Starting January 14th Startup Delta will take its first tour around the Netherlands, to host a series of 6 mini-hackathons to co-create the online startup community ecosystems, centered around StartupDelta.org. The meetup session for the Amsterdam community is already fully booked, evidence of the excitement within the startup community around StartupDelta, lead by Neelie Kroes. The program for each of the six meetups focus on gathering and providing information around four points:
- Position the Netherlands as the country for startups within Europe.
- Attract (fast growing) tech startups, talent, investors and corporate innovation teams from foreign countries.
- Inform Dutch as well as foreign startups about all aspects relevant for Business Support.
- Create a community for all players within our Dutch startup ecosystem.
While the initiative seeks out to position the Netherlands as the startup hub for Europe, there is a key point that these meetups are not addressing: the lack of available capital in the Netherlands. One doesn’t need to look far for evidence of Dutch startups falling apart due to lack of funding, ie. online catering business VanChefs. News site StartupJuncture detailed all the funding raised by Dutch startups in 2014, totaling up to €500 Million across 75 companies. As StartupJuncture notes, this is something to be proud of among us Dutch, but to achieve the ambitions of StartupDelta to attract foreign startups and investors to the Netherlands, much more is necessary.
There is abundant wealth in the Netherlands; in order to create the reinvestment cycle that is character of Silicon Valley for successful startups, StartupDelta should focus on creating new sources of investment from experienced business people who can become Angel Investors and from big brand names that are able to make big investments. Venture Capital firms will also need to mature, but do more to raise capital for their funds. To understand more of why these funding structures are necessary to create leading startup scene in Europe, looking at the lifecycle of startups will provide more insight.
The Startup Life Cycle
My favorite definition of a Startup runs along these lines: “A startup is a company which has yet to find a scalable business model.” While some say a startup is a state of mind, the purpose of my definition is to take into account the monetary aspect of startup companies. Most startups seek this scalable model as they develop or have developed a product or service ready for the market. However, where most startups encounter problems is a region in the life cycle known as the “Valley of Death”. Typically speaking, companies need capital during this time in order to survive until it turns a profit and create and refine its scalable model. More than capital, founders need mentoring; cue the Angel Investors. Getting to the break-even point is no easy affair, and even then achieving a scalable model for sustainable growth is hard work. However, once the startup creates a scalable model, the company needs to grow too. Seed Rounds and Venture Capital will support the company team to expand in order scale out the product or service and eventually the maturity in which the company no longer really refers to itself as a startup. StartupDelta exists as a concentrated effort by the Ministry of Economics to support startups because the ministry recognizes the potential for small young companies to make a big impact. If the goal of creating a startup ecosystem is to be realized, capital must be available.
StartupDelta must create the Reinvestment Cycle to achieve its goals
StartupDelta will surely boost the Netherlands startup community, and the goals they’ve set as outlined above will help accomplish that. Nonetheless, an emphasis on making capital available to startups need to be present. The StartupDelta tour across the Netherlands will set the stage for Neelie Kroes and it is without a doubt of great importance. As these meetups take place to co-create the community portals, those present must focus on how to stimulate the Netherlands’ normally conservative fiscal sentiment into investing in risky startups. My suggestion is to build a place for startups and investors to seriously meet and find each other, but beyond that convince experienced business people with enough personal liquid assets to become Angel Investors. Furthermore, existing and future Venture Capital Firms in the Netherlands will need help raising money for their funds, StartupDelta can help here too. Ambitious entrepreneurs with talent and innovation are building startups and get great support from accelerators and knowledge centers (who are the main partners of StartupDelta too!). The next step in creating the reinvestment cycle for the startup ecosystem is to help these startups find their scalable model and reap profits. What comes next is hallmark of Silicon Valley, companies grow big, go public and profits are made for the startup, its Angels and the VCs; they go back to invest in new startups. When this happens, StartupDelta will succeed in making the Netherlands the startup ecosystem of Europe we want it to be.