Europe needs to do much better when it comes to scaling startups. That’s the prediction of European Union President Ursula von der Leyen, who is heading into her second five-year term leading the country’s roughly 449 million people, with a December 1 start date now set.
Addressing the European Parliament ahead of the vote confirming his top team (aka “panel”), von der Leyen said the EU’s competitiveness would depend on closing what he termed the “innovation gap”. We help startups scale and reduce bureaucratic red tape that can hinder them from making the most of their access to the 27 member states of the EU single market.
Support for innovators is central to von der Leyen’s second term. Therefore, for the first time, it was decided to create a Commissioner with a portfolio focused on startups (Ekaterina Zaharieva).
In his speech to MEPs, von der Leyen highlighted the “good news” that Europe’s share of global patent applications was “on par with the US and China”, while von der Leyen emphasized that only a third were exploited commercially.
“We are almost as good as the United States when it comes to creating startups. However, when it comes to scaling, we are performing much worse than our competitors. “The gap must be reduced,” he warned.
When it comes to reforming the conditions for startups to scale, she summarized her strategy as “invest more and focus better.”
Early investment also appears to be a key part of the plan, given the decision to have a commissioner (Henna Virkkunen) whose technology-focused portfolio also includes a specific brief to foster “frontier technologies.”
“For us to be competitive, Europe needs to be home to the next generation of cutting-edge technologies,” von der Leyen emphasized.
On the funding side, she said financial reforms were also planned as the EU “urgently” needed more private investment if it was to realize its ambitions to rely on innovative business ideas to boost competitiveness.
“Corporate spending on research and development in Europe accounts for approximately 1.3% of GDP. This compares to 1.9% in China and 2.4% in the United States. This private capital gap is the main reason why we lag in overall R&D spending and innovation,” she said.
“This is why we have proposed a European Savings and Investment Union. I have entrusted this task to Maria Luís Albuquerque (Commissioner of the Financial Services and Savings and Investments Association). “She will help European companies find the capital they need here in Europe.”
Bureaucracy, which can hinder entrepreneurs, is also in the EU president’s crosshairs.
“For Europe to catch up, we will also have to make things easier for our companies,” she told European lawmakers. “They are saying the regulatory burden is heavy on them. There are too many reports. There is too much overlap. And it’s too complicated and expensive to comply with. “Regulations must be simplified to reduce the burden on businesses.”
Valdis Dombrovskis, von der Leyen, “Economy and Productivity; “Implementation and Simplification” will be tasked with introducing “a new omnibus bill.”
Von der Leyen said he would look at different sectors and assess the rules that apply, with the aim of simplifying the legal environment to help businesses scale.
“The biggest advantage of the single market is that it replaces numerous national standards and customs with a single set of rules. So we need to get back to what the single market does best. And it makes it easy to do business across Europe,” she added.
The speech’s focus on supporting innovation as key to Europe’s future competitiveness will be good news to the ears of the local startup ecosystem. Some may wonder whether the notion that the EU is simplifying a huge amount of regulation is contradictory. This is especially true because Brussels has historically prided itself on being a leader in rule-making.
But this EU shift to the right undoubtedly marks a change in direction.
But ultimately, delivering the innovation pipeline von der Leyen seeks may require a cultural shift. This requires local investors to become much more comfortable with risk and large investments than with stable, predictable returns.
