Follow investment flows to see where innovation and growth emerge

According to Gijs van Leeuwen, Industry Leader Private Equity at PwC, this is also how investors view it: venture capital as an indicator of economic reinvention. ‘Venture capital is risk capital. It is deployed in places where investors expect new markets to emerge. Not everything succeeds (quite the opposite) but where it does, you often see strong and sustained growth later on.’

An early signal of economic movement

The research shows that venture capital is particularly valuable as an early signal, rather than as a direct driver of growth. ‘On average, three out of every four VC investments fail,’ says Van Leeuwen. ‘But that one successful investment can have a disproportionately large impact. That is precisely what makes VC so interesting: it shows where the potential lies.’

Barbara Baarsma, Chief Economist at PwC, places this in a broader economic context. ‘Venture capital is deployed early, often before companies become profitable. As a result, these movements do not yet show up in traditional macroeconomic indicators such as GDP or employment. But the data clearly show that VC is associated with higher productivity and greater business dynamism in the years that follow.’

Venture capital as a thermometer

In the study, PwC analyses the development of venture capital since the beginning of this century, broken down by sector and region. International data sources such as PitchBook, Refinitiv and Orbis are linked to Dutch COROP regions.

Baarsma: ‘You can see venture capital as a radar for opportunity. It does not create growth by itself, but it shows where the conditions for future growth are emerging. These are precisely the places where knowledge, talent, infrastructure and entrepreneurship come together. This points to ecosystem effects: where strong conditions already exist, VC can be highly effective—and in turn, VC further strengthens those regions.’

Van Leeuwen adds: ‘You can also see this reflected in the amounts involved. In the report, we show how investment volumes develop and how they relate to sectoral specialisation. These figures make clear that we are not looking at isolated incidents, but at structural shifts.’

From a mono- to a polycentric innovation landscape

One of the most striking trends is the regional spread of venture capital. In the early 2000s, around two-thirds of all VC deals took place in the Greater Amsterdam COROP region; today, that share has fallen to approximately 30 percent. Since 2016, the majority of Dutch regions have seen at least one venture capital investment each year.

‘This is an important development,’ says Van Leeuwen. ‘It means that innovation is no longer concentrated in a single centre, but that multiple regions are developing their own profiles. For investors, this expands the range of opportunities; for the economy, it makes us less vulnerable.’

Baarsma sees this as a structural strengthening of the Dutch innovation landscape. ‘In the Netherlands, VC is evolving towards a polycentric model, with distinct regional niches. Think of Eindhoven in high-tech manufacturing, Delft in AI and data, and various regions focusing on energy and climate innovation. This increases the economy’s adaptive capacity.’

Venture capital investment has become increasingly prevalent across Dutch regions over the last 25 years

Venture capital deal distribution by region

From venture capital to private equity

Within the investment chain, venture capital clearly plays a role at the front end. ‘VC takes the early risk,’ says Van Leeuwen. ‘Once companies have proven their technology and business model, you see private equity step in. That is no coincidence, but a logical next step.’

This flow-through makes venture capital an important precursor to broader capital movements. Sectors in which VC is successful tend to attract other forms of capital later on, particularly in technology-driven domains. ‘This often includes software and AI, which have seen the strongest growth in venture capital activity in recent years, as well as high-tech manufacturing, which stands out for its sustainable value creation and relatively low failure rates,’ says Van Leeuwen. ‘In addition, we see cleantech emerging rapidly.’

In recent years, VC increasingly invested in cleantech and AI

Technologies by deal count in 2-Year intervals from 2010 onwards

Redefining success

The research shows that sectors such as high-tech manufacturing and healthcare have relatively low failure rates among VC-backed companies. This raises the question of whether success should be defined differently than purely in terms of rapid growth or unicorns.

‘These figures invite a reassessment,’ says Baarsma. ‘Perhaps we should focus less on financial hype cycles and spectacular growth stories, and more on resilience and long-term earning capacity. These companies often turn out to make structural contributions to productivity, employment and innovation.’

Van Leeuwen recognises this shift in the market. ‘Investors are increasingly looking at the quality of growth. They are looking at scalability, robustness and how well a company can withstand shocks. That fits with a more mature investment climate.’

Europe, capital markets and international flows

The analysis also shows that venture capital is strongly internationally interconnected. Dutch investors invest relatively heavily in the United States, while the Netherlands simultaneously attracts foreign investment.

‘This is easy to explain,’ says Baarsma. ‘A significant share of this capital comes from pension funds, which invest with a strong focus on returns and international risk diversification. In addition, European capital markets are still fragmented, making it harder to operate at scale compared to the US. At the same time, the Netherlands has strong innovation ecosystems that are internationally attractive to investors.’

Van Leeuwen also sees a strategic challenge here. ‘If Europe wants to remain competitive, further deepening of the capital market is essential. For entrepreneurs, this means that an international orientation is becoming increasingly important, even at an early stage.’

What’s in it for you?

At a time when economies must constantly adapt and reinvention is the rule rather than the exception, this analysis gains additional relevance.

At the end of the interview, Baarsma speaks with passion. ‘Ultimately, this is about choices. About where we educate talent, where we build infrastructure, and which innovations we give room to grow. VC helps us make those choices more informed, because it shows where entrepreneurs and investors jointly see a future.’

Van Leeuwen agrees. ‘For entrepreneurs, investors and policymakers, this research provides a framework. By understanding where value is moving, you can make better strategic decisions – whether that concerns growth, collaboration or international expansion.’

Further reading

Those who want to understand where economic value is in motion will find an extensive analysis of data, trends and implications in the full report.