At present, “the financial sector is a good example of an industry where IT is really taking over,” says Timo de Man, a consultant at Ugoo, “which is good for business.” Ugoo is a young Dutch organisation that helps companies, particularly those in IT and tech innovation, find the right subsidies at European, Netherlands, and local levels, and apply for them. They’re also start-up friendly and help organisations set up the necessary administration for subsidies and provide guidance for subsidy-related checks by subsidy providers.
Last week, we sat down with de Man and talked about subsidies for IT and innovation, challenges facing companies around subsidies, what subsidies have in store for fintechs, and what makes Ugoo, a leading company in its sector, unique.
The call to IT and innovation
De Man asserts that, “if your business is technically innovative, it will receive government grants,” adding that increasingly, IT is getting a larger share of Dutch government grants. The two biggest government subsidies in the Netherlands are the WBSO and Innovation Box, the former covering wage reductions for technical innovation and the latter is a special rate within corporate income tax, where the profits that fall within this “box” are taxed at a rate of 7% instead of 25%, which translates to profit exemptions of up to 80%.
Challenges, and advice for fintechs
“A lot of companies are aware of the fact that there are subsidies out there they can benefit from,” de Man says, “they know they exist, but don’t know how the process works or have time to delve into the application details.” For example, companies have to know how to apply for subsidies in the most beneficial manner, knowing which attributes of their business to emphasise for the particular subsidy being applied for.
Knowing how to apply for subsidies means having knowledge of their numerous technical rules and complexities and being able to apply them to the specific circumstances of one’s company. Due to the varying nature and uniqueness of each company, de Man says that it’s difficult for companies that have similar business to use one another as templates on how to apply for subsidies.
Demonstrating the depth of knowledge it takes to apply for subsidies, de Man gives an example involving fintechs applying for the MIT subsidy. To be eligible for this subsidy, companies need to share focus points with one or more government-defined “top sectors”, yet the financial sector isn’t one of these. So where does that leave fintechs? “If a fintech company wants to apply for MIT, they have to apply in the top sector for high tech systems and materials, specifically in the IT sub-category,” he advises, “so you have to write the application more in terms of IT than financial services.”
Because of the complex and time-consuming process of applying for subsidies, de Man says that outsourcing this task is beneficial to companies, so they can concentrate on what they’re best at: innovation.
“Our services aren’t the cheapest in the market,” de Man says, “but we are very accessible for start-ups.” They’ve worked with many fintechs such as a large PSP from the early stages of their now highly successful business, and partner with the three biggest start-up accelerators in the Netherlands. “We also achieve a higher net revenue for subsidies,” he adds, making the higher cost of their services less of a decisive factor. They also work on a no cure, no pay basis, which is common in the industry.
In their work with accelerators, what makes Ugoo appealing is that they’re a young organisation that builds relationships beyond the subsidies being applied for.
What makes Ugoo unique
Ugoo’s subsidy services are available via other companies, but what makes Ugoo unique is their commitment to relationship building and the range of grants they offer. In this regard, they provide assistance for pan-European grants, such as Horizon2020, and national and regional-level subsidies, energy and environment and education and employee-related subsidies.
Moreover, in the constellation of their offerings, they make connections between subsidies and navigate differences to optimise clients’ experiences. Here, de Man says that, “many government grants are related. For example, the WBSO and Innovation box, and that there are regional differences between the MIT subsidy. “You can’t be a generic subsidy advisor,” he adds, noting that in Brabant there are more opportunities for tech innovation compared to Zeeland or Drenthe. Because of this, they have dedicated teams working on a large variety of subsidies.
Ugoo’s subsidy calendar is available here, which not only gives deadlines for a range of subsidies, but general information and indications on how much and what type of monetary assistance is awarded.