Recent research by Techleap and Panteia provides insight into the bottlenecks that startups and scaleups experience when growing and scaling their businesses. The study maps the practical challenges faced by entrepreneurs and the structural factors which, in their view, may affect the further development of their companies.
This article focuses on the growth risks that startups and scaleups themselves identify once they begin to scale.
The findings are relevant for founders, management teams and investors involved in scalability, strategic decision-making and the legal structuring of growth companies. For companies seeking investment, preparing for an acquisition or building an international organisation, these issues are not merely operational. They can also affect valuation, deal structure and long-term flexibility.
In an earlier article on Dutch startups and growth without legal stumbling blocks, I discussed the broader conditions for growth, including corporate structure, financing and international positioning. Where that article focused mainly on how growth can be structured, the Techleap–Panteia study shows which risks become visible once growth actually takes place.
Why this study is relevant for growth companies
Startups and scaleups operate fundamentally differently from traditional businesses. They often grow quickly, work with small teams, have limited financial buffers and operate in an international market.
In that environment, legal obligations relating to employees can have a greater impact than initially expected. The study is based on a survey among 57 Dutch startups and scaleups and shows that the tension between regulation and entrepreneurship becomes particularly visible during phases of growth.
For founders and investors, this matters because growth is not only a commercial or financial process. It also creates legal, organisational and structural consequences. These consequences should be taken into account when preparing for funding rounds, expanding teams, entering new markets or considering an eventual exit.
Key findings from the study
1. Continued salary payment during illness
The Netherlands has a system under which employers may be required to continue paying wages during employee illness for up to two years, combined with extensive reintegration obligations.
According to the study, this is the issue most frequently experienced as a bottleneck by startups and scaleups. The concern is not necessarily the existence of social protection itself, but the extent to which the financial risk is placed on the individual employer, particularly in small teams and where specialist roles are involved.
For an early-stage or fast-growing company, the long-term absence of one key employee can have a significant operational and financial impact. This is especially relevant where the business depends on a limited number of technical, commercial or managerial employees.
2. Limited flexibility in workforce adjustments
Many respondents also perceive Dutch dismissal law and the rules around employment contracts as insufficiently flexible.
For companies that are still developing, roles may change quickly, strategies may be adjusted and teams may need to be built or reorganised at speed. In that context, employment obligations can create long-term commitments that do not always fit the stage of development of the company.
This may create tension between strategy and execution, particularly in phases where the company needs to redesign its organisation, change commercial direction or respond to market developments.
For startups and scaleups, this is not simply an employment law issue. It can directly affect the company’s ability to adapt its business model and execute its growth strategy.
3. Collective labour agreements and pension structures do not always fit
The report also notes that some startups and scaleups may fall within collective labour agreements or pension schemes originally designed for more traditional sectors.
For innovative or hybrid businesses, this can create uncertainty and administrative complexity, especially where remuneration structures differ from the traditional salary model.
In practice, these issues increasingly arise in due diligence processes and in discussions about future scalability. Investors will want to understand whether the company’s workforce structure is sustainable, whether employment-related obligations have been properly assessed and whether hidden liabilities may exist.
This is particularly relevant for companies that use flexible remuneration models, equity-related incentives, international teams or non-traditional job profiles.
4. International comparison
Entrepreneurs in the study refer to countries such as Germany, Sweden and Denmark, where risks relating to illness or workforce adjustments are more often borne collectively.
This comparison shows that the Dutch system is reliable and protective, but that it relies relatively heavily on the responsibility of the individual employer.
For internationally oriented startups and scaleups, this may influence strategic decisions about where to hire, where to locate certain functions and how to structure future growth.
Why these insights also matter for investors
The findings of the study do not only affect day-to-day operations. For investors and shareholders, these issues are relevant to questions such as:
- How scalable is the business model?
- How predictable are personnel costs?
- Which obligations arise when the company grows?
- Are employment-related risks properly reflected in the company’s planning?
- Could these obligations affect valuation, deal structure or future exit options?
Employment law and structural obligations may therefore indirectly influence valuation, investment structure and strategic decision-making.
For venture capital investors, private equity investors and strategic buyers, these topics can become relevant during legal due diligence. A company may have strong commercial traction, but still face structural risks if its employment model, pension position or organisational setup has not been properly assessed.
What the report makes clear
The Techleap–Panteia study shows that many entrepreneurs value the Dutch system for its stability and protection. At the same time, they experience that the system does not always move in line with the speed of startup and scaleup growth.
That tension is not a theoretical issue. It is a practical reality that startups, scaleups and their investors increasingly need to deal with.
For that reason, it is valuable to identify these issues at an early stage and include them in strategic decision-making. This is particularly important for companies that are preparing for a funding round, expanding internationally, hiring key personnel or professionalising their governance and legal structure.
Final remarks
The study contributes to the broader debate about the Dutch business climate for innovative companies.
For entrepreneurs and investors, the central message is clear: growth does not only create commercial opportunities. It also brings legal and structural consequences.
Understanding those consequences helps founders, management teams and investors make better-informed decisions, particularly in phases where speed and flexibility are crucial.
Startups and scaleups should therefore not approach growth solely from a commercial or financial perspective. They should also consider the legal and structural effects that growth brings with it.
For founders, investors and shareholders, early legal structuring can help reduce friction later on. This includes reviewing employment structures, incentive arrangements, governance, financing documentation and the company’s readiness for future investment or exit discussions.
Dirk de Waard, corporate and M&A lawyer in the Netherlands, advises startups, scaleups, investors and shareholders on corporate structuring, venture capital, M&A transactions and strategic growth-related legal issues.
For questions about the legal structuring of your startup or scaleup, venture capital documentation, shareholder arrangements or preparation for an investment or exit process, please contact Dirk de Waard at dirk.dewaard@viottalaw.com.
