Europe has to get better at scaling startups. This is the outlook of European Union President Ursula von der Leyen. He is about to begin his second five-year term leading the EU, which has a population of around 449 million people, with his start date set for December 1.
Speaking in the European Parliament ahead of the vote to approve the top team (also known as the “Commission”), Ms von der Leyen said the EU's competitiveness would depend on closing what she called the “innovation gap”. Ta. It will increase support for start-ups and reduce red tape that can prevent companies from making the most of their access to the EU's 27 member states.
Support for innovators is a key pillar of von der Leyen's second term, hence the decision to create the first commissioner (Ekaterina Zaharieva) with a portfolio focused on startups.
In a speech to MPs, Ms von der Leyen highlighted the “good news” that Europe's share of global patent applications was “on par with the US and China”, but that only a small percentage of the world's patent applications are being used commercially. He emphasized that it was only one-third of the total.
“We're about as good as the U.S. when it comes to creating startups. But when it comes to scaling, we're far worse than our competitors. We have to close that gap. ” she warned.
When it comes to changing the conditions for scaling a startup, she sums up her strategy: “Invest more, be more focused.”
Early investment also appears to be a core part of the plan, given the decision to bring in a commissioner (Henna Virkunen) whose technology-focused portfolio also includes a specific outline for fostering “frontier technologies”.
“For us to be competitive, Europe must be home to the next wave of frontier technologies,” von der Leyen stressed.
On the financial front, she said more private investment was “urgently” needed if the EU was to realize its ambition to lean into innovative business ideas to improve its competitiveness. Therefore, financial reforms are also planned.
“Corporate spending on R&D in Europe accounts for approximately 1.3% of GDP, compared to 1.9% in China and 2.4% in the United States. “That's the main reason we're falling behind,” she said.
“This is why we proposed the creation of a European Savings and Investment Union. I have entrusted this task to Maria Ruiz Albuquerque.” [Commissioner for Financial Services and the Savings and Investments Union]. She will help ensure European companies find the capital they need here in Europe. ”
Bureaucratic policies that could hold back entrepreneurs are also in the EU president's crosshairs.
“For Europe to catch up, we need to make things easier for businesses too,” he told MPs. “They're telling us we have a heavy regulatory burden. There's too much coverage. There's too much duplication. And it's too complex and costly to comply. We need to streamline the rules to mitigate it.”
Valdis Dombrovskis, who was elected as von der Leyen's commissioner for “economy and productivity. Enforcement and simplification”, will be tasked with introducing “a new omnibus law”.
Von der Leyen said this will look at various areas and assess the applicable regulations, and the aim is to simplify the legal environment to help companies expand. Ta.
“The single market's greatest strength is that it replaces myriad national standards and customs with a single set of rules. We therefore need to get back to what the single market does best. And across Europe “It makes it easier to do business,” she added.
The speech's framework of focus on supporting innovation as key to Europe's future competitiveness is likely to be music to the ears of the local startup ecosystem. Some may wonder if the concept of the EU simplifying its vast regulations is contradictory, but Brussels in particular has historically prided itself on being a leader in rulemaking. It's for a reason.
However, this further shift to the right of the EU definitely signals a change in direction.
But ultimately, achieving the innovation pipeline von der Leyen is aiming for may require a cultural shift. This will require regional investors to become more accustomed to risk and big bets rather than stable, predictable returns.