How to expand your business in the EU? Why do you need to choose Amsterdam for your European Headquarters? Who do you need to hire first to build a team abroad? All these questions and more were answered during our interview with Jonas Liekens, Project Manager at Amsterdam Inbusiness.
1. What are the top 3 reasons foreign companies choose Amsterdam for business?
Jonas: Of course it largely depends on the industry, but Amsterdam is generally seen as an ideal option for European Headquarters. However, also sales & marketing, R&D or logistics are common activities companies want to start here. Companies determine their main location choice drivers accordingly. Some of the reasons we hear a lot are the English proficiency of Dutch people, neutral political climate, quality of life, according to the industry and activity, but location choice factors we typically hear are:
- Connectivity, being close to Schipol is very convenient for internationally operating businesses.
- Being a part of the EU is also a big reason. Besides the EU presence, the neutrality of Amsterdam is a competitive advantage. Companies can choose to open an office in Paris or Berlin in order to expand their businesses to French or German markets rather than the whole EU. However, when it comes to Amsterdam, anyone understands that the Dutch market is too small to be the only target.
- And, specifically for fintech companies, Amsterdam has quite a large talent pool for both software development and payments. So people know that they can easily build their team here. Also the Dutch regulator is mentioned many times for its good reputation in the EU.
Rogier: What about taxes and employment law? For example, I personally know that the employment law is a big issue in France.
J: I think our regulations are less of a problem for international companies compared to current employment law in Southern Europe , but Dutch employment law is definitely not as flexible as the US. So also it can cause a bit of a risk sometimes, especially for the Anglo-Saxons countries. However, we also point out to companies that the Fintech space is highly competitive. If there is not a match with an employer, they also want to move on. For taxes, The Netherlands is a good option especially due to the amount of tax treaties with countries around the world. However, if taks really is the only driver, Ireland is probably a better option.
2. Do you still think that we’re experiencing the impacts of Brexit? Why?
J: Yeah most definitely. In many other industries, everything has been consolidated and companies made their decisions where they want to be located. In Fintech however, Brexit still is an important factor, because they need to be regulated in all regions that they operate in. If you’re a general SaaS company, you can still be flexible with where your footprint is and for example manage all EU operations from London. But if you’re a fintech company, you need dual regulation. So Brexit is a very important reason why we still have an influx of great companies here, especially in fintech.
3. Can you give us some information around what are the trends you’ve seen in the market for the past few years?
J: Just before Covid-19, we had some of the best years in terms of inward FDI. When the pandemic started however, most of the expansions stopped or were postponed so we were only working with the projects that were already in the pipeline. Subsequently, 2021 was a crazy year with all the valuations that went through the roof and we saw a lot of companies expanding and hiring which was followed by worldwide layoffs in 2022.
At the end of 2022, everyone was waiting to see how these layoffs from the big tech companies would evolve. Many fast growing tech and fintech companies were high on cash, but now needed to be careful on not burning that too quickly. Profitability is now the key, and we see new investments coming in, but in a more sustainable way.
Overall, I think we went through some fluctuations but now we reached a healthier and more stable position. Currently, I think especially European fintechs are kind of a winner. We have not seen heavy layoffs here and EU fintechs have always been more leaning towards having healthier growth and burning less cash.
R: Besides an increase in investments, do you see any difference around where these companies are coming from? As you say, Europe has been affected less with the layoff but the US has been affected significantly.
J: It’s generally still the same mix. Majority has always been from Europe, UK, Singapore, Hong Kong and the US. Additionally, South African and Turkish companies are becoming big players as well. Of course everyone is more careful after covid about their extension plans. Now they have a better understanding of what they want in the EU and how they want to do it. So their playbook is sharper. Before 2021 or Covid, growth was the only thing that they went for so it almost felt more reckless compared to the expansion plans we see now.
4. What are the top 3 industries that are coming to Amsterdam according to the projects of Amsterdam Inbusiness?
J: Finance, IT and SaaS always play a big role. We also see many new companies from emerging industries like the circular economy, energy and digital transition. Also we want to help these companies specifically since they fit the challenges that we have as a country and the city as well.
R: What are the differences between assisting a fintech company vs. a SaaS company when they’re expanding?
J: I think expansion for the whole payment infrastructure is pretty different from other sectors. First of all, every country has its own way of dealing with money. From the perception of having mortgages to the popularity of using credits, there are a lot of factors. Therefore it requires a lot of product-market fit testing and embracing different expansion strategies.
Generally, I think expanding is easier for SaaS companies since the industry is more unified and you do not have to be regulated. Of course, you have GDPR and there are still certain regulations, but you can be compliant to them while not having any physical presence here. You could potentially manage everything outside the EU with your database, although we do encourage any business with significant plans here to open an office because it definitely does help to conquer the markets here.
5. Are there new countries other than the Netherlands that might become new European hubs for international companies? Such as Netflix’s latest engineering hub in Poland.
J: We see some Southern European countries implementing the digital nomad visas and I wouldn’t say that they’re competitors because they have different profiles. They can actually become complementary if you have your leadership team and key hires here with a clear strategy. Therefore, I’m not concerned but actually very happy about this complementary option, since finding the right talent in only one location is not sustainable and realistic.
6. What are the 5 key elements of scaling up your company in the Netherlands?
J: Some of the key elements would be:
- Know your market and do your research. Best way is to hire local people to understand what the game is like here, understand how payments work and what people are looking for.
- Define your goals. Do you first want to conquer the Dutch market or do you want to directly dive into the EU market? It’s all possible but I think it’s really good to have that clear idea before you execute.
- Become a Dutch company and work with Dutch talent. For example, you need to be present in the ecosystem by attending events. People need to recognize your name and understand what you are doing here. Or try to work with local recruitment professionals like PCN!
- Have a long term vision. We see a lot of SaaS companies starting here and if they don’t find the clients, it’s easy for them to leave. But especially for fintechs, they expand with a significant investment and they have regulatory obligations. So they need to make a long term plan.
- Hire good people. You shouldn’t go cheap with it. People are crucial to build your foundation. Invest well in the first few key hires and hire them as you hire new owners of your company. Then you can grow organically and go for more junior hires once you gain your presence here.
R: What are the ideal first hires of companies with successful expansion?
J: Compliance professionals and experts on license application. But for sure, it also depends on your industry.
R: Out of those hires, how important is it to have a Dutch speaker?
J: Very important. You can also hire an international who has been living here for quite some time. They need to understand Dutch even if they can’t speak fluently. They need to have a clear understanding of how the game is played. It’s also beneficial to understand the culture here better and easily become a local.
Are you someone looking to expand your team/business in Europe? PCN is here to help you find the right talent who will let you take the right first steps.Contact us now and let us help you to build your dream team. Don’t forget to check out our case studies to see how we helped other industry leaders so far!