Only 1 in 5 Dutch startups becomes a scale-up, TNO finds

The Netherlands produces plenty of promising technology startups, but far too few of them go on to become large international companies. That is the conclusion of a new report from research organisation TNO, published on 28 September and commissioned by NXTGEN Hightech.

According to the study, 21.6% of Dutch startups reach the scale-up stage. That is below the European average of 24.1% and less than half the 52.2% seen in the United States. The researchers say the gap is not caused by any one problem. It comes from a combination of external and internal bottlenecks, including grid congestion, shortages of skilled technical staff and too few testing facilities.

"Startups currently lose too much time," said Lotte de Groen, market director at TNO Vector. She pointed to financing, talent, infrastructure and regulation as the main areas where companies get stuck.

Slower funding, slower growth

The report, titled Speed as Key Success Factor for Scale-ups, compares the Dutch ecosystem with those of the United States, China and Singapore, among others. Funding is one of the clearest differences. In the US, 39% of companies move from a Series A to a Series B funding round, against 24% in the Netherlands. The transition also happens much faster there. European firms take an average of 5.8 years to make that step, while American firms do it in 2.3 years.

China and Singapore show how targeted government policy can speed things up. China pairs heavy investment in strategic technologies with a huge domestic market, and Singapore has focused on developing and attracting talent. The researchers caution that these models cannot simply be copied, given differences in governance and population size, and argue that Europe needs an approach of its own.

Real-world delays

Interviews with entrepreneurs show how these problems play out. Battery developer LeydenJar lost about a year because the grid connection for a new factory was not delivered on time, and slow subsidy procedures added further delays. VitalFluid, which makes plasma-activated water for horticulture, says European rules are poorly suited to its type of product, which makes entering the market slow and expensive. Cybersecurity firm SandGrain describes the difficult period between developing a technology and launching it. During that stretch, a company has to win customers, earn revenue and persuade investors all at the same time, while competitors keep moving.

Internal challenges matter too. Many tech companies are strong at innovation but still have to build skills in manufacturing, sales, leadership and market development as they grow.

A coordinated response

The researchers argue that more growth capital alone will not solve the problem. It only helps if companies also have access to talent, facilities, energy infrastructure, workable regulation and customers. Because the Dutch market is too small on its own, European cooperation is essential. Still, the report says the Netherlands can act by itself in several ways. It can expand late-stage growth capital, invest in technical talent and leadership, improve access to testing sites, production space and grid capacity, and simplify regulation. It also recommends that the government act more often as a first customer for new technologies.

Monika Hoekstra, managing director of NXTGEN Hightech, said startups do not need to build every capability themselves. In her view, making better use of the specialised suppliers the Netherlands already has could help companies scale faster and compete globally.