What Canadian & Dutch Tech Entrepreneurs Can Learn from Each Other

What is the role of entrepreneurs in driving innovation? How important is cultivating a national culture of entrepreneurship to help disruptive technological innovations reach expansion, commercialization and internationalization stages?

Innovation and entrepreneurship are becoming synonymous. Delivering real, radical, and innovative products and services to the market requires a vehicle—and that vehicle comes in the shape of a start-up.However, large corporations also play a role in facilitating the innovation process; by supporting start-ups with the resources they need and providing the legitimacy they aspire to, large companies enable entrepreneurs to build, develop and deploy their technology.

If corporations play a role in supporting entrepreneurs, they speed up a linear research and development product’s access to the market. This accelerates start-up growth while integrating outside innovation into a corporation’s business units. The influence of large corporates lies in their sizeable digital platforms and portals. They hold enormous and comprehensive data sets, which combined with communication domination make them very powerful.

“Delivering real, radical, and innovative products and services to the market requires a vehicle—and that vehicle comes in the shape of a start-up.”

So, an entrepreneur in medical technology or biotech who is building a very specific solution to a surgical operating process knows from the start that they are building either to exit or collaborate with corporations like GE or Philips. It’s easier today for entrepreneurs to build multi-billion dollar companies if their idea, product or service proves to be successful.

What are some key indicators of the Netherlands’ tech ecosystem’s health that other countries, such as Canada, could learn from?

The Netherlands has a very good track record for innovation; several important tech companies like Philips, NXP and ASML are Dutch. Dutch people have a very anti-authoritarian streak and constantly challenge common wisdom by asking: “Is there a better way of doing this?” Together, these qualities make up our innovation DNA. In fact, the Netherlands is one of the earliest countries to endorse the Internet. The domain “.nl” is one of the first to be registered outside of the US.

Although venture capitalism was slow to grow in Holland, there has always been an appetite for new concepts. However, our tech ecosystem is not used to thinking of building a company and growing it through equity and foreign investments, resulting in a different growth mindset than those generated in North American hubs like Toronto, New York and Silicon Valley.

Also, investing in education and innovation helps us build our local talent pool. In the Netherlands, we offer coding classes and grass root activities to get groups that are underserved into our tech ecosystem.We also introduced a start-up visa and other migration policies to attract and retain start-ups and new talent in our country. That’s very important. Many countries are doing this already, but some—like the UK—are now imposing more stringent migration laws; limiting the flow of talent. This is counterproductive. Canada knows that very well.

What are some universal challenges faced by entrepreneurs today—and the solutions you have found to them in the Netherlands?

We have barriers in terms of market access, access to capital, talent acquisition, and building our investor networks. One of our biggest challenges is that our start-ups are trying to build their business and be transactional right away. They build their investor network only once they need capital, instead of fostering healthy relationships while building out their technology.

Another barrier we face is increasing our geographic concentration of venture capital. We aim to change that by getting more institutional investors to invest in the venture capital asset class. For example, in the past five years, we’ve seen dramatic growth in the start-up ecosystems in Scandinavian countries by the opening of large funds, as pension funds started to invest in VC.

“The more countries an entrepreneur is familiar with, in terms of its tech landscape, the more likely he or she is to leverage a collaboration with investment funds and venture capitalists, increasing chances of delivering innovative products, processes, or businesses.”

It’s one of our priorities to stimulate the formation of large funds that invest in companies until the later stages. That is something we don’t have enough of. Instead, every stage has its own funds, which creates complications in the funding funnel as it creates friction between the different funding stages. That’s something you’d like to avoid.

Therefore, I would encourage the current successful entrepreneurs to embrace a culture of payback whereby they provide their knowledge and capital to grow the next generation. This is crucial to a functioning ecosystem: entrepreneurs that have enjoyed success must continue to be involved and continue to invest in and support the next group of businesses.

How can government, industry, and academia come together to create a launching pad for entrepreneurial success to cultivate the Netherlands into an attractive destination for FDI, a gateway to Europe, and a favourable growth climate?

One lever we are looking to pull is a financial instrument that supports early stage investments similar to what we have seen in the UK. For example, to stimulate and support entrepreneurship, England has been very successful in offering two tax incentive schemes for UK taxpayers who invest in qualifying early stage and growth-focused businesses that are permanently established within the UK: the EIS and SEIS tax reliefs.

The first scheme, the Enterprise Investment Scheme (EIS), is designed to encourage investment in qualifying early stage growth-focused companies by providing investors with up to 30% of their investment back in income tax relief. Plus, investors can defer up to 50% Capital Gains Tax until after the EIS investment matures. They can also set loss relief against an investor’s Capital Gains Tax or income tax in the year of disposal or the previous year.

The second scheme, the Seed Enterprise Investment Scheme (SEIS), aims to encourage investment in qualifying new seed-stage companies by providing individuals with income tax relief.  Besides this, investors can also benefit from up to 50% Capital Gains Tax relief on gains that are reinvested in EIS eligible shares.

What similarities do you see between the Canadian and Dutch tech ecosystems—and how can they support each other?

Also, Canada and the Netherlands share an awareness that talent drives everything.Maybe this comes from the fact that lots of Canadian talent that usedto drain to the US. Everybody speaks about the importance of talent: universities, government, institutions and private entities.

AI remains very dominant and is more spread out across the world. The Netherlands has some good capabilities, but we’re not a world leader in this sector. Our strengths lie in logistics, medtech, food and agtech, and emerging technologies like photonics and quantum computing.

“As two small markets—Canada with 35 million and the Netherlands with 17million people—our limitations lie in capital allocation, market sizeand technology restrictions.”

We have a scientific collaboration already happening in AI and quantum computing, which has a lot of potential. There’s also a big drive to apply tech to climate and tackle the challenges in circular models, energy transition, health and biotech. Canada and the Netherlands are very similar countries in terms of leadership techniques, with similar interests to impact and deliver purpose rather than just make a lot of money.So maybe Dutch companies should consider establishing themselves in the Canadian tech hubs rather than focusing on the US, while Canadian companies should come to the Netherlands rather than elsewhere in Europe.

During your recent trip to Canada, what were you most surprised to learn about the Canadian tech ecosystem or economy in general? How competitive in tech do you consider Canada?

It surprised me to see that Canada is more risk-averse, similar to Europe. The appetite for entrepreneurship in the Netherlands is high; our country’s sentiment on entrepreneurship as a career is around 75% approval.  

While I was in Toronto, I attended the Creative Destruction Lab Annual Meeting. There is a strong concentration of talent from a great variety of businesses and technological centres. The best Canadian and international mentors and investors are reunited there. So, having seen the hub, I can confirm that although it is more conservative, the Canadian tech ecosystem is very strong and focused.

“Canada and the Netherlands are very similar countries in terms of leadership techniques, with similar interests to impact and deliver purpose rather than just make a lot of money.”

They also impressed me in how they do tech transfers, which is one of our biggest challenges in the Netherlands. They have set up an approach that brings mentorship into companies at a much earlier stage. This helps start-ups develop and find their go-to-market strategies. Many of our start-ups, ones that are very technology-focused, have innovative tech but very little understanding of their go-to-market strategy. This happens everywhere—not just in Europe or the Netherlands. It’s prevalent because those developing these technologies usually aren’t the best to bring them to the market. Collaborating with the Creative Destruction Lab in any kind of way will be a great opportunity.