Daan De Wever | Destiny

Daan and Samuel De Wever were just shy of thirty when they founded their own telecommunications company, called Destiny, in 2008. Destiny provides telecommunications services and cloud solutions to the business world, to small and large companies. The De Wever brothers have plenty of ambition and appetite. Being a challenger for the big players on the Belgian market? Why not? Gladly even. Rolling out a European strategy in the long term? Most certainly. “But you need to get other financial partners on board in every growth phase.”

Destiny is celebrating its tenth anniversary. Where are you now?

Daan De Wever: I was just 28 when I founded this company with my brother Samuel (22). We were really young but we were ready to conquer the market, like real entrepreneurs. Our initial plan was to be a small but ambitious challenger for the big boys on the Belgian market, like Proximus or Telenet. I think we’ve already succeeded quite well in our endeavour, among others because of our recent acquisitions, including three in Belgium. We grew very fast from the outset. Our headquarters are in Zaventem but we have already opened two offices in the Netherlands (one in Heerlen and one in Amsterdam). But as you can guess, fast growth means you need help; in other words, we needed capital.

How did you get through the first capital raising round?

Daan De Wever: In 2009, one year after we founded the company, it was obvious that our own start-up capital of a few hundred thousand euros was no longer sufficient. So we went in search of partners, hoping to raise approximately 1 million euros of seed capital. At the time, two investment funds (ING, Sherpa Fund) and two business angels decided to invest in us. In 2015, the time had come for the next step, which is why we joined forces with a Dutch fund, called Mentha Capital, which is still on board.

How do you look back on that first capital round today?

Daan De Wever: A company needs different partners in every phase of its growth. The initial investors no longer were the right partners to support our growth and our ambitions. Overall, I think it was a positive experience. But there are certain things I would do differently, with what I know now. I would definitely “give away” less of the company. The initial investors got a lot of shares for relatively little money. Of course, they bear part of the risk, and I understand that, but still. Let’s put it this way: their contribution was sufficient for the first phase of our growth, but that’s all there was to it. What I take away from it is that you need to do everything yourself as an entrepreneur. Financial backers are also interested in the bottom line, in their profit, even though they promise you the world on a plate. So you need to be realistic. And young entrepreneurs need to realise this. Anyway, in 2015 the time had come for the next step, to achieve our ambition.

How difficult was it to find the right private equity partner who wanted to invest in the project?

Daan De Wever: To be honest, it was quite easy. There was a lot of interest because Destiny continued to grow. We needed a financial partner who had the clout to help us with our internationalisation strategy. Ultimately we decided to go with a Dutch fund, called Mentha Capital. We immediately realised that we would be expanding our operations to the Dutch market. With Mentha’s support, we made four acquisitions in the past few years, three in Belgium and one in the Netherlands. Thanks to Mentha’s financing, we are growing faster than ever. When they came on board, Destiny had a turnover of 15 million euros and 2 million euros EBIDA, which has since increased to 40 million and 8 million respectively. We would never have grown this fast without private equity.

Every growth phase requires different partners

What is Mentha’s greatest added value?

Daan De Wever: Two things stand out. One: they bring a lot of insight and competence to the table, in every phase and especially for every investment. And this goes quite far, believe me. Which makes you, the entrepreneur, feel like they have your back. Two: private equity is like a good marriage. You need a good match. And that certainly is the case with Edo Pfennings, the partner at Mentha Capital. I like to call him my perfect sounding board and it is a well-known fact that every CEO needs someone to touch base and check ideas with.

Which formal agreements did you make with the private equity player?

Daan De Wever: We listed everything, including a consensus on the strategy. We soon agreed that expanding our operation to the Netherlands was a logical next step as part of our international ambitions. And also: we wanted to continue to be independent. A buyout is not an option for the immediate future. We have a lot of leeway on the operational level. They don’t force us into acquisitions or potential targets. We are free to appoint our own board. One thing that is important is a possible exit. That is something I think you need to talk about, because sooner or later you’ll need a new partner, for your new ambitions. I prefer a long-term strategy when I think of our company. To enter the European market, and expand our operations beyond Belgium and the Netherlands is our goal. Whereas a private equity player tends to look at the short term. You need to be realistic. In a few years, you’ll turn another page, and start a new chapter with a different financial partner. In the longer term, we hope to have a company with a turnover of roughly 500 million euros. Which means we’ll need to seek fresh capital to the tune of 100 million euros.

Do you think there’ll be any interest and from whom?

Daan De Wever: There are players of this calibre in Flanders, like the GIMV among others. But we may also choose to partner with an Anglo-Saxon or another Dutch fund. We’ll see. In any event, it has to be someone that believes in our story of growth. Something tells me there’ll be a lot of interest again.

Private Equity/BVA
Author: Karel Cambien