Massive amounts of cash are flowing in 2021. In the second quarter of this year, the total funding raised by Dutch startups already far exceeds that of the entire year of 2020. More than a third of the startups that raised funding in the first half of 2021 is from Amsterdam.
Record funding Dutch startups and scaleups
In the first six months of 2021, Dutch startups together raised a whopping €3B. A year ago, Dutch startups managed to raise €500 million in the same period while the entire year of 2020 ended up with €1.7B in funding. This is shown in the Quarterly Startup Report, compiled by Dealroom.co, Dutch Startup Association (DSA), Golden Egg Check, KPMG, de Regionale Ontwikkelingsmaatschappijen (ROM’s) and Techleap.nl.
€3B in half a year, €2B of which was raised in the second quarter only, is a record amount for Dutch startups. The huge number is in large part made possible by some serious late-stage funding rounds from fresh unicorns.
Amsterdam leads the way
Amsterdam-based Messagebird and Mollie led the pack, respectively with their €823 and €672M Series-C rounds. Challenger bank Bunq and fashion retail disrupter Otrium, also based in Amsterdam, raised more than €100M.
Compared to last year, it is a remarkable rise. The pandemic is an obvious factor. From March on, 2020 was a year with many of its own challenges. But this huge peak in funding is not an exception, believes Thomas Mensink. He is a Startup & Investment Analyst at Golden Egg Check and one of the creators of the report. He sees a strong trend upward, even though last quarter is exceptional.
‘More late-stage rounds’
“I don’t think we’ll break this record again in the next half-year”, he explains on the phone. “Some really big funding rounds just happened to come together in a short period. However, we’ve seen for a while now that Dutch startups close ever-larger funding rounds. There are more and bigger late-stage rounds.”
That’s a good sign for the Dutch startup ecosystem, Mensink says. “It means there are companies that are not only able to raise those amounts, but which are also able to handle it and who are entrusted with such an investment.”
‘Money will not dry up’
It is a sign of the ecosystem growing up. However, it is not just the big ones that are making their mark. Mensink compares the ecosystem with a pyramid, with a small top of unicorns and a broad base of early-stage startups. “At the bottom of the pyramid, a lot is happening as well. We see not only a rise in large funding rounds, but also many smaller rounds for early-stage startups. The pyramid not only grows higher but also broader and stronger.”
Mensink says regional development agencies play an important role at that level but also notices more and more professional angel investors participating. “I’m not worried the money will dry up.”
Lots of foreign money
Dutch scaleups are popular with foreign investors for the big funding rounds. For their Series C, Mollie’s round is led by Blackstone Growth while Messagebird’s round is led by Spark Capital. Both are from the USA. Golden Egg Check sees this as money flowing to other countries in the future. However, Mensink is not worried of negative effects on the ecosystem.
“Dutch funds don’t operate on this scale”, he explains. “So I totally get why Mollie and Messagebird look abroad. However, Dutch investors are becoming bigger and some Dutch VCs are leading in Europe. It’s only a matter of time before Dutch funds can create unicorns as well.” Mensink says that as long as scaleups with foreign funding are not pressured to move out of the Netherlands, something he sees as very unlikely, there’s nothing wrong with having foreign investors on board.
Despite the record-breaking numbers, the research also shows that the Netherlands is lagging behind other countries. “We’re well on track, but now it is important to take the next step”, says Maurice van Tilburg, Managing Director of Techleap.nl. “The Netherlands is one of the fastest-growing countries in Europe, but we have solid competition from the countries around us. They do not only grow rapidly as well but are also ahead of us in regulation.”
According to Van Tilburg, this prevents many Dutch startups from becoming scaleups. Mensink agrees there is a task for the government. “By making investing more attractive for angel investors, we can solidify the base of the pyramid.” He also stresses employee participation, for instance by offering shares, is crucial for long term success.
“You want to keep your talent aboard and let them reap the rewards of the company’s success as well. This will allow them to become the next generation of angel investors. There’s a lot to win here, but the first step is political.” Are politicians willing to take the steps necessary to help the startup ecosystem in the Netherlands?
Mensink thinks so. “There are some political choices to be made and they require some deep thought. Techleap.nl can play an important role there. Startups are cool now and we’re currently in a phase where everything is moving upwards. If times get tougher, we need to prevent startups from being the first to suffer.”