Constructing a world-class Dutch start-up ecosystem



A sturdy entrepreneurship ecosystem has the potential to be among the many elementary drivers of a nation’s economic system and a linchpin of its society. Dutch start-ups are already thriving in some ways, however international locations equivalent to the UK, Sweden, and america are extra aggressive alongside key metrics of start-up success. The Netherlands has a chance to construct a method that encourages the participation of a extra various group of founders, which can result in much more entrepreneurial exercise than already at present. Moreover—and the place probably the most important share of worth creation lies—is the chance to facilitate start-ups’ means to scale. Collectively, these methods can rework the entrepreneurship ecosystem within the Netherlands right into a pillar of the nationwide labor market and an engine of worth creation and innovation, with start-ups based within the Netherlands between 2022 and 2030 doubtlessly contributing an estimated €250 billion to €400 billion market capitalization.






Though Europe has many high-performing firms in mixture, European firms underperform relative to these in different main areas: they’re rising extra slowly, producing decrease returns, and investing much less in R&D than their US counterparts. This largely displays the truth that Europe missed the boat on the final expertise revolution, significantly within the space of worth and development in data and communications expertise, and on different disruptive improvements.

Inside Europe, the Netherlands is very regarded on a number of metrics of start-up success. Nonetheless, the Netherlands has the potential to turn out to be not solely a frontrunner within the area but additionally the engine that helps make Europe a worldwide chief in entrepreneurship. First, the Netherlands is going through the subsequent wave of worldwide challenges, together with meals insecurity, power resilience, local weather change, and well being entry, and options to those challenges could lie within the subsequent era of start-ups. Second—and maybe even extra essential—are the numerous components that favor the Dutch entrepreneurship ecosystem.

At present’s Dutch start-up ecosystem by the numbers:
4th in start-up worth creation in Europe
fifth in start-ups per capita within the EU
sixth on the 2021 World Innovation Index 130K native jobs nationwide


The Netherlands ranks fourth by way of start-up worth creation in Europe, and amongst cities, Amsterdam is one in all Europe’s fastest-growing start-up hubs.


One other metric of a rustic’s success in entrepreneurship is the entire variety of start-ups per capita. On this regard, the Netherlands is performing comparatively effectively with a rating of fifth within the European Union.


Trying on the labor market within the Netherlands, homegrown start-ups have created greater than 130,000 native jobs throughout all provinces.

Nonetheless, there may be potential for enchancment. Equally clear is what’s at stake. Failure to behave places the Netherlands’ entrepreneurial standing in jeopardy. Our evaluation has recognized two very important components for start-ups within the Netherlands to be extra aggressive with entrepreneurship ecosystems in different components of Europe and america: first, carry a brand new and various set of entrepreneurs to the desk to put the groundwork, which can generate about 20 % further financial worth over the established order; and second, and by far probably the most vital lever with doubling to tripling (two to 3 occasions) the financial worth generated by the start-up ecosystem, make sure that all start-ups are capable of scale.






Extra start-ups: Priming the pipeline

At present, roughly 1,000 start-ups are launched within the Netherlands yearly. This tempo of founding places the Netherlands fifth within the European Union (Estonia, Eire, Luxembourg, and Denmark rating greater) and eighth Europe-wide.


To discovered new firms at the next tempo, the Netherlands may also help paint a broader, extra various image of what a founder seems like. Particularly, a number of initiatives throughout 5 mandates can deal with a number of the recognized boundaries and assist enhance start-up exercise throughout underrepresented demographic teams—and from one explicit institutional supply.

At present, roughly 1,000 start-ups are launched within the Netherlands yearly. This tempo of founding places the Netherlands fifth within the European Union and eighth Europe-wide.


If profitable, the Netherlands might enhance the variety of start-ups based every year by 35 to 45 %, or 350 to 450 in absolute phrases, on prime of sustained exercise of 1,000 start-ups based yearly (Exhibit 1). Its per capita start-up quantity would develop from a complete of about 900 start-ups per million residents by 2030. This enhance would place the Netherlands within the prime three of start-ups per capita within the European Union, behind Estonia and Eire.



Constructing a world-class Dutch start-up ecosystem





Picture description: A vertical, stacked bar chart reveals the variety of Dutch start-ups based in 2021 (1,000), and the variety of start-ups projected for 2030 (from 1,350 to 1,400), illustrating an estimated enhance within the variety of start-ups of 35 to 45 %.

Finish of picture description.



1. Enhance the share of founders with a nonacademic background

Whereas there may be potential for universities to be larger launching pads for founders, investing within the potential of entrepreneurial-minded folks with out a college schooling can be essential. In our analysis, we recognized three potential actions that would assist make a constructive contribution to growing the variety of founders with nonacademic backgrounds:

  • making entrepreneurship an important a part of secondary schooling, by way of for instance, devoted programs and competitions
  • selling structured mentoring packages and networking occasions to assist allow entry to data, expertise, and capital
  • working a public marketing campaign to spotlight success tales of founders who studied utilized sciences or acquired vocational schooling

Growing the share of nonacademic founders by round 40 %, from roughly 13 % at present to 18 % by 2030, might result in a further 35 to 55 start-ups within the Netherlands based every year by 2030.

2. Enhance the share of feminine founders

In the case of really beginning an organization, there’s a important gender hole, with solely round 15 % of start-ups based between 2010 and 2020 having at the very least one feminine founder.


The constructive information is that the gender hole has decreased over time, with round 25 % of start-ups based since 2019 having at the very least one feminine founder.


Three potential actions might assist make a constructive contribution towards closing this gender hole:

  • selling structured mentoring packages and networking occasions to assist allow entry to data, expertise, and capital
  • growing public consciousness of gender bias in funding processes to encourage extra inclusion
  • selling extra variety on the enterprise capital (VC) degree to infuse higher variety amongst founder units (for instance, Fundright, a gaggle of Dutch VCs, goals to have a 35 % feminine administration group by 2023)

This might result in a further 115 to 170 start-ups within the Netherlands based per yr by 2030, our evaluation reveals.

3. Double the share of founders with non-Western immigrant backgrounds

Potential future Dutch start-up ecosystem by the numbers:
€100 billion from present degree of start-ups
+
€20 billion from further start-ups
+
€90–€200 billion from higher scaling of present degree of start-ups
+
€40–€80 billion from higher scaling of further start-ups
=
€250–€400 billion in market capitalization for start-ups based 2022–2030


Residents with non-Western immigrant backgrounds signify 14.5 % of the entire Dutch inhabitants


however solely round 7 % of start-up founders.


4 potential actions might assist make a constructive contribution towards growing this proportion:

  • selling structured mentoring packages and networking occasions to assist allow entry to data, expertise, and capital
  • growing public consciousness of background bias in funding processes to encourage extra inclusion
  • selling extra variety amongst VCs to infuse higher variety in founder units
  • figuring out expertise swimming pools by partnering with organizations with a observe report of reaching migration communities

This might result in a further 50 to 75 start-ups within the Netherlands based per yr by 2030, our evaluation reveals.

4. Enhance the share of skilled founders

Analysis has proven that the typical age of a profitable start-up founder is 45 years,


however early-stage entrepreneurial exercise


is highest within the 18 to 24 age class and reduces with every successive age class. Sparking further entrepreneurial exercise amongst folks aged 25 to 54 couldn’t solely result in further start-ups based but additionally to extra start-up successes given the work expertise probably obtained by people in that age class. Two potential actions might assist make a constructive contribution to the variety of start-ups with skilled founders:

  • establishing devoted packages with the purpose of accelerating the share of entrepreneurs with skilled expertise, for instance, by way of collaboration between personal employers and the general public sector
  • Better public consciousness of success tales of founders with working expertise

This might result in a further 55 to 85 start-ups within the Netherlands based per yr by 2030, our evaluation reveals.

5. Enhance the variety of spin-offs from Dutch universities and analysis establishments

Universities within the Netherlands generate fewer enterprise spin-offs than main universities in the UK and United States, equivalent to Oxford and Stanford, respectively. Three potential actions might have a constructive contribution on growing the variety of spin-offs:

  • encouraging an entrepreneurial mindset amongst college students and college employees
  • offering assist for commercializing analysis and applied sciences by establishing affordable time period sheets (for instance, decrease fairness stakes for universities, as in america)
  • set up entrepreneurship facilities which are near and affiliated with universities however that function independently (for instance, UnternehmerTUM in Germany)

Growing the variety of college spin-offs to the extent of worldwide main universities by 2030 might result in a further 65 to 100 start-ups within the Netherlands based every year by 2030, our evaluation reveals.

Larger start-ups: Profitable start-up scaling

Nearly all of worth is created by scale-ups in later levels of maturity, however Dutch start-ups lag with regards to conversion charges in later funding rounds (Exhibit 2). At the moment, the Netherlands performs worse at scaling than main international locations globally, European front-runners, and the EU common.



The Dutch scale-up ecosystem is not achieving its potential, with conversion rates lagging behind peers in all funnel stages.





Picture description:
Potential funding rounds for start-ups are listed. These levels, from begin to end, are as follows: basis, seed, sequence A, sequence B, sequence C, sequence D, and long-term steady. Horizontal bars present the typical conversion charges between levels for the Netherlands, the European Union, Germany, and america. The info point out that, for all funding levels, the Dutch scale-up ecosystem has conversion charges beneath these of its peer international locations.

Finish of picture description.



Evaluating macroeconomic indicators for profitable scaling of start-ups, the Netherlands scores beneath main international locations. Market capitalization of start-ups as a share of GDP is round 6 % within the Netherlands, 25 % in Israel, 20 % in Estonia, 17 % in america, and 15 % in Sweden.


The typical start-up valuation within the Netherlands is round €5.5 million, €55 million in america, about €19 million in Israel, and €14 million in Sweden (Exhibit 3).



The Dutch start-up ecosystem is currently underperforming on most of the scaling criteria compared with peers.





Picture description:
A warmth map desk reveals that the Dutch start-up ecosystem is underperforming on many of the scaling standards in contrast with different international locations. Eight rows signify the next international locations: Israel, Estonia, america, Sweden, the UK, Germany, France, the Netherlands.

Finish of picture description.



Taking a look at funding obtainable for start-ups to scale, the Netherlands has potential room for enchancment. Though Dutch start-ups and scale-ups acquired round €2.3 billion of VC funding in 2021, VC funding per capita in 2021 within the Netherlands was solely 60 % of the funding per capita in Sweden, and fewer than 50 % the funding per capita in america. Moreover, solely 22 % of whole financing quantity within the Netherlands is native funding, versus 37 % in Sweden and 78 % in america.

To facilitate the expansion of Dutch start-ups, the situations for scaling an organization within the Netherlands will probably should be improved. We recognized six scaling conditions that would assist on this regard:

1. Deal with sectors which are each globally related and robust fits of the Netherlands

The Netherlands might concentrate on investing in sectors which are each enticing primarily based on world demand and that draw on the nation’s distinctive experience. Well being and fintech are internationally enticing; in america, these sectors obtain larger shares of the entire pool of start-up funding than some other sector (19 % and 17 %, respectively). Well being and fintech take the highest two spots within the Netherlands as effectively, commanding 13 % and 25 %, respectively, of all start-up funding, as will be noticed by their excessive financing quantity in america (well being ranked first with 19 % and fintech second with 17 %). These sectors additionally acquired the very best funding within the Netherlands (13 % and 25 %). As well as, a comparatively excessive variety of Dutch start-ups is already lively in these sectors.


Different sectors that the Netherlands might concentrate on, due to their know-how and excessive worldwide relevance, are power and meals.

2. Undertake a worldwide mindset from the outset

The Dutch start-up market is basically home in focus and, due to this fact, scalability inside the Netherlands is proscribed. Our interviews with many Dutch founders recommend that their development aspirations are targeted inside the nation’s borders. By specializing in the worldwide market from the outset, Dutch start-ups might open themselves as much as a a lot bigger market with immense development potential—and switch their focus to internationally related points.

By specializing in the worldwide market from the outset, Dutch start-ups might open themselves as much as a a lot bigger market with immense development potential.


3. Appeal to prime expertise

In contrast with probably the most profitable start-up ecosystems, the Netherlands has a excessive share of hard-to-fill job openings within the tech sector, with 56 % of the tech job openings within the Netherlands thought-about arduous to fill, versus 47 % in Germany, 40 % in america, and 44 % in Sweden.


Having the ability to appeal to (worldwide) expertise is essential in the course of the scaling section due to the growing complexity and quantity of labor, and noncash compensation may also help. At the moment, the Netherlands ranks within the backside quartile by way of worker inventory possession plans (ESOPs) in contrast with its chosen friends.

4. VC ecosystem: Give start-ups adequate steering and funding, particularly in late levels

Financing quantity per capita within the Netherlands is beneath friends equivalent to Sweden and Israel.


On the similar time, the Netherlands traditionally tends to construct firms with a profit-over-growth enterprise mannequin (the “PE mindset”). Dutch VCs are much less current in later rounds and therefore execute fewer repeat investments. Moreover, the advisory function and steering that VCs present to start-ups is a key catalyst of their success. A strong and engaged Dutch VC base might enhance the scalability success fee of the start-up ecosystem.

5. Capital: Funding from a wide range of traders

The provision of sufficient home and international capital is a vital catalyst for entrepreneurship actions equivalent to attracting expertise, conducting R&D/product improvement, and advertising. These actions are significantly essential in the course of the scaling section of start-ups. Attracting extra capital from institutional traders might enhance scalability success fee. Pension property as a proportion of GDP are greater than 210 % within the Netherlands.


Dutch VCs raised €220 million from Dutch pension funds between 2016 and the primary half of 2021, 0.012 % of the entire Dutch pension property.


Twenty-two % of whole financing quantity within the Netherlands is home financing, whereas in Sweden, for instance, the share is 37 %.


Having adequate capital obtainable will allow start-ups to scale optimally.

6. Facilitate a supportive start-up surroundings

Create a good ecosystem for start-ups to thrive by successful the race for expertise and elevating further funding by way of, for instance, the 30 % ruling and alternative-taxation insurance policies. In a number of different international locations, together with France, Spain, and Sweden, further tax incentives exist for angel investments.

The affect

If the Dutch start-up ecosystem have been to unlock these 5 levers for growing the variety of start-ups based and deal with the six priorities for enhancing profitable scaling, start-ups based within the Netherlands between 2022 and 2030 might doubtlessly contribute an estimated €250 billion to €400 billion market capitalization.

To place this sum in perspective, it’s equal to 30 to 45 % of the round €850 billion market capitalization of at present’s AEX. As well as, these start-ups might doubtlessly generate 165,000 to 250,000 new jobs.


Constructing globally aggressive start-ups within the Netherlands might have a big affect on the general Dutch economic system. With adequate scale, the start-ups of at present can turn out to be elementary to Dutch society, serving to create jobs and supporting the nation’s means to put money into schooling, healthcare, and social-services supply. Trying past the Netherlands’ borders, a robust Dutch start-up ecosystem would contribute to constructing a European economic system that’s extra globally aggressive. Our evaluation reveals it is going to take an orchestrated effort of the complete vary of stakeholders—from educators and legislators to VCs, founders, and C-suite executives—to create a extra affluent and globally aggressive start-up ecosystem.

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