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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
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
d
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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