Roundup: Efforts mount to boost start-up funding in the Netherlands

Funding of start-up companies in the Netherlands is picking up, but still lagging behind best in class start-up locations in Europe, like Berlin and London.

"There is a gap in funding in the Dutch start-up scene, but efforts are made to attract more investors," Tijs Markusse, editor and co-founder of StartupJuncture told Xinhua.

LAGGING BEHIND

According to StartupJuncture, which lists all publicly announced start-up investments in the Netherlands, more than 30 Dutch start-ups have raised 79 million euros (about 89 million U.S. dollars) in the first quarter of 2015, marking a 60 percent increase in number of deals.

The biggest investment on Dutch start-ups during Q1 2015 reached 22 million euros and went to file transfer platform WeTransfer.

Tech developer AppMachine was second with 13 million euros, followed by real-time trend intelligence company Bottlenose with 12 million euros.

More investment came during April and May with maritime start-up Barge Master securing 20 million euros. Leading online travel platform TravelBird attracted 16.5 million euros.

As large as this increase might seem, it pales by comparison with figures in Berlin or London. Investors pumped 1.028 billion euros into German tech start-ups during the first quarter of 2015. Deals reached a quarterly high at 58, according to venture capital and angel investment database CB Insights.

Start-ups in London have attracted almost 625 million euros during the first quarter, up 111 percent versus the same quarter a year ago, putting the city on course for a total investment of more than 2 billion this year.

"There is still a long way to go, since it is hard for Dutch start-ups to raise large amounts of funding," said allround IT expert Sieuwert van Otterloo in an interview with Xinhua. "But the good news is that 2015 promises to be even better in number of funding deals than last year."

In 2014 Dutch start-ups raised 500 million euros in 75 deals. In Berlin and London investors pumped 1.14 billion euros and 1.4 billion euros respectively.

MARKET FRAGMENTED

"Start-up scenes in London and Berlin are more focused. Both cities have more specialized start-ups, whereas in the Netherlands start-ups come from all over the industries," according to Markusse of StartupJuncture.

Investors seeking to invest in financial technology start-ups go to London, which has been dubbed the Fintech capital.

And "the Berlin start-up scene is dominated by web and mobile start-ups making it easier for investors focusing on these industries to search for deals," the StartupJuncture editor noted.

On the contrary the Dutch start-up scene is fragmented. There are 10 cities positioned as innovative clusters, focusing on a variety of industries, including smart food, gaming, healthtech, bioscience, nanotech and smart mobility.

Official rankings do not rank any of the 10 Dutch clusters, not even Amsterdam, among the world's top start-up ecosystems.

"This does not help the investment climate," Markusse said, adding "But we see more and more Dutch start-ups developing products for the international market, while the number of success stories is increasing. These are crucial factors for attracting more investment."

NEW SOURCES OF FUNDING

Positive developments will allow more funding to Dutch start-ups, such as the increasing interest of American venture capitalists to invest in Europe.

"They have gone to Berlin and London and they have also started looking into the Dutch start-up market," said Markusse.

In addition large companies are launching programs to invest in start-ups. Earlier in June leading Dutch telecom company KPN launched KPN Ventures, a 35-million-euro venture fund which will be used to invest in start-ups.

Moreover, StartupDelta, the umbrella initiative linking up the 10 Dutch start-up hubs, is looking into possibilities to involve pension funds in investing in start-ups. Soon the organization will provide an overview of venture capitalists and available subsidies through its web portal.

Chaired by former European Commissioner for Digital Agenda Neelie Kroes, StartupDelta's priorities include improvement of the international position of Dutch start-ups and establishment of more international ones in this country.

The launch of a start-up visa program earlier this year will enable innovative companies from outside the European Union (EU) to stay in the Netherlands for one year.

ALTERNATIVE FUNDING OPTIONS

The Dutch government has taken initiatives to support the pool of business angels and seed funds, offering alternatives to early-stage companies, which find it difficult to secure venture capital investments.

"We see now a lot of attention going to Dutch start-ups raising funding with seed rounds ideally between 150,000 and 700,000 euros and follow up rounds sometimes well above the 1 million euro mark," Jost Faganel, co-founder and CEO of connected-car start-up ULU told Xinhua.

The Eindhoven based ULU, which helps car fleet owners leverage data from the car itself, received 500,000 euros funding from the Chinese Fang Group in May, just one year after it started operating.

"A lot of the money still comes from abroad, like in our case. We first did a small round with a convertible note through Leapfunder."

Leapfunder is a funding option that's gaining a lot of popularity recently among Dutch start-ups. "Convertible notes have also become very popular, with leapfunder as the major platform," Otterloo said.

AMSTERDAM TAKING LEAD?

In the city's four-year action plan called StartupAmsterdam, it is clearly stated that the availability of growth capital is a vital aspect of a successful start-up ecosystem.

"Soon Amsterdam will host Capital week where investors and startups meet and pitch their ideas," Sebastiaan Meijer, spokesperson for Amsterdam Alderperson for Economic Affairs, Kajsa Ollongren, told Xinhua.

StartupAmsterdam aims at positioning the Dutch capital among the top start-up hubs in Europe. Set to run until 2018 it will cost 8 million euros. Efforts to provide access to growth capital will require 300,000 euros.

"Amsterdam is one of the most popular cities in Europe for a startup nowadays. It's a fertile breeding ground for startups who want to scale up to the rest of world," Symen Jansma, CEO of TravelBird told Xinhua, adding that his company aims at expanding to new destinations, such as Asia and Australia. (1 euro = 1.12 U.S. dollars) Endit