Keeping innovators at home
The European Commission turns its attention to four key aspects of the problem.
People — better connections
The Commission’s 2016 Start-up and Scale-up Initiative tries to make it easier for start-ups to find the right people. Various local and regional communities exist to connect with investors, business partners, universities, new staff and research centres, but efforts are fragmented. This year, the Commission plans to reinforce Startup Europe, which will connect various start-up communities and bring greater coherence to EU initiatives. Meanwhile, Enterprise Europe Network will provide specific advisory services through scale-up advisors, innovation brokers will offer improved access to public procurement, and a number of national, regional and EU-wide schemes will promote and encourage entrepreneurship, management and innovation skills.
Finance — more venture capital
European start-ups are finding seed capital (€1 million or less) more easily, but the big money (€25 million plus) needed to go global remains elusive. In general, US investors spend six times more than their European counterparts. With no Google or Microsoft to fund innovative companies, European governments have filled the void. “The EU is making access to finance easier through loan guarantees, business loans, microfinance and venture capital”, explains Jyrki Katainen, Vice-President for Jobs, Growth, Investment and Competitiveness at the European Commission. Together with the European Investment Bank Group, the Commission is launching a pan-European Venture Capital Fund-of-Funds, expected to raise a minimum of €1.6 billion for businesses aiming to take on Silicon Valley’s giants.
Culture — changing attitudes
The American Dream runs deep in Silicon Valley, galvanising entrepreneurs to believe they can accomplish anything if they put their minds to it. The same cannot be said for Europe, where a risk- and failure-averse culture, compounded by draconian insolvency laws, high taxes and complex regulations, generally persists. This stereotype is changing: innovative start-ups are popping up across the continent, new hubs and accelerators are helping businesses grow, and entrepreneurial spirit among young people is rising. According to a recent study, 50% of 18–24-year-olds want to become entrepreneurs. “Today’s European start-ups can become tomorrow’s global success stories”, underlines Katainen. “Our policies aim to provide the platform and support to encourage this growth.”
Regulatory compliance — improved information
“Information about national and EU rules may often be dispersed and difficult to digest”, says Katainen. “Understanding all the tax, company, labour and other requirements is a real challenge, especially for a start-up.” Add to that the fact that taxes are generally high, 24 official languages are spoken, and each country has its own idiosyncratic labour and other laws, and it is clear that operating in multiple European countries can stifle a company’s growth. In response, the Commission will put forward proposals later this year for a Single Digital Gateway which will offer easier access to information and assistance to navigate regulatory requirements, as well as a new electronic one-stop-shop European Services e-card, which will make it easier for providers to offer services abroad.
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