The Dutch Financing Gap
The prosperity of the Netherlands and its future growth is built on a strong foundation of Research and Development. The innovations that have arisen from this culture have produced a wave of growth companies achieving scale. Banks and traditional funding providers must now keep pace with this wave to meet companies' future needs and ward off any widening in the financing gap.
Strong heritage
A wave of scaling growth companies drove the past strong economic development and laid the foundation for the Netherlands’ prosperity.
Dutch companies have in many areas demonstrated their skill in scaling growth. The country has produced global champions such as Philips, ING, Heineken and AkzoNobel. They, in turn, have helped drive the Netherlands' economic development and prosperity.
A fundamental shift
The Dutch economy is increasingly struggling to keep up with historic growth levels.
Banks and other traditional financing options are failing to reflect the fundamental shifts and needs of today’s new companies characterized by rapid growth and asset-light business models.
Missing out at scale
The next wave of economic growth cannot replicate the winning formula of the past. New sources of growth are required.
Despite generating attractive returns, Dutch growth financing continues to fall behind. As a benchmark, the U.S. shows ~5x more financing and ~17x more value creation per capita than the Netherlands. Despite its strength in research, The Netherlands lags behind in commercialisation and scaling, emphasizing the need to act now.
What’s needed going forward
To secure a leadership position in new battleground industries and drive economic growth to 2-3%, significant growth financing will be required to scale up to 4,500 new growth companies and create value of €1-3tn.
For the Netherlands this translates into a €0.5tn financing gap which equates to €25bn a year for the next twenty years. The Netherlands has to find ways to enable large pools of money, such as pension funds or insurances, to invest in the private markets at a broader scale. There are four potential action fields to achieve this goal:
Informing the broader public about the “growth financing” asset class
Shifting assets from public to private
Removing regulatory hurdles to pave the way for new asset allocation
Creating broad access, e.g. through lower investment thresholds or new models
This will secure Europe's strategic autonomy and its ability to finance and profit from the fast-growing companies that will shape our future societies.
