The Start-up and Scale-up Initiative Presentation to IGLO Innovation Working Group Brussels, 11 May 2017
The Start-up and Scale-up Initiative 1. Why did we launch it? 2. What are we proposing? 3. What are the next steps?
Range of initiatives already taken on start-ups and scale-ups • Stakeholder – e.g. Startup Manifesto • Local/ Regional/ National • Various EU initiatives e.g. Innovation Deals, Startup Europe
But evidence suggests that more can be done • Not that much difference between EU and US in number of start-ups or initial survival rates • But nowhere near as many EU start-ups scaling up into larger firms as in US • And even those who grow, do not grow as fast. • Yet such scale-ups create disproportionate gains to economy and jobs (4% of the firms generate 70% of all new jobs) • So: need to focus on scalability and the barriers to this.
Single Market Strategy The Commission will launch a Start-up initiative to initiate a broad assessment of requirements for start-ups and ways to reduce such requirements and, where this is not possible, to facilitate compliance.
Public consultation 2016: key facts 53% 571 from replies entrepreneurs 16 Structured around written Reaching the company life beyond the EU cycle contributions
Start-up: main obstacles to start a company 1 2 3 4 5 Least important Most important Average ranking Access to finance 72% 4.2 Rules and costs of hiring workers 66% 4.0 Resources required to navigate overall 61% regulatory complexity 3.7 Tax compliance costs (filing and paying 55% taxes) 3.7 Procedures and costs to access 46% industrial and/or IPRs 3.5 7
Scale-up: main obstacles to expand a company 1 2 3 4 5 Least important Most important Average ranking 65% Securing financing for expansion 4.0 Outside EU: 4.2 Understanding and complying with employment 58% law 3.8 Outside EU: 4.0 Compliance costs: tax regulations (not VAT) 54% 3.8 Outside EU: 3.9 Compliance costs with VAT regulations 53% 3.8 Outside EU: 3.9 Uncertainty about regulatory requirements 53% 3.7 Outside EU: 4.2 8
So: evidence from economic analyses and public consultation points in same direction. Need to do more to support survival beyond 2-3 years and scaling up. Three broad sets of issues: A. EU start-ups still face too many regulatory and administrative barriers especially cross-border; B. there are still too few opportunities to find and engage with potential partners; C. there are still too many problems accessing finance, particularly to scale up.
Start-up and scale-up initiative • Coordinated approach across EU policies, building on measures in place or being developed; • Targeted set of practical measures ; • Partnership with public authorities and stakeholders.
A. Removing the barriers Commission will support a major, comprehensive and detailed peer review of all Member State rules and practices towards start-ups and scale-ups.
Addressing tax burdens Comprehensive package to reduce the complexity and fragmentation of VAT system: 1. simplify and extend MOSS; 2. targeted VAT simplification package for SMEs, 3. definitive VAT regime for cross-border trade Common Consolidated Corporate Tax Base (CCCTB) incentives for businesses to grow cross-border. Broaden forthcoming guidance on best practice in Member State tax regimes for Venture Capital.
Second chance The Commission will work with the European Parliament and the Council [ … ] to secure timely adoption and implementation of the proposal on preventive restructuring frameworks, second chance for honest entrepreneurs and increased efficiency of restructuring, insolvency and discharge procedures.
Navigating Information Single Digital Gateway Startup Europe Digital Innovation Hubs Enterprise Europe Network (EEN) Dedicated Scale-up Advisors
B. Creating opportunities
Ecosystems Reinforce Startup Europe Coordinate EU work… bring stronger coherence … link up national, regional… stakeholders & ecosystems Connect start-ups: pilot matchmaking, extend Erasmus for Young Entrepreneurs
Procurement Opportunities (i) establish innovation brokers (COSME) to build networks of buyers interested in public innovation procurement, linking with innovative businesses and helping access risk funding (ii) encourage all Member States to set ambitious innovation buying targets (iii) provide guidance on innovative procurement - Innovation Partnership
Skills Build on the New Skills Agenda: Digital Skills and Jobs Coalition - Blueprint for Sectoral Cooperation on - Skills Big data tool - European Entrepreneurship Framework - Digital Competence Framework - Scale up the EIT for entrepreneurship, - management and innovation skills Encourage Member States to make more use of Erasmus+ Knowledge Alliances, and the HEInnovate self-assessment tool - EU Blue Card
Innovation Opportunities - Changes to Horizon 2020 - support breakthrough innovation projects with the scaling up potential - European Innovation Council - EIT - investment - Innovation Radar - Innovation Deals & regulatory sandboxes - Measures to support use of IPR by SMEs
Social economy and enterprises Build on the Social Business Initiative through: better access to finance, access to markets, regulatory frameworks by advising Member States on policy design. Explore how to facilitate uptake of new technologies & business models, support impact financing of the social economy and enterprises (e.g. G20 Inclusive Business platform) .
C. Access to finance
Contrary to US, venture capital for later stage rounds is still poor in EU, also because funds are small and fragmented. Venture capital for start-ups and Venture capital investment in scale-ups as % of GDP (2015) Europe (2015) 0,25% 0,20% 0,15% 0,10% 0,05% 0,00% Early stage Late stage
Access to finance - The Pan European Venture Capital Fund of Funds. - Tax incentives for investments into start- ups/scale-ups. - Additional incentives to venture capital - Coordinate pan European platform on crowdfunding - Assessment of gaps in alternative sources of finance
What are the next steps? • Engagement with Member States and stakeholders • Delivery • 4 legislative actions already adopted • 30 other initiatives already underway
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