The Dutch government announced it will make €100 million available in bridge loans for startups, scale-ups and innovative SMEs. These loans will be provided through the regional development agencies (ROMs), such as the Investment and Development Agency for the Northern Netherlands (NOM).
TechLeap, InvestNL, regional development agencies and the Ministry of Economic Affairs and Climate have worked hard together to come up with this plan. InvestNL and TechLeap have also worked on a joint program focusing on startups and scale-ups. The goal is to be able to ensure applications for bridge financing for companies by April 20. In the coming weeks, the NOM will communicate further details regarding the criteria and the application procedure.
Startups struggling to survive
A recent survey conducted by TechLeap shows that 80% of startups expect to run into financial difficulties as a result of the COVID-19 crisis. Around 67% is looking for bridge financing, because of liquidity issues. The regional development agencies are by a large margin the most active investors in the Netherlands, being involved in about half of all early investments for innovative companies every year. Thorough analysis of their portfolio companies also shows a large share of these companies will be in acute financial distress in the coming period.
Startups, scale-ups and other innovative companies were not fully included in the previous financial government measures , even though this industry is crucial as a driving force of innovation and future revenue models in the Netherlands.
Temporary bridge financing
With the resources made available by the Ministry of Economic Affairs, the regional development agencies will be providing bridge loans to innovative companies experiencing financial difficulties as a result of the COVID-19 crisis. These resources are emphatically meant to be an emergency instrument to ensure a temporary bridging to break-even or a new investment round. These loans will range from €50,000 to €2 million. For larger amounts, the agencies will work together with InvestNL. When possible, there will be joint collaboration with private investors. In the coming weeks, more details will be announced about criteria, interest rates, loan duration and application procedure.
Photo credit: Deon Prins