Illustrating the importance of governments working closely with private industry and academia, the Netherlands’ Ministry of Economic Affairs has committed capital to the €18m ($20m) Mainport Innovation Fund II (MIF II).
The ministry, investing through its seed capital programme, joined Dutch government-backed Schiphol, an airport company whose portfolio includes the airports of Amsterdam, Eindhoven and Rotterdam the Hague; airline operator KLM; rail network manager NS Dutch Railways; Delft University of Technology; and Port of Amsterdam.
The ministry, NS Dutch Railways and Delft University had not backed Mainport’s first fund, launched in 2009, while financial services provider Rabobank, a limited partner in Mainport Innovation Fund I (MIF I), chose not to participate in MIF II.
MIF II may invest in areas such as internet of things and big data, both of which have already taken other sectors including healthcare and cybersecurity by storm, and will also expand its focus from aviation to include transport and logistics.
Apart from capital, companies stand to benefit from access to the respective networks of the fund’s limited partners and assistance with product launches.
With regards to international expansion, it will be particularly interesting to see how much of an edge public players in the consortium will be able to give participating startups.
The Dutch government’s interest in connecting local industry to foreign players is already apparent in Schiphol, which is 69.8% owned by the state. The remaining shares are held by the municipalities of Amsterdam (20%) and Rotterdam (2.2%), and, importantly, Aéroports de Paris (8%), which operates a range of airports across the French capital.
The decision by the government to take on a more direct role is certainly a positive development, especially as Global Government Venturing noted, in its government report on the Netherlands, that “small and medium-sized enterprises struggle to attract funding, which in the longer term will curb innovative growth if alternative funding cannot fill the gap.”
The fund is set to increase funding commitments to startups and expects to invest between €200,000 and €1m in individual rounds rising to a total of €3m or more for each startup. It also plans to back more companies, targeting between 10 and 15 over the next six years.
MIF I had focused primarily on the aviation sector, providing between €100,000 and €200,000 to individual startups. It was set up in 2009, closing a day ahead of the successor fund’s launch.
MIF I’s nine portfolio companies include Snocom, a spinout from Eindhoven University of Technology that has developed compression technology to remove snow more efficiently and cheaply, and which was able to test its technology at Amsterdam airport.
Like its predecessor, MIF II will be operated by NBI Investors, with the firm’s investment partner Thijs Gitmans acting as fund manager. NBI’s other active fund, Shift Invest, is backed by Rabobank, Delft University, University of Wageningen, nature conservation group WWF and insurance provider Menzis Health Insurance.
Gitmans said: “We can provide businesses with a unique platform, together with our partners. This method proved to be successful in our first Mainport Innovation Fund and demonstrated that it can help businesses get ahead in a very short period of time.”
– A version of this article first appeared in the weekly newsletter of our sister publication, Global Government Venturing.