The newly unveiled Startup and Scaleup Strategy is getting praise from business. But there’s still long way ahead until Europe can effectively compete with the likes of USA.
Europeans create start-ups. A lot of them. The issue is what happens afterwards. They either fail to grow, or they relocate, most likely to the USA. That’s the gist of what Mario Draghi said in his report last autumn—the wake up call behind the Start-up and Scale-up Strategy, proposed by the European Commission last week.
“Businesses that are born in Europe must grow in Europe,” says Stéphane Séjourné, Executive Vice-President of the Commission for Prosperity and Industrial Strategy, directly adressing Mr Draghi’s claim.
EU-wide regime instead of national ones
The strategy contains 26 points—many of them measures already introduced by Mr Draghi; among them a plan to create a so-called 28th regime.
According to the strategy, the “Commission will propose a European 28th regime which will provide a single set of rules for companies. It would include an EU corporate legal framework, based on digital-by-default solutions, and will help companies overcome barriers in setting up, scaling up and operating companies across the Single Market”.
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New European tech start-ups face issues in scaling up. Europe is now creating a significant number of start-ups, comparable to that in the US. However, European companies often fail to successfully pass the growth stage. — Mario Draghi in the Draghi Report
In practical terms, it means that a company could choose to operate under a unified EU-wide regime instead of adhering to individual national laws.
Moreover, the entire thing should be “digital first”, meaning simplified administrative processes for startups operating in multiple countries. To help with that, another key point of the strategy promises to propose a so-called European Business Wallet “as the cornerstone of doing business simply and digitally in the EU, establishing a digital identity for all economic operators and providing a framework for sharing verified data and credentials to enable seamless digital interactions between economic operators and public administrations across the Union”.
Then there are the usual suspects: financing and attracting talent. To help with that, the Commission plans to deploy a Scaleup Europe Fund, develop a voluntary European Innovation Investment Pact to mobilise large institutional investors and promote the EU Blue Card Directive among else.
Exactly what we asked for
While the strategy isn’t all that surprising, it is—according to Cecilia Bonefeld-Dahl, the Director General of DIGITALEUROPE—a sign that “Europe is finally getting serious about scaling tech and recognising the importance of attracting and supporting top talent across the continent”.
“The new Scaleup Europe Fund and the proposed 28th regime for simpler, digital-first business setup are exactly what our startups have asked for,” she claims. What matters now, she thinks, is creating real market demand, as “without large-scale public procurement and targeted investment, even the best-funded startups won’t scale in Europe.”
