Startups and scaleups play a key role in Europe's economy and society, which was true before and during the Covid19 crisis and will even more be so in the post-Covid19 era. The role startups can play in the recovery from the ongoing crisis - and in accelerating the green and digital transformation - cannot be understated: they have a proven capacity to develop breakthrough innovations in response to real world needs, create new jobs and build synergies with Europe’s strong traditional industries.
In the recent Communication on the Digital Compass, the Commission suggested a target for 2030 of doubling the amount of unicorns in the EU. This target can be reached through actions such as those that create more favourable conditions for startups at all phases of their life cycle, for example by simplifying the processes of setting up businesses to attracting talent, to using stock options, to participating in public procurement. At the member state level, access to growth finance is critical – national policy makers can take actions that increase the European risk capital available for startups entering the growth phase.
However, today, startup founders are facing considerable challenges linked directly to the COVID crisis. For example, according to the report on the State of European Tech, nearly half of European founders found it harder to raise funding in 2020, which was compounded for many by the challenge of declining sales due to the COVID crisis. According to the same report, in 20 EU Member States the funding raised by startups in 2020 was lower than in 2019. Addressing these challenges is particularly important for the growth and expansion stage where startups need much bigger investment tickets.
To this end, the European Commission together with Member States and stakeholders have identified a number of best practices that are hallmarks of a growth-friendly environment. Such an environment is central to the EU’s transition to a sustainable, resilient, open and digital economy, and unleashing the tremendous innovation and growth potential of its startups.
24 EU Member states and Iceland have signed the EU Startup Nations Standard of Excellence, to ensure that all startups and scaleups in EU countries benefit from the best practices underpinning Europe’s and the world’s most successful startup ecosystems.
Signatory countries of the EU Startup Nations Standard of Excellence
The EU Member State signatories include: Austria, Belgium, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. Iceland also signed the declaration.
Actions to support startups and scaleups across the EU
The Member States commit to take actions including:
- Establishling a clear EU-wide reference point to define key features of a Startup that across all Member States; which would make it easier to design common policies in support of startups.
- Highlighting that sustainable growth as well as an entrepreneurship friendly environment are central to the future global success of startups and scaleups. With a favourable framework, many more startups will be able to achieve European and global success as they pass from ‘standup’ to ‘startup’ to ‘scaleup’ to ‘exit’ e.g. in the form of an initial public offering (IPO) or merger and acquisition (M&A).
- Sharing of best practices, from Europe and other countries, and to take action at national level to implement best practices that support startups and scaleups at all stages of their development.
- Establishing in 2021 of a Startup Nations’ Hub, which should promote and enable exchange of best practices among signatory countries and the creation of a common data platform for all Member States, that will provide valuable information across the EU. The platform will also facilitate measuring and monitoring of progress based on regular reporting from Member States in implementing best practices and so help each country become an ‘EU Startup Nation’. This will also involve working closely with EU startup ecosystems and stakeholder organisations (including the SME Envoys network and the EIC Forum).
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