Voting for startups

What’s the best political party to vote for when you have a startup? With the elections just around the corner, Startup Delta, Sprout, RTLZ, Accenture and Get in the Ring organized a political debate in Amsterdam last Thursday, with representatives from 6 different parties explaining their policies and future plans for startups.

“Let’s get ready to rumble!” The announcer’s voice booms as the politicians get ready to enter the boxing ring that’s set up on the stage. Arda Gerkens (SP), Tom van der Lee (GroenLinks), Nico Drost (ChristenUnie), Mei Li Vos (PvdA) en Agnes Mulder (CDA), Kees Verhoeven (D66) and Aukje de Vries (VVD) will try to convince the audience they are all about startups.

There are three rounds in total, where the politicians explain their plans, debate each other, answer questions from the both audience and an expert panel of critical entrepreneurs: Mark Vletter (Voys) Mirjam Bink (ONL) and Janneke Niessen (Improve digital).

Getting investments

Most Dutch investors are not as eager to sign the cheque for promising startups as their American counterparts. The “valley of death” is a common term in the startup world, referring to the difficulty of covering the negative cash flow in the early stages of a startup, before their new product or service is bringing in revenue from real customers.

Verhoeven (D66) is in the ring first with de Vries (VVD). The VVD already has an initiative called StartupNL with quite a few measures benefitting startups realized already, such as equity tax breaks and the option for reducing wages founders have to pay themselves to minimum wage for the first two years.

“I think D66 and the VVD are really on the same page here”, Verhoeven explains. “But D66 also proposes to use the UK government policy called Seed Enterprise Investment Scheme (SEIS). This is already very successful in Great Britain and will make investing in startups more attractive. It could be very helpful in the critical early stages, when startups are not yet profitable enough.”

All parties also agree on a collective investment bank. The PvdA wants to have an investment bank for green innovation, with 2.5 billion euros available. Green party representative van der Lee (GroenLinks) agrees, but has a side note: “Let’s not forget that regular banks have the public responsibility to give out small loans to starting companies. That has really changed in the past two decades and I think it should be their job again to help small and new companies, not just the really big ones.”

Red tape

There already are a few tax breaks and exemptions for innovation, research and development, but there is a lot of bureaucracy involved too. Panel expert Mark Vletter notes some of them are really good in theory, but he had to struggle through 40 pages before he could understand and apply for one.

All parties agree that it should be a lot easier. Nico Drost (ChristenUnie) adds that the government should also be more flexible and less critical upfront. “You should be able to trust entrepreneurs and make it easier for them to get the money they need. And afterwards, the government can check if all the conditions were met.”

Hiring employees

Even though GroenLinks wants to stimulate startups involved in green innovation and a circular economy, startups in other industries can expect some breaks too. “We want to lower the cost of labor for employers in all sectors with up to 80%.” van der Lee explains. “Hiring new employees should be a lot cheaper for all companies.” D66 also wants a separate industry sector for startups with lower to no taxes, to stimulate startups to hire personnel.

But what about talent from abroad? One way startups attract employees, is to offer equity and stock options. But in the Netherlands, the problem with that is that you have to pay taxes for that when you get them, not when you cash them out. So if your startup does not become successful, you’re employees still have to pay taxes. The VVD has already taken the first steps, but de Vries promises to look into it in more detail.

“Why should we hire people from abroad and not focus on the talented people in the Netherlands?” Arda Gerkens (SP) notes. “All of us already agree that computer programming should be taught in schools, so let’s focus on training people here too.”

Paying for sick employees

Another thing that’s holding back small and new companies to hire people, is that they have to pay for sick leave for up to 2 years. Panel member Mark Vletter notes: “If someone who had cancer or if someone is obese and applies for a job, the risk of them getting sick is much higher. Small companies can’t afford those two years, so why should they be responsible and pay, when it’s a problem that affects our whole society. Shouldn’t sick leave be paid for collectively?”

All parties agree and want to turn those two years of paying into one year or even two months. But even though all parties agree, this is the only point in the debate where the fireworks start. Verhoeven (D66) accuses the CDA to be not fully honest in the matter: “You say you want to do that, but we’ve made four such proposals and in the past and four times, you voted against it!” When asked for a reply, the response from Mulder (CDA) is not the most tactical: “Well, you were not very straightforward about the Ukraine referendum either!”

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