Dutch pension funds are being urged to invest in domestic venture and growth capital, to help make an impact in leveraging new technology and job creation in the Dutch market.

A report by Dutch Private Equity and Venture Capital Association, NVP, and Techleap.nl, titled, The untapped potential of Dutch venture capital, found that if Dutch pension fund were to allocate 20 per cent of their private equity allocations to venture and growth capital, it would make available €4 billion a year.

According to the report, this would have a huge positive impact on the industry, enabling larger follow-up financing rounds and thus keeping the shareholder base of promising companies in Europe. Moreover, as returns of other asset classes are under pressure, a change could also improve a portfolio’s risk/return profile.
Techleap.nl managing director, Maurice van Tilburg, said: “Dutch venture capital funds are in great shape and there is momentum in the asset class and an investment opportunity for pension funds not to miss, for long-term portfolio returns as well as contributing to a positive global footprint.

“Investing in Dutch venture capital is not about financial engineering, it is all about the growth of the local economy, investing in people and new technology. Specific sectors still need more capital, such as capital-intensive hardware and deep tech. These industries would benefit from public investments at this stage, accompanied by private investments, in particular longer-term, such as pension funds can provide.”

The report concluded that Dutch pension fund savers are missing out on impacting growth and innovation in their home market due to a lack of investment in the fastest growing and most innovative Dutch companies.

While investments in Dutch startups and scaleups are increasing and reaching record levels, this increase is largely driven by non-domestic VCs and there is a growing lack of capital support from local investors, the report said. Dutch startups and scale-ups received around €2.3 billion of venture capitalist (VC) funding in H1 2021, mostly from American and Chinese investors, and only approximately 24 per cent from Dutch VCs.

Commenting, NVP chair, Annemarie Jorritsma, said: “Innovation is key to impact and to solving some of our most urgent challenges worldwide. But we also need Dutch and European values, ideas and input to be part of shaping the future we want to see. Dutch venture capital funding is essential for this to happen and to assure we don’t depend on overseas investments only.

“US and Chinese investors are currently taking the lead, ultimately benefiting from healthy returns delivered, leveraging new technology and job creation in their respective home markets. This implies that, although local VC investors facilitated the start of many promising companies, the benefits are reaped overseas.”

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