Netherlands lacks focus on long-term development of the tech ecosystem: Techleap.nl’s State of Dutch Tech report

The Netherlands lacks focus required for long-term development of the tech ecosystem and digitisation, according to the annual State of Dutch Tech report from Techleap.nl. The report shows that the lack of long-term vision in the tech sector has hindered the country’s progress on climate, healthcare and circular economy goals.

The report, detailed during the IGNITE 2022 Summit, further notes that the country is also lacking in resources and ideas required for innovative companies to play a defining role in the growth of the land of canals. The scathing report comes amidst record fundraising by Dutch startups during 2021.

State of Dutch Tech report paints a grim picture

The State of Dutch Tech report explains that a thriving tech ecosystem and digitisation act as a vital engine for major social transitions in the society. With the country lagging on that front, the entire tech ecosystem is believed to be falling behind other countries. This comes on the back of Quarterly Status Report showing that VC investments for Dutch startups hit new record high for the third straight year.

However, the report also showed that Dutch startups are raising record capital from international investors while Dutch investors are falling behind. The report further notes that “decrease in share of Dutch investors has led to lack of influence on growth and innovation within the Dutch market”.

In its report, Techleap.nl notes that startups and scaleups ensure that the Netherlands stays innovative and competitive on a global scale. The country now has a tech sector that is three times more productive, grows four times faster and has three times faster job growth than other sectors. They are also vital to the Dutch government’s ambitious goals in the fields of climate, healthcare and the circular economy.

The Netherlands remains innovative even today with the country helping the likes of Mollie and Adyen flourish while Philips remains a quintessential Dutch brand. The report further argues that the long-term development of the Dutch tech ecosystem has not been given priority, both socially and within government policy.

Techleap.nl argues that this lack of focus could result in the country falling behind in crucial areas. It also believes that this could lead to fewer innovative companies developing solutions that enable major transition in the country.

Constantijn van Oranje, Special Envoy of Techleap.nl, says, “The ambitions in the coalition agreement on ‘future earning capacity’ and social transitions will not be achieved without effective digitisation and innovative startups. They are the engine of the new economy. Every sector gets its Tesla, Beyond Meat, Amazon, Adyen or Moderna.”

“The Dutch earning capacity will depend on our capacity to facilitate the growth of these types of companies. For the time being, we lack early-stage capital, IT talent, ambitious entrepreneurs and an effective valorisation practice to make this happen. That is where the major joint challenges lie for the government, universities, investors and entrepreneurs,” he adds.

State of Dutch Tech also shows year of growth

While the outlook may be grim, the State of Dutch Tech report does show how 2021 was a year of growth for the tech sector. During the year, Techleap.nl notes that a total of €5.6B in venture capital was invested, which makes it three times more than the amount invested in 2020. There are now 11,000 startups and the tech sector has a total value of more than €300B.

While the tech sector has flourished, Techleap.nl also notes that investments in smaller rounds or early phases of a startup have remained stagnant. This has resulted in many startups staying stuck, either due to availability of talent or access to capital in the earliest phase.

The report also notes that entrepreneurs often lack ambition and place more emphasis on “starting a company and achieving autonomy, than to let it grow successfully.”

This is further highlighted by the fact that only 21 per cent of Dutch startups progress to scaleup status. In comparison, the US is found to have a 60 per cent conversion rate. The State of Dutch Tech report says that “right preconditions and investments in the early phase” are essential to increase conversion rate.

The report also shows that deeptech founders feel left out in the rapid growth seen by other startups in the Dutch ecosystem. The Dutch investors have been found to avoid companies like ASML responsible for developing “revolutionary technologies for major transitions the country faces in the coming years”.

The State of Dutch Tech report concludes that the government is making tens of billions available to solve the problems surrounding the transitions in the field of climate, healthcare and the circular economy. But the role of the innovative business community in solving these problems remains lacking.

The resources and ideas necessary to support companies from the new innovative economy to drive this change is also lacking. The report says countries such as Germany and France are giving priority to these transitions in their government policies, resulting in faster developments in their tech sector.