The keys to the success of "Dutch Tech"

As a traditionally innovation-oriented country, the Netherlands has not only well-established market giants but also ambitious, highly competitive start-ups. How can a country with such a small population compared to its competitors be so successful in such a strategic field?

The Netherlands, a model of success for high-tech start-ups

The strength of the Netherlands lies in its ability to create competitive new businesses. It has 2.6 times more start-ups per million inhabitants than the average of other European countries. Moreover, the Netherlands may have "only" 17 million inhabitants, but it has almost the same number of start-ups as France ... even though it has four times the population. Among them are unicorns in communications (MessageBird), fintech (Mollie, Mambu, Bunk), fashion (Otrium) and e-commerce (Sendcloud), a major sector in the Netherlands where 99% of the population is connected (internet or mobile). There are also global heavyweights, some of them former start-ups, such as Adyen (electronic payment), Booking.com (accommodation) and TomTom (route planning). Investments in these start-ups have increased considerably, from €1.7 billion in 2020 to €5.3 billion in 2021. The latest accolade: the Global Innovation Index 2020, which rewards the most innovative countries, ranks the Netherlands 5th worldwide.

The influence of Dutch culture

There are several reasons for this success, starting with the history of the Netherlands. Innovation is part of the Dutch DNA, as they had to "take their land out of the water", fight floods and invent solutions like polders to address this problem. Because of their geographical position, the Netherlands naturally turned to maritime trade, developed a trading mindset and, from there, innovated in shipbuilding. As early as the 17th century and the beginnings of capitalism, there was a particular taste for entrepreneurship and a pronounced appetite for international development.

But the real shift in the Netherlands towards a knowledge-based society has economic reasons. In a country of full employment, an increase in productivity necessarily requires innovation. The government has therefore focused on education, which has proven to be a profitable choice: the Dutch population is qualified and multilingual, which allows them to easily travel abroad and therefore to feed their curiosity and innovative spirit.

The Netherlands, an organizational model focused on innovation

Beyond its history and culture, the Netherlands has other specificities, starting with the presence of world-class clusters and research and development centers throughout the country. There is an aerospace center of expertise in Delft, logistics in Groningen, medtech in Twente, deeptech / e-commerce in Amsterdam and agrotech in Wageningen. The best example, however, is the High-Tech Campus in Eindhoven, which has been dubbed the "smartest square mile in the world". It has 10,000 employees and researchers, as well as around 100 companies and institutions. This is the great strength of the Netherlands: a symbiosis between the private sector, research centers and the government, even if the role of the latter is more limited.

The Netherlands also succeeds in attracting workers and investors from all over the world thanks to a flexible tax policy. A foreigner who settles in the Netherlands benefits from a 30% tax reduction for 5 years. More generally, the simple and efficient administration makes things easy for entrepreneurs. On the other hand, the flexibility of the Dutch social and fiscal policy sometimes attracts the wrath of its European neighbors.

In addition, the high-tech sector offers solutions in a wide range of fields (such as health care, for example), which explains the growing interest of global companies from different sectors (Tesla, Intel, IBM, Airbus, Canon, Bosch) who are investing more and more in these start-ups.

Finally, Dutch Tech has a luxury ambassador in Constantijn van Oranje Nassau, brother of the current King of the Netherlands, who actively promotes these start-ups abroad in order to attract investors.

The Netherlands, a model to follow?

Dutch Tech has its own problems: low employee ownership, a tight labor market (especially in strategic positions), and a decline in the share of Dutch investment from 62% to 21.7% between 2019 and 2021, which raises a sovereignty issue.

But these rare shortcomings do not detract from the country's capacity for innovation and the success of these companies, both giants and unicorns. The mastery of advanced technologies, which has become a geopolitical issue, raises the question of whether Europe can draw inspiration from the Dutch model in order to hope to compete with Asia and the United States in this field.