What is a Seed Business Angel Fund?
A Seed Fund is a special venture capital fund that targets innovative startups (0-5 years) specifically. Half the fund's capital comes from private investors (participation fund), and the other half by the Ministry of Economic Affairs and Climate Policy (EZK). This way, the Ministry of Economic Affairs and Climate Policy encourages investors to invest in young, high-risk companies. The private investors manage the fund.
As of 1 July 2021, the Seed Business Angel scheme allows for more than 2 investors to make use of the scheme together. This way, Business Angel groups can also participate. Read more in this news article (in Dutch).
Applying to a Seed Business Angel Fund
You can apply for seed funding from the fund directly. You usually apply for capital of €200,000 or more, against a percentage in shares. The average Seed Business Angel Fund investement runs to €1-3 million. Every seed fund has its own scope and focus on a given sector or industry. Find out on the website of the Netherlands Enterprise Agency (RVO) 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.