The landscape of venture capital (VC) and private equity (PE) in the Netherlands has experienced notable shifts in 2024. The Dutch Private Equity and Venture Capital Association, known as the Nederlandse Vereniging van Participatiemaatschappijen (NVP), has unveiled its annual report, spotlighting investment trends and challenges. This extensive report outlines developments in funding for startups and scaleups, providing insights into the broader financial ecosystem of the country. Importantly, this year’s investment volume in Dutch startups, measuring at €1.2 billion, reflects a stabilization rather than a significant increase, indicating a potential pause in the previous dynamic upwards trend.
Regarding historical patterns, the Dutch venture capital market has witnessed robust growth in recent years, marked by significant deals and an influx of foreign investments. However, the 2024 report highlights a plateau in investment volumes, contrasting with past years’ upward trajectories. Previous records showed increasing investments and rising numbers in both deals and sectors involved. While earlier years hinted at an expansive growth phase, the current trend suggests a more cautious approach, aligning more investments with specific opportunities rather than overall market growth.
Why Did Scaleup Investments Decline?
Dutch scaleup investments have dropped substantially to €698 million in 2024, distributed across 88 companies, compared to €1.06 billion in 2023. The reduced scaleup investments relate to declining larger follow-up rounds this year. The smallest fundraising total since 2016 accentuates a market contraction, affecting numerous sectors within the growth capital spectrum. Institutional investors may need to identify new avenues to ensure the vibrancy of the local entrepreneurial scene.
What About Buyout Activity?
Buyout activities reflected a varied landscape, with PE investments totaling €5.8 billion in 111 Dutch companies. Although this marks an increase from the previous year, exit strategies play a crucial role in maintaining this investment cycle. The number of company sales increased to 63 from 52, highlighting a regained momentum crucial for a sustainable investment ecosystem.
In terms of capital raising, Dutch venture capitalists raised €3.2 billion predominantly from international pension funds, showing a consistent capital influx. This trend mirrors the previous year’s figures while resting comfortably above average historical levels. New VC funds have emerged, focusing on technology and sustainability, reflecting strategic shifts to align investments with sectors poised for future growth.
The development of notable funds in the deep tech, digital, and sustainable sectors, underscored by initiatives such as Innovation Industries Fund III and 4impact Fund II, bolster the Dutch market’s ability to compete on a global level. Such funds target digital and sustainable innovations, crucial areas identified by investment analysts as key to future economic resilience.
“The importance of a well-functioning sales climate cannot be overemphasized,” said Felix Zwart, NVP’s head of research. Highlighting the balance required between investment and subsequent exits, he emphasized the need for a robust sales market in Europe.
Annemarie Jorritsma, NVP chair, noted, “It is encouraging to see that private equity and venture capital are ready to support companies with risk capital, knowledge, and expertise…there is a clear task here for all of us to work together.”
With venture capital and private equity activities remaining pivotal for the economic landscape, the intricate growth capital dynamics stress the need to foster environments conducive to both startup inception and scaleup nurturing. Institutional investors are integral in this regard, as strategic investments in promising yet established ventures can significantly amplify regional and international growth trajectories. Hence, recalibrating fund allocation strategies to tap into the less saturated scaleup market might unleash untapped financial potential, enhancing both national and cross-border economic prospects.
