Dutch pension fund ABP has reportedly stopped offering money to its investment arm, Inkef.
The Dutch newspaper FD reports that Inkef is no longer receiving money from pension administrator APG, which invests money on behalf of ABP.
At the end of November 2022, APG Asset Management represented approximately €547B for its pension funds.
While the move remains unexplained, it might put bigger stress on Dutch startups in the healthcare and technology industry looking to raise new funding.
Dutch startups have found it difficult to raise seed capital compared to other European startups. Inkef being one of the prominent investors in early-stage Dutch startups makes the future environment uncertain for investment.
Role of pension funds
ABP’s withdrawal of funds to Inkef and its investment arm APG puts a renewed focus on the role of pension funds in the Dutch startup ecosystem.
As evident from Dealroom data, Dutch startups struggle to raise seed capital from prominent investors.
They often find support from family offices, pension funds, or rely on co-financing to get started.
At a major tech congress last week, Micky Adriaansen, Minister of Economic Affairs and Climate Policy of the Netherlands, said institutional investors are not doing enough while advocates have called for pension funds to invest more in promising startups.
Vauban, an online platform that makes it easier for investors to pool capital, told Silicon Canals that angel investors have stepped in as VCs decide to take a step back amidst funding winter.
Maurice van Tilburg, Managing Director of Techleap.nl says ABP stopping financing startups through Inkef does not help the Dutch tech ecosystem.
Tilburg says German startups receive twice as much funding and startups based in Sweden receive three times more. “A lot of our savings don’t go to new promising companies like that,” he told FD.
Neither Inkef nor ABP are answering the cause for this decision to stop financing Dutch startups through its venture arm.
However, Inkef had proposed a new long-term structure that included a performance reward and APG is said to not support this move.
Robert Jan Galema, Managing Partner at Inkef Capital told FD that performance reward is not the reason to not provide new capital.
While ABP cuts investment in startups, Dutch pension funds PMT and PME are expanding their capital investment.
Earlier this month, PMT and PME announced €150M investment in the third fund of Innovation Industries, a Dutch deep tech venture capital firm.
With €13B invested capital in the Netherlands, PMT sees a need to invest in Dutch tech startups, especially deeptech startups and scaleups.
During a meeting with its accountability body (VO), Terry Troost, employer chairman and Eunice Bronswijk, employee chairman of Pensioenfonds Metaal en Techniek (PMT), further emphasised on the need for pension funds to invest in fast-growing Dutch tech startups.
For Dutch pension funds, the ability to invest in new and growing tech companies in the Netherlands is seen as beneficial for the sector as well as for its participants.
With the influence ABP has through Inkef, PMT and other pension funds to fill the vacuum soon.
€500M in startup investment
Inkef began its journey with €100M in capital for investment in technology and healthcare.
Its investment philosophy has been to back early-stage startups looking to build sustainable business and not just valuation.
Inkef has also been a hands-on investor unlocking true value and sustainable returns with long-term strategic vision.
Since it first began investing in technology and healthcare startups, Inkef has grown its investment pool to €500M with €200M invested so far.
It has invested in 50 startups, including startups like digital newspaper kiosk Blendle, remote work startup Remote, and marketing software provider ChannelEngine.
It is also the biggest investor of NPEX, a fully-licensed exchange in the Netherlands for small and medium enterprises looking for a growth capital of €500,000 and higher.
Inkef has reportedly made only two investments since August last year and has exited four companies.
Inkef does not report its revenue but its investment in Remote remains the crown jewel of its portfolio with the startup now valued at $3B.
With ABP pulling back financing, Inkef has less capital to invest than before and APG believes the venture arm can go for at least five years with the remainder (€100M) of the money promised.
“We have not given new commitments to Inkef, however Inkef remains manager of the current fund and will continue to manage the current investments,” a senior spokesperson for APG said in an email response.
ABP to continue investing
While Inkef is being stripped of capital, FD reports that ABP will continue to invest in startups focussing on sustainable energy.
In 2019, it had announced plans to invest $250M in sustainable energy startups and with no plans to further support Inkef, the funds could be diverted to sustainable energy startups or to support new areas.
The situation puts Dutch healthcare and technology startups looking to raise seed capital in a murkier position.
With Inkef having been a proven and reliable investor, it will be difficult to find another replacement.
Startups that have Inkef on its cap table will have questions around its long-term strategy and possible plan to exit.
The logical solution for Inkef would be to raise capital from other sources but it remains to be seen whether it gets approval from APG for such a move.
