The untapped potential of Dutch venture capital

Read the Dutch press release here

  • Dutch pension funds, the largest in the EU in terms of AUM, hardly invest in Dutch venture- and growth capital 
  • The absence of Dutch (and European) institutional investors from the asset class, compared to their US or Chinese counterparts, impacts growth investments and European technological autonomy. 

Savers in Dutch pension funds are missing out on impacting growth and innovation in their home market due to a lack of investment in the fastest growing and most innovative Dutch companies, reveals a report from the NVP and Techleap. The NVP is the Dutch Private Equity and Venture Capital Association while Techleap is a non-profit organisation, funded by the Dutch Ministry of Economic Affairs and Climate Policy, helping to quantify and accelerate the tech ecosystem of the Netherlands.

If the pension funds invest in venture and growth capital, they would not only benefit from healthy returns delivered, but also make an impact by leveraging new technology and job creation in the Dutch market. This is according to The untapped potential of Dutch venture capital a report published today that provides an in-depth assessment on the case for pension investments in venture capital, identifies the challenges and proposes potential solutions to overcome these.

Benefits to home market from capital support by local investors
While investments in Dutch startups and scale ups are increasing and reaching record levels, this increase is largely driven by non-domestic VCs and there is a growing lack of capital support from local investors. Dutch startups and scale ups received around €2.3 billion of VC funding in H1 2021, mostly from American and Chinese investors, and only approximately 24% of Dutch VCs.

If pension funds were to allocate the equivalent of 20% of their PE allocations to venture and growth capital, this would make available €4 billion a year. This would have a huge positive impact on the industry, enabling larger follow-up financing rounds and thus keeping the shareholder base of promising companies in Europe. Moreover, as returns of other asset classes are under pressure, a change could also improve a portfolio’s risk / return profile.

Annemarie Jorritsma, Chair NVP, said: “Innovation is key to impact and to solving some of our most urgent challenges worldwide. But we also need Dutch and European values, ideas and input to be part of shaping the future we want to see. Dutch venture capital funding is essential for this to happen and to assure we don’t depend on overseas investments only. US and Chinese investors are currently taking the lead, ultimately benefiting from healthy returns delivered, leveraging new technology and job creation in their respective home markets. This implies that, although local VC investors facilitated the start of many promising companies, the benefits are reaped overseas.”

Maurice van Tilburg, Managing Director Techleap, said: “Dutch venture capital funds are in great shape and there is momentum in the asset class and an investment opportunity for pension funds not to miss for long-term portfolio returns as well as contributing to a positive global footprint. Investing in Dutch venture capital is not about financial engineering, it is all about the growth of the local economy, investing in people and new technology. Specific sectors still need more capital, such as capital intensive hardware and deeptech. These industries would benefit from public investments at this stage, accompanied by private investments, in particular longer-term, such as pension funds can provide.''

2022-01-03 13:33:08