The European startup scene is booming, with the total equity value exceeding $3 trillion in 2021 — the highest number ever recorded.
Currently, four countries are the major players in the ecosystem: the UK, the Netherlands, Germany, and France, which host nearly two-thirds of the continent’s top 1,000 startups and scaleups.
Among them, Amsterdam has seen explosive growth, with a whopping 53% average year-over-year growth since 2011. It has also been ranked as Europe’s second top performing startup hub for 2021 — preceded by London, and followed by Paris and Berlin.
Yet, compared to the other countries, the Netherlands is less competitive when it comes to attracting foreign talent and business ideas from outside of Europe.
Many European governments have launched startup visa programs in order to attract the best and brightest talent to their respective countries. In return, they provide an alternative pathway to immigration for non-European citizens.
The Netherlands introduced a startup visa scheme in 2015 that provides a residence permit to people outside of the EU who are looking to start a company.
Among the criteria to be met, entrepreneurs need to demonstrate that their product or service is innovative, they have a clear business plan, the support of an approved facilitator, and enough resources to reside in the Netherlands.
Interested founders have one year to create an innovative product or service in the country.
The one year limit, however, isn’t only restrictive for a business’s development, but also demotivating for an entrepreneur who considers moving their life to another country.
After the visa’s expiration, foreign startup founders have the option to apply for the residence permit for a self-employed person — which is valid for a maximum of five years — and following that, they have the option to apply for the Dutch citizenship.
Requiring similar eligibility criteria, the UK, France, and Germany offer more appealing options in comparison.
The UK not only provides a two-year startup visa, but also enables entrepreneurs with a successful startup to switch to the three-year Innovator visa, which can be extended indefinitely.
France is even friendlier with its Tech Visa, as it not only lasts four years on a renewable basis, but also allows the inclusion of a founder’s spouse and dependent children under the “accompanying family status” scheme.
In Germany, non-EU startup founders fall under the visa/residence permit for self-employment scheme. If the business idea is successful and an entrepreneur is able to make a living for themselves and their family, the initially three-year residence permit can be turned into a settlement permit, which allows them to live in the country for an unlimited period.
But there’s hope the Netherlands will soon offer more inclusive opportunities as well.
Last week, State Secretary Eric van der Burg of Justice and Security wrote to the Dutch House of representatives that foreign startups coming to the country will have not one, but two years to set up their business, fd reports.
The associated report that prompted the visa’s re-evaluation found the scheme has achieved its objective of attracting innovative startups to the Netherlands, with 649 visas having been granted since 2015.
Yet that’s still overshadowed by the UK’s 364 grants given in the period between September 2021 and September 2022 alone.
The benefits of attracting foreign startups are numerous. They make a sustainable contribution to economic growth, they support local employment, and they strengthen a country’s competitive position both within Europe and on the world stage.
So if the Netherlands wants to enhance its startup hub ecosystem and provide a more appealing case for non-EU founders, it will need to offer a larger number of incentives, starting with the visa’s two-year duration. There’s a lot of benefits for starting businesses in the country, but if it is ever going to unseat other startup hubs, the Netherlands needs to do more than just match them.