The Next Global Tech Hotspot? Amsterdam Stakes Its Claimby
Tim Cook, Travis Kalanick expected at startup conference
For entrepreneurs, the city offers ‘a bit of a village feel’
Frustrated by the difficulty of finding dates while living in London, Dutchman David Vermeulen started InnerCircle, a matchmaking website focused on highly educated singles. Yet rather than set up in Europe’s biggest city, he moved to Amsterdam, home to about 800,000 people and a much smaller pool of potential customers. The city, he says, offered an inexpensive place to try out the idea as well as a launchpad for international expansion if the site took off.
“Amsterdam is the ideal market for testing,” Vermeulen said at InnerCircle’s office, a shared startup workspace on the placid waters of the Herengracht canal. “The concept was initially set-up in such a way that we could easily roll-out internationally.” His site is now available in five cities and has 93,000 approved suitors, with another 95,000 on a waiting list.
Amsterdam has become a preferred destination for companies aiming to start small and grow into the broader European market. The international mindset -- about half of Amsterdam’s residents are of a foreign origin -- makes it a natural place to test-drive new businesses. Its central location and transport connections make it a good spot to expand from. And it doesn’t hurt that its liberal, bike-to-work atmosphere makes Amsterdam a pretty nice place to live.
The Digital City Index for 2015 ranked Amsterdam the region’s second-best city, behind London, for tech startups. On May 24, tech titans Tim Cook of Apple Inc. and Uber Technologies Inc.’s Travis Kalanick will speak at the opening of “Startup Fest,” a five-day conference intended to showcase Dutch innovation.
“The more we position Amsterdam as a gateway to Europe, the more companies come here,” said Kajsa Ollongren, Amsterdam’s deputy mayor in charge of economic affairs. Last year, a record 140 foreign companies opened shop in the city -- which local authorities expect will add an additional 3,000 jobs within three years. Netflix, Uber and Tesla have all established their European headquarters in Amsterdam, citing the international talent pool and quality of life. Generous corporate tax rates paired with individual breaks for knowledge workers also help attract companies.
Homegrown newcomers are also building buzz. Payment processor Adyen in September raised an undisclosed sum that it says values the company at $2.2 billion. Takeaway.com is said to be mulling an initial public offering that could establish a valuation of more than $1.1 billion. And last July, high-frequency trading startup Flow Traders NV raised $671 million in an IPO on the Amsterdam Stock Exchange.
The city is “a very stimulating environment, whether for trading or any other industry,” said Dennis Dijkstra, co-chief executive officer of Flow Traders.
To help attract more newcomers, the local government in 2014 formed StartupAmsterdam, an agency aimed at helping entrepreneurs navigate bureaucracy and drum up support. Last September, the city hosted Capital Week -- a conference designed to link entrepreneurs and investors. And the Dutch government has earmarked 100 million euros through 2019 to give an extra boost to startups it decides have the potential to grow and create jobs.
Amsterdam’s global outlook pulled in John Staunton, an Irishman who in 2013 co-founded Countr, an application that helps store owners manage cash registers. After considering London, Berlin and Copenhagen, he settled on an office in a startup hub funded by ABN Amro Group NV, where he works alongside people from more than a dozen countries.
“It’s easier to build a network here; It’s a bit of a village feel,” Staunton said, perched on a beat-up couch in the hub’s warehouse-like space in central Amsterdam. “It’s a great testing ground.”
This is illustrated by one of Amsterdam’s most successful internet startups: Booking.com. When it started in 1996, the company only worked with hotels in the Netherlands, but it soon noticed customers were searching for reservations in Spanish beach towns and other vacation spots abroad. After sealing deals with hotels across Europe and then the globe, Booking.com grew rapidly and today offers rooms in more than 200 countries and territories. In 2005, competitor Priceline.com bought the company for $133 million, and last year, the Netherlands accounted for two-thirds of Priceline’s $9 billion in revenue.
Startups intending to focus on a single market would “do better in France, Germany or the U.K.,” said Pepijn Rijvers, Booking.com’s chief marketing officer. “If your aim is a truly global business, then Amsterdam is a great starting point.”