How US capital can scale Dutch deep tech safely

The Netherlands builds world-class science, but it struggles to scale its most promising innovations. While Dutch universities and labs produce breakthrough technologies, local companies often hit a wall when they need late-stage growth capital. A report by national investment arm Invest-NL reveals that American venture capital has become a vital catalyst for these firms.

Rather than a threat to national sovereignty, transatlantic capital offers a strategic bridge to global markets. However, this relationship requires active management. To maintain its competitive edge, the Netherlands must learn to welcome American dollars while keeping its core intellectual property, research, and talent firmly anchored at home.

The reality of the late-stage funding gap

The analysis underlines how funding disparity between Europe and the United States becomes starkly visible as technology companies mature. In the early stages, European investors fund up to 93% of deep tech rounds. However, when companies reach Series C and larger growth phases, they require deep capital pools that European markets currently lack.

According to recent data, American participation in Dutch funding rounds between €50 million and €100 million surged from 14% to 40% in recent years, while European participation in the same segment dropped from 55% to 21%. American investors bring specialized sector expertise, immediate access to the world’s largest homogeneous market, and vital connections to corporate partners.

For sectors like semiconductors, photonics, and quantum computing, the United States houses the primary customer base and the most viable exit routes. Forcing Dutch firms to rely solely on domestic capital limits their ability to compete globally.

The rise of the layered expansion model

Critics often fear that accepting American capital triggers an immediate brain drain, pulling Dutch companies entirely across the Atlantic. The data, however, tells a different story. According to Invest-NL findings, only 3.1% of Dutch startups ultimately relocate their parent entities abroad. Instead, successful deep tech firms adopt a "layered expansion model". 

Under this structure, companies establish a corporate or commercial subsidiary in the United States to handle sales, marketing, and investor relations. Meanwhile, they keep their core engineering, research and development, and technical talent rooted in the Netherlands.

By keeping the scientific engine in Europe and the commercial engine in the United States, deep tech founders can scale rapidly without stripping their home country of economic value. The goal is to build global champions with deep Dutch roots.

Avoiding the pitfalls of the Delaware flip

Despite the benefits of layered expansion, American investors often pressure European startups to execute a "Delaware flip, relocating the parent company to the US, a process which can create severe legal and operational risks if executed poorly.

A primary danger is "legal limbo," where the new American parent fails to secure proper ownership of the underlying technology. To prevent this, Dutch firms must ensure that all employees and contractors explicitly assign their intellectual property to the correct legal entity. Furthermore, founders can avoid the pressure to flip by structuring their Dutch entities to mirror American investor expectations.

Implementing United States-style preferred stock, drafting robust shareholder agreements with clear investor veto rights, and aligning deal terms with National Venture Capital Association standards can satisfy American funds. These mechanisms allow Dutch firms to attract institutional capital without changing their legal seat or losing control of their core technology.

Stricter safeguards and the expanding Vifo Act

As geopolitical tensions rise, the terms of transatlantic deal-making are shifting from purely economic decisions to matters of national security. The Dutch government is actively intervening to protect critical technologies from unwanted foreign control. Effective January 1, 2027, the government will expand the Act on Security Screening of Investments, Mergers, and Acquisitions, known as the Vifo Act.

This expansion adds six strategic sectors to the mandatory screening registry: biotechnology, AI, advanced materials, nanotechnology, sensor and navigation technology, and medical nuclear technology. While these regulations aim to block undesirable technology transfers, they must remain proportionate. Invest-NL underscores how overly restrictive policies risk choking off the very capital that Dutch deep tech companies need to scale. The challenge for Dutch policymakers is to design a system that protects national security interests while keeping the country open to trusted international investment syndicates.

Mobilizing capital to build a resilient flywheel

Relying entirely on American capital is not a sustainable long-term strategy for European competitiveness, the report concludes. The Netherlands must simultaneously mobilize its own institutional wealth, particularly from pension funds and insurance companies, which remain historically risk-averse.

Currently, European deep tech remains relatively resilient, with nearly half of its investment coming from domestic sources or European funds. However, matching the ticket sizes of American growth rounds requires deeper domestic participation. To bridge this gap, the newly integrated national investment institutions of Invest-NL and Invest International can act as an anchor, co-investing alongside American venture funds.

This ensures that Dutch public and private entities maintain a seat at the table during critical late-stage decisions. Ultimately, the goal is to create an "exit flywheel". When a Dutch deep tech company succeeds globally, the resulting capital, talent, and entrepreneurial expertise must circulate back into the local ecosystem. This reinvestment cycle will fuel the next generation of Dutch innovation.