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TD Shepherd provides a unique blend of corporate finance expertise, hands-on experience with high-tech, high-potential companies, and a rich network of Dutch, European, Asian and US venture funds.
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➔ Mergers & Acquisitions Insights
Startups and Finances – Challenging Your (part-time) CFO
As the recent demise of the Silicon Valley Bank is now illustrating, startups need to apply common sense to their finances. Where most startups Management Teams (MT) are fully focused on getting the money (raising a round) to fund their growth strategy, their focus turns to execution once the money is in the bank. Specifically, early-stage startups often omit further attention to the financial management of the company. If a (part-time) CFO gets added to the team, it is more to ensure proper monthly, quarterly, and yearly accounting procedures and to have an eye on the cash-0 point. As such, the CFO is often regarded as a somewhat isolated function within the Management Team and not challenged to the same degree as, e.g., the VP of Product Development. Challenging the CFO should go much further than just ensuring proper financial procedures according to GAAP and covering the yearly accounts. It must include important and well-maintained packages such as a financial risk analysis (including currency exchange risks), an up-to-date plan for managing the cash-0 point of the company, and a current analysis of the funding climate. The CFO, as a key member of the MT, must be challenged continuously to ensure the financial agility of the startup. Failing to master a specific technological challenge is one thing, failing to manage your finances properly is a very different thing.
EDA Conference 2022
TD Shepherd attended the 2022 annual EDA conference (EDA as in European Defence Agency), which took place on December 8th in Brussels. The conference featured several panel discussions as well as regular keynote speeches. The most important takeaways from the conference were:
- the €70B increase in defence related investments until 2025,
- the recognition of the importance of dual-use technology and its missing support in the current innovation landscape,
- the need for easing procurement rules for the (European) Defence departments,
- and last but not least, the need to be able to rapidly scale production when circumstances require this (industrialization of the supply chain).
The latter includes the drive to secure (synonymous with “localization”) that same supply chain.
Hardtech2022 Key Takeaways
TD Shepherd was present at VentureLAB’s Hardtech conference, last week in Markham/Toronto, Ontario, Canada. This was the second time VentureLAB organized this event which is focused on DeepTech- in general and more specifically semiconductor startups in Canada. The setup of the event was build around a pre-selection of 8 deeptech startups which were present with a table-top as well as with a pitch. Startups ranged from photonics to AI processors, from AI-based quality control to smart building technology. Their stage ranged from early seed to Series A and Series B. One of the noteworthy aspects of the early stage companies was that their seed rounds were all targeting significant amounts, usually in excess of US$2M and in general more in the range of US$4-6M.
HardTech was in its second year. Despite its early stage, the event has already gathered some interesting corporates (such as Intel) as well as regular investors. It is clear that the HardTech event is addressing a critical void in the Canadian startup eco-system. With Silicon Valley in close proximity Canada will have to make an all-out effort to ensure its talent will remain “local” and will not wander out to where the “easier” money is.
TD Shepherd & Co. operated as the sole financial advisor to the shareholders of ItoM Holding B.V. in its acquisition by Robert Bosch GmbH
On Thursday, September 22nd, Robert Bosch GmbH and ItoM Holding B.V. signed an agreement covering the acquisition of 100% of the shares of ItoM Services by Robert Bosch GmbH.
ItoM Holding B.V. was founded in 1998 by pioneers in the semiconductor RF and analogue/mixed-signal circuitry. Since its creation, the ItoM founding team has successfully created a market leader in semiconductor design services with an unmatched IP- and patent portfolio and a global authority in the field of RF and Analogue/Mixed-Signal (AMS) circuits.
TD Shepherd & Co supported the shareholders of ItoM Holding B.V. and the Management Team of ItoM Services along the full acquisition path including the restructuring.
Further information on the transaction can be found here:
Conference Collision 2022
We had the opportunity to attend Collision Conference in Toronto this year, and we wanted to share some key takeaways with you. Collision is North America's fastest-growing tech conference which was held from June 20th to June 23rd, 2022, in the city of Toronto, Canada. The event included tech experts, some of the world’s best speakers and market leaders.
Across the board, despite a significant slowdown in funding, there is an incredible amount of innovation happening in the tech sector. DeepTech fields such as AI, AR/VR and autonomous vehicles continue to move forward pushed by new and existing startups. Corporate funds are replacing part of the slack in VC funding.
Some of the key takeaways from Collision were:
1. The Tech sector has incredible innovations coming down the pipeline, especially in the field of AI.
2. Although hardware companies were underrepresented, the ones present showed great promise and an array of future applications.
3. From an investment side, although many investors are aware of a major slowdown in funding, this is the best time to find the future winners in the DeepTech arena.
4. Building on the last point, this is a great time for early-stage investment, as many fantastic companies will emerge out of the current struggle and competition.
HTVD22 Key Takeaways
TD Shepherd has participated as a partner at the HTVD 2022 annual event. This year the event took place from Oct 10th through Oct 11th in Dresden, Germany. 40 DeepTech Startups have participated in HTVD22 and presenting their pitches. Participants represented various fields of engineering and mechanical engineering, micro- and nanotechnology, information and communication technology, environmental and energy technology, materials science, life sciences, and others.
Some of the key takeaways from HTVD22 were:
1. A new credit instrument for growth companies with a minimum ticket size of EURO 5M (the minimum pool size), allowing for flexible “on-demand” dipping;
2. An increased interest by Corporates to provide investment as well as loans to startups operating in their eco-system and important to the innovation cycle in their part of the industry; most of this through informal off-balance sheet funding mechanisms;
3. A continued drive of innovation in the OLED sector; a new badge of startups focusing on next-generation OLED materials and stacks;
4. Two of the teams supported by TD Shepherd were also present at the HTVD; Phonemics presented its Voice Activity Detection (VAD) and cryptographic IP lines in combination with supporting design services for customization; Heteromerge discussed their multi-material solutions for 3D micro-printing with various investors and successfully networked with the community.
Market Dynamics of M&A in the First Quarter of 2022
The global market of mergers and acquisitions (M&A) in the first quarter of 2022 decreased by 29% compared to the same period in 2021, writes Barron's, citing Dealogic data.
In January - March of this year, 6,436 M&A transactions were announced worldwide, compared to 9,022 at the beginning of last year. The total value of transactions for the same time fell from $ 1.4 trillion to $ 989.4 billion. A decline in both quantitative and monetary terms was observed in the U.S.: In the 1st quarter the number of deals fell from 2384 to 1958, and their total value - from $ 685.4 billion to $ 503.5 billion.
The number of mergers through SPACs, which last year accounted for about 20% of M&A deals in the U.S., dropped markedly. From the beginning of the year to the end of March, only 16 such deals were recorded. Their total value amounted to $ 7.6 billion. This is 78% less than the same period last year - 74 deals through SPAC amounting to $ 173.2 billion.
"M&A activity will slow slightly compared with last year as volatility in financial markets introduces an element of uncertainty," said Jonathan Rauner, vice chairman of Nomura Japan. He added that with rising interest rates and volatility in the stock market, it is becoming increasingly difficult to value businesses and make public companies private.
Semiconductors Sales Increase 2022
According to the Semiconductor Industry Association, semiconductor sales worldwide reached $151.7 billion in the first quarter of 2022, an increase of 23.0% over the first quarter of 2021. Statistics on semiconductor sales are compiled by the World Semiconductor Trade Statistics (WSTS) organization.
“Global semiconductor sales remained strong during the first quarter of 2022, increasing across all major regional markets and product categories compared to the first quarter of last year” said John Neuffer, SIA president and CEO. “For the month of March, sales into the Americas continued to lead all regional markets, increasing by 40.1% year-to-year.”
Apart from the increase in sales in the Americas, sales were also up compared to March 2021 in Europe (25.7%), Japan (20.4%), Asia Pacific / All Others (17.9%), and China (17.3%). China, Japan, Asia Pacific, and Europe saw month-over-month increases, while sales in the Americas fell slightly (-1.5%).
Arioso Systems GmbH, 2022
The TD Shepherd team congratulates Arioso Systems GmbH on their successful acquisition by Bosch Sensortec. Arioso’s all-silicon MEMS-based uSpeaker technology enables at-cost volume manufacturing while reducing the size of the speaker as well as the power consumption. These are essential characteristics for the next step of the “internet of voice”: true wireless in-ear microspeakers.