National Review: State, strengthen position Regional Development Companies

National Review: State, strengthen position Regional Development Companies

Regional Development Companies (ROMs) are a crucial player in the innovation landscape in the Netherlands, according to the Ministry of Economic Affairs and Climate's national evaluation. ROMs were assessed on their results over the period 2016-2020.

Not only did the ROMs amply succeed in strengthening the innovation and competitiveness of their region, they also fulfilled a crucial role in developing ecosystems and accelerating societal transitions. The government is advised to further strengthen cooperation with the ROMs and to give the ROMs a more prominent role in the implementation of national and European innovation policy, such as the National Growth Fund. If the ROMs are to properly carry out their role in ecosystem development and accelerating societal transitions, additional funding is needed from the State.

Regional development companies are active in promoting the innovation and competitiveness of Dutch regions. The ROMs develop the innovation ecosystems in their region, finance innovative companies in the early phase and help innovative foreign companies settle in the region.

The evaluation lists a number of recommendations to the Ministry of Economic Affairs and Climate:

  • Continue the government's involvement in the ROMs, and work on a broader (integral) Ministry of Economic Affairs commissioning. Clarify what is expected of the ROMs in terms of ecosystem development, supra-regional cooperation and social tasks.
  • Strengthen the development power of the ROMs, to further develop regional ecosystems, and give the ROMs more national funding, as the current funding tilts too much towards the regional shareholders (now 80% region, 20% state), especially in view of the largely national tasks.
  • Give the ROMs position in the implementation of major national and international programs, such as the National Growth Fund. Indeed, ROMs have a unique position as an implementation tool of the State and Region.
  • Revisit shareholder instruction regarding investments. Pioneering technologies such as deep technology are high-tech, capital-intensive and have long payback periods. Other criteria in terms of maximum term, maximum investment size and risk profile are appropriate for this.
  • Continue the change of direction "from volume to value," and put more effort into attracting foreign companies that strengthen regional ecosystems.

ROMs also receive a number of recommendations:

  • Better align the measurement of KPIs, including paying more attention to the social effects of ROMs' activities.
  • Set up a light, umbrella structure like ROM-Netherlands, especially now that a nationwide network has been created with 9 ROMs.
  • Work on regional, innovation ecosystem agendas.
  • Use the three core tasks (Innovation, Investment, Internationalization) in an even more integrated way for ecosystem development. New funding arrangements (public/private, subsidies/loans) also have a role to play in taking up social tasks.
  • Continue to build cooperation with Invest-NL and RFO.

"I welcome this evaluation. They are clear recommendations for both the state and us. NOM is a unique instrument of the state and the North Netherlands region with which we can do even more for future earning capacity. It is therefore highly desirable that the Ministry of Economic Affairs and Climate increases the contribution to NOM, as the evaluation recommends," said Dina Boonstra, director of NOM.

As the oldest of all regional development companies (in 2024 NOM will be celebrating its 50th anniversary), NOM also manages to create a solid financial return that is among the highest of the national results. The figures presented do not yet include the financial results for the year 2021.

"The ROMs receive an 8 from the surveyed business community in the evaluation, in part because of their network and result orientation. SME entrepreneurs face major challenges: production and process innovation to increase productivity, sustainability, digitalization. All more important than ever these days. The ROMs can play an important role here," said MKB-Nederland chairman Jacco Vonhof.

Investing: most active VC investors in the Netherlands

In the period 2016-2020, the ROMs were involved in as much as 45% of all venture capital investments in the Netherlands. This makes the ROMs by far the most active VC investors in the Netherlands. Most of these are high-tech, innovative early-stage companies. The ROMs finance in an extremely difficult landscape: they invest in those startups and scale-ups where the private market does not yet dare to step in, they nevertheless invest on market terms and are also expected to recoup their efforts (revolving funds). Nevertheless, the ROMs managed to achieve € 47 mln in positive results during the evaluation period. Moreover, the ROMs succeed very well in activating private capital. On average, € 1 from a ROM generates € 3-6 in private co-financing.

Innovate: drivers of innovation and ecosystems

The ROMs stimulate innovation in SMEs in areas such as health, sustainability, food, security, smart industry and circular economy. To this end, the ROMs work with companies and knowledge institutions on innovation projects and business cases, but also on preconditions for innovation such as field labs, availability of funding and the development of networks and programs. Strengthening regional innovation ecosystems is an essential part of the ROMs' innovation activity package. In terms of activities, organizing funding for projects and the role as advisor and sparring partner are rated positively. This also applies to bringing companies together in consortia. where the neutral position of the ROMs proves to be an important incentive for trust in mutual cooperation on innovative ideas. Super-regional cooperation between the ROMs has increased in recent years, partly due to larger programs under mission-driven innovation policy, European programs and the National Growth Fund.

Internationalizing: collaboration NFIA and ROMs best practice

Since their inception, ROMs have been tasked with attracting foreign companies to their regions in order to stimulate the economy and employment in those regions.
The 6 ROMs managed to complete 711 investment projects (65% above target) during the evaluation period, investing €6.2 billion (almost 3 times as much as target) and realizing almost 24,000 jobs (10,000 more than the joint targets). The cooperation between the NFIA (Netherlands Foreign Investment Agency) and the ROMs is widely praised as an example of how implementing organizations of national and regional governments can work together. Since 2018, the ROMs' remit has been expanded to include entrepreneurial support in (continuing) international business. International trade promotion is essential for the Dutch economy. The evaluation recommends giving this relatively new task of the ROMs a national financial boost as well.

*The evaluation focuses on the BOM, InnovationQuarter, Impuls Zeeland, LIOF, NOM and Oost NL. There are now 9 ROMs operating in a nationwide network; in addition to the above six, Horizon Flevoland, ROM Utrecht Region and ROM InWest also belong to ROM-Netherlands.

Toolkit D&I
Toolkit D&I

In this white paper you will learn:

  • How do you arrange more diversity and inclusion?
  • Top 5 tools and tips you can start using tomorrow
  • Special tips for entrepreneurs, investors, ecosystem developers, knowledge institutions and government

    Please note that this whitepaper is only available in Dutch at the moment. We are in the process of translating this whitepaper.