56 To gain insight into possible solutions, commercially successful projects were analysed. In addition, several projects that are currently on the drawing board – some promising, others less so – were analysed. Key conditions for financing innovative projects, such as sufficient availability of equity, were considered. One interesting finding was that successful projects can usually only access debt capital once contracts have been concluded and licences obtained. Projects that fail to get off the ground often cannot raise equity because the uncertain future profitability casts doubt on whether the investment costs will ever be recouped once the project is up and running. Faced with such a speculative cost-benefit outlook, banks are unable to provide finance, particularly in the absence of sufficient collateral. Financiers point to a lack of professional entrepreneurship, while entrepreneurs complain that financiers have an insufficient understanding of risks. Further analysis shows that many recreational companies are familyrun, which does not make it any easier for the banks to make an accu­ rate risk assessment. One important challenge is to achieve more profes­ sional entrepreneurship in the recreational sector. Due to the shortening life-cycles of facilities, cash flows must be generated faster to recover the investment more quickly. This problem is compounded by the fact that many companies cannot provide sufficient collateral, so that financiers tend to shorten the permitted depreciation term to 5-10 years. Many recreational investments are thus treated as a kind of goodwill where the costs incurred must be recouped in a relatively short period of time. To explore ways and means of raising finance amidst these inauspi­ cious circumstances, the existing (financial) instruments were studied. These include numerous supportive schemes sponsored by the Ministry of Economic Affairs, Agriculture and Innovation (EL&I). Alongside these schemes which are often designed to facilitate access to loan capital, there are also instruments for increasing equity and obtaining one-off funding. In addition, there are supplementary instruments in the form of e.g. ploughing back local taxes. The equity-increasing instruments are particularly powerful as these also facilitate the resolution of other bottlenecks. One reason is that the venture capitalists providing the equity are taking a big risk and, in return, often demand a say in how the business is run, which gener­ ally leads to a better business plan. In addition, the contribution of venture capital creates security for providers of debt capital who are consequently more inclined to extend loans. The ‘venture capital company’ emerged as the ‘most suitable’ solution from this analysis. Venture capital strengthens the company’s equity position. Moreover, the involvement of venture capital companies gives the recreational sector a broader operational base by generating greater interest among financiers and recreational entrepreneurs. Finally, venture capital companies give organizations a sharper commercial edge by providing the necessary knowledge, networks and entrepreneurial skills for realizing genuinely viable recreational invest­ ments. By applying a sound revenue model, such a venture capital company can be attractive both for the investing entrepreneur and the participants. The ‘venture capital company’ thus presents itself as a powerful solution for the many challenges facing the sector. Pagina 65

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