Delft Circuits and YES!Funded: Matching the right startup with the right investor
Collaboration is a key ingredient in every startup-advisor relationship out there. Especially in their early days, startups need specialized advice and support in order to steer their business in the right direction. Yet, what they also need is a strong business case to start with. The startups with the strongest product, service or technology are the ones that would make it all the way. Only then, in fact, can a startup-advisor relationship really thrive.
This is exactly the case with Delft Circuits, a young innovative company providing quantum hardware solutions, and YES!Funded, a service launched by YES!Delft to support startups with their funding needs.
Bringing startups and funding together
“If you want to be investor-ready and do things properly, you need to have the right knowledge and experience,” says Daan Kuitenbrouwer. As co-founder and COO of Delft Circuits, he knows what it takes to build a high-tech company and look for ways to make it financially sustainable. “You need guidance along the way and you need to always look ahead towards your next step.”
Founded in 2017, Delft Circuits provides hardware solutions for quantum engineers and, in particular, flexible cabling for cryogenic systems. They are specifically focused on making cables that enable quantum computing in low-temperature conditions. It is a complex technology solving a complex issue for quantum engineers.
The market potential for a niche solution like this is big, but potential alone is not enough to make it a success. Knowing this, the startup reached out to YES!Funded to help them find the right financing tools and connections, and eventually leverage that market potential.
“We started YES!Funded about a year ago and what we soon found out is that startups don’t have much knowledge in how to structure their company or make it financially viable,” says Jan Geert van Hall, Investment Director at YES!Delft. “To help them, we decided to launch a program that would support startups in financial lifecycle planning and securing the right funds.”
In essence, YES!Funded enables young companies to match up with the right investors, both public and private, and helps them apply for the funds that fit them best. The program is open to YES!Delft companies as well as to startups outside of the incubator’s network. The selection process, however, is strict and the startups that do make it into the program are the ones that (1) have a very strong business case and (2) are ready to look for an investor.
“Each company we select needs to have something special,” says Jan Geert. “It needs to have market potential, but also be ready to take the next step in developing itself. When it came to choosing Delft Circuits, we were convinced from the start because what they have is world class.”
So it shouldn’t come as a surprise then that soon after they started working together, the startup was selected for a project worth 2 million euros in a grant from the European Innovation Council to further develop their solution.
The importance of choosing the right type of funding
The way to look at YES!Funded is as an independent party for startups’ funding needs. They are the ones assessing the funding needs of each startup in their program and looking for the right funding instruments for them.
“For everybody who comes in, we make an initial funding plan and advise them on what to do,” says Jan Geert. “What most companies do when they come in is to ask us to find them an investor, but in reality most of them are not ready for that step. So what we try to do is, first, help raise their knowledge and expertise, and then start working with the ones that we think are ready and in need of a specific funding structure.”
The startups that are considered ready are usually the ones that have a solid business plan, know their product-market fit and have a strong team already assembled.
Perhaps one of the key unique selling points of YES!Funded is that they look at a wide range of financing instruments in order to find the most suitable for the startups in their network. “Most consultants tend to focus on one type of financing instrument, while for us it is crucial to do blended funding,” says Daan.
Leveraging both public and private funds can eventually help strengthen a startup’s position in the market. A lot of governmental funds want to see a private investor vouch for a company before they decide whether or not to provide a subsidy, and vice versa. Many private investors want to know that a certain innovation technology or solution is backed by public funding before they assume any risk of their own.
“We see that it’s possible to leverage a lot of instruments simultaneously and that it can bring a lot of benefits, especially for a young company,” says Daan. With the recent public funding, Delft Circuits is clearly on the right path. It is only a matter of time for them to reach their full market potential.