The Netherlands is a resilient, progressive country. It has a healthy business climate with over 450 multinationals like Philips, Heineken, Unilever, established financial industry, and high-ranking academic institutions in order to make it a solid home for technological development.

Yet very little and a very fragmented supply of venture funding is available with little or no institutional investor contribution. After validating, business models of early- and later-stage startups with revenue between Eur 0 - 1 mln, fall into a critical valley of death where there is little or no funding available. In order to ensure that ventures get access to investors and funds, there are challenges to be addressed:

• Investment deal sizes are too small for institutional investors as opposed to the relatively high administrative costs;
• Mismatch of venture risk profiles and risk  appetite of institutional investors;
• Unpredictable and uncertain deal flow and a potential lack of available investment opportunities; 
• Due to different (restrictive) investment terms its hard to co-invest / make future investments in ventures; 
• The pool of private investors is relatively unorganized; 
• Little or no availability of venture debt for scale-up ventures;
• The lack of a self-sustaining transparent online marketplace where ventures and investors can seamlessly connect and access support services; 
• No fiscal stimulation to invest in early-stage high-risk ventures; and
• Public and private funding possibilities are fragmented by many parties. 

For the above-mentioned reasons, having a well-designed technological infrastructure does not necessarily mean that raising capital or listing a security token can be done efficiently for ventures. An optimal, aligned process is needed to help ventures start, grow and scale. For this purpose, the concept of a venture vertical has been developed.

The vertical will be offered to investors in the primary market as one single (bundled) investment offer using standardized documentation, standardized issuing practices, and complying with a standardized framework of investor requirements. Subsequent Funding will take place when the relevant venture satisfies pre-agreed Milestones.

In the secondary market, every single financial instrument as issued by every single venture can be traded individually in order to create flexibility for the investors to continuously optimize portfolio allocation or, at the request of an Investor, be traded in a bundle as to be determined by that investor. A Vertical is managed by a Program Manager for purposes of developing and/or accelerating the ventures’ (initial) business ideas into a successful venture, business, or company.

A vertical will have the following characteristics:

• A venture vertical consists of a minimum of 20 ventures (diversification) with a minimum Technology Readiness Level / Investor Readiness level of 4 that will run through an acceleration program of a maximum of three years
• the total value of capital that needs to be raised for the venture vertical is > Eur 20 mln
• the ventures in the vertical are funded with 80% equity and 20% in debt, grants, and subsidies
• an investor can only invest in the vertical of ventures in the primary market
• every venture is separately listed on the secondary market (separate ISIN) of an exchange and can be traded as such
• the bundle of ventures can also be traded on the secondary market