Bridging boundaries in regional entrepreneurial ecosystems: a deep dive with Jip Leendertse on startup growth, regional challenges, and solutions

Original post on MT/Sprout: https://mtsprout.nl/columnisten-experts/paradox-van-regionale-financiering

Last month, State of Dutch Tech was launched with a captivating event in The Hague, sparking widespread discussions both online and offline. Topics ranged from insufficient investments and the lack of clear policies and vision to concerns about scaleups leaving the Netherlands. Around the same time, my friend Jip Leendertse published an insightful paper on regional ecosystems, adding another layer to the conversation. (https://link.springer.com/article/10.1007/s11187-025-01015-4) After exploring data analysis and theoretical frameworks on data-drivenness in my previous pieces, I’d like to take a zoom out this time and look at the bigger picture: entrepreneurial ecosystems.

You’ve likely heard the famous saying, "It takes an ecosystem to raise a successful founder." Entrepreneurial ecosystems are widely praised as foundational networks designed to foster innovation, accelerate startup success, and drive regional economic development. These ecosystems, intricate webs consisting of entrepreneurs, incubators, accelerators, universities, local governments, investors, and regional development agencies, form a vital support structure for emerging ventures. However, despite their apparent strengths, ecosystems can inadvertently develop rigid boundaries that restrict startup growth, limit resource access, and fragment otherwise integrated regional innovation systems.

In an in-depth discussion with Jip Leendertse, a leading scholar from Delft University of Technology, we explored the complexities and unintended consequences of ecosystem boundaries. Our conversation covered key insights from his research, the interplay between public and private funding, and the potential risks of regional fragmentation in the Netherlands. We also examined broader entrepreneurial dynamics, including whether Dutch startups are overly VC-focused rather than client-driven, and how public sector involvement can more effectively support sustainable innovation.

One of the central insights from Leendertse’s research is the role of institutional logics in shaping how entrepreneurial ecosystems function. He identifies two competing, yet often overlapping, logics: regional development logics and startup development logics.

• Regional development logics focus on strengthening the local economy, creating jobs, and retaining talent within a specific geographic area. Public institutions, such as regional development agencies and municipal governments, often operate with this mindset, prioritizing investments that benefit their own region.

• Startup development logics, on the other hand, prioritize what is best for the individual startup—access to the best investors, talent, customers, and market opportunities, even if this means relocating or engaging with ecosystems outside their immediate region.

“Regional development logic prioritizes local impact, often leading to rigid conditions for startups,” Leendertse explained. “Startup development logic explicitly prioritizes what’s best for individual startups, regardless of geographic constraints.”

Before diving into the issue of fragmentation, I questioned Jip about the very nature of defining an ecosystem’s boundaries. Specifically, I challenged the selection process of participants based on their geographic locations, suggesting it could unintentionally reinforce a regional perception of ecosystem boundaries and/or introduce a selection bias. Jip thoughtfully acknowledged this critique, clarifying their intent: “We chose specific cities as starting points, yet explicitly allowed respondents to define their ecosystems freely. The fact that an actor is in Utrecht does not necessarily mean they perceive their ecosystem as limited to Utrecht. The actors we interviewed weren't necessarily regional actors; they were actors located within a region. Our goal was to understand how these actors perceive the boundaries of their ecosystems.”

But isn't Netherlands too small for regional ecosystems?

Despite the Netherlands being a relatively small country with high connectivity, Leendertse’s research found surprisingly strong regional fragmentation in its entrepreneurial ecosystems. He argues this fragmentation often prevents startups from accessing the best possible resources, limiting their growth potential.

“I initially expected more cross-regional interactions because the Netherlands seems too small to justify multiple separate entrepreneurial ecosystems,” Leendertse admitted. “Yet, our research clearly demonstrates a pronounced regional fragmentation, with actors primarily collaborating within their regions, significantly limiting interregional resource-sharing.”

I questioned whether this fragmentation was truly problematic or if it simply reflected a natural pattern of regional specialization. Could it be that different regions naturally develop expertise in different industries, and therefore, these boundaries actually help rather than hinder startups? Jip acknowledged that specialization is not bad per se “but if it prevents startups from cross regional activities it becomes problematic. If a startup needs to collaborate with experts in another region but is incentivized—whether through funding conditions or networking habits—to stay local, that’s when we start seeing inefficiencies.”

A case study: when funding becomes a barrier

One of the key issues is how public funding is structured. In some cases, funding from regional development agencies comes with conditions that require startups to remain within a particular region he argues. While this ensures that public money benefits the local economy, it can also restrict startups from pursuing better opportunities elsewhere.

Leendertse shared an interesting example: A Delft-based startup secured investment from a regional development agency, but they had to move to that region, limiting their access to Delft-based networks. This move disrupted key local relationships, proving costly for the startup in the long run. “This case illustrates how regional development logics, while beneficial to local economies in the short term, can actually hinder startups’ long-term potential by limiting their flexibility,” he explained.

I pressed further: Wasn’t this simply the reality of economic development? Wouldn’t any regional government prioritize keeping talent and investment within its own jurisdiction? Jip agreed but pointed out a key distinction: “Of course, regions want to retain talent, but the question is whether they do it in a way that strengthens startups or limits them. Smart policy encourages cross-regional interaction rather than suppressing it.”

Client vc VC: the challenge of Dutch entrepreneurs

We are blaming Dutch VCs to be more risk aversive compared to US peers for example but, I also believe Dutch founders tend to be too VC-focused rather than client-focused. During a panel last year, someone asked me when a founder should start raising capital, and I gave the obvious answer: as late as possible. I personally believe that many startups spend significant time and effort raising funds but fail to adequately validate their products with real customers. Our ecosystem cannot sufficiently support them to prioritize client focus over VC focus. 

I asked this to Jip, whether he agrees that the local startup support actors inherently encourage founders to stay local and make them too much VC-focused.

"Partly, yes. This ties into two competing logics: one focused on benefiting the region and another on supporting individual startups. Our findings suggest that this regional focus leads to more locally anchored startups. For example, if a startup approaches a regional development agency for legal support, they are typically referred to someone within the same ecosystem. That person might then recommend another local expert for ERP, and so on. This creates a reinforcing cycle where networks—and, in some cases, explicit policies—encourage startups to remain local. Some of this happens intentionally, while some is simply a byproduct of how economic geography functions—business connections tend to cluster regionally."

“Entrepreneurs frequently chase early-stage funding, partly due to easily measurable success metrics,” Leendertse observed. “However, they often realize too late that securing investment doesn’t necessarily translate into long-term success without adequate client validation. On the other hand, startups face a constant trade-off—there’s only so much time, and every decision involves balancing priorities."

I asked whether this was a problem unique to the Netherlands or if it was a more global phenomenon. Jip pointed out that while VC fixation is common worldwide, the Netherlands has a particular challenge due to the way public funding is structured. “The issue isn’t just cultural,” he said. “It’s systemic. Public funds often reward startups based on their ability to raise investment rather than their ability to generate revenue. That’s what needs to change.”

The role of public capital

Public funding plays a critical role in shaping entrepreneurial ecosystems in Netherlands. I observed that the 5 most frequent investors in the VC rounds in NL are all public bodies.  (Check: https://www.linkedin.com/posts/mustafatorunbu_vcinvestments-venturecapital-datainsights-activity-7295705294892851201-INWu?utm_source=share&utm_medium=member_desktop&rcm=ACoAAA3Ur3IBjSDlz6_48aAnMOce1YWEHAB3Og4). This might show how well public financing is doing but also might show the founders' tendency to go to their ROM quickly!  Leendertse also pointed out a major flaw in how public institutions engage with startups.

“Public institutions often generously support startups, especially in sustainability sectors, but fail to follow up as actual clients,” he noted. “This creates a dangerous cycle where startups initially receive funding but struggle when anticipated market demand—especially from public sector buyers—never materializes.”

I asked examples of successful models where public institutions played a more active role in purchasing from startups. Jip pointed to Estonia, where the government has been proactive in procuring technology from local startups. “In Estonia, public agencies don’t just fund startups—they buy from them,” he explained. “That’s a model we should be looking at.”

I was very surprised with his real example where a regional development agency funded a startup to address a local challenge, but then the province itself did not buy the solution and it’s reached the point where he even heard regional actors advising startups not to target municipalities or provinces as clients because they are unreliable buyers. He says "That is a serious issue."

I think there are two main views on public capital issue: one argues that markets should evolve with very limited public money inference, relying heavily on private capital—even for transitional solutions (a more U.S.-style approach). The other sees public funding as essential, not just as a client but also as an investor, especially in risk-averse cultures like the Netherlands.

I believe both perspectives can be valid, depending on the context. In Europe, and particularly in the Netherlands, a level of public investment is necessary to encourage entrepreneurship in transitional sectors. The question is: Where should this involvement stop? A definitive answer to this is hard, but data shows that public actors are the most frequent first investors in these solutions. Personally this concerns me because the presence of these "big brothers" might make entrepreneurs even more VC-focused—when they should be prioritizing clients and business-market fit instead at the first place.

Here are some suggestions from Jip as solutions to these topics.

Blended Finance Models

He summarized that public funding should complement rather than replace private investment. By using blended finance models, where public and private capital are combined, startups could receive the necessary funding without being restricted by regional constraints. Our approach in Invest-NL of being additional to the market and dragging VCs into risky deals becomes even more important.

“Public funding must become flexible enough to allow startups to choose locations based on market conditions rather than being confined by rigid regional boundaries,” Jip emphasized.

Cross-Regional Referral Networks

Initiatives like "Incubator United" and "ROM Nederland" have made progress in connecting regional players, still more structured cross-regional referral systems are needed.

“Current collaboration initiatives are positive first steps,” he said, “but we must move beyond dialogue toward actionable referral networks that proactively connect startups to the best resources, no matter where they are.”

Shifting Cultural Metrics for Success

He said, “We need to redefine what success looks like,” Leendertse argued. “Startups should be celebrated not just for how much money they raise, but for the real value they create in the market.”

In this regard, I believe VCs and founders should leverage data more effectively and the support programs should reserve a significant spot for this topic in their agendas. (See my pieces on this: https://mtsprout.nl/author/mustafa-torun) Additionally, for measuring success we need data. That’s also a data problem. Investment data is easier to find and can be useful, but it doesn’t tell the whole story. It doesn’t show any clue about client focus or business market fit of founders. And collecting the latter is hard. We have two options regarding this: collecting data from a sample – for example from the companies applied to ROMs, from which I believe we can’t drive conclusions for the entire ecosystem or trying to cover each startup for collecting data, which is very hard if not impossible. Jip said, “I know of a researcher in Germany working on a large-scale project to systematically collect data from entrepreneurs each year, providing valuable insights into the state of their entrepreneurial ecosystem. This type of initiative enables better policy decisions based on real evidence.”

Toward a more integrated and entrepreneur-friendly future

“While regional development plays a critical role in mobilizing resources and addressing local challenges, excessive territorialism can create harmful competition between regions,” Leendertse concluded. “Enhanced cooperation and strategic flexibility are essential for maximizing both individual startup potential and collective regional impact.”

Ultimately, our in-depth conversation pointed toward the critical need for a comprehensive cultural and institutional shift within entrepreneurial ecosystems. Jip’s insights clearly underline that redefining success, reforming policy, and enhancing regional collaboration can unlock the Netherlands’ full entrepreneurial potential. Only by effectively balancing regional ambitions with startup-driven growth and moving beyond rigid boundaries can ecosystems genuinely foster sustainable, scalable, and impactful entrepreneurial success.