Chapter 6. Strengthening entrepreneurship support in higher education in the Netherlands

The business start-up environment is excellent but complex

The Netherlands offers an excellent business environment for business start-ups in many aspects (OECD, 2014). However, in common with many OECD countries, there are barriers to growth after the start-up phase, mainly as young firms have to overcome the double-constraint of lacking internal resources and having only limited access to external resources.

Lack of funding remains the main bottleneck for growth according to 90% of interviewees in a recent study on barriers to academic start-ups in the Netherlands (Technopolis, 2015). The lending survey of the European Central Bank shows that small and medium-sized enterprises (SMEs) in the Netherlands, anticipating possible rejection, are less likely to apply for credit than firms in comparable countries, and if they do apply, are less likely to get what they want (European Central Bank, 2017). Venture capital investment (including early-stage) as a percentage of gross domestic product, is roughly on par with comparator countries in the European Union but far behind the leading countries. To strengthen equity capital availability to academic entrepreneurs and others, the government has put in place several targeted financing facilities and is planning additional ones, such as an early-stage instrument and the business angels co-investment facility. This might be an area for HEIs, individually or in a partnership, to address, for example, by raising joint investment funds.

There is substantial public funding to stimulate innovation collaboration between HEIs and business. However, the potential to involve entrepreneurial students and start-ups in innovation collaboration programmes appears to be under-exploited. StartupDelta has recently developed a promising initiative to open up public procurement to startups with the help of a coalition of government departments and municipalities collaborating in a testlab and experimenting new models of startup support develivery (Chapter 4).

As of 2015, a new regulation makes it possible for ambitious entrepreneurs from abroad to apply for a temporary residence permit in the country. The so-called residence permit scheme for start-ups gives ambitious entrepreneurs one year to launch an innovative business. A prerequisite is that this start-up must be guided by an experienced mentor (facilitator) who is based in the Netherlands. Under this scheme, new start-ups, with a potentially international orientation, are offered support to develop into mature enterprises. This regulation offers a particular opportunity to HEIs in the Netherlands to support ambitious entrepreneurs among international entrepreneurial staff and students.

A bottom-up initiative to support start-ups in getting globally connected is “Get in the Ring”. It started a few years ago and quickly became part of a global start-up network with regular events all around the world (Box 6.1).

In all these different areas there is a strong environment for startups from HEIs. On the other hand, the support system is quite complex for entrepreneurs to navigate due to a high density of actors and support offers.

Students are “game changers”

DesignLabs, Fablabs, StudentIncs, Centres of Entrepreneurship, etc., all play an important role in getting students involved in entrepreneurship. Also, hackathons are an increasingly common practice to raise interest in innovation and entrepreneurship and build interdisciplinary teams. There are good examples of using student union re‐enrolment questionnaires to ask students about their interest in entrepreneurship and connect students with relevant initiatives, as practised at Twente University for example.

Some of the most internationally-recognised entrepreneurial universities, such as Stanford University in California and Aalto University in Helsinki, have entrepreneurship awareness activities that are often driven by students. When the student community is gaining momentum, it often builds on a great variety of entrepreneurial role models to push the “tipping point” and trigger a fundamental change of culture. Beyond this point, the HEI no longer only offers incubation facilities for entrepreneurship, but is genuinely perceived as “one incubator” and a place where people look with admiration at entrepreneurs.

Slush is an example of a student-driven global entrepreneurial success in raising awareness of entrepreneurship and start-ups (Box 6.2), similar to Get in the Ring and other start-up initiatives in the Netherlands.

Clearly, a student event such as Slush depends on the students who created the event in the first place, and in this sense it can be difficult to plan and aim for. However, it was not a coincidence that the students at Aalto University got such an aspiration. The initiative resonated well, even in its very early stages, with the university management, who supported their students in organising Slush.

One of the main messages is that HEIs should seek to involve students in their start-up support agenda. In doing so, they should emphasise continuity in their collaboration with students. Often student associations change their leadership quickly and it is important that the new student leaders can access the institutional knowledge and connections accumulated over time.

Supporting start-up students to cross the “drop-out valley” and opening support for alumni

Supporting student start-up requires that study programmes are sufficiently flexible to allow students to pursue business creation by extending the duration of their studies. Students who start a business during their studies risk abandoning their studies. HEIs can help students get through this “drop-out valley” by, for example, allowing them to suspend their studies as they start up their business, and/or by giving them the chance to focus part of (or all of) their entire graduation thesis on a research question that is related to the start up. Several UAS in the Netherlands already offer their students this possibility. These options are less present in research universities.

The decision to start up a business may not occur during studies or directly after graduation. Rather, it often takes place after an initial period of employment during which graduates gain experience in how businesses and markets operate. Two important consequences result from this. Firstly, students may not look for start-up support in the first instance, but for education activities that stimulate their creativity and require the application of knowledge to solving real-world challenges. These activities are often extra-curricular in nature. It is important that students have the opportunity to document the competencies and skills developed in such activities, for example with diploma supplements or other certificates, in particular when they decide to delay their startup and to initially look for a paid job. And, secondly, startup support offered by HEIs should be accessible to alumni.

Currently in the Netherlands, alumni cannot use start-up services offered by their former HEI. Often, new graduates that have a business idea (e.g. conceived from their thesis work) are under high pressure (economically and culturally) to quickly find a job, whereas they would be at a very favourable point in their life to found a start-up because they still have relatively few commitments and economic needs. A first step could be to allow alumni to use the HEI’s entrepreneurial support system after graduation. Further, a national scholarship scheme could be considered for new graduates (e.g. master’s and PhD graduates) to seek funding for continuing setting up their business. An example that offers valuable learning is the EXIST Business Start-up Grant in Germany (Box 6.3).

Targeted and internationally connected startup support

HEIs in the Netherlands generally offer a range of role models, coaches and mentors to inspire and support potential student entrepreneurs. They come from within the HEI, from the business and student communities and from external partners. They also support access to networks for potential entrepreneurs.

Reaching out to potential would-be entrepreneurs among staff members requires a different approach than working with students. Visibly placing entrepreneurship in general, and startup support in particular, within the HEI’s mission statement and regularly informing staff about the existence of supportive rules and regulations (e.g. owning shares in spinoffs, working part time, sabbaticals, diploma supplements) are very important. For this, central communication mechanisms, which reach internal and external stakeholders, are needed. The knowledge or technology transfer offices (KTOs/TTOs) play an important role in this.

It is important that regulations on how to handle intellectual property rights are clear and simple and that KTOs have the necessary skills and critical mass across all disciplines. An example of how such support can be organised across different higher education institutions is IXA, an expert interface between five Technology Transfer Offices in Amsterdam (Box 6.4).

An international perspective to encouraging entrepreneurship among students and staff is also important. A good number of the Dutch universities have large and increasing numbers of international students and staff, which is an important, but not fully recognised opportunity to enrich entrepreneurship.

Building effective regional entrepreneurial ecosystems

An effective ecosystem appears critical for successful valorisation, and HEIs, research organisations and individual inventors need that ecosystem support to flourish. When communities that form around the HEIs are inclusive, connections are built as well as a physical community of ventures. Effective entrepreneurial ecosystems connect the connectors and reward participants for stewardship not ownership. This remains relatively rare for HEIs globally.

Regional entrepreneurial ecosystems in the Netherlands are already growing in depth and breadth, driven by an above-average level of co-operation across usually rivalrous institutions (Stam, 2014). Engagement in local activities and engaging the community in HEI activities are clear markers of a healthy regional entrepreneurial ecosystem. Rewarding this is imperative for the HEI as well as local, regional and national policy makers.

A key concept for understanding regional entrepreneurial ecosystems is that they are networks. Researchers have begun to use social network analysis to explore ecosystems. If it is a network, then the connectors are more important than the nodes; the more connectors (and the more connections they have) the more information and resources flow through the network. A key question is whether the connectors control access to resources (gatekeeper) or connect people to resources and each other (hub). A healthy regional entrepreneurial ecosystem will find many ways to create and nurture connectors and especially “super-connectors” who proactively connect the connectors. There are many super-connectors acting in support of regional entrepreneurial ecosystems in HEIs in the Netherlands. Consider Stanford where, in the 1960s, Engineering Dean Fred Terman set out to connect with everyone in the area to help find jobs for his students. In time, he became the super-connector for Silicon Valley and set Stanford on its trajectory to being a key source of regional connectors and convenors. Stanford is now also a leader in connecting other universities. In the Netherlands, the emergence of centres that channel resources into knowledge exchange can be at the start of such a movement.

Feld (2012) described four elements that sustain entrepreneurial ecosystems: i) they grow bottom-up, that is, they are led by entrepreneurs and not by institutions; ii) they are inclusive of the entire entrepreneurial stack, that is, different types of businesses and support entities; iii) there are one or more rallying points for the community to focus their identity; and iv) they must be allowed to develop their sustainability for the long-term.

In many ways, the Netherlands has begun to fit the regional entrepreneurial ecosystem model and even show leadership with initiatives such as StartupDelta, which brings together all ecosystems in the Netherlands into one single hub helping all sorts of startups to grow (Box 6.5). Each partner contributes with its own speciality or local stronghold; this maintains the exchange of knowledge and best practices in policies regarding start-up ecosystems. A key strength of StartupDelta is its ability to minimise the “turf” battles that plague many countries. Too many ecosystems are held back by powerful institutions that seek (and feel entitled) to “own” the ecosystem. And far too often the HEIs are the leading culprits. A lot can be learned from how StartupDelta has defused such conflicts so far, by modelling the ecosystem as a network of networks. Critical is that the success derives largely from the formal and informal incentives to minimise both territorial and free-rider tendencies.

Many excellent entrepreneurial learning systems in the world (Y-Combinator, TechStars, Startup Weekend) operate as open source. If little is owned then there is less incentive to seek ownership. StartupDelta is predicated on an implicit gentlemen’s agreement among the different areas in the Netherlands that is reflected in an explicit specialisation in distinctive innovative research and development areas across the country. For example, while the area around Rotterdam focuses on logistics research, development innovation and startup activity, the regional economy around Twente university emphasises its world-renowned nanotechnology institute and attracts associated firms and start-up activity.

HEIs in the Netherlands should work to understand the entrepreneurial ecosystems in which they are embedded. This embeddedness is something that most HEIs find difficult. As Feld (2012) observed, HEIs want to be the experts and the critical source of knowledge, so they neglect the powerful roles they can play in growing a healthy, resilient community. Yet to be impactful as innovative and entrepreneurial organisations, HEIs must be co-embedded with students, the business community and others, blurring bureaucratic boundaries. They need to reward and incentivise their staff to engage in this way. Furthermore, the Netherlands has a lot of grassroots dynamic in its regional entrepreneurial ecosystems, but the HEIs can do more to be the “hubs” and not just the “gatekeepers”. One potent role that any HEI can play is to foster a reputation as “convenor” or “broker” in providing a safe harbour for strategic collaboration.

One of the barriers is lack of a deep, accurate understanding of the current state of regional entrepreneurial ecosystems and in particular their specific players, including the individual entrepreneurs, their motivations, opportunities and problems. The Netherlands is no exception in this, but the existing “networked infrastructure”, for example StartupDelta and the Dutch Centres of Entrepreneurship, are a good starting point to rigorously map the existing ecosystems. Important are “listening sessions” with Dutch entrepreneurs across the country and across industries; this has already started (e.g. City of Amsterdam) and should be encouraged, further developed and rewarded. An interesting learning model is KCSourceLink in Kansas, USA, which connects 245 business support organisations. Its research unit develops action plans, monitors and reports on the progress of the overall ecosystem (Box 6.6).