Startups go Dutch for new era in manufacturing

Mon Sep 15, 2014 6:10am EDT
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By Sara Ledwith

AMSTERDAM (Reuters) - Beneath the low beams of a converted warehouse in Amsterdam lives a company with many of the attributes of a Silicon Valley startup, except that at less than a year old it has zero venture capital and says it is already making enough money to sustain itself.

Fairphone started in 2010 as a campaign against smartphone makers’ use of conflict minerals. Last year, after a series of artistic and social protests to highlight what it says are injustices in global supply chains, its founders decided to make and sell phones of their own.

The company has now sold more than 41,000 phones in Europe using African minerals it certifies as “conflict free”, and will begin selling in the United States in 2015. Co-founder Bas van Abel, a 37-year old Dutch artist, concedes his company is far from a panacea for the ills of mass-manufacturing, but says it is working to improve conditions for the Chinese workers who assemble the handsets.

“We had to be economically viable because we wanted to be part of the economic system,” said Van Abel.

Europe’s politicians would like more success stories like Fairphone. In a continent where one in five young people are out of work, governments are pumping more and more cash into startups in the hope they can goose economic growth. Exact numbers are hard to determine, but according to AngelList, a website for new companies, there are now more than 4,700 startups in Europe, compared with nearly 14,000 in the United States.

As in North America and Asia, most European tech startups focus on software. In the Netherlands, though, Fairphone and a handful of other firms are trying to change manufacturing. Some are taking the principles of what’s known as the sharing economy pioneered by car-poolers like Lyft or room-sharer Airbnb, and applying them to the way things are made. That could reshape not just how people produce things, but how they buy them, and even the economics of intellectual property.

The Dutch focus on manufacturing stems partly from the Netherlands’ strong design culture, and the ground-breaking 3D printing community found there and in neighboring Belgium. Belgian 3D printing firm Materialise, a pioneer in 3D printing, has been around for more than two decades.

The Dutch startups capture many of the main differences with startups in the United States. Like all young European firms, they face big financing challenges. Europe is the world’s biggest single market, but it struggles to fund its newest firms. According to Thomson Reuters data, venture capitalists invested an average of $4.7 million in each of more than 1,600 new European firms last year. That compares with $7.14 million per firm in India, $8.6 million per firm in the United States, and $12.3 million in China.   Continued...

3D Hubs co-founder Brian Garret holds a set of headphones, the first object he 3D-printed, as he poses for a photograph at the company's office in Amsterdam September 2, 2014.    REUTERS/Toussaint Kluiters/United Photos