technology companies should help us make progress on these and other issues. We would like to thank the members of the EVCAs High-Tech committee who were involved in this project; Jean-Bernard Schmidt, Sofinnova Partners and Andy Allars, Prelude Technology Investments who were involved in the review of the company profiles; and Callie Leamy, a consultant to the EVCA, who carried out the research and writing of this publication.

Max Burger-Calderon, EVCA Chairman

Michael Elias, Chairman EVCA High-Tech Committee

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ContentsContentsForeword 2 aBAXX TECHNOLOGY AG ACTELION PHARMACEUTICALS LTD DARTFISH DETECTION TECHNOLOGY OY GENMAB A/S GIGA A/S IMMUNO-DESIGNED MOLECULES (IDM) SA LASERBIT MORPHOCHEM AG NO WIRES NEEDED NOVUSPHARMA S.P.A TISCALI S.P.A 5 7 9 11 13 15 17 19 21 23 25 27

Updated Stories DR SOLOMONS GROUP PLC FLOMERICS GROUP PLC INNOGENETICS NV MACONOMY AS SCM MICROSYSTEMS INC. SEAGULL HOLDING NV SOITEC

29 31 33 35 37 39 41 43

Acknowledgements

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abaXX Technology AGabaXX Technology AG Activity: software solutions for on-line e-CRM and

process portals Country: Germany Venture capital backers: 3i Group Plc, Accenture, Earlybird, General Atlantic Partners Transaction summary: a total of 38.5 million raised in three financing rounds

The companys technology has won it several awards and nominations. Most recently it won the CyberOne award for its innovative solutions and was nominated a finalist in the Deutscher Grnderpreis (annual competition for entrepreneurs in Germany) on the basis of its extraordinary growth and potential. Tornado Insider has also named the company twice - in 2001 and again in 2002 - as one of the 100 hottest high-tech companies in Europe. abaXXs products have been well received since its inception. Within nine months of its launch the company had already recorded sales of 1.9 million, and this figure soared to 15 million for 2000 before doubling again in 2001. Within two years of establishing the company, abaXXs management was already celebrating its first profitable quarter in Q2 2001. Employee numbers have jumped as well - from the three founders in 1999 to 150 in 2002. By the height of the dot.com boom in 2000, the company already had more than 200 employees spread out in offices throughout Germany and Europe.

abaXX Technology AG was founded in March 1999 by Dr. Jrgen Enders, Thorsten Schfer and Dirk Matzat. All three were managers at the one-time Neuer Markt software star, Brokat, before they terminated their employment contracts to start abaXX. The company develops components for online relationship management software applications to be used in e-CRM and process portals. The applications are built to customer specifications by abaXX, working in close co-operation with leading technology and consulting companies such as Accenture, BEAsystems, IBM and SUN Microsystems. Since 2001, abaXX has partnered with Siebel Systems Inc, the worlds leading provider of e-business applications software, to facilitate the integration of abaXXs e-business suite into Siebels e-business applications.

The Venture Capital Investment

abaXXs initial 2.5 million in funding came from 3i, Earlybird and the German federal government through its TechnologieBeteiligungsgesellschaft (TBG). According to Siegele, 3i invested Together with the management, abaXXs components allow for the seed capital because the companys the venture capital investors completely reviewed development of fully customised vision was compelling and the 3i abaXXs business plan. and integrated functionality. Today specialists liked the dynamic and growth potential of that particular Java 2 EE software components are e-commerce sector. The second round of financing came in used widely, says Christian Siegele of 3i, explaining abaXXs innovative edge. But when abaXX first started, use of these 2000, with the lead investor, General Atlantic, and Accenture injecting 18 million. components was completely new. And abaXX boasts the richest and largest number of Java 2 EE software components. Since its investment in the company, General Atlantic Partners In addition to components, abaXX also provides clients with has helped recruit former head of Oracle Europe Loek van training, as well as professional consulting services to help den Boog as abaXXs chairman of the board. Offering valuable them develop successful, highly-targeted solutions. assistance to the young management team, Mr van den Boog provides consistent input on the companys sales strategy and Many of abaXXs customers are leaders in the banking sector, overall direction. General Atlantic Partners has aided abaXXs such as Crdit Suisse, Dekka and Dresdner Bank, but abaXXs growth in a variety of other ways as well, including assisting components can be used in applications that serve a wide variety of other industries as well. abaXXs client list spans abaXX as it moved into new markets in Europe and the US. many sectors and includes BertelsmannSpringer, Logis Market, which is Spains largest manufacturer of storage products, and tech2B, a direct provider of computers.

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The investors intended to exit the company through an IPO scheduled for December 2000, but due to market conditions abaXX was forced to pull the offering just weeks before its planned launch. At the news of the cancelled IPO the venture capital backers rallied around abaXX, and General Atlantic Partners drove the third financing round in the final weeks of December 2000 in order to ensure that the company had enough funds to keep it going. In just three weeks from the announcement of the pulled IPO, abaXX received another 18 million from its existing investors. abaXXs management were very encouraged by our confidence in them, shown by the amount of capital we raised and the speed with which it was done, recalls Siegele. Since then no additional money has been needed by the company. The venture capital companies also helped abaXXs management team develop a restructuring plan following the pulled IPO. In 2000, abaXX was growing tremendously. Although it had a clear plan for revenues, it lacked one for profits. Together with the management, the venture capital investors completely reviewed abaXXs business plan, relates Siegele. The goal of the new plan was for the company to take measures enabling it to become profitable within 6 months and to cut costs. The implementation of the plan was successful, and, as mentioned above, abaXX became profitable for the first time in the second quarter of 2001 - little over a year after the implementation of the new plan. This was due largely to managements strong leadership and their execution of the plan, adds Siegele. Cost-cutting measures included the closure