For several years now, the Netherlands is one of the most important financial and investment destinations in Europe. Thanks to its legislation which is harmonized with the EU directives on investment funds and financial instruments, the Netherlands has managed to attract numerous investors interested in private equity.
If you are interested in setting up a financial vehicle to use for private equity in the Netherlands, our company formation specialists can help. You can also rely on us for assistance in opening a company in the Netherlands in other important investment sectors.
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Private equity – characteristics of the Dutch market
There are several financing methods that can be employed by Dutch companies seeking to gather funds without listing their shares on the Stock Exchange. Among these methods, venture capital and private equity are the most popular among company owners.
Most of the businesses gather funds through these options are Dutch startup companies.
If you want to open a Dutch company under the form of a startup, we can help you.
Legislation on private equity in the Netherlands
The most important laws that need to be respected when it comes to private equity in the Netherlands are related to the creation of investment funds, venture capital, mergers and acquisitions, and even the Company Law.
Apart from these, in 2017 and 2018, several regulations appeared in order to make room to new ways of raising money which also apply to private equity. Among these, we mention the following:
- the legislation on crowdfunding which targets the possibility of raising funds through loan-based crowdfunding platforms;
- the initial coin offering/cryptocurrency regulations which has become a popular way of raising money;
- the Markets in Financial Instruments Directive 2 (MiFID2) which provides for enhanced investor protection, transparency and product development;
- the Alternative Investment Funds Managers Directive (AIFMD) which relates to the authorization of fund managers.
There is also the General Data Protection Regulation (GDPR) which requires a higher level of protection for private investors.
Our Dutch company formation agents can offer more information on the legislation on private equity.
Funding sources in the private equity sector in the Netherlands
The most common sources through which Dutch companies can raise money through private equity are venture capital, private investors also known as business angels, regional development funds, crowdfunding and through family offices.
There is also the possibility of raising money by creating investment funds as the Netherlands offers some of the most flexible investment vehicles for this purpose. Among these, the limited partnership (CV) and the cooperative are the most employed thanks to the simple structure and fast incorporation procedure. They are also advantageous from a taxation point of view.
The limited partnership can be used for registering a private equity firm in the Netherlands. Even if it does not have a legal personality, it offers limited liability to the investors.
The cooperative can be used for creating a private equity association in the Netherlands. Its main advantage is that it is suitable for private individuals.
All operations of private equity firms are supervised by the Netherlands Financial Markets Supervisory Authority.
The most common industries for private equity in the Netherlands
Even if private equity is a suitable option of all types of companies to gather funds for their activities, it should be noted that in the Netherlands, in most cases, the following industries attract most of these funds:
- – fintech;
- – energy and technology with a focus on clean-tech businesses;
- – life sciences;
- – biotechnology and medical technology.
These are innovative investment sectors which also benefit from support from the government. The Innovation Box, the Research and Development Cost Incentive and the Environmental Investment Rebate are the most popular.
If you want to open a business in any of the industries above, our company registration consultants in the Netherlands can guide you.
Private equity statistics in the Netherlands
According to the Dutch Association of Private Equity Firms, the following investments were made in Dutch companies in 2018:
- – 387 million euros were invested through venture capital in 293 new and fast-growing businesses;
- – 481 million euros went into growth capital to 72 scale-up and fast-growing companies;
- – 5 billion euros were invested into buyouts of 94 local companies;
- – 86 startups and 114 mature businesses were also sold.
For more information on private equity and assistance in starting a business in the Netherlands, please contact us.