For an operating start-up raising venture capital, the Dutch flex B.V. is the European default: no minimum capital, flexible share classes, and a STAK for employee equity. A Luxembourg S.à r.l. suits holdings and funds but caps shareholders at 100 and restricts transfers; a Luxembourg S.A. works for a growing cap table. US investors may ask for a Delaware parent above either.
Why the choice of company matters to investors
Investors do not just buy a percentage of your business; they buy shares with specific rights. Preference on exit, protection against dilution, a seat on the board, the right to drag other shareholders into a sale. All of that has to be written into the company's articles and shareholders' agreement, and some company forms make it easier than others.
The Dutch flex B.V., introduced in 2012, was designed for exactly this. It has no minimum capital, allows almost any combination of share classes and voting rights, and is familiar to venture capital funds across Europe. The main practical cost is that every issue or transfer of shares goes through a notary, which adds a step, and a fee, at each round.
Luxembourg is Europe's fund capital, so most VC funds themselves are Luxembourg partnerships. For the start-up, a Luxembourg S.A. works well, while the S.à r.l. is less suited to a growing cap table: transfers to new shareholders need 75% approval and the company cannot have more than 100 shareholders.
Dutch B.V., Luxembourg S.à r.l. or S.A. for a funded start-up
| Dutch B.V. | Luxembourg S.à r.l. | Luxembourg S.A. | |
|---|---|---|---|
| Minimum capital | EUR 0.01 | EUR 12,000 | EUR 30,000 |
| Share classes and voting | Very flexible | Flexible | Very flexible |
| New shareholders | Board or shareholders as the articles say | 75% approval for transfers to non-shareholders | Free unless restricted |
| Shareholder cap | None | 100 | None |
| Share transfers | Notarial deed | Private deed, notified | Register entry |
| Employee equity | Options or STAK receipts | Options, warrants | Options, warrants |
| VC familiarity | High across Europe | High for holdings and funds | Good |
For the operating start-up, VCs know the B.V. For the fund that invests in it, they know Luxembourg.
What investors will ask for
- Clean cap table. Founder vesting, a STAK or option pool, no dead equity.
- Investor protections. Preference shares, anti-dilution, drag and tag, information rights, built into the articles.
- Convertibles at seed. Convertible loans or SAFE-style agreements, converted by notarial deed at the priced round.
- IP in the company. All code and patents assigned to the company, not to founders or contractors.
- Tax. Dividend withholding 15% in both countries with treaty relief; founders' holdings for future exit gains.
What changes when US investors arrive
Many US venture funds prefer to invest in a Delaware corporation. They know its law, their documents assume it and their own investors expect it. For a European start-up that means one of two things: either the US fund accepts a Dutch or Luxembourg company with US-style documents, or the founders put a Delaware parent on top of the European company, a so-called flip.
A flip is not just paperwork. Exchanging European shares for Delaware shares can be a taxable event for the founders and early employees, and it changes where future exit gains are taxed. It should be planned with tax advice before the term sheet, not after.
A Dutch B.V. raises a seed round from European angels on convertible loans, sets up a STAK for employee equity, and converts the loans at a priced Series A with a European fund. If a US fund leads the Series B, the founders consider a Delaware flip at that point, with the Dutch B.V. remaining the operating company.
Where should your start-up raise?
The result updates with each answer.
Where should your start-up raise?
Five questions. You get the vehicle investors expect and what to prepare.
Flexible, no capital, known to VCs.
For a growing cap table in Luxembourg.
Votes stay with the founders.
May want a Delaware parent.
Venture capital in the Netherlands and Luxembourg: frequent questions
Is a Dutch B.V. good for venture capital?
Yes. The flex B.V. has no minimum capital, flexible share classes and voting rights, and VCs across Europe know it. Share transfers need a notarial deed, which adds a step to each round.
Is a Luxembourg S.à r.l. good for venture capital?
It works for holdings and fund vehicles but is less usual for operating start-ups: shares can only go to new holders with 75% approval and the company is capped at 100 shareholders. A Luxembourg S.A. is the better choice for a growing cap table.
What do US VCs prefer?
Many prefer a Delaware parent. A European company can stay as the operating subsidiary, and a flip to Delaware is possible but has tax consequences for founders.
How are convertible loans used in the Netherlands?
Convertible loans and SAFE-like agreements are common at seed; conversion needs a notarial share issue and the terms should match Dutch law on share classes.
How do employees get equity in a Dutch start-up?
Usually through options or depositary receipts issued by a STAK, which keeps the cap table clean and the votes with the founders.