If you’re a Dutch entrepreneur looking to start or grow your business then you might be looking at all the different finance options available to you, but what are the pros and cons of each of them?
When it comes to the initial funding of your business, you will need money to get your business off the ground. This money is typically called seed capital. Often, seed capital is provided by the entrepreneur or business owner themselves from their personal savings. Sometimes that person may take out a personal loan or put their business expenses on their credit card. This can be quite a risk, since repayments will need to be made immediately, and these expenses can escalate. More so when a business is first launched, since there is typically a period where the business is not profitable.
Lucky investors may borrow the money they need to launch their business from family members or close friends who are willing to invest in the individual, and perhaps offer more flexible repayment terms than a credit card company.
However, not all entrepreneurs in the Netherlands have an adequate stake to start their business using their own personal finances, nor do they have close friends and family they can rely on to inject money into their business idea. For these investors other options need to be explored.
For many new entrepreneurs in the Netherlands the first thought when they need to raise seed capital for their business idea is to turn to their bank to see what is available. Unfortunately, long gone are the days when banks are keen to invest in individuals and loan money for brand new businesses without a solid track record and trading history. A bank will help you set up your initial business account, but it is not common to be able to get any form of credit, or even an overdraft initially.
The next port of call for Dutch entrepreneurs is to turn to the government for support and help. Generally speaking, although some grants are available in the Netherlands and for EU businesses, they tend to be fairly specific and are for businesses that operate or are looking to launch in a particular sector.
In the Netherlands there are a few grants available from the Dutch government. For example:
The Innovation credit grant is specifically focused on the medical sector. If as a Dutch entrepreneur you’re looking to move into the (clinical) technology area to work on developing a new product, medicine or device, then this scheme may be applicable and may be open to you. However, this is a very specific grant and for the majority of Dutch entrepreneurs not much help or support.
Another grant that is operated by the Government in the Netherlands is the Dutch Good Growth Fund (DGGF) – If you’re a business in the Netherlands that is looking to invest or create a business around an upcoming market or to trade with a developing country this scheme may be beneficial.
Another Dutch scheme that can be useful for certain individuals is the financial support for self-employed professionals (Bbz) scheme. In short, there is potentially some financial support available from various municipalities across the Netherlands focusing on helping the self-employed or freelance workers.
Ultimately, for many Dutch Entrepreneurs with a great business idea that they do not have the capital investment to get off the ground, a final option that they can explore is attracting private investment for their business project.
Private investors are also known as angel investors and are a type of investor that looks for brand new businesses or projects that they can invest in. Typically, they will invest in projects and businesses that have the potential to grow quickly and become successful. In return for their investment stake, they will take a part of the ownership of the company that they invest in. Although the entrepreneur will lose some of the total ownership of their company, they will at least gain the financial support that they need to launch it. Often, without this third-party financial support the business is simply not viable to begin with or it could take many years to grow and get off the ground before it becomes profitable.
Private investors are less risk adverse than traditional banks or financial institutions so they will often invest in a brand-new company or idea off of the back of an individual’s experience and a solid business plan.
For Dutch entrepreneurs looking to launch a business in the Netherlands then the first step to attracting private investment for their business is to ensure that their business plan is well thought out and has been comprehensively planned. Any investor into your business will need to know exactly how you think your business will make money and what sort of time scales and investment you will need to achieve your goals.
Some private investors like to take an active role in the companies that they invest in. Others prefer to sit back and let the entrepreneurs and founders themselves run the business without much involvement. Depending on how you personally feel about this, it can be a benefit to your overall success. Some entrepreneurs have a great business idea but lack a certain amount of business experience.
Private investors who are highly experienced in business or particular sectors can not only come on board with some financial assistance, but they can also provide additional support and mentorship to the entrepreneurs. Some private investors also have a wealth of business contacts that a new entrepreneur can leverage. Again, this can help fast track the growth of a new business.
If you’re a Dutch entrepreneur looking for private investors for your business, then sign-up to the Netherlands Investment Network to begin your journey. The Netherlands Investment Network helps connect entrepreneurs with private investors based in the Netherlands and across the rest of the world. Because our network is a global enterprise you could find investors from around the globe looking to invest in Dutch businesses just like yours.