How the EU Is Cementing its Place as an Entrepreneurial Playground
With headlines throughout Europe primarily consisting of talk about Brexit and the rise of nationalist parties in EU member countries such as Poland, Slovenia and Hungary, you’d be forgiven for thinking that the main focus of the EU today is putting out fires and fighting against the latest crisis.
However, you’d also be wrong.
Hidden behind the sensational and worrying headlines about Brexit, the EU is working diligently on securing the future of Europe, much of which relies on the success of Europe’s entrepreneurs.
The Entrepreneurship 2020 Action Plan
In an attempt to tackle the devastating effects of the world economic crisis in 2008 on entrepreneurship, the EU established the Entrepreneurship 2020 Action Plan in early 2013. The initiative aims to reignite Europe’s entrepreneurial spirit as well as to clear existing hurdles for European entrepreneurs.
To achieve these aspiring goals, the European Commission identified three main objectives.
First, proper education for and from entrepreneurs should be made widely available in current education systems. This includes not only the sharing of ideas, knowledge and experience but also exchanging best practices among different nations, companies and business owners. Besides, the EC also promised to give access to practical experience through developing models and projects with a focus on EU standards.
Furthermore, the removing of existing administrative and bureaucratic obstacles is seen as another crucial target. By making entrepreneurship more accessible and affordable, for example through increased availability of funding, lawmakers hope to attract risk-takers from all over the world. In addition, jurisdictions should be willing to support entrepreneurs in critical phases of the entrepreneurial life cycle.
Last but not least, the EU prepared to build a truly entrepreneurial culture on the European continent. According to the plan, entrepreneurs should become role models for European citizens. Interestingly, the EC especially mentions women, seniors, migrants, the unemployed and young people as potential future business owners. In order to be seriously competitive on an international level, a focus on the digital age was also considered to be a major pillar of the program.
The actual actions
Regarding entrepreneurial education, we can definitely observe substantial development. In 2015, University World News stated that all universities in the Netherlands offered education for entrepreneurship. Moreover, a ranking of European universities, conducted by Reuters in April 2018, disclosed that universities that are members of the European Institute for Innovation and Technology tend to achieve better rankings than their challengers.
Originally established in 2008, the Small Business Act (SBA) of the European Union was created to get rid of several concerning legal obstacles for entrepreneurs. Since its advent, the SBA has been updated several times, while the actual implementation process has also been closely monitored during this time.
To reach its original goals of building a competitive infrastructure in the digital world, the European Innovation Council launched its pilot stage in 2017. Since it’s foundation, the EIC has already made quite an impact, with more than 1,200 innovative projects receiving a combined funding of about €730 million.
On March 18, 2019, the European Commission announced that the European Innovation Council will receive €2 billion in funding over the next two years. With this program, the EU is addressing the intensifying global competition around novel technologies by supporting the innovation and risk-taking capabilities of European startups and established companies.
The entrepreneurial generation
The EU clearly seems to be doing its homework, but has it really ignited an entrepreneurial culture? Apparently, yes. When taking a look at the capital cities of several big European nations as well as some smaller nations, an increase in entrepreneurial activity is undoubtedly noticeable.
Valuer, an AI-powered platform for finding early-stage startups for accelerators and investors, has just released a ranking of the 50 best cities for startups. Surprisingly, the ranking is mainly dominated by European cities, as the top 10 features six metropoles from the European continent.
Germany’s capital Berlin, which is leading the list, is often described as a city with relatively low living expenses and an extraordinary ecosystem for startups. As Matt Cohler, a tech venture capitalist and co-founder of Facebook, once said in a guest post on TechCrunch: “I believe Berlin has the best shot in the Western world outside of Silicon Valley at becoming a place with a true tech startup ecosystem.”
Additionally, the World Economic Forum shed light on further fascinating developments in a report in 2016. According to the white paper, Europe experienced a substantial increase in Entrepreneurial Employee Activity -- also known as intrapreneurship. The term refers to employees drafting and realizing new ideas within corporations, instead of opening their own businesses. As hinted in the study, Europe has the world’s highest number of EEA, adding up to 40 percent of the whole entrepreneurial activity.
The bad news
With all these spectacular advancements marking European milestones, one has to bear in mind that there are always two sides to every coin. And in this case, the other side does not seem to be shining at all.
Around one year ago, the Startup Europe Partnership, founded by the European Commission, released an open letter that criticized the EU for neglecting to support businesses in their attempts to scale across the continent. “Europe needs more tech companies that are able to grow rapidly and go international while producing revenue, employment and innovation on an increasingly larger stage,” said the letter.
Apart from that, the EU has often displeased small-business owners with questionable laws and obligations, such as tax changes or privacy regulations. The latter has been heavily discussed in the controversial GDPR, which seems to have seriously damaged the EU’s tech startup scene in the past few months.
As it turns out, the downsides of European legislation appear to have already scared off several high-tech startups. ATRONOCOM, a high-security messaging and payment platform, has previously picked Dubai as its jurisdiction of choice, although a considerable share of its business lies in central Europe. "Dubai gave us the opportunity to do necessary technical work, to have a good cost-benefit factor, and to scale the team in a financially sound framework with a huge pot of talents from all over the world. We could not find an equal situation in Europe,” said Thomas Koller, CEO of ATRONOCOM.
When being asked if the company is considering to open offices in the EU, Koller explained that “we are in the process of setting up AtronoSwiss AG in Switzerland, which is where we will manage the application from and market it worldwide. Switzerland has the right environment for this with all the banking experts and international organizations that are based here."