5 top investors in Dutch startups discuss trends, hopes and 2020 opportunities
The Netherlands' ecosystem has been flourishing; more than $85 million was invested in regional startups in 2019 alone. The nation's proximity to the U.K., Belgium, France and Germany makes Amsterdam a natural gateway to those markets. Long ago the savvy Dutch realized this, and built up Schiphol to become the world's twelfth-busiest airport. Indeed, Amsterdam's logistical and social connectedness is ranked number one in DHL's Global Connectedness Index.
Plenty of good funding rounds, a highly skilled workforce and a strong entrepreneurial culture have given Amsterdam a booming startup ecosystem. And Brexit is helping: The Dutch are highly proficient in English and Dutch law is similar to English law, which means U.K.-based tech founders are welcomed with open arms.
In 2020, the venture industry continued to invest in startups, despite the COVID-19 crisis. According to a study by KPMG and and NL Times, startups raised $591.2 million in the third quarter, more than double the $252.4 million raised in the quarter before.
For obvious reasons, this year has seen more cash go into companies that were able to adapt to the pandemic. KPMG found that while the total amount of investment increased in the past six months, the number of overall investments decreased. New startups pulled in fewer investments, KPMG sees this trend continuing and likely leading to consolidation amongst startups in similar sectors.
According to a report by Dealroom.co and StartupAmsterdam, there are 1,661 tech companies in Amsterdam, while the city ranked fifteenth in Startup Genome's 2019 report Global Startup Ecosystem Report," moving up four places since 2017. The median seed round is $500,000 (above the global average of $494,000) and a median Series A round for a startup is $2.4 million. The average salary for a software engineer is around 54,000.
Amsterdam has tech industry schools" such as Growth Tribe, The Talent Institute and THNK for educational courses, as well as accelerators like Rockstart, Startupbootcamp and Fashion for Good. Co-working is well-catered for with TQ, Startup Village and B.Amsterdam, and workers can cycle everywhere in minutes.
While taxes are high, entrepreneurs won't find the staggering income inequality so often seen in cities like San Francisco and New York. In Amsterdam, rich people take public transport, not private buses.
During COVID-19, the Dutch government has also announced support packages such as tax deferrals, temporary employment bridging schemes and other initiatives. It also launched a national program, TechLeap.NL, to boost the ecosystem with more international investor visibility. StartupDelta, a Dutch startup lobby group, keeps the pressure on the politicians.
The Netherlands' most famous unicorns include Booking.com, Adyen, Virtuagym, MessageBird, Swapfiets, Backbase, Picnic and Takeaway, among several others.
Adyen launched in 2006, and in June 2018, it was listed as one of Europe's largest tech IPOs with a value of 7 billion. Booking.com started in 1996 and was later acquired by Priceline Group (now called Booking Holdings) in 2005. Elastic, the provider of subscription-based data search software used by Dell, Netflix, The New York Times and others, was another gangbuster IPO in 2018.
For this survey, we interviewed the following Amsterdam-focused investors:
Janneke Niessen, partner, CapitalT VC
Stefan van Duin, partner, Borski Fund
Nick Kalliagkopoulos, partner, Prime Ventures
Bas Godska, founder, Acrobator Ventures
Renaat Berckmoes, partner, Fortino
Janneke Niessen, partner, CapitalT VCWhat trends are you most excited about investing in, generally?
Digital health, education, B2B SaaS.
What's your latest, most exciting investment?
Wizenoze.
Are there startups that you wish you would see in the industry but don't? What are some overlooked opportunities right now?
More overlooked founders than opportunities.
What are you looking for in your next investment, in general?
A great team.
Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Delivery, taxis, scooters.
How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less.
Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
NL seems well-positioned for fintech, deep tech. I am really excited about Tracy Chou and Diane Janknegt, two incredible founders.
How should investors in other cities think about the overall investment climate and opportunities in your city?
Very positive. Lots of innovation, great infrastructure, good talent.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I think startups have always been there, investors just don't tend to look at them. I think the opportunity is more that they now will.
Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
None. We look at digital health, education and SaaS and they all thrive in this climate. Of course an economic crisis will have an impact on spending in general.
How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
It has confirmed our approach. We have a data-driven approach to teams, which is great when people cannot meet.
Are you seeing green shoots" regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
We invest so early that companies are growing regardless.
What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
When I explained to my little boy what racism is and he answered: Mummy that is just really weird. That gives me hope that the generations after us might do better.