The first modern central bank, stock exchange, WiFi, Bluetooth, photosynthesis, superconductivity, virology and the World Wide Web. All areas that the Netherlands pioneered or at least played a critical role in advancing them forward.Though very impressive, these are all past accomplishments.
How can the Netherlands be one of the most innovative and thriving economies in the 21st century? Many Dutch politicians, academics, entrepreneurs and concerned citizens have put their hopes on tech startups. And even though the Dutch startup ecosystem is flourishing, a more fertile breeding ground seems to be needed to enable startups to thrive and permissionless innovation to take hold.
In this interview Samir Saberi of StartupJuncture talks to Robert Verwaayen, investor at Keen Ventures Partners and member of StartupDelta’s Cirlce of Influencers, about the strengths and weaknesses of the Dutch startup ecosystem. Moreover, Verwaayen shares his thoughts on what’s needed to create a fertile breeding ground for young companies that enables the Netherlands to become one of the most advanced economies in the 21st century.
Let’s start with Prime Minister Mark Rutte. As a member of StartupDelta’s Circle of Influencers you shared some ideas with him last summer on improving the Dutch startup ecosystem. How did that go?
“He was super receptive. He actually impressed the socks out of the foreign members of the Circle of Influencers.”
“The Prime Minister displayed the typical Dutch egalitarian attitude of being very accessible and interested in all the backgrounds of the members. Though the meeting was at the Catshuis, the official residence of the prime minister, the discussion was much more like a working session. ”
So what did you propose to the Prime Minister?
“Prior to our meeting with the prime minister we made a distinction between short and long-term initiatives and took the best practices of other startup ecosystems such as London and Stockholm at heart. Based on this discussion, we proposed Mark Rutte a few things he could act on right away and a few longer term initiatives.
For example, near term we proposed he and minister Henk Kamp should talk to a few prominent startups and scale-ups about the developments in the modern digital world on a regular basis. We also brainstormed blue-sky ideas on fiscal stimulation, such as a temporary tax free zone for startups. He was very pragmatic and open-minded and very happy to engage with us.”
You alluded to the egalitarian Dutch culture. But some elements of the Dutch culture actually don’t contribute to a thriving startup ecosystem.
“Yes, I think we have to get rid of our uneasy relationship with success and start encouraging an ambitious attitude.”
“By brute force celebration of success. For example if companies like Adyen or Takeaway.com ever get to an IPO, we should really rally around it and celebrate it massively, even if it’s not comfortable for us.”
Research on cultural change shows that it’s difficult to change deeply rooted attitudes and cultural belief systems. Isn’t it going to be very hard to change our uneasy relationship with success?
“I think that it’s indeed difficult, but not impossible. I believe that if you want to accelerate cultural change you need to have international companies settling here. A single company can have an impact, just look at Rocket Internet’s effect on Berlin, particularly from a cultural point of view. It has really boosted entrepreneurship. Imagine what the effect on the Dutch startup ecosystem would be if companies like Facebook and Apple would have their EU headquarters here. Also in the long term educating and informing our kids about entrepreneurship, even from a very young age, will have a positive impact.”
Culture is one of the things we could still work on. What are the strengths of the Dutch startup ecosystem?
“The Netherlands is doing well across the board. It has a thriving economy and a world-class infrastructure. What makes the Netherlands particularly interesting is it’s a superb testing market. It has all the important ingredients in place such as an affluent consumer population with a positive attitude towards internet and mobile and a propensity to buying things online. The Dutch are also early adopters of innovative technology. For startups and scale-ups it’s also important to have access to corporate companies. For such a tiny country the Netherlands has quite a large number of big companies.”
But for many startups it seems to be quite difficult to attract corporate clients.
“That might have been true in the past, right now there is renewed interest from corporate companies to partner with startups. ING, ABN AMRO and KPN are trying to reach out to the startup community and adopt startup products. I also think that startups can do a lot more to onboard corporate clients. It’s critical to convince the corporate client that your young company can deliver a product that is ten times better than the substitute, and that you can deliver it at scale. In the end, you should take away all doubts of the purchasing department. You are competing with the mind-set ‘no one ever got fired for hiring IBM’.”
Isn’t one of the weaknesses of the Dutch startup ecosystem the lack of sales talent that is on par with the sales talent at work in Silicon Valley as mentioned by 500 startups partner Marvin Liao?
“I am not sure this is an accurate observation. I think that traditionally the Dutch have been merchants and have been great at selling almost anything. So I would be surprised if we would really fall short when benchmarking sales talent from the Netherlands to that of the USA. I think what maybe skews the perspective of Liao, is that he is a part of a mature ecosystem where big corporates are more experienced in working with small innovative companies. So it’s more the capacity of innovation absorption of big companies, which is better developed in the US, than the lack of the salesmanship of Dutch companies.”
What is your take on the investment landscape in the Netherlands?
“There is quite a lot of capital available in the Netherlands. There is however an asymmetry between the capital available earmarked for a particular stage and the lifecycle of startups and scale-ups in our country. In the early stages we can use more professionally run venture capital funds that can compete with Accel, Balderton, Index and their ilk. I also think that angel investing should be stimulated more by the Dutch government as is done in London.”
So the complaints of entrepreneurs that there is a lack of venture capital money in the Netherlands is off the mark?
“I think that some entrepreneurs are not always honest enough with themselves. If you can show a truly innovative product and when you have real momentum and need the capital to scale, someone is going to fund you. I think that there are a lot of entrepreneurs who have viable businesses but that does not necessarily mean they are suitable for venture capital.”
What about the government. Is it doing enough?
“There are a plethora of initiatives, but they are not always geared towards startups, such as tax and credit facilities. Most of these initiatives assume that you have revenue and profit, a situation that is not applicable to 90 percent of the startups. Obviously StartupDelta is a superb initiative, at least putting all of that stuff on the political agenda. I think we will see some improvements in that direction pretty soon and you’re already seeing some politicians acting in the direction of promoting the Dutch startup ecosystem like the liberal party VVD and social-liberal party D66.”
How does StartupDelta help?
“It helps to focus the agenda. Prior to StartupDelta, we obviously had an ecosystem, but it was fragmented. People were doing different things that were helpful, but they weren’t leveraging each other’s efforts. Just by bundling all the efforts, StartupDelta is making a lot of impact. In addition, because Neelie Kroes is who she is, she can command a listening ear at the highest levels of government. Hence, our meeting with Mark Rutte this summer.”