‘Why stop doing something that’s finally going well?’

From photonics to the Einstein Telescope, from sustainable aviation to green steel: since 2021, the government has allocated billions to innovation through the National Growth Fund. Just as easily, the Schoof government turned off the tap again in 2024. What have the billions from the Growth Fund delivered?

TEXT: DENNIS VAENDEL

Making the Netherlands more sustainable, creating economic activity and jobs for the future, promoting prosperity, and strengthening the country’s position on the world stage: some six years ago, these were all reasons for the then government to set up the National Growth Fund. In September 2020, on Prinsjesdag, Ministers Hoekstra and Wiebes announced that, over the following five years, twenty billion would be invested through the fund in projects designed to strengthen the Netherlands’ ‘sustainable earning capacity’.

This was to take place in five phases, but it never got that far. The last two rounds – accounting for nearly seven billion euros – were scrapped in 2024 by the newly appointed Schoof government, which decided to phase out the Growth Fund. In the years prior to that, it had already been nicknamed the ‘Grab Fund’, due to politicians’ tendency to dip into this well-stocked pot for purposes that had little to do with innovation. Although Prime Minister Rob Jetten’s new minority government declared in its coalition agreement earlier this year that it was in favour of a successor to the Growth Fund, there is still little clarity on the matter.

Despite the political turmoil, the allocation of some eleven billion in the first three rounds went ahead. This has been distributed across fifty projects, covering a wide range of themes: from strengthening digital autonomy to the development of new cancer drugs, and from climate-resilient agriculture to more sustainable inland waterway transport.

Development aid

This investment is crucial for the Netherlands, as those involved in several projects emphasise. Without something like a National Growth Fund, we are effectively providing a form of development aid to countries such as the United States and China, says Tom van der Horst, Director of Strategy & Innovation at TNO, who wrote the book *Innovation Power* in 2025. The Netherlands has been facing an innovation paradox for decades, he says. ‘Universities produce a great deal of knowledge, but as a country we are only marginally successful in converting that into new economic activity that strengthens the economy or solves social problems. Entrepreneurs who cannot secure investment capital in the Netherlands go to raise it in places such as the US, meaning that the real economic impact takes place there.’

Van der Horst himself is involved as Director of Strategy in the NXTGEN High-tech project, which received nearly half a billion euros from the Growth Fund. A significant portion of this is going to dozens of start-ups and scale-ups: young companies trying to further develop and market an innovative idea. ‘Within our project, they all focus on ultra-precise, high-tech equipment for all sorts of applications, such as laser communication for satellites and drones. These small companies say themselves: we wouldn’t have existed without NXTGEN, or at the very least, development would have been much slower. Together with the applied research institutions, they form vital links between knowledge and business activity, enabling us to break through that innovation paradox. This is important not only for our economy, but also for the autonomy we are now striving for as a country.’

Level playing field

Laurens Weers, director and chief financial officer at PhotonDelta – a project that can also count on nearly half a billion euros from the Growth Fund – agrees. It focuses on expanding the production of photonic chips by also investing heavily in research projects, start-ups and the recruitment and training of talent. Unlike the ‘traditional’ variety, photonic chips use photons rather than electrons to transmit information, making them more energy-efficient. This makes them crucial for quantum computers and very interesting for energy-intensive AI data centres, says Weers. ‘From a geopolitical perspective, it is hugely important for the Netherlands and Europe to be able to manufacture these themselves. That gives you autonomy and a voice at the table, just as we now have for electronic chips thanks to ASML.’

The production of conventional chips is dominated by Taiwan. That competitive battle has been lost, argues Weers, but the playing field for photonic chips is still wide open. ‘We have a great deal of expertise in this field in the Netherlands, with strong hubs such as Eindhoven and Twente. If we want to capitalise on this major opportunity and accelerate the industry, government funding is needed. In Taiwan, the government has also been investing in the chip industry for years; this has had an enormous knock-on effect on private investors and companies. Our competitors, China and the US, also have such national programmes. Those who don’t keep up will soon cease to matter.’

Headwinds

The fear of losing the international competitive edge – and with it, geopolitical autonomy and future earning potential – without the millions from the Growth Fund is present in several sectors. Take solar energy, for example. This sector is ‘bizarrely dominated by China, which often sells solar panels on the European market below cost’, says Jan Vesseur, chair of the Growth Fund project SolarNL. ‘As a result, Dutch start-ups are facing enormous headwinds. If we do nothing, the industry will disappear. The energy transition would then grind to a halt if China suddenly stopped supplying solar panels. To remain resilient, we must take action.’ With over 100 million euros from the Growth Fund, dozens of PhD students and start-ups, amongst others, are focusing on flexible solar panels made from perovskite rather than ‘standard’ silicon. ‘This allows you – certainly in combination with silicon cells – to achieve the same efficiency, but in a more sustainable and ultimately cheaper way: the production process is less complicated, fewer materials are required – all of which can be sourced within Europe – and the panels are lightweight and easier to recycle. In terms of expertise, we’re among the frontrunners, but not yet when it comes to large-scale production. Those millions from the Growth Fund are a major boost, encouraging private investors to think: ‘Hey, the Netherlands is back in the game.’

Knocking on Brussels’ door

These government investments are also making an impression in Brussels, says Ron van Manen, director of the Aviation in Transition (LiT) project, which is seeking to make the Dutch aviation sector more sustainable with just under 400 million from the Growth Fund. ‘Aircraft manufacturing is so complex that it doesn’t happen at national level, but at European level at the very least. That’s why you sometimes hear in Dutch politics: don’t come knocking on our door, but turn to Europe for grants. But there’s a lot of competition there. Moreover, you also want to bring something to the table, not just come and take something. I worked in Brussels for a long time and saw that national innovation programmes really do act as a ticket to get on board with projects worth billions.’

Van Manen can already see the benefits of LiT. ‘The Dutch aviation sector and government are once again being taken seriously and are being offered opportunities, for example within major Airbus consortia; think of projects involving hydrogen-powered aircraft or ultra-efficient electrical systems. We can benefit from this for a long time to come, because new aircraft last for decades.’

Building confidence

In a similar vein, a provision of nearly nine hundred million euros in the Growth Fund for the potential construction of the underground gravitational wave detector, the Einstein Telescope, in the border region near South Limburg could spur decades of innovation. However, there is first the competition from the East German state of Saxony and the Italian island of Sardinia to contend with. Next year, a decision will be made at European level as to which location will host this multi-billion project.

According to Stan Bentvelsen, scientific director of the Einstein Telescope Euregio Meuse-Rhine project office, the National Growth Fund is of vital importance. ‘It has given the Netherlands the opportunity to take political leadership.’ He points out that the Dutch commitment has ‘boosted the confidence’ of neighbouring countries to contribute themselves to the potential construction in the border region. Since then, Flanders has set aside half a billion and Wallonia two hundred million. With this financial foundation, the Euregio could well outdo its competitors.

Moreover, millions from the Growth Fund are already available for developing a bid book and fostering collaboration between academia and industry in the development of the technology required for the ultra-sensitive detector, which may later find its way onto the market. In the field of technology development, the region has already taken a leading position in Europe, says Bentvelsen, which, in his view, presents a ‘unique opportunity’ to ‘attract Europe’s top research institutes and the best high-tech industry in Europe to the region’.

Giant

Although many projects focus primarily on helping start-ups, large, highly profitable companies are sometimes involved as well. Could they not act as investors in innovation within their own sector themselves, rather than benefiting from government funding?

That’s putting it a bit too simply, says Erik Vegter, programme director of the ‘Growing with Green Steel’ project, which, with 100 million euros from the Growth Fund, focuses on making the steel sector more sustainable. The Dutch branch of steel giant Tata Steel is also involved in the project.

‘It’s not as though 100 million is going straight to Tata,’ says Vegter. ‘Most of it goes to universities or smaller companies setting up demonstration projects. If Tata had to pay for that itself, why would the company do it in the Netherlands rather than somewhere where it might be cheaper? The whole point of the Growth Fund is precisely that we want to stimulate the Dutch economy, and that is exactly what we are seeing happen now.’

Flaw

No, the National Growth Fund isn’t perfect, according to various projects. For instance, due to the many rules governing the use of government grants and loans, it sometimes takes a long time before the money can actually be spent. This is particularly often the case for start-ups, which are on shaky financial ground.

‘Yet that is precisely the whole point of the support,’ sighs Vesseur. ‘It needs to happen faster. If you want to bring new technologies to market, there needs to be momentum.’ As far as he is concerned, the Netherlands could, for example, take a more assertive stance when it comes to European rules.

Weers agrees with this view. He points out that other European countries also regularly request exemptions from Brussels. Nevertheless, Van Manen sees a growth trend. ‘Projects are sharing experiences, and civil servants also recognise that the bureaucracy is rather rigid. The government is simply not used to taking the lead on high-risk investments in deep-tech start-ups. Things are getting better, though, and the Growth Fund is a positive factor in this.’

Another thorn in Vesseur’s side is that the millions allocated may be partly conditional. For instance, last year the government decided to definitively scrap a reserved sum of 277 million for ‘his’ SolarNL project, as they no longer considered the establishment of large-scale production of ‘conventional’ silicon solar panels in the Netherlands to be ‘realistic’. ‘We’re allowed to carry on with perovskite, but when it comes to silicon, they apparently think we’ve lost the battle as a country. We don’t agree with that. It is a fundamental flaw in the Growth Fund’s approach that they first say ‘We’re going to do this’ and then, a few years later, can backtrack. That does nothing to boost the confidence of private investors. In Europe, there is a growing realisation that we actually need to focus more on this and that solar energy is here to stay. In a year’s time, we in the Netherlands might well be thinking: ‘We really should have kept investing in silicon after all.’

A robust ecosystem

Nevertheless, optimism about the Growth Fund prevails within the projects. They have all now moved beyond the start-up phase and, by their own account, are in full swing. Hundreds of PhD students and postdocs are at work, whilst dozens of smaller and larger companies are achieving results and securing millions in private investment: all developments that would otherwise probably not have got off the ground, or at least not as successfully. The close collaboration between research institutions and the business community is particularly praised. ‘A powerful ecosystem is emerging around a single theme that feeds and strengthens itself,’ says Weers. ‘I can’t actually think of any previous examples of such an approach on this scale in the Netherlands.’

This is mainly due to the fact that researchers and entrepreneurs no longer have to scour for smaller grants separately, but can work as a single entity for several years with substantial funding. ‘I’ve noticed that other European countries sometimes look up to our project,’ says Vegter. ‘As a researcher or a company, you can come up with all sorts of brilliant technical solutions, but if the framework conditions aren’t right, they’ll remain on the shelf. Within our project, we take the entire system into account: we focus not only on the more sustainable production of steel, but also on its use, recycling, regulations and training people. The whole chain shares knowledge, including partners who would normally never be involved. That approach is unique.’

The duration of the projects – most of which will run until the start of the next decade – is also crucial, says Van Manen. ‘Large companies and investors often do not even consider the millions involved to be the most important factor; rather, it is that stability. The Growth Fund, as it were, elevates the allocated investments above the political parties. Even when governments fall, it’s not a constant case of ‘one up, one down’. The investments remain in place.’

Four-lane road

At least, that applies to the eleven billion distributed during the first three rounds of the Growth Fund. The fact that the remaining billions have subsequently been cut from the budget and little is yet known about a successor scheme is drawing considerable criticism from existing projects. ‘We’ve finally got something that’s working well – so why stop it?’, is the rhetorical question that’s been raised time and again.

After all, demand for high-tech equipment, photonic chips, green steel, solar panels and climate-neutral aircraft will not suddenly disappear after 2030. On the contrary. ‘You have to keep developing photonic chips continuously; they need to get faster and faster,’ says Weers. ‘In the Netherlands, we’ve now set up an excellent production chain; think of it as a single-lane motorway. But to keep up on the world stage, we need three or four lanes. Otherwise, we’ll lose momentum and other countries will overtake us.’

Ongoing government support for follow-up projects is crucial in this regard, Weers emphasises. ‘Successful companies naturally need less and less support, but we must continue to encourage them. I’m not saying that otherwise everything will have been for nothing, but you will be letting slip a huge opportunity that you, as a country, have created for yourselves.’

Van der Horst agrees. ‘To put it very simply: if there is no successor to the Growth Fund, we will lose our position in Europe and the world in many important areas. Companies may move abroad or go bankrupt, and talented people will move on to other things. We then run the risk of the Growth Fund becoming a divestment. The new government has, admittedly, reversed the cuts to education and research, and is also investing in larger companies, but seems to pay little attention to start-ups and innovative small businesses, which are precisely what matter most. That is very worrying.’

He hopes that clarity will soon emerge regarding a stable successor to the National Growth Fund. ‘Innovation is not a sprint, but a marathon. Calm, consistent policy, verging on the boring: that is half the battle. It also took decades for ASML to get off the ground. And that is what we want: to create new ASMLs.’