Investing in research and development often costs a lot of money and the results are, in many cases, not guaranteed. However, what many startups or scale-ups in the technology world fail to recognize in the beginning of their journey is that there are a lot of funding possibilities and tax optimizations for innovation to help support companies with their developments. Innovation support through grants or various tax incentives can make the investments more manageable. The various Belgian governments are aware of the huge competitive advantages and necessity of innovation and have issued a wide range of measures, both fiscal and financial. Yet, especially for SMEs, it is often a complex tangle to navigate.
Why are you the ideal partner for PropTechLab?
Innovation is more than just a buzzword. At BDO we can assist all companies ready to embark on their innovative journey with a broad range of services. Together we decide on the concept and the scope that will steer the direction of the project. Any changes along the way are carefully taken into account to fit the company’s needs. Our seasoned experts are known for their strong knowledge of tax, legal, and financial matters, and can guide you through the complex forest of subsidies, tax incentives and legal matters. We believe innovation is a marathon we can win together.
Thanks to close cooperation with our BDO colleagues around the world we can even guide international companies or companies with international ambitions in their innovations. Besides Belgium the importance of innovation has not escaped other countries either. However, given the increasingly stringent transfer pricing legislation and tax audits worldwide, it is advisable to coordinate things. You don’t give your competitor the use of your IP for free, do you?
At the same time, the responsible handling of building materials (and the planetary limits of available raw materials), offers opportunities for new business models in the construction sector. Local economy, sustainable mobility and less energy consumption is everywhere nowadays. But perhaps one could use some help in putting this whole story into practice.
Our BDO Real Estate & Construction sector group supports developers, builders, proptech companies, fund managers, investors and other stakeholders in real estate with a broad range of services ranging from feasibility analysis, debt and equity financing, fiscal structuring, private placements, urban developments, Public-Private Partnerships, due diligence and M&A transactions. We have experts in technology transfer, smart and circular buildings, energy transition and developing business models for disruptive ICT technologies in the construction industry.
How can we raise awareness for these benefits?
I think awareness, information and communication is key! A lot of the support is needed to be applied right from the earliest stages of innovation and idea generating. Given the amount of measures, often accompanied by a lot of administrative formalities, a lot of start-ups lose focus and start doing what they like doing best: development and entrepreneurship, and to be honest, they are right. However, they are already missing out on some great opportunities.
What do you think are the innovation challenges for PropTech startups?
We notice that many start-ups (but even more mature companies) are not familiar with the various supporting measures and/or the legal pitfalls regarding intellectual property. But all too often, the rule is: unknown makes unloved.
Even though startups are often not profitable in their first years, it is advisable to already organize and optimize your tax and financial situation. We often notice that companies only reflect tax optimization when they are in a tax paying position. We advise them to investigate all possibilities from the very first idea. At the same time, all the implications, around cooperation with third parties, intellectual property or the appropriate company structure should be investigated first.
An equally important element is to have consistency between the different measures. An innovation project often starts with a grant. After this has been obtained, people and resources are deployed to realise the project. These investments can again benefit from support in the form of various fiscal measures. Finally, one goes to the market and the result is eligible for another measure: the innovation deduction. We are noticing more and more that it is important to have a common thread through the various measures.
The well-matured companies understand the importance of their intellectual property beforehand and have therefore put the necessary formalities in place. All too often, however, we find that some corporates begin their innovation process from a certain drive and gut feeling, only to realise the value creation of their innovation until they see the reaction from the market highly valued.
So, what is your advice?
Before embarking on innovation, it is important to have a good idea of the financial and fiscal measures you can count on. This exercise will in any case have an impact on your financial plan. It is also important to make a good estimate of the value of your innovation and to protect it legally. However, an entrepreneur cannot be expected to be fully involved in all the various legislation and formalities. Therefore, it is important to be assisted by specialists who will work with you on this process.
What about the impact of public-private partnerships in pushing for innovation?
Learning from one to another, there are a lot of interesting companies that we can collaborate with and by joining forces they are capable of doing great things. The Belgian authorities, as well as the European authorities, are playing the innovation card to the fullest. Cooperation between companies is hereby strongly encouraged. Unfortunately, we still notice some reluctance among companies to share information and expertise. However, joining forces in this way could lead to very good results. In addition to trust in each other, having a good agreement also determines this joint success story. We usually find that having a legal agreement in place provides a great deal of peace of mind, allowing people to focus on the essentials again.