NETHERLANDS Law and Practice Contributed by: Herald Jongen, Maarten de Boorder, Samuel Garcia Nelen and Jelmer Kalisvaart, Greenberg Traurig, LLP
investors or banks, or through crowdfund- ing, family offices or governments-sponsored funds. There are many opportunities available for government funding or tax benefits, such as the Seed Business Angel Fund (specifically for tech and creative start-ups), proof-of-concept funding ( vroegefasefinanciering or VFF), R&D tax credit ( de Wet bevordering speur-en ontwikke- lingswerk or 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 subscription agreements. 2.4 Venture Capital Dutch start-ups typically attract external funding from several sources: the three Fs (friends, family and fools), angel investors, family offices, (cor- porate) venture capital funds and government funds. While venture capital 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 venture capital inves- tors provide funding to Dutch start-ups, where domestic investors pick up a relatively larger size of funding in early stages, and international investors in later stages. The Dutch government aims to create a favourable business climate for start-ups and has introduced various measures and initiatives to increase access to venture capital. Noteworthy recent examples include Techleap, the Seed Capital Scheme, Invest NL, the Dutch Growth Fund, and the Regional Devel- opment Agencies. 2.5 Venture Capital Documentation Unlike in the US (NVCA) or the UK (BVCA), there is no generally acknowledged Dutch venture capital association that prepares comprehensive industry templates for venture capital documen- tation. The Dutch foundation Capital Waters, a
private initiative, has developed several tem- plates with the help of multiple investors, entre- preneurs, and experts in the venture capital field. 2.6 Change of Corporate Form or Migration Most Dutch start-ups are structured as a Dutch private limited liability company ( besloten ven- nootschap or BV) (see 2.1 Establishing a New Company and 2.2 Type of Entity ). Dutch start- ups typically remain as 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 appro- priate legal form for Dutch listed companies. Dutch law provides a legal basis for cross-border conversions of a Dutch BV into the 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, whether they are more likely to take a company public by listing on a securities exchange or to run a sale process depends, amongst other things, on market senti- ment. 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.
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