Is there a Shortage of Venture Capital in the Netherlands?

Money isn’t missing — opportunities are. The fix lies in talent and market depth, not another public bank.

Executive Summary

Europe’s innovation challenge is not a lack of money but of scale and skills. Despite ambitious support schemes, the EU still trails global peers in productivity and technological diffusion. Fragmented markets and shortages in advanced skills — from engineering to applied research — constrain innovation more than the level of fiscal incentives.

Expanding Europe’s talent base and completing the Single Market would deliver greater impact than new subsidies. Recognition of qualifications, cross-border research mobility and stronger technical education can enlarge Europe’s innovation workforce. Removing barriers in services, data and finance would allow firms — especially in countries like the Netherlands, where knowledge intensity is high but scale is limited — to expand across borders and capture returns to innovation.

The policy message is clear: innovation policy should prioritise talent, integration and market depth over tax breaks and fragmented subsidy schemes — aligning EU and national strategies toward a genuinely continental innovation area.

According to Draghi (2024), Europe’s missed productivity growth mainly stems from the fact that the United States has a much larger, more innovative, and more productive tech sector. To replicate this American success, Dutch policy aims to stimulate the emergence and growth of start-ups and scale-ups in the tech sector.

When it comes to promoting start-ups and scale-ups, the perceived lack of financing receives the most policy attention. In the U.S., three times more venture capital is invested than in the European Union (Arampatzi et al., 2025). Techleap and NVP (2021) claim that the Netherlands faces a shortage of start-up investors. The Schoof cabinet has already allocated €900 million in additional funds to Invest-NL and is exploring the creation of a National Investment Bank (2025). The latest Budget Memorandum also set aside €200 million through the European Tech Initiative to address financing problems among Dutch start-ups and scale-ups.

However, as Draghi (2024) recognised, the difference in venture capital investment between the U.S. and the EU may also stem from demand-side issues: there are fewer promising investment opportunities, leading to fewer venture capital investments. Empirical research, such as that by Ambrosio et al. (2021), which tries to disentangle this chicken-and-egg problem by comparing the availability of venture capital with the number of profitable firms, provides little clarity. The correlation between the two variables is high and hard to separate. To assess whether venture capital availability in the Netherlands is truly a problem for the sector, this article looks at what entrepreneurs say about financing availability and what the market says about expected returns.

1. Sufficient Venture Capital in the Netherlands

According to entrepreneurs, financing is hardly a problem in the Netherlands. Access to finance is cited as the least significant obstacle to investment in the EU, except for Denmark (EIB, 2023). This is not surprising: the Netherlands has one of the most developed capital markets in the EU (Van Dijk and Van Rijn, 2024). In other words, capital is abundant and searching for investment opportunities.

There is no obvious reason why this capital would not flow to start-ups and scale-ups if expected returns were high enough. In fact, there are anecdotal signs that there is too much venture capital. Venture investor Prime Venture stopped raising a new fund because it could not find suitable investments (FD, 2025). Competition in the Dutch venture capital market is intense: foreign venture capital is increasingly entering the market. Between 2018 and 2023, international investors participated in 85% of large funding rounds (over €100 million) and 37–68% of smaller ones (Techleap, 2024).

The evidence supporting a funding gap for scale-ups is weak. This claim appears often, for example in the interdepartmental policy study on business financing (IBO, 2024), in a Ministry of Economic Affairs letter (Parliament, 2025), and in the election programs of CDA and VVD (CDA, 2025; VVD, 2025). All these studies rely on a Techleap (2024) report showing that the Netherlands has relatively few scale-ups (over €10 million in funding) compared to start-ups (€100,000–10 million). However, this snapshot says little about whether start-ups actually grow into scale-ups. Even if fewer companies scale up, that alone doesn’t prove a funding shortage, it may point to other growth barriers instead.

In some European countries with poorly developed capital markets, a weak venture capital sector may indeed constrain company growth (EIB, 2025). These countries, often in Eastern Europe, are falling further behind nations like the Netherlands and Denmark (New Financial, 2020). Draghi (2024) therefore stresses the need to integrate capital markets across the EU so that capital can reach these lagging regions. But when we look at the Dutch capital market, there is little evidence of a capital supply problem for start-ups and scale-ups.

2. Lack of Returns

Low investment in innovation and technology may instead be due to poor returns on investment opportunities in Europe. Available capital is then deployed elsewhere in the world. This explanation seems plausible.

Gros et al. (2024) show in their macroeconomic analysis that expected returns on investments in the U.S. have been higher than in the EU since the early 2000s, when the U.S. tech sector began to surge. This suggests that the U.S. offers more attractive opportunities relative to available capital.

Several factors explain this. The U.S. has a large domestic market. A start-up’s expected return increases when it can serve a large market and scale quickly. Although the EU market is larger on paper, it suffers from barriers between member states. The IMF (2024) calculated that these barriers are equivalent to a 40% tariff on goods and 110% on services.

Furthermore, investment opportunities may be better in the U.S. because the cost of failure is lower (Coatanlem & Coste, 2024), or because commercialising university research in Europe is more difficult (StepUp StartUps, 2025).

Another crucial factor is talent. The U.S. stands out from the Netherlands and other EU countries for its abundant supply of skilled labor (OECD, 2025). Talent is essential for a vibrant entrepreneurial ecosystem (Qian et al., 2013): you need it to start new companies, and tech firms need it to grow. America’s top universities and the magnetism of Silicon Valley attract global talent. Many successful U.S. tech companies were founded by immigrants (Azoulay et al., 2022). Amazon’s choice of Virginia for its second headquarters, based on talent availability rather than subsidies, illustrates how decisive talent is (Berube, 2018).

3. An Investment Bank Won’t Help

The question, then, is whether a public investment bank like Invest-NL, founded in 2019, is necessary to stimulate start-ups in the Netherlands. Market-based capital from Invest-NL can add value if there are financial frictions such as information asymmetry. However, the extent of these frictions, and whether public project financing is the most efficient way to address them, is debatable (CPB, 2024).

Public investment banks also carry risks. Historically, government intervention in the venture capital market has often led to disappointment (Lerner, 2009). There may be other reasons to create a national investment bank, such as consolidating programs under one roof or resolving coordination failures, but not necessarily to fix a supposed funding shortage.

New innovative firms are crucial for productivity growth. However, the Dutch government would likely be better off supporting the start-up ecosystem through other policies: strengthening the entrepreneurial ecosystem (OECD, 2025), educating and attracting talent (Van Dijk, 2025), investing in universities and improving research valorization (Birch, 2023), and tackling broader growth barriers, such as further integration of the EU internal market (Letta, 2024).

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