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Dutch innovation and entrepre-neurship policies, interventions inthe venture capital market.

8th September 2015, OECD ParisDutch Ministry of Economic AffairsDirectorate General Enterprise & Innovation

Jan Dexelj.dexel@minez.nl

Dutch Ministry of Economic Affairs

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The Netherlands in the world, the humble giant?

135th Size

52st Population

17th Economy GDP

12th Universities in top 200

10th GDP per capita

8th WEF Global Competitiveness 2013

6th EC Innovation Union Scoreboard EU2014

4th INSEAD World’s Most Innovative Countries

3th Best country to live

2nd Agro exporter

1th Commodity trading globally

1th most enterprising country in Europe

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The Netherlands in the world, the humble giant?

135th Size

52st Population

17th Economy GDP

12th Universities in top 200

10th GDP per capita

5th EC Innovation Union Scoreboard

5th WEF Global Competitiveness

4th INSEAD World’s Most Innovative Countries

3th Best country to live

2nd Agro exporter

1th Commodity trading globally

1th most enterprising country in Europe

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The Netherlands in the world, the humble giant?

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Economic Top sectors

Generic interventions and additional focus on the nine

economic top sectors of the Dutch economy based on

comparative advantages

• Water

• Food

• Horticulture

• High tech

• Life sciences

• Chemistry

• Energy

• Logistics

• Creative industry

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Changes in the Dutch Innovation andIndustrial policy landscape

• Policy changes

• Shift in financial approach;

• Budget cuts

• From subsidies to (soft)loans, risk capital & garantees

• More emphasis on tax measures: corporate tax reductions,WBSO (wage tax reduction for R&D) and RDA (tax reductionfor R&D-investments)

• Shift in focus of research and innovation, focus on nine topsectors and development of generic revolving innovation fundInnovatiefondsMKB+ / Toekomstfonds

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Risk

profile

high

low

Loans

Subordinated loans / mezzanine

Banks

FFF Informals

Venture capitalists Private Equity

Positioning of schemes in portfolio:risk profile versus maturity phase of company/organisation.

Risk capital

Prepare Start Growth Expansion Consolidation

“Right horse for the rightcourse in the financial landscape”

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Risk

profile

high

low

Loans

Subordinated loans / mezzanine

Banks

FFF Informals

Venture capitalists Private Equity

BMKB GO

Growthfacility

Intern.

instrum.

ROM

Seedcapital

Qredits

microkrediet

Positioning of schemes in portfolio:risk profile versus maturity phase of company/organisation.

Risk capital Fund-of-funds

Prepare Start Growth Expansion Consolidation

“Right horse for the rightcourse in the financial landscape”

• OECD Review Netherlands, 2014:

“Venture capital investment as a percentage of GDP is roughly on par with some comparatorcountries in the EU but is far behind the leading countries.”

“The fund of funds and co-investment approaches are considered good practice owing totheir reliance on private investors’ expertise, incentives and resources.”

• Review of Finance, 2015, “The Effects of Government-Sponsored Venture Capital:International Evidence*” / Oxford Entrepreneurship Policy Roundtable, May 2015

“significant evidence of additionality—evidence that government-sponsored venture capitalactivity increases the total amount of venture capital funding available.”

“enterprises with mixed funding are significantly more likely to have successful exits thanenterprises that receive pure private venture capital funding while enterprises that receivepure government-sponsored funding are less likely to have successful exits.”

“for enterprises receiving mixed funding, it seems that the better exit performance is duelargely to obtaining more investment”

Peer reviews

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The Dutch VC ecosystemis well developed, but improvementsare possible

Grants/subsidiesEquity

Alternative finance

SubsidiesEquity

Subordinated loansAlternative finance

SubsidiesEquity

Subordinated loansBank loans

Alternative finance

Seed capital“Start up”

Growth capital“Scale up”

Management buyout“Staying ahead

FFF & Informals

> 40 seed capitalfunds

> 7 regional investors

> 41 venture capital funds +13 corporate venture capital funds

12 growth capitalfunds < €150 mln

45 MBO/MBIfunds

Stockexchanges

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The Dutch VC ecosystemis well developed, but improvementsare possible

Grants/subsidiesEquity

Alternative finance

SubsidiesEquity

Subordinated loansAlternative finance

SubsidiesEquity

Subordinated loansBank loans

Alternative finance

Seed capital“Start up”

Growth capital“Scale up”

Management buyout“Staying ahead

FFF & Informals

> 40 seed capitalfunds

> 7 regional investors

> 41 venture capital funds +13 corporate venture capital funds

12 growth capitalfunds < €150 mln

45 MBO/MBIfunds

Stockexchanges

EZ VFF

EZ ROM’s

EZ Seed Capital

EZ & EIF Dutch Venture Initiative

Dutch entrepreneurs are building more and more world-leadingcompanies

The Dutch VC ecosystem is well developed, but improvementsare possible

Larger fund sizes would enable Dutch fund managers to financesuccesses through the growth phase

Larger fund sizes would enable Dutch fund managers to attractmore (foreign) institutional investors

Larger funds would require a wider geographic scope: invest inDutch world-leading companies through European growth capitalfunds

Developments in Dutch later stageventure capital market.[ref. NVP 2015]

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“Corporate structure” DVI

Fund-of-funds“Dutch Venture Initiative”

“First closing”€150 mln

“Second closing”additional €150 mln

EIF

EIF

PPM Oost

3e privateLP(‘s) LP’s

Advisory & fund-management rolefor EIF

Portfolio of fast growinginnovative companies

“Later stage funds”

Portfolio of“Fund-of-funds”

Fund M Fund N Fund Z

Investmentcommittee

Board

Fund-of-funds investing in VC/PE funds focussing on Dutch innovativeSMEs

Sectors (« Topsectoren »): LS, High Tech, Cleantech, ICT,…

Fund size of EUR 157.5m

Complementary to other products of the Ministry of Economic Affairs(such as Seed Capital and Innovation Credit)

Targeted portfolio of some 12-15 funds

Advised by EIF

Key facts

Strategicpartners

Dutch Venture Initiative /DVI-1

Ministerie van EZ

EIB Group / EIF

PPM Oost

BOM

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Dutch Venture Initiative /DVI-1

DVI’s Underlying Dutch SME Portfolio

Internationalportfolio ofcompanies>50% is Dutch

Dutch entrepreneurs are building moreand more world-leading companies

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