How the Netherlands became Europe鈥檚 startup hub
| Amsterdam
The spectacular failure of VanMoof, the Dutch company once dubbed the Tesla of electric bikes, has dominated business headlines about the Netherlands.
Launched by two Dutch brothers, VanMoof tucked the bulky e-bike battery into a sleek frame, which floated down Amsterdam streets. The bikes found a rabid 200,000-strong global following, only to descend into bankruptcy late last year.
But in many ways, its rise 鈥� and fall 鈥� illustrates an entrepreneurial spirit in a tiny country that birthed global travel鈥檚 Booking.com and electronics behemoth Philips.
Why We Wrote This
A story focused onIn the Netherlands, an e-bike company bankruptcy masked a thriving startup ecosystem. What鈥檚 behind the small country鈥檚 entrepreneurial spirit?
鈥淭he headlines said, 鈥榁anMoof went Van Poof,鈥欌�� says Vilma Chila, a professor of entrepreneurship and innovation at the University of Amsterdam鈥檚 business school. 鈥淏ut it鈥檚 a little unfair to the city and country. Big firms are thriving, and Amsterdam is a city of 900,000 people, with 65% of all venture-backed startups in the general area of western and northern Europe located here.鈥�
Indeed, the Netherlands plays an outsize role in Europe鈥檚 startup ecosystem. It has a culture that encourages risk-taking, universities that draw skilled minds from around the world, and a government friendly to entrepreneurs. Its startup culture hews closer to America鈥檚 fast-paced capitalistic ethos than France鈥檚 or Germany鈥檚, say experts, and could potentially help Europe become a global leader in entrepreneurship. But the Netherlands must first work through a few limitations, including growing anti-immigrant sentiment and a spotty track record when it comes to scaling up.聽
鈥淭he Dutch were sailors and traders, and they鈥檝e always done business abroad; they鈥檝e always expanded,鈥� says Dr. Chila. 鈥淣ow they鈥檝e got a thriving entrepreneurial ecosystem.鈥�
鈥淕ive it a shot鈥� atmosphere
Amsterdam is already one of Europe鈥檚 fastest-growing startup hubs, with the market cap of Netherlands-founded startups potentially reaching a total of 鈧�400 billion this decade.
The port city has plenty to offer as a laboratory.聽It boasts the European Union鈥檚 second-largest airport behind Paris. It also re-homed more United Kingdom-based companies after the U.K. left the EU than any other European city.
Add to that a university system that attracts global talent. Satya Ankur gave up a tech career in India to further study computer science in Amsterdam, and he鈥檚 planning to stay.聽鈥淚 love the openness here, and the hierarchy is less evident [than in India],鈥� says Mr. Ankur.聽鈥淚 can talk to my professors like a colleague.鈥�
After he graduates, a plethora of entrepreneurship programs await, including university-sponsored grants of 鈧�10,000 to try out vetted ideas, with incubators stepping in at higher funding levels.
A handful of cultural 鈥渋ntangibles鈥� also boosts the energy around startups, says Jonathan Sitruk, a professor of entrepreneurship and innovation at the University of Amsterdam.聽鈥淭here鈥檚 a lot of romanticism around entrepreneurship in the culture,鈥� he says, noting that his students and the general public are 鈥渧ery interested in startups and what they do.鈥�
That culture was shaped over centuries, coming from a Protestant work ethic and the concept that 鈥渕aking money is not a bad thing, and building a business is not a bad thing.鈥� Contrasted with the more Catholic traditions of neighboring countries, these traditions, Dr. Sitruk says, clearly impact 鈥渢he way society behaves.鈥�
For example, there鈥檚 almost no bureaucracy, with a company readily initiated in an afternoon at the appropriate government office. 鈥淭his is really quickly done and very accessible to anyone who does or does not speak Dutch,鈥� says Dr. Sitruk.
A societal pragmatism also values trying over a fear of failing. 鈥淭he Dutch have created this atmosphere where you put a little money into something, see if it works, open your own shop, give it a shot,鈥� says Dr. Chila.聽
And they have. Health and fintech take the top two spots in the Netherlands, commanding the largest shares of startup funding, as they do in the United States.聽There are also strengths in electric mobility, life sciences, sensor technology, and a host of other industries.聽
Weak points
All that business activity and the influx of talent have stretched Amsterdam to its seams. Housing is pricey and scarce, and the Dutch education minister proposes to limit foreign enrollment at colleges to tackle the 鈥渦nchecked pace of internationalization鈥� in education, the workplace, and the community. The country鈥檚 far-right party won the largest single bloc of seats in parliament in November on an anti-migration, anti-EU platform.
Yet 鈥渋n-migration of skilled people鈥� dates back to the Golden Age of the 17th century, which birthed the painter Rembrandt and the United East India Company, says Erik Stam, professor of entrepreneurship and former dean of the economics school at Utrecht University.
鈥淭o some degree, the Dutch government and also society has forgotten about this part of Dutch success,鈥� says Dr. Stam, pointing to a growing narrative that migration is bad for the Dutch economy.
Another problem: Many Dutch startups don鈥檛 scale up successfully. The sheer number of startups and amount of venture capital are 鈥渢op leagues globally,鈥� says Dr. Stam, 鈥渂ut if you look at the number of scale-ups and unicorns, they do slightly less. You鈥檇 expect a higher position given the overall strength of the ecosystem.鈥�
VanMoof could be considered one case study in failure to scale.
Rise and fall of VanMoof
鈥淧eople loved the design; they wanted it,鈥� says Andres Martinez, founder of the bike repair shop WheelGood in Amsterdam, about VanMoof鈥檚 early success. 鈥淚 ditched my car for riding a bike, like a lot of these [customers].鈥�
VanMoof expanded quickly globally, but it couldn鈥檛 keep up with servicing demands and ultimately sold bikes below cost.聽
Still, it was the Dutch ethos that birthed the company鈥檚 initial success, and that should be celebrated, says Colin Westerwoudt, an Amsterdam-based entrepreneur who rides a VanMoof bike to work.
He compares the company to Tesla, which faced spectacularly bad press for engine fires and other technology issues but ultimately helped advance the electric vehicle market. 鈥淪ame with VanMoof,鈥� he says. 鈥淢aking a difference is hard. They innovated, and now you see a lot of companies copying their bikes. We have to be proud of it.鈥�
Overall, the Dutch ecosystem is raring to go, say experts.聽
鈥淭he Netherlands can be a laboratory for all kinds of entrepreneurial experiments to address societal challenges,鈥� says Dr. Stam, the entrepreneurship professor. 鈥淭here are not so many economies in which the room to maneuver, or the appreciation of creativity are so well developed.鈥�
