NETHERLANDS Law and Practice Contributed by: Herald Jongen, Maarten de Boorder, Samuel Garcia Nelen and Jelmer Kalisvaart, Greenberg Traurig, LLP
2.2 Type of Entity Entrepreneurs in the Netherlands are predominantly advised to choose a private limited liability company ( besloten vennootschap ) for the initial incorporation due to its flexible regime and the limited liability for the shareholders (attractive for venture investors), and because nearly no initial capital contribution is required (see 2.1 Establishing a New Company ). In some instances, different types of entities are pre- ferred due to tax and other considerations. 2.3 Early-Stage Financing Early-stage financing (or seed investment) is usually provided by entrepreneurs themselves, friends and family, venture capitalists, angel investors or banks, or through crowdfunding, family offices or govern- ments-sponsored funds. There are many opportuni- ties available for government funding or tax benefits, such as the seed business angel fund (specifically for tech and creative start-ups), proof-of-concept fund- ing ( Vroegefasefinanciering VFF), R&D tax credit ( Wet Bevordering Speur- en Ontwikkelingswerk WBSO) and the innovation credit. The method of documentation varies by type of investor and financing and can, for example, be in the form of loan agreements or sub- Dutch start-ups typically attract external funding from several sources: the three F’s (friends, family and fools), angel investors, family offices, (corporate) venture capital (VC) funds and government funds. While VC is readily available to Dutch start-ups, especially in the early stages, this is decreasing as companies become more mature and their funding needs increase. Both domestic and international VC investors provide fund- ing to Dutch start-ups, where domestic investors pick up a relatively larger amount of funding in the early stages, and international investors in later stages. The Dutch government aims to create a favourable busi- ness climate for start-ups and has introduced various measures and initiatives to increase access to VC. Noteworthy recent examples include Techleap, the seed capital scheme, Invest NL, the Dutch Growth Fund and regional development agencies. scription agreements. 2.4 Venture Capital
2.5 Venture Capital Documentation Unlike in the USA (National Venture Capital Associa- tion; NVCA) or the UK (National Venture Capital Asso- ciation; BVCA), there is no generally acknowledged Dutch VC association that prepares comprehensive industry templates for VC documentation. The Dutch foundation Capital Waters, a private initiative, has developed several templates with the help of multiple investors, entrepreneurs and experts in the VC field. 2.6 Change of Corporate Form or Migration Most Dutch start-ups are structured as Dutch private limited liability companies (BVs) (see 2.1 Establish- ing a New Company and 2.2 Type of Entity ). Dutch start-ups typically remain BVs as they grow into more mature companies. Only if a start-up seeks further financing through an IPO would it convert into a Dutch limited liability company ( naamloze vennootschap or NV), as this is the most appropriate legal form for Dutch listed companies. Dutch law provides a legal basis for cross-border conversions of a Dutch BV into a legal entity form of another EU member state. This is not a typical move for a start-up, but can be an option for companies that are looking to relocate to a different EU member state. 3. Initial Public Offering (IPO) as a Liquidity Event 3.1 IPO v Sale When investors in a start-up in the Netherlands are looking for a liquidity event, it depends on, amongst other things, the market sentiment if they would be more likely to take a company public by listing on a securities exchange or to run a sale process. In the past, several tech companies have gone public on Euronext Amsterdam. However, in the last couple of years, the number of IPOs in the Netherlands has been limited, and most investors looking for a liquidity
event ran a sale process. 3.2 Choice of Listing
Generally, if a Dutch company pursues a listing, Euronext Amsterdam is considered since it is one of the major stock exchanges having international expo-
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