The sustainability sector in Amsterdam’s startup ecosystem
Ellen Oetelmans (programme director at Amsterdam Impact), Ioannis Ioannidis, (entrepreneurship lead at AMS Institute) and Bas Beekman (director at StartupAmsterdam) weigh in on the ecosystem for impact-driven startups in the sustainability sector in Amsterdam.
Leading the field
Amsterdam strives to lead the field in the sustainability sector, both nationally and internationally. As part of its circular economy policy, the City has boldly adopted various economic models. These include the Economy for the Common Good, the wellbeing economy and the doughnut economy model, which envisions a city that thrives within the boundaries set by the health of the planet and that has set ambitious targets to cut and ultimately eradicate the use of new raw materials. The City also fosters a healthy cleantech industry and actively supports impact entrepreneurship. But how does this translate to the ecosystem for Amsterdam startups in the vanguard of the transition to sustainability? What support is available? And what’s the prognosis for the future? We talked to StartupAmsterdam director Bas Beekman and asked key figures at two Amsterdam initiatives that promote sustainability and entrepreneurship – Ellen Oetelmans, programme director at Amsterdam Impact, and Ioannis Ioannidis, entrepreneurship lead at AMS Institute – for their insights.
Increasing investment in impact
A growing number of the Amsterdam startups receiving funding operate in the field of impact or have societal challenges such as sustainability at the core of their business, says Beekman. Specifically, €644 million was invested in Netherlands-based impact startups out of a total €4 billion in 2021, 2.7 times as much as in 2020. At Amsterdam Impact, a City of Amsterdam initiative created to strengthen the impact entrepreneurship ecosystem, programme director Ellen Oetelmans has also observed a rise in the number of Amsterdam startups with business models tackling sustainability-related societal challenges. “We think the more, the better, so that we can accelerate the transition to a new economy that creates wellbeing for all, for people and the planet,” she says. “This new economy based on multiple value creation is not about competition, it’s about collaboration – between different startups, between startups and larger companies, between startups and government, between startups and investors. We need everyone to contribute and to work together.”
Ioannis Ioannidis, entrepreneurship lead at the Amsterdam Institute for Advanced Metropolitan Solutions (AMS Institute), also sees startups as key players in driving innovation. The institute applies a scientific approach to tackling societal challenges, including circularity and urban climate resilience, by fostering a collaborative approach. To help shape and establish new startup ideas, AMS Institute runs the AMS Startup Booster, a development programme aimed at growing startups who want to make impact with ideas in a wide variety of sustainability related fields, such as energy, urban agriculture, micro-mobility and waste management.
“I’ve had the pleasure and the privilege to be around some amazing groups of entrepreneurs with really novel ideas,” says Ioannidis. “Through their creativity and entrepreneurial spirit, startups are constantly pushing the boundaries of what is possible, coming up with new and innovative solutions to the challenges we face as a society. With a high level of flexibility and a much lower overhead than traditional businesses, startups are able to quickly adapt to the changing societal and market conditions.”
As Beekman additionally observes, startups simply aren’t hindered by the kind of existing stakeholders that can restrict the room for manoeuvre for many corporates.
Support for impact
Can purpose-driven startups in the Amsterdam sustainability sector count on a firm base of support? “I would say, especially in comparison with other European cities, the startup ecosystem here is leaps ahead of the competition,” says Ioannidis. “There is a plethora of supporting mechanisms in place, great access to knowledge and information, a strong network of venture capital firms and investors, and a very vibrant startup community.”
The City of Amsterdam doesn’t focus primarily on running its own support schemes, says Beekman, but rather on creating the right conditions for initiatives in the field and on collaboration with partners.
“At Amsterdam Impact, we collaborate with many ecosystem partners to support all impact enterprises – including those trying to solve challenges in circular economy, energy transition, green mobility and other sustainability-related areas,” Oetelmans says. Amsterdam Impact focuses on providing more capital for impact enterprises through networks such as Co-Financing Our Future, increasing market access through Buy Social activities, and strengthening impact business models with programmes such as Boost your Neighbourhood (Boost je buurt, page in Dutch) and Building Better Business.
AMS Institute and Amsterdam Impact are just two of the initiatives supporting the Amsterdam startup ecosystem in the sustainability sector. The open innovation platform Amsterdam Smart City offers a meeting place for innovation professionals working on metropolitan challenges and solutions, with themes including energy and the circular city. Startup in Residence runs a Sustainability & Circularity programme supporting entrepreneurs with innovative solutions to Amsterdam challenges, and offering the City of Amsterdam itself as a launching company. Circular at Scale, a national organisation, is an accelerator programme that helps circular scale-ups in the Dutch construction sector. Finally, Fashion for Good supports innovations driving greater sustainability in fashion, working directly with the industry.
The money obstacle
The supporting mechanisms for startups in general, and for impact and sustainability enterprise in particular, might be profuse, but both Ioannidis and Oetelmans agree that access to capital remains a key obstacle, especially for early-stage entrepreneurs. “Impact startups can be seen as risky investments – in the sense that the return on investment can take longer than for a conventional startup,” says Oetelmans.
Ioannidis agrees that startups generally have to rely on public funding: “I think it’s becoming more and more obvious that venture capital money is moving towards bigger tickets in their efforts to de-risk their investments, going for the big wins – which makes sense from a purely economic point of view.”
Nevertheless, there is some cause for optimism in impact investors bucking this trend, such as Carbon Equity, 4impact, Duurzaaminvesteren.nl and LSP (Life Sciences Partners).
Co-financing and deal sharing
Oetelmans argues, however, that in the long run, impact enterprises have actually proven themselves to be stable and resilient investment opportunities. And on the positive side, approaches such as co-financing and deal sharing are increasingly helping to break down the barrier to capital. One initiative to give impact startups a chance to pitch their business to finance providers is the Integrated Capital Network, co-initiated by Amsterdam Impact, Impact Hub Amsterdam and the expert and investor group Generous Minds.
“Another good example of where local government can play a role in the ecosystem is taking companies to other cities around the world on trade missions to make the right connections to help them internationalise,” says Beekman.
Given the mounting atmosphere of urgency in relation to the need for action on climate and sustainability, Beekman observes a growing willingness on the part of big companies and pension funds to invest in the economic transition. He also cites the example of the Noord-Holland regional investment agency ROM InWest, which is increasingly investing in the sustainability sector.
However alarming the looming threat of climate change might be, one thing Beekman, Oetelmans and Ioannidis share is a sense of optimism about the future for entrepreneurship in the sustainability sector. “There’s a lot of momentum for the transition to a different type of economy and society,” says Oetelmans. “That goes for finance, the corporate world, at all levels of education, and in government policy. And consumers are also increasingly opting for products and services that make a difference.” She points to the success of Amsterdam Impact’s Building Better Business, a programme helping companies in the Amsterdam Metropolitan Area to accelerate their social and environmental impact and receive certification for doing so. “The fact that so many companies in the greater Amsterdam region are ready to take this leap and play their part in advancing the wellbeing economy is highly encouraging. Impact entrepreneurship has a bright future.”
Apart from the profusion of support programmes and funding initiatives, says Ioannidis, improved access to information is a major benefit. “Having all information aggregated in one municipality-run website, for instance, makes it so much easier for a startup to navigate the ecosystem and find the right fit for their needs. It also makes life easier for us as programme developers and managers to reach these startups.”
Ioannidis sees that climate change is driving innovation in many areas, with impact-driven entrepreneurs taking the lead. “It’s clear that we will spend the coming years in a rush, trying to meet our environmental obligations and commitments. The City of Amsterdam will definitely need as many driven and resourceful minds as possible, to create the necessary technological solutions. In this race, startups should and will have a big role to play, resulting in a much bigger sustainability sector.”
“It is a wonderful opportunity for the City to play its part too,” adds Oetelmans.
“It’s like the beginning of a revolution,” says Beekman. “Everybody feels that this is needed now. There’s no going back.”