How the Netherlands became Europe’s startup hub

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 – and fall – illustrates an entrepreneurial spirit in a tiny country that birthed global travel’s Booking.com and electronics behemoth Philips.

“The headlines said, ‘VanMoof went Van Poof,’” says Vilma Chila, a professor of entrepreneurship and innovation at the University of Amsterdam’s business school. “But it’s 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.”

Indeed, the Netherlands plays an outsize role in Europe’s 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’s fast-paced capitalistic ethos than France’s or Germany’s, 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. 

“The Dutch were sailors and traders, and they’ve always done business abroad; they’ve always expanded,” says Dr. Chila. “Now they’ve got a thriving entrepreneurial ecosystem.”

“Give it a shot” atmosphere

Amsterdam is already one of Europe’s fastest-growing startup hubs, with the market cap of Netherlands-founded startups potentially reaching a total of €400 billion this decade.

The port city has plenty to offer as a laboratory. It boasts the European Union’s 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’s planning to stay. “I love the openness here, and the hierarchy is less evident [than in India],” says Mr. Ankur. “I can talk to my professors like a colleague.”

After he graduates, a plethora of entrepreneurship programs await, including university-sponsored grants of €10,000 to try out vetted ideas, with incubators stepping in at higher funding levels.

A handful of cultural “intangibles” also boosts the energy around startups, says Jonathan Sitruk, a professor of entrepreneurship and innovation at the University of Amsterdam. “There’s a lot of romanticism around entrepreneurship in the culture,” he says, noting that his students and the general public are “very interested in startups and what they do.”

That culture was shaped over centuries, coming from a Protestant work ethic and the concept that “making money is not a bad thing, and building a business is not a bad thing.” Contrasted with the more Catholic traditions of neighboring countries, these traditions, Dr. Sitruk says, clearly impact “the way society behaves.”

For example, there’s almost no bureaucracy, with a company readily initiated in an afternoon at the appropriate government office. “This is really quickly done and very accessible to anyone who does or does not speak Dutch,” says Dr. Sitruk.

A societal pragmatism also values trying over a fear of failing. “The 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,” says Dr. Chila. 

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. There are also strengths in electric mobility, life sciences, sensor technology, and a host of other industries. 

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 “unchecked pace of internationalization” in education, the workplace, and the community. The country’s far-right party won the largest single bloc of seats in parliament in November on an anti-migration, anti-EU platform.

Yet “in-migration of skilled people” 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.

“To some degree, the Dutch government and also society has forgotten about this part of Dutch success,” says Dr. Stam, pointing to a growing narrative that migration is bad for the Dutch economy.

Another problem: Many Dutch startups don’t scale up successfully. The sheer number of startups and amount of venture capital are “top leagues globally,” says Dr. Stam, “but if you look at the number of scale-ups and unicorns, they do slightly less. You’d expect a higher position given the overall strength of the ecosystem.”

VanMoof could be considered one case study in failure to scale.

Rise and fall of VanMoof

“People loved the design; they wanted it,” says Andres Martinez, founder of the bike repair shop WheelGood in Amsterdam, about VanMoof’s early success. “I ditched my car for riding a bike, like a lot of these [customers].”

VanMoof expanded quickly globally, but it couldn’t keep up with servicing demands and ultimately sold bikes below cost. 

Still, it was the Dutch ethos that birthed the company’s 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. “Same with VanMoof,” he says. “Making a difference is hard. They innovated, and now you see a lot of companies copying their bikes. We have to be proud of it.”

Overall, the Dutch ecosystem is raring to go, say experts. 

“The Netherlands can be a laboratory for all kinds of entrepreneurial experiments to address societal challenges,” says Dr. Stam, the entrepreneurship professor. “There are not so many economies in which the room to maneuver, or the appreciation of creativity are so well developed.”