Dutch VCs not afraid of international competition

How small Dutch venture capital players dance with the big bears.

On June 5, the day before the EU elections in the Netherlands, the VEECEE event took place with the theme ‘VC developments in the EU’. During the panel discussion, led by Constantijn van Oranje (Special Envoy Techleap.nl), the positioning of Dutch VCs was the central theme. The most important conclusion: no matter how small the Dutch parties are, they certainly do stand a chance in competition with international parties.

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It is doubtful whether the results from the record year 2021 will be surpassed in the foreseeable future. But the members of the panel discussing the future of the Dutch venture capital industry were certainly optimistic. “A return to pre-corona levels should be possible,” said Jan Andriessen, partner at henQ.

He received support from other panel members, Thijs Dijkman (partner Peak Capital) and Sophie Heijenberg (partner No Such Ventures). After Elisa Houweling, the new M&A and VEECEE Community Manager of Sijthoff Media, welcomed them, the discussion started.

‘People laughed at the founders when things went wrong’
Central question: what is that optimism based on? In any case, Dutch culture may be an obstacle to a thriving VC industry. Often risk averse, sometimes even anti-entrepreneurship. Van Oranje points out the gloating that Van Moof experienced when the company went bankrupt. “People did not express their admiration that the company had invented a new category of bicycles, but laughed at the founders when things went wrong.” An interesting comment that was not discussed in depth.

More attention was paid to the following topic: the limited size of the Dutch venture capital industry. Although it has grown in recent decades, the industry is still a dwarf compared to the major American parties. A dwarf who soon finds foreign giants in his path. Because the Netherlands has a relatively small home market, companies quickly expand abroad and therefore attract the attention of large international investors.

Can Dutch venture capital companies hold their own against those parties? And if so, how? The rest of the discussion focused mainly on this question.

‘The Sequoias of this world also started small’
Indeed, the Netherlands does not have VC funds of the same size as, for example, Sequoia in the United States, the panel members readily admitted. This affects the type of deals that Dutch VCs can do and the amount of capital they can invest.

But as a relatively small VC you can certainly distinguish yourself favorably from large competitors, as the discussion showed. Why not? After all, the Sequoias of this world also started small. And they too have had to make efforts and take risks to grow into the giants they are today, no matter how self-evident and obvious their investment decisions may seem in retrospect.

In any case, there are great opportunities for Dutch VCs within the Netherlands. After all, they have knowledge of the home market and a valuable local network. And when entrepreneurs need support on a personal or business level, they can easily act as the first point of contact.

But Dutch parties can also present themselves favorably abroad. And in two ways, says Andriessen. First and foremost, speed, for example by making an offer to a party that is in need of financing before others do so – and then hoping that that party will respond. And, the second way, by being kind. After all, you offer more than just money, but you also have to work with the entrepreneurs of the companies in which you participate. And then it helps if you like each other a little bit. In fact, personal relationships and mutual trust play an important role in building successful collaborations.

“Be a pleasant person”, is Jan Andriessen’s motto.

He receives support from Thijs Dijkman: “Certainly experienced entrepreneurs who have previously brought companies to great prosperity are often directly approached by established names such as Sequoia or Index, who are prepared to invest amounts of ten to fifty million euros. We are not really in the market for those kinds of sums, as we are used to making an average investment of one million euros. However, we do have something to offer smaller entrepreneurs who come to us: not only financing, but also practical support and expertise.”

‘Bridging the gap’
Dutch VCs can also collaborate with larger international parties. ‘Dancing with the bear’, as Jan Andriessen calls it. Collaboration with foreign VCs offers Dutch portfolio companies access to an international network, which they would probably never have achieved without those Dutch VCs.

The Dutch VCs are therefore ‘closing that gap’ for their portfolio companies. “They are bridging the gap”, as Thijs Dijkman called it: attracting larger investors in a later financing phase, after which those companies can scale up their activities abroad with the support of those major parties. Dutch VCs can possibly share their expertise in specific sectors or technologies, while foreign VCs can contribute market knowledge.

‘Physical presence abroad not always necessary’
Sometimes it is not even necessary for a Dutch party to have its own office abroad. This became apparent during the corona pandemic, Sophie said. “A physical presence abroad turned out not to be necessary to be able to conclude deals.”

However, face-to-face meetings remain valuable to get a good impression of potentially interesting propositions (especially in the earliest phases, when there is hardly any data on which to base an investment decision). And of course to be able to build relationships.

For a smaller venture capital firm, it may be best to focus on a limited number of countries and limit themselves to areas where they can really add value. Preferably with a partner who can close deals and guide companies on the spot.

In Sophie’s words: “VCs add value to their portfolio companies by supporting issues such as elevating management, attracting top talent, go-to-market strategies and preparing for larger financing rounds. They act as a sounding board and ask the right questions to help founders grow.”

And not by entering into direct competition with major parties, but by distinguishing themselves from them and occasionally collaborating with them. Dancing with the bear, without stepping on his toes.

The VEECEE event ‘VC developments in the EU’ was sponsored by Google Cloud and Houthoff.

View the photos of the VEECEE Community Event >>

Make sure you don’t miss the next VEECEE event on September 5 >>

Looking forward to catching up next time!