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This phrase has become common in political discourse: Europe must take radical measures to remain competitive. Among the long list of potential reforms, one that is gaining particular momentum is granting new EU-wide institutional status to innovative companies.
The innovation, known (somewhat vaguely) as the “28th System,” is described as Europe’s answer to the Delaware Sea Corp, and would add to what already exists in the EU’s 27 member states. It is now backed by entrepreneurs and a grassroots movement backed by venture capital which has also brought with it the more accepted name of “EU company“—and some unexpected momentum. EU Inc. launched on October 14 Petition It has already attracted about 11,000 signatures.
The American connotation of the term Inc is no coincidence; While startups and venture capital firms around the world are now familiar with the Delaware C Corp, Europe still has a gap in this regard. An existing formula is called “European community“(Europe Loves Its Latin) was aimed at major corporations but failed to attract interest or any widespread use. As a result, expansion across the continent remains an arduous process that must be carried out from country to country, all the more reason why technology champions in Pan-European they are still rare.
Since the new corporate vehicle would likely facilitate cross-border investments in European startups, the EU Inc petition was approved by the entire venture capital firms and figures from startup founders and investors, such as Niklas Zennström and Patrick Collison.
One of the four petition leaders, businessman-turned-investor Andreas Klinger, is reminded of how all of his first companies ended up being British limited companies because at the time, the ability to distribute options was too curvy in places like France or Germany. The main issues facing startups in Europe are “very fundamental structural problems,” he says. He and other EU supporters have effectively marched into the EU Commission. “A, the startup community needs and wants this; B, it has urgency. And C, make sure it’s done the right way,” he told TechCrunch in an interview.
In recently added Road mapthe EU movement has set the goal of submitting its final petition on December 1, hoping to make the new body of EU Commissioners that will then take over part of its agenda for the next five years.
It would certainly be helpful if the call had tacit support from within the Council, or rather, from the European Commission, with the recently commissioned reports. By Enrico Letta and Mario Draghi They both pledged to the 28th Order, let alone that President Ursula von der Leyen herself. But with so many issues and sectors competing for attention, the campaign must be careful not to lose momentum. Hence the campaign’s call for the European startup ecosystem to unite around this initiative.
Mobilization appears to be well underway, largely by French startups and venture capital lobbying organizations France Digital. Its working document Call for the twenty-eighth system This program was already underway before the EU Inc campaign, and has now been adopted by several other startup associations across Europe.
This kind of national support could be the key to success; But it may be more than that, given the level of detail contained in the proposal that France Digital drafted and amended after conversations with peers. For example, co-author Antoine Latran noted to TechCrunch, it calls for “regulation” rather than guidance to avoid unwanted differences in national transfers. This is one of the lessons learned from Societas Europeea, the cross-border legal form that France Digital says “has proven almost impractical for start-ups, SMEs and high-growth companies.”
EU Inc and its supporters are certainly keen to benefit from past experiences, including… Campaign is not optional Which contributed to improving stock options policies in 11 European countries. Index Ventures partner Martin Minot told TechCrunch that he and his team are passionate about EU Inc, and leading this previous campaign has shown that there is a long way to go: “With all kinds of lobbying, you have to be willing to go the distance and keep applying the pressure.”
Some observers worry that the aspiration for the European equivalent of Delaware’s corporate structure will be dampened by red tape and nation-states.
“When it comes to the EU company, I have serious doubts that countries will be able to agree on a common standard that is easy to understand and, most importantly, not too bureaucratic,” specialist lawyer Steve Gettler told TechCrunch. He is an Austria-based partner at the law firm E+H Rechtsanwälte, and gave the example of the very different capital maintenance regimes across the EU.
“Applying the (strict) Austrian or German capital preservation system to every EU company would make it rather unattractive in countries with a ‘not so strict’ system,” Gitler wrote. France Digital has covered this The point is precisely in her non-paper, calling for the creation of a “1 Euro” company.
However, there will be many other similar obstacles along the way. “The devil is in the details, and that’s where we’ll be very vigilant,” Minno said.
Brexit is another can of worms, but Mignot hopes the UK can still follow suit: “They can say: look, if you’re an EU business, this works for us too.” EU affiliates share a similar view in the FAQ, noting that while “initiating EU-centric solutions has the greatest impact,” its focus is “Europe, not the EU.”
Whether it is Europe or the EU, there is a growing consensus that the region needs to take action so as not to fall behind. “Europe is in a much more competitive landscape than it was 30 or 40 years ago, right? China is the big panda in the room,” says deep-tech investor Michael Jackson. “There are other parts of the world that are already starting to grow their economies and focus on technology and innovation.” “Europe cannot stand on the sidelines.”
Given all the above, it is difficult to contain the enthusiasm of EU corporate activists like Klinger: “The crazy thing about all of this is that it will actually happen. (…) This is us as an industry saying very clearly on one topic, very focused, not like… A list of 20 requests, but one thing is like, “This is important plus it can become a platform for other important things like stock options, exits, all that kind of stuff that is very complex in Europe.”
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