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The Innovation funds for SMEs builds on existing financing tools. One of these is the Seed Capital arrangement.
Using the Seed Capital scheme, the Ministry of Economic Affairs and Climate Policy aims to support techno and creative start-ups. The ministry grants capital to investment funds that invest risk capital in innovative entrepreneurs in the technological and creative sector through this scheme. The Netherlands Enterprise Agency is responsible for its implementation.
What is a seed fund?
A seed fund is a special type of private equity fund specifically intended for innovative (techno and creative) start-ups. Private investors provide half the capital required and the Ministry of Economic Affairs matches this investment. The government does this to encourage investment firms to invest in young and high-risk ventures. The private investors then manage the fund.
Applying to a seed fund
You can apply for seed funding from the fund directly. Every seed fund has its own scope and focus on a given sector or industry. Find out if seed funds exist for your business or sector.
The admission scheme for foreign investors in the Netherlands has been simplified.
Customer Due Diligence (CDD) and foreign investors
If your company attracts a foreign investor, for example in the form of an equity stake, you should contact your bank before the investment is actually made. This will enable the bank to carry out the Customer Due Diligence (CDD) process correctly, as is their obligation under (amongst others) the Prevention of Money Laundering and Terrorism Financing Act (Wwft). Part of this process is gaining insight into money flows (from abroad) and, sometimes, the organisations and persons involved.
If a new foreign investor becomes involved in your company, and the ownership structure of your business might change as a consequence, you will have to inform the bank of these changes beforehand. The bank will then inform you of the information or documentation it needs to carry out their CDD policy. This also enables you to prepare for the actual investment by a foreign party in your business. You can start collecting the necessary information yourself, while requesting part of the information from the intended investor. This may prevent delays and disappointments in the process later on.