Dutch investors send far more venture capital abroad than into domestic startups

Dutch investors are sending far more venture capital abroad than into domestic startups, with over 113 billion dollars leaving the country in the past 25 years, according to a report released Tuesday by PwC. During the same period, 23.6 billion dollars came into the Netherlands, making the country a net exporter of venture capital.

Barbara Baarsma, PwC’s chief economist and a professor at the University of Amsterdam, told De Telegraaf that the trend reflects structural issues in Europe’s capital markets. “We need innovative companies to strengthen our productivity and earning capacity,” she said. Foreign markets offer faster scalability for startups, Baarsma noted.

Dutch venture capitalists focus heavily on the United States, the United Kingdom, India, as well as other European countries. At the same time, foreign investors are increasingly active in the Netherlands, with more than a quarter of venture capital in Dutch companies coming from the United States, reportedly creating strong dependence on American capital.

The Dutch venture capital market has grown significantly since 2000, with deals increasing over 4,500 percent and total investment volume rising roughly 5,700 percent. A global correction began in 2022 following pandemic-era stimulus and rising interest rates.

“During the pandemic, there was a huge amount of capital available because governments and central banks stimulated the economy,” Baarsma said. “Digitalization accelerated, leading large companies to acquire innovative startups to integrate into their operations. This caused an exceptional investment wave.”

Investments are shifting from telecom and traditional ICT to knowledge-intensive sectors such as AI, cleantech, and deeptech. “Venture capital shows where new value is created. It invests not in yesterday’s structures, but in the opportunities of tomorrow,” Baarsma said.

The government has introduced the National Investment Institution and invests 100 million euros annually in regional campuses and innovation ecosystems. Baarsma said these measures could help if they take risks private investors avoid. “If it has to be fully market-conform, it doesn’t add much. You want an institution to take risks that private parties shy away from,” she said.

Baarsma also emphasized the European dimension. “Europe’s internal market is larger than the United States, but we don’t exploit that scale. We have barriers across 27 member states, including capital market regulations. Due to tensions with the U.S. and China, the need for strategic cooperation within Europe has grown,” she said. Harmonized rules could facilitate cross-border investments and reduce capital outflow.