Startup Genome, in collaboration with the Global Entrepreneurship Network, published the 2021 Global Startup Ecosystem Report during the London Tech Week. The report provides a comprehensive look at how regions foster and sustain vibrant startup ecosystems.
Let’s take a look at how the Dutch startup ecosystem fared in 2021.
Amsterdam startup ecosystem value rises to $86B
Amsterdam as a startup ecosystem packs an increasingly big punch. Over the last decade, the overall value of the startup ecosystem has been rising fast in Amsterdam.
The Startup Genome report reveals that startups founded since 2000 in the city have a combined value of more than $86B (approx €73.5B), up from just $12B (approx €10.2B) in 2015, the third-largest in Europe.
The large exits of $50M (approx €42.7M) or more have also grown at an impressive rate compared to other European hubs, says the report.
Since 2011, the Amsterdam region saw an average growth of 58 per cent year-over-year compared to London’s rate of 29 per cent.
Amsterdam ranks at #3 in Connectedness
According to the report, three cities in Europe feature in the top 5 spots when it comes to Connectedness – London, Paris, and Amsterdam. The number of billion-dollar exits tripled in 2020 in Europe from 3 to 9.
Amsterdam ranks #13 Global Startup Ecosystem ranking
In the Global startup Ecosystem ranking, Amsterdam-Delta ranks #13 globally, which is one position down compared to 2020. The ranking is based on six factors – Performance, Funding, Connectedness, Market Reach, Talent, Knowledge.
Here’s how the city scored on each metric:
- Performance (Ecosystem Value, Exits, Startup Success) – 6
- Funding (Access, Quality, and Activity) – 6
- Connectedness (Local Connectedness, Infrastructure) – 9
- Market Reach (Global Leading Companies, Local Reach, IP Commercialisation) – 7
- Talent (Tech Talent, Life Sciences Talent, Experience ) – 7
Reasons behind Amsterdam’s growth
Talking about the success behind Amsterdam’s growth, the report mentions several factors contributing to the area’s success.
First among them is the Netherlands’ fundamental strengths as a home base for companies. Located centrally, the Netherlands is home to business-friendly laws, strong infrastructure, and a well-educated workforce. On top of that, over 90 per cent of the Dutch population speaks English.
Further, international graduates are allowed one year to find work or start a business post-graduation, and the government runs an entrepreneur visa scheme that offers international entrepreneurs a 1-year visa to get their companies off the ground.
Additionally, budding startups benefit from the city’s dozens of accelerator and incubator programs, including several focused on women founders and diverse entrepreneurial talent.
“There may be something in the Dutch culture that wants to challenge and redesign things and cherishes independence,” says Constantijn van Oranje, Envoy for the Ecosystem Hub, Techleap.nl.
Challenges faced by Amsterdam startup ecosystem
The Startup Genome report mentions that Amsterdam generates more startups per capita than any other European hub (1.10 per 1,000 residents), but VC investment per capita trails Berlin, London, and Stockholm with a slower pace of growth.
The Amsterdam startup ecosystem relies heavily on local investors, where 54 per cent of the capital comes from domestic sources, 25 per cent from the rest of Europe, and just 21 per cent from the rest of the world.
Series A rounds seem to be particularly hard to come by, though the latest data shows startups are doing better in reaching rounds after Series A with 28 per cent moving from Series A to B and 25 per cent from Series B to C.
Techleap.nl managing director Maurice van Tilburg has noticed these trends as well. “Venture capital has become much more available. Still, tickets remain small and many Dutch software startups prefer to bootstrap, remaining under the radar for data analysts and limiting their growth,” he says. “This is also how several of these large startups are suddenly discovered at a later funding round.”
The Startup Genome report also says that investments in AI and Big Data sectors accounted for 36 per cent of local deals since 2016, whereas fintech startups accounted for 20 per cent of deals.
Another notable sub-sector gaining momentum according to the report is Cleantech, which thus far has covered 10 per cent of deals.
According to Techleap.nl, the Netherlands needs to improve its tax regime to make it easier for early-stage businesses to attract talent with stock options and promote the reinvestment of investors’ earnings.
“Providing additional funding for coding bootcamps, STEM programs, and other initiatives to develop the tech workforce will help ensure startups can find the diverse talent they need to continue to grow,” says Techleap.nl.