Dutch food scale-ups are innovative and help solve our sustainability challenges, while helping the Netherlands secure its international lead in food and agriculture for the future. This can be achieved if the Dutch government provides them with a level playing field.
The Netherlands is known worldwide for its strong agriculture and horticulture sector. In addition, our country is also a leading player in food ingredients and processed foods. We owe this prominent position to a combination of innovative small and medium-sized enterprises (SMEs), advanced higher education institutions, Wageningen University & Research, and multinationals such as Unilever, Corbion, Cosun, FrieslandCampina, DSM-Firmenich and Upfield. These companies are firmly anchored in the Netherlands with both their research and development (R&D) departments and production sites.
This high-tech sector delivers significant economic value and is a major buyer of our agricultural products. The global market for food ingredients and processed foods is dynamic and full of opportunities. The Netherlands can capitalise on these while securing its own food supply.
Healthy innovation system for food start-ups
The Netherlands has established a healthy innovation system that has spawned a new generation of food scale-ups. These companies not only generate economic value, but also help the existing food industry to become more sustainable and healthier. The early phase of technology development and innovation is increasingly shifting from the large corporate laboratories to start-ups and scale-ups. This process has been strongly supported by active government policies over the past decade. Organisations such as StartLife, Foodvalley NL, regional development agencies and Invest-NL provide solid support. The knowledge exchange between companies and knowledge institutions is excellent, and getting initial funding here takes only 2.5 years on average, which is faster than in France or the UK, for example.
Investment gap
Although developments are mostly positive, one important gap stands out: Dutch scale-ups expand their production significantly slower than international competitors. Dutch scale-ups raise an average of 35 million euros, while competitors in neighbouring countries receive an average of 84 million euros. An example is Revyve, which raised 8 million euros in the Netherlands, compared to a younger German competitor that received 15 million euros. The difference is even greater when we look at Rival Foods, which received 6 million euros, partly from foreign investors, while French competitor Umiami raised over 100 million euros. As stated by Dealroom.co. Many Dutch food scale-ups struggle to attract more funding, which threatens the continuity of their operation in the Netherlands. These scale-ups often turn to international capital to build plants abroad.
Innovating in the agrifood sector
Innovation in the agrifood sector is complex. Investment requirements are high, margins are small, and development and growth cycles are long, leading to a delayed return on investment. This sets the sector apart from high-tech manufacturing and companies in data science and ICT. Despite European competitors facing the same challenges, they are more successful in attracting funding.
Government support in neighbouring countries
Like Dutch startups, international competitors have significant capital needs when scaling their production. The public financial instruments provided by countries such as Belgium, Germany and France make scaling up production more attractive to private investors. In these countries, it is possible to obtain bank loan guarantees for the construction of unique plants. Moreover, public investment banks there are more likely to provide soft loans for scaling up production.
In practice, this means scale-ups in these countries need to raise relatively less equity or ‘dilutive funding’. Not only does this make them more attractive to global private investors, who invest significant amounts in the international competitors of Dutch scale-ups, but also more interesting as acquisition targets for global players, as the financial risks in an acquisition are lower. The consequences for the Netherlands are significant: Dutch scale-ups lose momentum against foreign competitors. Companies move their production to other countries, causing an erosion of economic activity and investment in the Netherlands, and threatening to wipe out the gains of previous government policies.
Call to the Cabinet
The current scenario can easily be avoided. The Netherlands has the capacity to adopt and improve the foreign model, for instance by encouraging existing companies to implement innovations at home. This would make it more attractive for scale-ups to expand their production here. Applying more combined funding could also help. The Dutch innovation system can build on the strong foundation of a highly productive agriculture and a well-developed food industry. In cooperation with the government, the sector can improve financing, innovation strength and commercial returns.
Based on the total financing needs of Dutch food scale-ups and comparison with foreign competitors, we estimate that around two hundred million euros of additional public funding is needed to create a level playing field. This could mobilise a multiple of additional private funding, as happens in neighbouring countries. Invest-NL is a logical vehicle to realise this. This requires an adjustment of its mandate and additional resources.
We call on the government to include this in its plans and bridge the investment gap so that the Netherlands retains its leading position in the Food & Agri sector.
Signed by:
- Marco Snikkers, CEO One Third
- Jasper Schouten, CEO 1-2-Taste
- Erik Hertel, CEO Vital Fluid
- Bert-Jan Woertman, CEO StartLife
- Anouk Snelders, Founder and Co-Owner Health Food wall
- Bram Ledeboer, Florentine Fockema Andreae, partners SHIFT Invest
- Ruud Peerbooms, Chief Innovation Officer & President Health & Nutrition Corbion
- Maarten Bosch, CEO Mosa Meat
- Joana Carneiro, CEO Nutrileads
- Sebastiaan Berendse, director of value creation Wageningen University &
- Research
- Marjolein Brasz CEO & Anieke Wierenga lead entrepreneurship Foodvalley
- Ferdinand Los, CEO Hudson River Biotechnology
- Rienk Landstra, Co-Founder & CFO/CPO Agxeed
- Birgit Dekkers, CEO Rival Foods
- Corjan van den Berg, CEO Revyve
- Willem-Jan Meulemeesters, CEO Ceradis
- Sue Garfitt, CEO The Protein Brewery
- Wendy de Jong, Managing Director OostNL
- Jaap Strengers, managing partner Future Food Fund
- Thomas van den Boezem, Principal PeakBridge
- Kees Aarts, CEO Protix
- Brigit van Dijk - van de Reijt, managing director/director Brabant Development Company (BOM)
- Daan Wilms Van Kersbergen, Investment Director Yield Lab
- Kim de Boer, Brightlandsventurepartners
