THE HAGUE, March 6 (Reuters) - Dutch semiconductor

sector startups are attracting an increasing amount of funding,

the organisation set up by the Economic Affairs Ministry to

strengthen tech entrepreneurship in the Netherlands said in its

annual review on Wednesday.

Venture capital funding for Dutch chip startups grew for the

fifth consecutive year in 2023, reaching 216 million euros ($234

million), the report by Techleap said, helped by increasing

recognition of chip equipment maker ASML as Europe's

largest tech firm.

The Netherlands is also home to chipmaker NXP, and

equipment firms ASM International and BE Semiconductor

.

The report named two companies that received significant

funding in the photonics sector - photonics chips use light

rather than electrons to make transistors - Smart Photonics and

Effect Photonics.

The report, a critical look at the relative position of

Dutch startups, noted that Dutch firms continue to have

difficulty in "scaling up" or growing past their initial funding

stage.

When they do grow, they take longer to negotiate additional

funding than peers in Britain, Germany and France, and much

longer than in the United States. Dutch companies are also more

likely to be bought out before reaching a 1 billion euro ($1.1

billion) valuation, as happened with Booking.com in

2005, now worth more than 100 billion euros.

Dutch payments firm Adyen and meals company Just

Eat Takeaway are notable exceptions.

The report recommended the Netherlands emulate Sweden in

attracting more pension fund money into funding deals, copying

France and Britain in offering more tax breaks to venture

capital, and noted Germany is now granting greater stock

ownership to employees.

It said the Netherlands is improving at capitalising on its

university research and in funding "deep tech" companies, those

based on engineering or scientific advantages - but it could do

better.

Among the few Dutch artificial intelligence startups,

Weaviate, a platform for building AI software applications,

raised $50 million.

($1 = 0.9219 euros)