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Europe has to do a lot better at scaling startups. Those are the expectations of EU President Ursula von der Leyen, who is about to take on her second five-year term leading the bloc of about 449 million people – with a start date set for December 1.
give a letter To the European Parliament before voting on it certain Von der Leyen, her top team (also known as the “College of Commissioners”), said the EU’s competitiveness would depend on closing what she called the “innovation gap” – by opening up more support for startups to scale up and reducing red tape that could hold businesses back. From making the most of access to the 27 EU single market member states.
Supporting innovators is one of the key pillars of von der Leyen’s second term – hence the decision to create a Commissioner, for the first time, with a portfolio focused on startups (Ekaterina Zaharieva).
While her speech to members of the European Parliament highlighted the “good news” that Europe’s share of global patent applications “is on par with the United States and China,” von der Leyen stressed that only a third of them are commercially exploited.
“We are almost as good as the United States at creating startups. But when it comes to scaling, we do much worse than our competitors. We have to close this gap,” she warned.
When it comes to fixing the conditions for scaling startups, her strategy boils down to “invest more and focus better.”
Investing early also appears to be a key part of the plan – given the decision to appoint a commissioner (Heina Virkkonen) whose tech-heavy portfolio includes a specific brief to promote “frontier technologies” as well.
“In order to be competitive, Europe must be home to the next wave of pioneering technologies,” von der Leyen stressed.
On the finance side, she said the EU “urgently” needs more private investment if it is to achieve its ambition of relying on innovative business ideas to boost competitiveness – so financial reforms are also planned.
Commercial spending on research and development in Europe represents about 1.3% of GDP. This compares to 1.9% in China and 2.4% in the United States. This gap in private capital is the main reason why we lag behind overall spending on R&D, and thus on innovation, she said.
“That is why we have proposed the creation of a European Savings and Investment Union – a task that I have entrusted to María Luis Albuquerque (Commissioner of Financial Services and Savings and Investment Union). It will help ensure that European companies can find the capital they need here in Europe.
Red tape that could hold back entrepreneurs is also in the EU president’s crosshairs.
“For Europe to catch up, we will also need to make things easier for our companies,” she told MEPs. “They are telling us that the regulatory burden is overwhelming them. Too much reporting. Too much overlap. Too complex and expensive to comply with. We need to simplify our rules to reduce the burden on businesses.”
He chose Valdis Dombrovskis, Von der Leyen’s commissioner, for “economy and productivity; “Implementation and simplification”, will be tasked with introducing “new comprehensive legislation”.
This will look at different sectors and assess what rules apply – with the aim of simplifying the legal landscape to help expand businesses, von der Leyen said.
“The greatest strength of the single market is that it replaces countless national standards and customs, with a single set of rules. So we need to get back to what the single market does best. Make business easy across Europe,” she added.
The rhetoric’s pivotal framing of innovation as key to Europe’s future competitiveness is likely to be music to the ears of the local startup ecosystem. Although some may wonder whether the idea of the EU simplifying its sprawling bloc of regulations is contradictory – especially since Brussels has historically prided itself on being a leading rule-setter.
but More right-wing deviation of this European Union It undoubtedly indicates a change in trend.
Ultimately, however, a cultural shift may be needed to achieve the streak of innovation that von der Leyen seeks – a shift that requires regional investors to feel more comfortable with risk and big bets in exchange for stable and predictable returns.
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