Dutch scale ups face €500b financing gap, report

Venture Capital firm Lakestar released The €500 Billion Dutch Financing Gap report, which delves into the Netherland’s strong heritage in scaling growth companies and how it can create the next wave of companies for the future.

The Dutch economy has historically relied on the scaling of growth companies. It laid the foundation for the country’s prosperity, cementing it as one Europe’s most competitive economies. The majority of companies on the Amsterdam Exchange Index (AEX) today were built or scaled from the post-war period up to modern day, with Dutch products being world renowned for their high quality.

Philips, ING, The Heineken Company, AkzoNobel, Shell and Unilever are just some of the first wave of growth companies that set the foundations for the Netherland's economic prosperity. How can we create the next wave of growth companies?

The €500 Billion Dutch Financing Gap report delves into historical data, revealing that from 1960-2000, average household income increased substantially, mainly driven by the GDP growth of approximately 3% p.a (CAGR). In contrast, the GDP grew only with 1% (CAGR) from 2000 to 2020. At the same time growth companies continue to offer attractive returns, approximately 16% across Europe, yet growth financing continues to dwindle.

The report uses the US as a benchmark, underlining that it has 5 times more financing and 15 times more value creation per capita. To plug this gap, approximately 3000 new growth companies could generate approximately €2 trillion in value over the next two decades. While a total of €500 billion in growth financing is needed for these companies over the next 20 years, the United States has demonstrated this is not only highly desirable, but also achievable.

The report outlines four potential action areas that are likely to help create the next wave of growth companies:

• Education: informing the broader public about the asset class of growth financing.
• Asset allocation: shifting assets from public to private could especially help institutional investors democratize their returns.
• Removing regulatory hurdles: this will help pave the way for a new asset allocation.
• Access: creating broad access, for example, through lowering investment thresholds or the developments of new investment models.

Nicolas Brand, Partner, Lakestar: “Having provided the foundations for the country’s economic strength today, there is a clear imperative to plug the current financing gap for growth companies. This a key tenet of Lakestar’s mission to help build a flourishing European startup ecosystem. Amsterdam and the Netherlands more generally is a proud leader of European innovation and economic development.”

Read the full report here

www.lakestar.com