Dutch Ministry of Economic Affairs Dutch innovation and entrepre- neurship policies, interventions in the venture capital market. 8 th September 2015, OECD Paris Dutch Ministry of Economic Affairs Directorate General Enterprise & Innovation Jan Dexel j.dexel@minez.nl
The Netherlands in the world, the humble giant? 135 th Size 52 st Population 17 th Economy GDP 12 th Universities in top 200 10 th GDP per capita 8 th WEF Global Competitiveness 2013 6 th EC Innovation Union Scoreboard EU2014 4 th INSEAD World’s Most Innovative Countries 3 th Best country to live 2 nd Agro exporter 1 th Commodity trading globally 1 th most enterprising country in Europe 2
The Netherlands in the world, the humble giant? 135 th Size 52 st Population 17 th Economy GDP 12 th Universities in top 200 The Netherlands in the world, the humble giant? 10 th GDP per capita 5 th EC Innovation Union Scoreboard d 5 th WEF Global Competitiveness 4 th INSEAD World’s Most Innovative Countries 3 th Best country to live 2 nd Agro exporter 1 th Commodity trading globally 1 th most enterprising country in Europe 3
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 4
Changes in the Dutch Innovation and Industrial 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 reduction for R&D-investments) • Shift in focus of research and innovation, focus on nine top sectors and development of generic revolving innovation fund InnovatiefondsMKB+ / Toekomstfonds 5
“Right horse for the right course in the financial landscape” low Loans Banks Risk Subordinated loans / mezzanine profile FFF Informals Venture capitalists Private Equity Risk capital high Prepare Start Growth Expansion Consolidation Positioning of schemes in portfolio: risk profile versus maturity phase of company/organisation. 6
“Right horse for the right course in the financial landscape” low BMKB GO Loans Banks Intern. instrum. Risk Subordinated loans / mezzanine Growth facility profile Qredits microkrediet ROM FFF Informals Venture capitalists Private Equity Risk capital Seed Fund- capital of-funds high Prepare Start Growth Expansion Consolidation Positioning of schemes in portfolio: risk profile versus maturity phase of company/organisation. 7
Peer reviews • OECD Review Netherlands, 2014: “Venture capital investment as a percentage of GDP is roughly on par with some comparator countries in the EU but is far behind the leading countries.” “The fund of funds and co-investment approaches are considered good practice owing to their 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 capital activity increases the total amount of venture capital funding available.” “enterprises with mixed funding are significantly more likely to have successful exits than enterprises that receive pure private venture capital funding while enterprises that receive pure government-sponsored funding are less likely to have successful exits.” “for enterprises receiving mixed funding, it seems that the better exit performance is due largely to obtaining more investment”
The Dutch VC ecosystem is well developed, but improvements are possible Stock exchanges 45 MBO/MBI funds 12 growth capital funds < € 150 mln > 41 venture capital funds + 13 corporate venture capital funds > 7 regional investors > 40 seed capital funds FFF & Informals Seed capital Growth capital Management buyout “Start up” “Scale up” “Staying ahead Grants/subsidies Subsidies Subsidies Equity Equity Equity Alternative finance Subordinated loans Subordinated loans Alternative finance Bank loans Alternative finance 9
The Dutch VC ecosystem is well developed, but improvements are possible Stock exchanges 45 MBO/MBI funds 12 growth capital EZ & EIF Dutch Venture Initiative funds < € 150 mln > 41 venture capital funds + 13 corporate venture capital funds EZ ROM’s > 7 regional investors > 40 seed capital EZ Seed Capital funds EZ VFF FFF & Informals Seed capital Growth capital Management buyout “Start up” “Scale up” “Staying ahead Grants/subsidies Subsidies Subsidies Equity Equity Equity Alternative finance Subordinated loans Subordinated loans Alternative finance Bank loans Alternative finance 10
Developments in Dutch later stage venture capital market. [ref. NVP 2015] Dutch entrepreneurs are building more and more world-leading companies The Dutch VC ecosystem is well developed, but improvements are possible Larger fund sizes would enable Dutch fund managers to finance successes through the growth phase Larger fund sizes would enable Dutch fund managers to attract more (foreign) institutional investors Larger funds would require a wider geographic scope: invest in Dutch world-leading companies through European growth capital funds
“Corporate structure” DVI EIF 3 e private LP’s LP(‘s) EIF PPM Oost “Second closing” “First closing” additional € 150 mln € 150 mln Board Advisory & fund- management role Portfolio of Fund-of-funds for EIF “Fund-of-funds” “Dutch Venture Initiative” Investment committee “Later stage funds” Fund M Fund N Fund Z Portfolio of fast growing innovative companies 12
Dutch Venture Initiative / DVI-1 Fund-of-funds investing in VC/PE funds focussing on Dutch innovative Key facts SMEs 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 Ministerie van EZ Strategic EIB Group / EIF partners PPM Oost BOM
Dutch Venture Initiative / DVI-1 DVI’s Underlying Dutch SME Portfolio International portfolio of companies >50% is Dutch 14
Dutch entrepreneurs are building more and more world-leading companies
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