With about a tenth of the population of London, the larger area of Amsterdam (+100km) may be a relatively small delta region, but as a startup ecosystem it packs an increasingly big punch. Over the last decade, Amsterdam has been rising fast in terms of the overall value of its startup ecosystem.

Startups founded since 2000 in the city have a combined value of more than $86 billion, up from just $12 billion in 2015, the third largest total in Europe. Large exits of $50 million or more have also grown at an impressive rate compared to other European hubs. Since 2011, Amsterdam’s region saw a whopping 53% average year-over-year growth, compared to London’s rate of 8%.

What’s Behind This Impressive Growth?

Veterans of the local startup scene point to a number of factors contributing to the area's success. First among them is the Netherlands’ fundamental strengths as a home base for companies of all kinds. Centrally located with business friendly laws, strong infrastructure, and an extremely well educated workforce — over 90% of the Dutch population speaks English — Amsterdam is home to the headquarters of many multinational corporations, providing startups with a pool of expertise and talent to draw from. International graduates are allowed one year to find work or start a business post-graduation, and the government runs an entrepreneur visa scheme that offers international entrepreneurs a 1-year visa to get their companies off the ground. The Netherlands also boasts a tolerant, open, cosmopolitan culture and an extremely high quality of life.

Beyond these fundamentals, the city — and the Netherlands as a whole — offers particular benefits for startups. The small local market forces companies to think globally from the outset, while budding startups also benefit from the city’s dozens of accelerator and incubator programs, including several focused on women founders and diverse entrepreneurial talent. The entrepreneurial and collaborative spirit of Dutch culture certainly helps too.

“There may be something in the Dutch culture that wants to challenge and redesign things and cherishes independence"

Constantijn van Oranje, Envoy for the Ecosystem Hub, Techleap.nl.

High-profile successes, such as Adyen and Takeaway.com, have also drawn attention and investor interest to the city’s startup scene. As has the birth of the ecosystem’s two latest unicorns, payment services provider Mollie and communications platform MessageBird, which both raised large rounds in the last quarter of 2020, raising the total number of Amsterdam unicorns to twelve since 2012. 2019 marked a record year in venture capital investment in the ecosystem, and despite the disruption of Covid-19, investment doubled again in 2020. Recent successes include Amsterdam-based sustainable online supermarket Picnic, which recently raised a $703.5 million Series D round from the Bill & Melinda Gates Foundation Trust to accelerate its growth.

This represents a massive improvement compared to the early years of the ecosystem when Dutch startups often struggled to attract foreign investment. “There has always been a lot of innovation in the Netherlands. It just took some time to connect it with new business and funding models. The VC simply wasn’t there to support high growth ventures in the early days of Booking, Hyves, Galapagos, Bol.com,” adds van Oranje.

Still, challenges remain in regards to particular stages and sub-sectors. Amsterdam generates more startups per capita than any other European hub (1.10 per 1,000 residents), but VC investment per capita trails Berlin, London, and Stockholm with a slower pace of growth. The ecosystem also relies heavily on local investors — 54% of capital flowing into the ecosystem comes from domestic sources, 25% from the rest of Europe, and just 21% from the rest of the world. Series A rounds seem to be particularly hard to come by, though the latest data shows startups are doing better in reaching rounds after Series A with 28% moving from Series A to B and 25% from Series B to C.

Techleap.nl managing director Maurice van Tilburg has noticed these trends as well. “Venture capital has become much more available. Still, tickets remain small and many Dutch software startups prefer to bootstrap, remaining under the radar for data analysts and limiting their growth,” he says. “This is also how several of these large startups are suddenly discovered at a later funding round."

Sectors that are particularly hot for investment include AI and Big Data, which accounted for 36% of local deals from 2016 onwards. Fintech startups accounted for 20% of deals, revealing Amsterdam’s strong legacy as a financial and trading center. Another notable sub-sector gaining momentum is Cleantech, which thus far has covered 10% of deals.

What Is Necessary To Keep This Momentum Going?

Local organizations such as Techleap.nl point to the need to improve the Netherland’s tax regime to make it easier for early-stage businesses to attract talent with stock options and promote the reinvestment of investors’ earnings. Providing additional funding for coding bootcamps, STEM programs, and other initiatives to develop the tech workforce will help ensure startups can find the diverse talent they need to continue to grow. Increased outreach to international talent could help on this front as well. Finally, programs focused on diversity and inclusion could widen the impact of an ecosystem that still trails comparable hubs in female participation.

With incredible talent, a strong culture of innovation, and increasing access to the funds necessary for companies to dream big, the future looks bright for Amsterdam startups. This momentum also seems to be lifting nearby ecosystems such as Rotterdam, Utrecht, and Eindhoven as well, meaning the entire Dutch startup ecosystem is poised to continue growing rapidly in the years to come.