Innovation engine under pressure: Tech- and platform ecosystem facing mounting challenges

The Netherlands has a strong and innovative technology and platform ecosystem that is a driving force behind the economy's innovation capacity and long-term earning capacity. Increasing policy instability, combined with an internationally less competitive fiscal climate, poses a growing threat to this crucial economic engine.

New research by PwC's Chief Economist Office reveals that the Dutch tech and platform ecosystem comprises more than 2,380 companies. These firms collectively hold nearly 140,000 patents across industries ranging from transportation and energy to healthcare and semiconductors and maintain close ties with leading academic institutions through dozens of university spinouts.

"This ecosystem is not just a cluster of companies, but an engine through which new ideas are transformed into economic value," explains Barbara Baarsma, PwC Chief Economist. "For every established technology or platform company, eight new ventures are founded by its alumni, creating a self-reinforcing cycle of entrepreneurship and knowledge transfer."

Amsterdam emerges as the center of this ecosystem

The research shows that 72.4% of the tech and platform companies are Dutch-headquartered, with Amsterdam serving as the dominant hub, accounting for 20.2% of the total ecosystem. The concentration extends across the central regions, with North Holland, South Holland, and Utrecht hosting the largest shares of companies.

Despite representing a smaller portion numerically, foreign-headquartered companies carry substantial economic weight in the ecosystem. They account for the largest global employment shares, are disproportionately represented in late-stage growth phases, and command higher valuations, effectively linking the Dutch ecosystem to global capital markets and innovation networks.

Because STEM skills are the foundation for technological innovation and the development and application of new productive technologies, this type of work plays a central role within the ecosystem. Within the ecosystem, approximately 36% of employees are engaged in STEM activities. Leading tech and platform companies each employ more than 500 STEM professionals in the Netherlands. Most companies operate software-as-a-service or manufacturing-oriented business models, with clear strengths in the healthcare, enterprise software, fintech, and energy sectors.

Warning signs amid strength

At the same time, concerning developments are emerging. New startup formation has declined by 38% since its 2023 peak, and the Dutch scaleup ratio of 21.6%, the percentage of companies successfully raising beyond €10m, trails both the European average and significantly lags behind the United States. No Dutch technology company has achieved a public listing since 2021, constraining the recycling of wealth into the next generation of startups.

An analysis of the business climate news sentiment for the ecosystem shows increasing media attention coupled with worsening sentiment, dominated by concerns over regulation, uncertainty, and investment climate.

Urgent policy reforms needed

The research identifies critical areas requiring policy attention to preserve the ecosystem's competitive international position. First, attracting and retaining international talent requires a stable and competitive fiscal regime. Recent erosion of the expat scheme undermines the Netherlands' position in the global competition for knowledge workers.

Second, current Box 3 treatment of equity, particularly taxation of unrealised gains on illiquid shares, undermines startups' ability to attract talent through equity participation.

Third, strict employment protection rules increase the costs of innovation and adaptation and discourage scaling. Baarsma explains: “Startups need to be able to expand and adjust their workforce quickly as projects succeed or fail. When scaling down is costly and risky, companies become more cautious about hiring staff and thus in their growth strategy. This hampers their ability to scale up quickly.”

Fourth, innovation policy instruments like the WBSO and Innovation Box need modernisation to align with how digital and platform-based business models actually create value. “Innovation has shifted from linear development trajectories to continuous, iterative processes, where the emphasis is on architecture, data, and scalable platforms instead of just on code. The nature of research and development has evolved, and administrative frameworks must evolve with it,” emphasises Baarsma.

A tipping point

Most critically, policy instability corrodes investment confidence. The tech and platform ecosystem thrives on long-term planning horizons, yet recent years have seen rapid succession of changes – from 30% ruling reductions to evolving transfer pricing interpretations – that undermine the predictability essential for sustained investment.

"In a world where capital, talent, and ideas move freely across borders, the quality of the institutional environment is the ultimate determinant of where value is created," warns Roos-Emonds. "The Netherlands possesses world-class universities, deep technical expertise, and an internationally oriented workforce. What it currently lacks is the policy stability required to convert these advantages into sustained growth."

As the Draghi and the Wennink reports emphasise, safeguarding future prosperity requires annual economic growth of at least 1.5-2.0%, driven primarily by productivity gains and investment in precisely the domains where the tech and platform ecosystem operates: digitalisation, artificial intelligence, energy technology, and life sciences.

Without decisive action to strengthen the institutional framework supporting this ecosystem, the Netherlands risks losing the economic base needed to finance its societal investment ambitions.

 What's in it for you?

For policymakers: The research provides a roadmap for targeted reforms that can strengthen the Netherlands' innovation capacity while maintaining fiscal responsibility.

For business leaders: Understanding ecosystem dynamics and policy pressures can inform strategic decisions about talent, investment, and market positioning.