Empowering startups to work throughout Europe
How can Europe transform its rich startup landscape into a flourishing ecosystem of actively growing companies? On 24 September, the GUBERNA startup and scaleup community met to discuss the main obstacles to scaling up in Europe. Based on the outcomes of this meeting, GUBERNA contributed to the public consultation on the 28th Regime, a framework proposed by the European Commission aimed at making it easier to set up a company, attract investors and operate across multiple member states. A summary of the discussions and key recommendations can be found below.
1. Have it quickly. EU-level of decision-making takes time for good reasons. However at the startup scene time plays a crucial role. We suggest the EU to experiment with a format of this initiative to act as rapidly as possible. For example, by inviting Member States to support the initiative at their level first, making proactive steps towards EU-wide support framework as soon as possible.
2. Have it simple. Startup founders deal with multiple uncertainties. They look for opportunities to minimise at least some of these uncertainties. To stimulate founders, Europe has to offer clear and easy guidelines for doing business in Europe.
a) Define key terms to guide founders. It should be clear what conditions have to be met to be considered a startup, how long the status remains valid, if it has to be proved or (re-) assessed, etc.
b) Accept risk as a part of the game. Liability expectations towards startups should be changed due to the high-risk nature of a startup. The existing alarm bell procedure is inappropriate for startups and has to be re-defined.
c) Let the baby grow. A startup requires maximal support to move from an idea to a full-scale business. To ensure stable growth, companies should focus on their core business and be less distracted with additional requirements. Compliance and reporting for startups should be as easy and affordable as possible.
d) Establish a one-stop-shop. Diverse requirements at EU, national, and regional levels can be complicated and costly to navigate through. EU-wide or national service that understands the needs of founders and offers tailored solutions to them, ideally continuous support as well, will enable smoother transition over initial hurdles of startup’s initiation and growth.
3. Have it united. Single Market makes Europe strong. The following features of Single Market are especially important for startups’ growth:
a) Investing across the European Union should be possible to facilitate access to capital.
b) Finding the right investor is essential to move from an idea to a startup, and from a startup to a scaleup. EU-wide effective up-to-date directory with detailed information on investors can serve 2 major goals:
i) facilitate access to funding (targetted by industry, profile, risk appetite);
ii) provide founders with the information on investors’ strategies and commitment.
c) Hiring contractors across the EU saves time and money for setting up a branch in another country. National labour and tax regulation hinder application of this easy fix for early growth stages. Special conditions, e.g. for the first 5 employees in another MS, could be a solution.
d) Allowing stock options across the EU will help startups in accelerating through a wider use of this tool throughout different Member States.
e) Ensuring united market access standards will simplify and speed up the initial test phase for a new product or service. A product that meets the requirements of one Member State should be allowed to enter the market of other Member States, at least for a certain period of time. Such “test phase” will result in a wider initial customer base and hence more feedback on product features, leading to rapid product improvement and thus higher competitiveness.
GUBERNA is willing to continue looking for the ways to improve the business climate in Europe, and has a special interest for supporting innovative ventures.
GUBERNA takes part in EU public consultations on the 28th Regime
By the end of September, a final day of public consultations, almost 1500 contributions have been submitted. Key contributors are EU citizens (slightly below a half of total submissions) and companies (over one third). The remaining 10% are diverse organisations, with business association as a leading type of a contributor: 5% or 76 responses all over Europe. GUBERNA falls into this category.
If we compare the population and the activity of participation in the open consultations, we see that smaller countries known for entrepreneurial spirit lead: Luxembourg and Estonia are clear champions1, followed closely by other nations that depend on larger external markets: the Netherlands, Belgium, Austria, Finland and Latvia2. “The bronze” in voicing efforts went to Sweden, Ireland, Denmark and Germany3.
Apparently, smaller economically active countries suffer more from the limited access to other markets, than their larger counterparts.
However, German individuals and organisations contributed most in the terms of absolute numbers, indicating the pressing need for the Single Market in every Member State, especially trade-focused ones.