Since his appointment in 2016 as special envoy for StartupDelta and subsequently Techleap, Dutch Prince Constantijn is committed to a thriving and future-proof start-up ecosystem in the Netherlands. Corona or no corona, he is convinced that “only companies that tap into the important trends of the moment, such as energy transition, AI and digitalization, will survive.”
These are turbulent times, also for start-ups. Companies that focus on services or products that have been hit by the crisis, such as artist booking site Plugify, are collapsing. While other start-ups that mostly offer online services or products are experiencing golden times. Such as TestGorilla, an online pre-assessment platform for companies that has recently secured an investment of 1 million euros. What have you noticed about all of this?
“So much is happening in the ecosystem of start-ups and scale-ups. Initially, corona caused a huge shock. Companies reacted in very different ways. Some immediately seized it as an opportunity. Entrepreneurs who had already been through a crisis like this knew: You have got to cut back on costs as drastically as possible and make sure you hold on to as much cash as possible. We advised our constituents to do the same by letting those experienced entrepreneurs have their say. Their message was always the same: Assume that things are not going to turn out well this year. Fortunately, we also see that many start-ups have survived the crisis. A fairly generous loan system was also quickly set up, which start-ups and scale-ups were able to take considerable advantage of.”
What is that makes one start-up able to survive while another doesn’t?
“A mixed picture has emerged whereby some start-ups are having a very difficult time, while others really have the wind in their sails. What you see is that a lot of companies are in trouble, for instance, because their customers are disappearing, or because they have a complex supply chain that was disrupted by the corona lockdowns. Or because an investment round has been postponed which has forced them to defer their plans for internationalization or their product launches. Or because they had to have a recruitment freeze that prevented them from continuing to grow. But you also saw that investment funds – strangely enough – have invested more. But in their ‘own’ companies. For new companies, on the other hand, it was much more difficult to raise money.”
“Of course, there are sectors, such as those where Plugify operated, that do not recover. Because there are no events. Some companies could make a switch to another business. Like Tiqets, an Amsterdam-based company that sells tickets for all kinds of events and historical monuments, including museums. Even that market was completely wiped out. They had actually just received a great investment from AirBnb and then made a switch to: How can we help museums when they reopen in the meter-and-a-half economy? How do you make buildings accessible? How do you manage crowd control?’ So, they have listened very carefully to their customers and ‘subsequently offered them another product.”
“Start-ups are often smaller, more flexible, and generally more entrepreneurial than large companies. What’s more, they don’t have the resources to go into sleep mode. Therefore, many of them had no other choice but to move on to something else. A number of start-ups have also grown incredibly fast. Such as home delivery companies like Picnic, and anything related to healthcare, but EdTech (distance learning) as well. That last one has long been a never-ending story as far as promises go, but it never really got off the ground. And now, all of a sudden, it has arrived on the market very quickly.”
“In any event, we see that all kinds of transitions in the corona crisis are accelerating extremely rapidly: The energy transition, the food transition, digitalization and AI: These are the transitions, i.e. trends, where a lot of start-ups are concentrated.”
What can Techleap do to help start-ups?
“First of all, we have succeeded in arranging 300 million in loans that are managed by the ROMs (Regional Development Agencies). In addition, we offer advice by letting a lot of experienced entrepreneurs talk about how best to deal with the repercussions of such a crisis. As we represent a whole community of companies, we have ultimately been able to help companies find new people who were no longer needed in another company.”
Is government support not overly focused now on supporting the established industry and large companies, which are usually not the most innovative, such as KLM?
“As far as investments are concerned, I do not believe in pitting some companies against others. KLM is important to the Netherlands, but so are other companies. It is kind of pointless to say: You are putting 1 billion euros into KLM now, but you could also have put that into another company.”
“What we have to realize is that it is not so much about start-ups and scale-ups, but that anyone who starts a business nowadays has to think about: ‘Where do I want to go with my business? Do I want to start a lifestyle company or rather a growth company?’ For example, if you do something in commerce, and with the technology that’s out there, you will always need to have an online channel that collects data about your customers. You will therefore have to offer intelligent services. Of course, you could also just start a pub. Or some other small business, and you might prefer to keep it small. But if you start a business these days, and you have the ambition to build it up, then it will invariably have to have an important tech component.”
“If you look at what kind of companies are still dynamic, then these are often the start-up type of companies. That is where there is growth, that’s where the kind of jobs of the future are. In fact, it is not so much about start-ups versus something else. The point is that the entire economy is digitalizing. And becoming more sustainable. Look at the transition to circularity and new energy sources. The companies that are not in step with these trends are often the problematic ones. So, if a company such as KLM does not opt for a more sustainable model, as well as a more data-driven way of working, that will be the end of KLM in the long run.”
How do you view the future? Will 2021 be a year in which we will do everything differently? And if so, in what ways?
“I believe that the ongoing second corona wave can play an important role in this. People thought during the first wave: It will all be over eventually. Major systemic changes take a very long time. Such as in healthcare, in government procurement procedures, but also in energy transition and in education. In the spring, we saw some indication of where it might be heading. But a sense of complacency, of taking things easy took hold soon after. Then we had to take it seriously again, and then we didn’t. We are now muddling our way through it a bit. All sorts of structural changes are needed as well. We should not just tag along in that. If the Netherlands wants to remain relevant, we will at least have to want to be frontrunners here. And then we really need to make that switch.”
Do you believe that this crisis signifies a tipping point, which makes us do things fundamentally different?
“I believe that those who do want to move forward will be more successful than those who stay lagging behind. But I’m less confident that those systemic changes can be made at the same pace. I think that we will still see considerable asymmetric developments in this. And that people who are leading the way will be held back.”
“I am sometimes amazed at how persistent these systems are. If you look at healthcare, for example, we have already been talking about e-health for twenty years. And in this crisis, it is only being applied sparingly. Then I hear Ernst Kuipers (chair of the Dutch National Acute Care Network, ed.) talk about the cooperation between hospitals that they have wanted to establish for years, and at long last, it is now becoming reality. But you can also see that as soon as the crisis seems to be over, they cancel that cooperation once more instead of taking it further.”
“In the meantime, you also have all kinds of developments taking place within the government, such as a National Growth Fund and two Deep Tech scale-up funds that are now being financed by the Dutch Ministry of Economic Affairs and Climate with a total value of around 500 million euros. So, there is the intention to invest in this modernization. It is now a matter of ensuring that everything comes together effectively.”
“Fortunately, we do have a very dynamic economy in the Netherlands. In recent years we have built up a start-up ecosystem of around 10,000 companies. You also notice that there are efforts that are being made at various levels to facilitate these breakthrough technologies. I hope that there is plenty of dynamism and flexibility there to achieve this shift.
“Is that also a warning? In light of the experiences of that first wave, will we guard against sinking back into a kind of complacency when this second wave also subsides?
“Someone really has to take charge here. And we are very bad at that in the Netherlands. We tend to want to patch everything up a bit instead of resolving anything. But all that poldering, that’s absolutely not feasible in times of crisis.” Prins Constantijn is making a reference here to the Polder Model, the Dutch style of consensus-based decision-making in social policy and economics, or in other words: ‘Pragmatic recognition of pluriformity.’