European Commission’s plans for development of startups in 2017

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The European Commission (EC), reacting to the rapid development of startups and the increasing contribution this sector has on the European economy, has created a new initiative called Startup Europe. The aim of the initiative is to make the business environment easier for new entrepreneurs, thus clearly defining that startups are a priority.

According to an announcement from the European Commission, there is not much difference between the EU and the United States in regards to the creation of new companies. This can be observed in the technology sectors, where EU companies are gradually becoming global leaders in certain medium and high technology sectors (ex. engineering and automotive industries). However, the anticipated boom and expansion throughout Europe and across its borders has not been observed, as there are not enough European startups to have made it beyond the critical first two to three years, and even fewer that develop into larger companies.

During public discussion sessions at the EC, it was determined that:

  • startups that are looking for ways to expand are still encountering too many regulative and administrative barriers, especially in cross-border situations;
  • there are not enough opportunities for startups and developing companies to find potential partners within the finance, business and local government environments to form relationships with them;
  • one of the biggest hurdles hindering expansion is the availability of financing. It seems that regulative and administrative hurdles within the EU frequently dissuade them from innovating, expanding and turning profits. Companies have also been leaving the EU jurisdiction to places with greater growth potential, thus taking away potential jobs within the EU. Public sector institutions within the EU, startups and their partners must work together to make sure that the efforts of these startups are not futile. A partnership is needed with state, regional and local government institutions, especially with the startups themselves.

The initiative Startup Europe has been created to help solve three problem areas – hurdles facing startups, the lack of partners and opportunities, as well as problems in attracting financing. 

It is planned to help do away with the hurdles hindering the development of startups with the following measures:

  • The Commission will work with the European Parliament and the Council and European Parliament to secure timely adoption and implementation of the proposal on preventive restructuring frameworks, second chance for honest entrepreneurs and increased efficiency of restructuring, insolvency and discharge procedures;
  • The Commission will broaden the forthcoming guidance on best practice in member state tax regimes for venture capital;
  • To help start-ups and scale-ups to navigate the often dispersed information sources, the Enterprise Europe Network (EEN) will expand its advisory services with dedicated scale-up advisors on relevant national and European rules, funding opportunities, partnering and how to access cross-border public procurement, link up with Startup Europe and access to Digital Innovation Hubs by small and medium sized enterprises, as well as manufacturing pilot lines for small and medium sized businesses under Horizon 2020.

Here are some of the steps that the EC will take to help create new opportunities for startups:

  • In 2017, the Commission will reinforce Startup Europe which will take a wider scope beyond the ICT and web start-up sector. The Commission will coordinate EU work to connect clusters and ecosystems across Europe, as well as bring stronger coherence between the different EU initiatives in particular by linking up national and regional Ministries, innovation agencies and other stakeholders and ecosystems;
  • To connect start-ups with business partners, in 2017, the Commission will launch a number of pilot measures on matchmaking, linking start-ups, mid-caps and larger enterprises and extend the Erasmus for Young Entrepreneurs program to incubators and entrepreneurs in international markets;
  • In 2017, the EC will implement EU procurement measures for the following purposes:
    • Establish innovation brokers to build networks of buyers interested in public innovation procurement, link them with innovative businesses and help the businesses access risk funding
    • Encouraging all member states to put forward ambitious innovation buying targets; 
    • Provide guidance on innovative procurement, drawing on the Innovation Partnership;
  • In order to improve support for innovation,the EC intends to make changes to the remainder of the Horizon 2020 period, with the aim of providing bottom-up support targeting breakthrough innovation projects with great potential for growth. Horizon 2020 is the EU’s largest research and innovation program, with EUR 80 billion available in financing between 2014 and 2020;
  • The Commission will use the Innovation Radar to connect potential business partners and investors with Horizon 2020-funded innovators to support them to scale up;
  • The Commission will carry out an evaluation of the Innovation Deals scheme allowing innovators to work with public authorities and other stakeholders to find ways to address perceived regulatory barriers, and if successful, expand it to other relevant areas;
  • The Commission will also explore an enabling framework for regulatory sandboxes, and in 2017-18 intends to adopt a set of measures to support the use of intellectual property rights by small and medium sized enterprises:
    • Streamlining awareness on existing intellectual property support schemes for small and medium sized enterprises;
    • Developing an EU intellectual property mediation and arbitration network for small and medium sized enterprises;
    • Encouraging the creation of European-level insurance schemes for litigation and intellectual property theft
    • Improving coordination of IP support funding schemes, including by means of a possible guidance to member states.

 In regards to access to financing, the following steps will be taken:

  • The EC and the European Investment Fund will make the cornerstone investments in 2017 in the new, independently managed pan European Venture Capital Fund of Funds alongside major private investors to increase the size of venture capital funds in Europe and overcome current fragmentation. The EU cornerstone investments of up to EUR 400 million will be capped at 25% of the total capital in the Funds of Funds, bringing a potential of at least EUR 1.6 billion additional investments to venture capital in Europe
  • In 2017, the Commission will coordinate a pan-European platform where member states’ best practice on crowdfunding can be shared, together with an assessment of financing gaps in alternative sources of finance, to understand whether further public financing or other measures are needed.

 Startup Europe is an initiative aimed at helping to create opportunities for new enterprises, so that they could develop their companies quicker, easier and more conveniently, so that they could become competitive not only on the European, but also the global market, as startups are currently proving themselves to be serious competitors to companies which have proven themselves on the market for quite some time. It is possible to follow along all the latest news and events about this initiative here.