By Cindy Jansen-Wong, Client Relationship Director, Private Equity, the Netherlands
The Netherlands’ economy is among the strongest in Europe, and its willingness to embrace and encourage innovation has created one of the world’s most exciting and lucrative start-up ecosystems. In this article, we examine the key drivers behind the growth of the Dutch start-up scene and explore what makes the Netherlands a jurisdiction of choice for entrepreneurs worldwide.
How the Netherlands became a thriving start-up scene
During the early 2000s, the Dutch economy faced a steep decline. Though many thought it would never recover, it currently ranks as one of Europe’s top 5 largest economies.
Despite the country’s modest size, the relentless ambition of local and foreign companies has cemented its position as a leading business hub. From a valuation of €10 billion in 2015, Amsterdam’s tech industry alone is now worth a whopping €73 billion. The modern business environment boasts an eclectic mix of global powerhouses and disruptive newcomers who are reshaping industries as we know them.
Fuelled by a combination of governmental support, VC funding, tech specialisation, access to talent, and a culture of collaboration, the country’s start-up ecosystem has shown remarkable growth potential and resilience even in the face of global challenges.
What is driving this growth?
After its early-2000s slump, the Netherlands made significant changes to revitalise its economy. One of those changes was to increase government support for entrepreneurship and start-ups. Initiatives like the Innovation Box regime and tax incentives for research and development (R&D) activities have attracted both local and international entrepreneurs.
This support reduces the financial burden on start-ups and fosters an environment where innovation is encouraged and nurtured. Furthermore, the introduction of the “Startup Visa” programme has streamlined the process for non-EU entrepreneurs to establish their ventures in the Netherlands.
Venture capital funding
The upward trend in the Dutch ecosystem is also driven by growing VC funding in the country, which has increased by 28% over the past five years. As the ecosystem matured and Dutch start-ups gained international recognition, the presence of esteemed universities, research institutions and a diverse workforce further boosted the jurisdiction’s credibility.
The injection of venture capital and angel investment further accelerated growth. Start-ups gained access to funding, mentorship and networking opportunities from established players, allowing them to scale their operations and expand globally.
At present, there are over 400 VC firms actively targeting Dutch start-ups. More than 100 start-up accelerators and incubators in the country provide entrepreneurs with the early-stage support they need to grow.
The Netherlands has already established itself as a strong player in certain tech domains, such as FinTech and AgTech. This specialisation is only expected to deepen as more start-ups emerge in niche technological sectors. With a strong foundation in R&D, Dutch entrepreneurs are poised to lead in areas like AI, blockchain and biotechnology, driving innovation and economic growth.
Dutch potential looms larger than economic headwinds
The Dutch start-up sector has been resilient despite a challenging macroeconomic environment. Investors worldwide have been cautious, but the Netherlands has outperformed neighbouring countries where investments continue to decline. Dutch start-ups saw significant growth in Q2 2023, raising €525 million in VC funding.
And the Dutch start-up ecosystem shows no signs of slowing down. With a solid foundation built on collaboration, supportive policies and an innovative culture, the Netherlands is well-positioned to continue producing groundbreaking start-ups across various sectors.
As discussed in a recent McKinsey report, the Netherlands has yet to meet its full potential as a top entrepreneurial ecosystem globally. Through initiatives to encourage participation by a more diverse group of founders and better facilitate scalability, start-ups established in the Netherlands could increase by 35-45% by 2030, contributing an estimated €250-400 billion market capitalisation.
Why establish your start-up in the Netherlands?
- Business-friendly and internationally oriented: According to the Harvard Business Review, the Netherlands ranks third worldwide and first in the EU for ease of doing business
- Government support: The Dutch government actively supports foreign start-ups with tools such as nl to connect them to capital, markets and talent within the Dutch ecosystem
- Tax ecosystem: The Netherlands arguably has the most attractive tax ecosystem for foreign entrepreneurs in Europe, including one of the most robust systems of bilateral tax agreements globally
- Optimal location: Rotterdam boasts Europe’s largest harbour, while Schipol Airport is one of the three largest in Europe. Beyond physical access, establishing a start-up in the Netherlands ensures access to the European single market
- Skilled workforce: The Dutch are well-educated and highly skilled in vital start-up sectors like tech. They also speak English very well
- High standard of living: The education, healthcare and social services systems in the Netherlands rate highly even compared to other European countries with high-quality services, and the Dutch consistently rank among the world’s happiest populations
The Dutch start-up ecosystem is undoubtedly poised for a bright future. With robust governmental support, a focus on sustainable innovation, tech specialisation and a commitment to collaboration, the Netherlands is well-positioned to remain at the forefront of global entrepreneurship. As challenges are addressed and opportunities seized, this ecosystem will undoubtedly continue to be a beacon of innovation for years to come.
Are you an aspiring entrepreneur? Consider leveraging the supportive Dutch ecosystem to launch your next venture with IQ-EQ’s full suite of corporate administrative services by your side. Get in touch with our team to take the first step.