Yesterday our Board send a letter to the House of Representatives, pointing out startups are at risk of being left out of the new emergency measure for job retention. The support for freelancers should also be extended to DSA’s as far as the organisation is concerned.
The Dutch Startup Association (DSA) is also “impressed by the ambitious package of measures” that the government unveiled last week. But the representative of companies such as MessageBird, Ticketswap and Bunq fears that startups are ineligible for thee measures.
Read the full letter in Dutch: Brief DSA Tweede Kamer EZK
Download in English: DSA letter house of representatives Corona measurements
The main three additional measures we ask for:
1. Widening ZZP support to DMs
Self-employed persons can apply to the municipality for a benefit at social assistance level for a period of three months. However, many startups have a bv-structure, especially if there are several founders involved. We as DSA therefore want the self-employed benefit to be broadened to a general entrepreneur’s benefit that also applies to DMSs.
2. Emergency job retention measure also for startups
In order to be able to handle the number of applications, the government replaced the short-time working scheme (‘deeltijd-ww’) last week by the ‘Overbrugging Overlegging voor Werkbehoud’ (NOW) emergency measure. This allows an entrepreneur who expects a loss of turnover of at least 20 per cent to apply to the UWV for a three-month period for a contribution towards the wage costs (of up to 90 per cent of the wage bill, depending on the loss of turnover).
Many startups, however, do not yet make any turnover, we note, but do have to continue to pay wage costs – while new financing rounds threaten to be postponed. Therefore, the NOW scheme should also be available to startups, “for example, for companies that have a certain degree of success measured by a certain number of employees or external, non-bank funding,” the DSA states.
This should take account of the fact that some employees, e.g. software developers, are hired as freelancers due to scarcity. “It is very important that startups are able to retain these employees as well.
3. Boost the funding market
When it comes to financing, confidence has fallen sharply and investments are being postponed or fine-tuned, TechLeap already noted in a Covid-19 report on Friday. DSA fears that this will lead to a blockage in the system, as a result of which fewer startups will continue to grow and valuations will drop. “In order to be able to support startups that are past the first phase, we propose to investigate how a vehicle like Invest-NL can support investments of venture capital companies according to a matching principle”.
According to the DSA, the brakes on these investments are now so strong “that a strong signal of confidence should be given by the government by taking on the bulk of the investment. A distinction should be made between follow-on investment and new investment, where the latter will require heavier public support and thus a greater factor of matching investment’.
Above all, early-stage startups should have sufficient time and opportunities to realise a first product/market combination. The DSA mainly sees a role for private investors, but with government support: “If a good scheme can be made available, a large amount of private capital can be drawn on that otherwise has little opportunity for return. Let it flow into the economy via new initiatives. Speeding up the introduction of an ‘aunt agath / aunt mona’ scheme would be a crucial factor here”.
DSA proposes “for very acute situations” an emergency credit, which will bridge a short period of time before the above initiatives take effect. This could be done, for example, by redesigning or extending RVO’s current credit arrangements.
In the meantime, we are working on an overview of startups that can quickly help to defuse the coronary crisis, such as with the development of respiratory equipment. We want to bring these startups into contact with governments and large companies in order to accelerate results.