Opinion | 'Deep tech should be given space in the Netherlands', NRC

So far so good. With government oversight, unwanted influence on our most critical companies can be kept out. The Vifo Law provides the government with the right tools for this, which they have lacked so far. For example, in recent years the Dutch government has had to intervene several times in the event of a threatening takeover of a 'critical' technology (for example, at Fox-IT and Smart Photonics).

At the same time, companies in these critical sectors must first be able to mature before they can become of critical importance. That doesn't happen on its own. The capital needs of deep tech companies are large, while private parties often do not want to take the risk of investing in these new applications (such as quantum and photonics technology). Successful growth of these young companies requires intensive high-tech research and involves high production and development costs from the start. The government also sees this problem. For example, the Netherlands is investing respectively 615 million euros (quantum) and 417 million euros (photonics) from the National Growth Fund to close the gap with private investors.

Now, however, an additional general measure of government (amvb) has been presented with the Vifo Law, which cut itself off at the knees. In practice, this amvb will lead to the fact that every domestic and foreign investment in one of these technologies will be subject to scrutiny by the newly established Investment Assessment Bureau.

That's because the Vifo Law distinguishes between gaining control over a company (high threshold) and gaining significant influence (low threshold). The starting point is that investments (including acquisitions) in so-called 'sensitive' technology should only be reported and approved if a party gains 'control' over the company, for example, by buying the company. This process is a good deterrent to prevent a company that is important to Dutch society from falling into other (foreign) hands. As a rule, a 'normal' investment will not lead to a report, since only a minority interest in the company is acquired.

However, the amvb qualifies all semiconductor, quantum, and photonics technologies as 'very sensitive.' With such 'very sensitive' technologies, virtually any form of domestic or foreign influence must be reported - even if a Dutch (semi-)government fund invests itself. Logical for a new nuclear power plant or water treatment plant, but is this a bit exaggerated for a starting quantum start-up from Delft?

Regardless of the additional paperwork, the amvb also has long-term implications for Dutch deep tech. The mandatory reporting creates uncertainty. There is uncertainty about the duration of the process (ranging from eight weeks to six months), and the average cost of reporting is estimated at €45,000. Investors will take these points into account in deciding whether to invest in Dutch deep tech or look across borders.

Even more importantly: mandatory reporting will work against the competitive position of Dutch companies compared to their counterparts in other EU Member States. If an enterprising scientist has a choice whether to develop the technology for his company in Delft or at a German university, but has easier access to capital in Germany, his choice will be quickly made.

It is therefore important that the Netherlands seeks to be in line with European product lists without subjecting generic categories of deep tech technologies to a (too) strict regime on its own. The legislature can mitigate the adverse effects of the amvb by classifying these technologies as 'sensitive' rather than 'very sensitive' for the time being. This way, the Netherlands keeps a finger on the pulse in case of a company sale, but the company experiences less disadvantage compared to its European counterparts in its development phase.

A thriving deep tech ecosystem is vital for the strategic position of the Netherlands within the EU and beyond. For this, the Netherlands must find a careful balance between facilitating investments and keeping unwanted parties out. By subjecting every investment in the earliest phase of a deep tech company to approval by the Investment Assessment Bureau now, the balance is tipping too much. If we don't want to be dependent on China for the production of our quantum or photonic chips in 20 years, the Netherlands would do well to give the deep tech sector the space it needs now.

As seen in NRC Handelsblad.