Rather than following its commitment to embracing non-legislative but self regulatory solutions, the Commission is about to undertake a second attempt in clamping down on platforms.
Platforms are recognised for a while now as the prevailing model for the digital economy. Finally entrepreneurs can spend time doing what they do best without having to be part-accountants, salesmen, IT-experts, web-developers or part-whatever. Building a business pre-platform was like digging out your house from snow before you actually could go in. Every day.
Platforms triggered an explosion of new startups who benefit from lower entry barriers and fractional costs when launching a business. We see new platforms emerging and even platform to platform (P2P) solutions.
Not only entrepreneurs but also users are becoming very aware of what they are good at and start to focus, in a nonchalant way, on what they do best and chose the most convenient way to buy a ticket or save their documents. As individuals we are becoming more aware of our strengths and skills. This seems like a very logical continuation of the separation of labour. Not everyone has to do everything.
While startups and entrepreneurs across the planet are still in the buzz of grasping the opportunities they now have to change the world, the conversation policy makers have is taking a different turn.
‘Fairness in Platform-to-business relations’ reads the European Commission’s work programme for 2018. Search results reveal that P2B is a term solely used in the political Europe and its notion is imminent, impending and even threatening if we attend to some of the stories around. The motivation seems less like a solid legal concept but more like a feeling; a feeling that something must be wrong. If we do something about fairness we presume that the current situation is unfair.
The motivation of the proposal limps for several reasons. First of all it highlights how the European Commission has pivoted and adapted their story over the years, changing its position more than once. A wide-ranging consultation in 2015 and 2016 resulted in no justification for sweeping legislation on platforms.
Part of the reason at the time was that the lawmakers did not manage to define what they were talking about. Considering platforms as matchmakers in multi sided markets, the Commission was not able to find evidence that there are structural problems. On the contrary, benefits of platforms overweight and the Commission committed to embracing non-legislative but self regulatory solutions .
Rather than following this commitment the Commission undertook a second attempt in clamping down on platforms. This time it follows a “problem based approach”.
Licenses and copyright protected content would not be sufficiently protected on online platforms, so the lawmakers say. The draft legislation that followed goes by far beyond its declared scope, obliging crowdfunding platforms, blogs, online shops or developer platforms to restrict parts of their content and conclude licenses similar to those of Spotify or Youtube for the rest of it.
This is by far the only area where “government comes after platforms”. Policy makers are quick in pushing responsibility on platforms about all kinds of controversial content or use or make often unrealistic demands.
All in all, the discussion often seems polarised and naive. It is true that technology can achieve more than eyes and hands, but this mustn’t mean that long established and enshrined principles of power and responsibility have to be shifted to technology. Many of the policy advances seem half-assesses and are sending mixed messages.
Coming back to platforms. We should ask ourselves if we really want to adopt regulation clamping down on e-commerce like asos, Zalando, HelloFresh, Lieferando, Deliveroo, payment platforms like Adyen, Klarna, Stripe or Transferwise? Platforms as business model brings producers, consumers, partners and owners together in ways that go far beyond what some of our political elites feel uncomfortable with Amazon, Google, Booking, ebay or Apple?
Is it all new? Part of the accusation is that a handful of platforms, which happen not to be founded or headquartered in Europe, abuse their position, do not provide enough transparency, push unfair contractual arrangements and keep valuable insights from data to themselves.
If we look back in time or into other sectors like retail supermarkets, we find that such practises are neither new nor necessarily abusive. The question arises: Why does the European Commission now want to intervene and not before. Or did we ever speak about where a “fair” position for products in a supermarket is or if it’s “fair” if Delhaize launches own brands on those products that sell well?
What’s the logic? It might seem easy and opportunistic to give in to the immediate picture of “big platform abuses power vs small business,” but such behaviour would not make sense in reality. As a platform you don’t only care about but you rely on business users. If there is no trust and users are unhappy with the product they will leave, regardless how big a platform is.
But let’s be clear, apart from some individual stories the image of platforms as malicious black boxes has never been supported by evidence.
Missing the point? So why is it that startups launch much faster today than before? Why do we experience a democratisation of entrepreneurship and a “wave of European innovative startups,” as President Juncker put it? For one part it is because we have the technology at our fingertips, i.e. startups as well as their users can easily afford the devices they need to interact on a marketplace.
Secondly it is because technology allows us to offer products of scale. Once a startup develops a software product or service, the majority of the sales, marketing and subscription service can be automated. So if we give in to one of the assumptions of the European Commission, that business clients cannot negotiate fair contracts with platforms – that actually is for a good reason because obliging them to put a lawyer behind every contract would do nothing less than rendering the entire advantage of technology useless.
Is it all about B2P? It seems evident that the Commission wants to stick up for businesses that have experienced issues with platforms. If such issues exist and deserve attention, first and foremost by the platform itself. Digital savvy consumers, startup entrepreneurs and pretty much anyone reacts to bad customer service and redress.
And if choice is limited that this might actually be a case for competition authorities rather than for legislators. The legislator rightfully envisaged this as one of the policy options which seems the most adequate and least invasive for startups in Europe and across the world as they offer the most efficient and speedy solution to problems when they arise. Startups don’t want to wait month or years for regulation and its enforcement to see it unfit for current realities and technologies.
Picture credits: Shelley Ginger
Filippos Zakopoulos the Executive Director of the Found.ation, discusses the evolution of the start-ups ecosystem in Greece and the Balkan region and how the European Union is supporting and enabling further growth.
The Digital Post: How the Found.ation operates to help tech startups build?
Filippos Zakopoulos: Found.ation has been a key player in the startup scene since 2011. Starting as a co-working space and then acting as an incubator, it has provided a great number of startups with valuable advice and access to a big network of key players of the startup ecosystem, such as mentors and investors. Also, having some of Greece’s largest companies as its clients, Found.ation has contributed in organizing acceleration programs, innovation competitions and hackathons, thus contributing in creating more opportunities for Greek startups, as well as startups from the greater Balkan region.
Looking more specifically into the acceleration and incubation pillar, a number of the companies that have taken part in Found.ation’s programs have raised 6M Euro in funding from local and international VCs. This corresponds to 15% of all VC-backed technology companies in Greece during 2013-2016.
Moreover, Found.ation acts as the local touchpoint for many international institutional investors, VCs and accelerators. Found.ation events have hosted so far Seedcamp, TheFamily, T-Ventures, Hub:raum, Axel Springer Plug&Play, Eleven, Launchub, Kompass Digital, Mojo Capital, 212 Ventures and the European Investment Fund, among others. Since 2015, Found.ation signed an exclusive agreement with the European open innovation organization EIT Digital, under the Arise Europe Program, with the objective of strengthening the Greek startup ecosystem, through the implementation of common, well-structured initiatives. The aim of the collaboration is to foster the ecosystem, support startups, give them faster access to the wider European market and hook them up with potential investors.
TDP: What are the plans for the forthcoming future?
FZ: Found.ation originally established in 2011 as one of the first co-working spaces in SE Europe, but has evolved also as a digital transformation consultant for corporations and a tech education hub. Our team strongly believes in the interaction between established corporations and startups. One of the key roles of Found.ation is to highlight these opportunities for cooperation between these two polar opposites and we already work with companies and organizations such as COSMOTE (Greece’s top telecommunication provider), Eurobank (one of the country’s largest banks) and the Municipality of Athens to make this happen. But startups are not the only ones to benefit from this kind of cooperation. Incumbents need to transform in order to stay agile and competitive and Found.ation helps them design innovative digital strategies, by teaching them how to adopt a more entrepreneurial mindset.
TDP: How do you see the European startups ecosystem evolving?
ZP: Europe is still far from becoming a new Silicon Valley, but on a more local level there are a lot of cities emerging as mature hubs, providing fertile soil for entrepreneurial bloom, like Amsterdam, Paris and Stockholm, among established spots like Berlin and London. The rest of the European countries are following their lead –Hungary and Estonia are emerging nods–, although they have yet a lot of distance to cover. Even in Southern and Eastern Europe, where the financial situation poses a significant barrier for prosperity, one can see optimistic signs of progress.
TDP: Is the European Union doing enough? What further actions should be taken in your view?
ZP: The first step towards solving a problem is identifying it. Europe has understood that it needs to take action and help local startup ecosystems in order for them to help boost their countries’ economies. A good example in this direction is the launch of EquiFund in Greece, part of the Commission’s Investment Plan for Europe. The new €260m Fund-of-Funds program, managed by the European Investment Fund, aims to boost entrepreneurship, by attracting private funding to all investment stages of the local equity market. But unlocking the equity potential in the market is only one part of the equation. The next step is to create policies that will enhance survivability and strengthen the ecosystem, such as tax and regulatory incentives. These measures need to be applied in local as well as pan-European level.
Free of the shackles of EU law when Brexit becomes a reality then the UK can offer businesses the flexibility that is needed in a modern world. But we need to ensure that key personnel have the ability to travel to and from the UK with as little hindrance as possible, says conservative MP Andrew Bingham.
The Digital Post: What Brexit means for the UK digital economy? A danger? An opportunity?
Andrew Bingham: Brexit presents huge opportunities for the UK in all areas of the economy and the digital economy is no different. Free of the shackles of EU law when Brexit becomes a reality then the UK can offer the flexibility that is needed in a modern world. The digital economy by its very nature is changing rapidly as new technologies emerge, grow and become commonplace. Countries wishing to benefit from these innovations need to be responsive and agile. The UK out of the EU can and, in my opinion, will be both these things.
TDP: Do you think there is a real risk of digital companies relocating outside the UK? How do you plan to counter this?
Andrew Bingham: No I don’t feel that digital companies will look to move out of the UK. The country has a proud record of being at the forefront of technology and innovation and this will continue. The UK is and will remain a good place to do business.
TDP: Broadly speaking, what policies are needed to ensure that UK digital economy will keep thriving outside the EU?
Andrew Bingham: The freedom of movement is a very hot political topic but whilst retaining the ability of the UK to control its own borders, we need to ensure that key personnel have the ability to travel to and from the UK with as little hindrance as possible. During a recent visit to Barcelona looking at the impact of Brexit on the creative sector this was a message that came across. Companies who operate in the EU and the UK have personnel shuttling between their two offices and thereby the two countries regularly. They need to be able to continue to do so.
TDP: The UK startup ecosystem seems very concerned about possible restrictions to freedom of movement for workers resulting from Brexit. That will stop them from recruiting high qualified staff from other countries. What is your opinion?
Andrew Bingham: In line with the previous answer, however I believe that this can easily be addressed. Things operated efficiently before freedom of movement came into being and I believe a return to a similar arrangement is perfectly feasible. With regard to recruiting from other countries, I feel that the UK will remain a centre for digital technologies where the brightest and the best will wish to come and work. The Governments stated aim to create a business friendly environment through a variety of taxation policies and finance initiatives will provide great incentives to start up businesses and encourage existing companies to retain a UK presence.
Picture credit: Kalle Paulsson
Innovation is the backbone of Europe’s capacity to export products and hence to support its economy. This is why any policy adopted by our decision makers should always take account of its impact on the ability to innovate, says Brian Ager, Secretary General at the European Round Table of Industrialists (ERT).
The Digital Post: How the global rise of protectionism with increasing adoption of trade restrictive measures, is playing out in Europe? How could it impact on Europe’s competitiveness in the innovation and digital sectors?
Brian Ager: Although protectionism is on the rise worldwide, it is not the silver bullet to address imbalances, as some argue. On the contrary, protectionism is likely to damage European economies.
The EU is a very open economy. While global markets have overall expanded over the last ten years, the EU remains the most important exporting region (in terms of goods and services combined). More than 30 million jobs in the EU depend on trade. Therefore market access, the elimination of trade and investment barriers and adherence to a rules-based global trading system are crucial to the competitiveness of the EU economy and to safeguard employment.
Protectionism may hamper international competition by limiting opportunities to invest abroad. Competition is however essential for economic and technological development, not only in manufacturing, but in particular in the services sector. The EU remains the biggest foreign investor globally and the biggest destination of FDI (although with a sharp decline over the last decade).
We also look forward to positive signals from the US, the most important trade partner for the EU, especially after the protectionist opinions expressed by President Trump. The transatlantic partnership should also include the digital arena. For example, the international free flow of data is a prerequisite for European industry to optimise global business operations through digital technologies.
Existing direct and indirect restrictions to the free flow of data, introduced by countries around the world, however tend to be unnecessarily protectionist and undermine the competitiveness and growth of European companies.
The digital economy is rapidly developing worldwide thanks to the many innovations made. However, we should remain aware that these innovations heavily rely on easy access to market, knowledge and capital – and are characterised by global value chains.
Take for instance micromechanical sensors invented and produced in Germany to equip cell-phones assembled in Asia and then distributed worldwide. From this perspective, the temptation of protectionism seems to go against the tide and put at risk countries that would take this route.
TDP: What are the main findings of your latest Benchmarking Report regarding Europe’s performance in innovation?
Brian Ager: The merits of this report is that it points out where the big key issues are, like the relatively slow pace of digitisation in Europe or the tough global competition in the innovation area. It also recognises that innovation is becoming a critical factor for competitiveness.
In addition, the Benchmarking Report emphasises the strengths of Europe and the EU in particular. For instance, the innovation performance is overall good, with some countries obviously more advanced than others.
Innovation is the backbone of our capacity to export products and hence to support our economy. This is why the report also highlights that policies should take account of their impact on the ability to innovate.
TDP: What are your main recommendations to Europe’s decision-makers as regards supporting Europe’s innovation and digital sectors?
Stimulating innovation and adoption of new technologies as the main driver of sustained economic growth in Europe. Evaluation of every legislation and policy measure with respect to its impact on innovation throughout the policymaking process. (Innovation Principle).
Strengthening of the internal market, in particular by completing the Digital Single Market.
Unleashing the benefits of digitisation by investing in digital infrastructure, key technologies and skills development; supported by a robust regulatory framework, covering security in cyberspace.
Enabling start-ups to scale up by boosting entrepreneurship, access to funding and cutting red tape.
Last but not least, ensuring access to foreign markets while maintaining a level playing field.
TDP: Is the Digital Single Market strategy delivering on its promises to boost Europe’s competitiveness in the digital sector?
Brian Ager: The construction of the Digital Single Market is a key example showing how European cooperation can bring benefits to all.
Europe should strive to achieve a global leadership role in the digital revolution by swiftly implementing an EU-wide harmonised framework, and by setting up standards for the Digital Single Market. This will boost the European economy, make it more competitive and create new jobs across all sectors.
Digitisation brings new opportunities for innovation and for the deployment of new technologies. Europe – as an innovation-driven economy – should grasp these opportunities and turn them into a real competitive advantage for its companies.
Progress made by the European Commission in delivering its Digital Single Market Strategy is a step in the right direction.
Picture credit: Andrew Stawarz
Europe can still be a rather bumpy landscape for innovators, although innovators should learn to market better their achievements, argues Robert Madelin, Senior Adviser for innovation within the European Commission and former Director General at DG Connect.
The Digital Post: What are the major challenges facing the DSM strategy?
Robert Madelin: The Strategy itself identifies several challenges under its 16 actions. It’s also clear that some of the changes brought in by the Strategy will imply winners and losers. The main political challenge is whether we are ready to accept this because we care enough about improving our society.
RM: We have entered the Fourth Industrial Revolution, a period where everything is changing and evolving so fast that it is difficult to grasp what’s next. Under these circumstances, the successful strategies should go to the basics. The Digital Single Market strategy is precisely future-proof in this sense, since nobody knows what the future is. Delivering infrastructure, capacity, industrial transformations, skills awareness, cyber security while investing enough in research into Quantum, Big Data and 5G: This is a good portfolio effort. But it’s impossible to avoid taking risks in a period of big change. The Digital Single Market Strategy take such risks and it is likely that some of its actions will fail.
TDP: On 1st September 2015 you were appointed senior adviser for innovation within the European Commission. Jean-Claude Juncker tasked you with drafting a policy review on innovation in Europe. What can you tell about this report?
RM: I think the missing piece is often the recognition that research is a component of European innovation and competitiveness. Let me put this in figures: less than one euro in five spent by European companies on innovation is poured into research. Moreover, in some areas we don’t have a positive conversation about innovation. At European level we don’t have a conversation at all. What we have, instead, is little pockets of reaction to disruptive innovation.
This resistance to innovation may be legitimate or not, but it is difficult to act on it if we don’t have a proper debate. That’s why Europe can still be a rather bumpy landscape for innovators and that’s the problem we have to fix. The report should be released by the end of June.
TDP: So are you saying that Europe is not a positive environment for innovators?
RM: Let’s talk first about the environment in the world. In 2015 the communications firm Edelman carried out an extensive survey on innovation by interviewing tens of thousands people in a hundred countries.
What came out is that two out of three respondents understand that innovation is good for growth and jobs, but only one out of three think that innovation is doing something good for the planet as well as for their communities and families.
I believe this proves that innovators are marketing their intentions and achievements very poorly and that’s not true only in Europe. The same survey tells us that Europeans want innovation to primarily look at issues such as health, family, community, environment. The two things fit together.
Everybody wants innovations, and wants innovation to benefit the areas they care about. Therefore, the vision underlying the European approach to innovation is right: ‘responsible innovation’ is a key concept within our research programme Horizon 2020. That’s the theory. As far as the execution is concerned, we are beginning to learn.
Coming to your question, is the atmosphere positive for innovators? Not yet. Can it get better? Yes. Do we understand how to? I think so. Are we working on it? Yes.
TDP: Let’s switch to the telecom sector. What do you think should be the priorities of the upcoming review of the telecom framework?
RM: The reason to have a telecoms framework is systemic empty competitive mechanisms in the market. Now we have to revisit how far that’s a problem. We’ve already narrowed enormously the number of markets to which the regime applies.
The second question to ask is to what extent we need a framework. We still do because telecoms it’s a network industry. But how do we tune the framework to ensure the best possible supply of infrastructure? That’s a big problem that we haven’t fixed yet.
Of course, everybody has different views on the best answer to this. My personal view, having been for five years Director General of DG CONNECT at the European Commission, is that the theory of the ladder of investment doesn’t reach to fiber to the home.
If it doesn’t work, we need to apply another theory: Which means we might need to either invest more public money or structure differently the market in order to generate very high speed connectivity investment.
This is part of a series of interviews held during the conference "Digital Single Market: Bridging the Gap" organized by the British Chamber of Commerce in Belgium. The event featured keynote speeches from Commissioner Oettinger Juhan Lepassaar and Robert Madelin (EPSC). Other speakers included senior EU officials, parliamentarians, trade bodies and business leaders who discussed the future challenges for business in the areas of fintech, e-health and industry 4.0.
Picture credits: Dennis Skley
One of the most remarkable crowd-fuding stories of the last years comes from Sweden. The Digital Post talks with Minut co-founder Marcus Ljungblad about how his project Point made a splash on Kickstarter.
The Digital Post: Behind “Point“ there is an outstanding crowd-funding story. Tell us more.
Marcus Ljungblad: Although we founders, Nils Mattisson, Martin Lööf, Fredrik Ahlberg and I are all from Sweden, we actually started out in Shenzhen, China. By the time we arrived in China we had put together a working prototype of a connected fire alarm. But no first prototype survives contact with user testing.
On the ground in Shenzhen, we were able to utilise the enormous eco-system to rapidly prototype and test different ideas—those who survived ultimately lead to Point. We knew we were on to something when, during a customer interview, the customer asked to buy one of the products then and there.
At that time we didn’t even know if it could be mass produced, let alone had we given Point its name. Fast-forward a couple of weeks and we launched on Kickstarter.
Over the next 30 days we raised almost 5x our goal and had received customers from every continent all across the world.
After the crowdfunding campaign ended we headed back directly to Shenzhen to get to establish the supply-chains we needed and to get Point to production. Today we are shipping our first batch, which is all sold out, to more than 2000 customers and we are a week from producing the second batch.
The Digital Post: What is Point about? How does it work?
ML: As apartment owners ourselves we felt there is a disconnect between us and our homes when we weren’t there. How can I know everything is OK at home when I’m away? Point is camera-free option to stay informed about the important things when you are away.
Did my fire alarm go off? Has there been unexpected noise? Or, if I rent out my home, how do I know that no one is smoking inside or staying quiet during late hours? Point uses a range of sensors and combines a lot environment data to inform users when something is amiss.
Everything is computed on Point, so no sensitive information ever leaves your home. It’s dead-simple to install and is designed to blend-in into any home.
The Digital Post: What should be improved in Europe to help young startups?
ML: Make it easier to offer shares and options to the earliest employees in the company. It is not only the founders who contribute to a company’s success, your first hires and are equally important and you want to reward them accordingly. While starting out, however, it is often expensive to compensate on salary only.
Shares and options offers a way to reward your employees if the company does well. A reward they are rightly entitled to! We’d love to see governments in Europe make it easier for startup founders to share their success with their employees.
The Digital Post: Can Europe match the success of Silicon Valley and Shenzen? What should be the ingredients?
ML: The aim should not be to compete with Silicon Valley or Shenzhen, these are unique ecosystems and they are extremely good at what they do already. Rather, Europe as a whole, should spend its energy doing what it does best: nurturing companies that start global from day one.
Sweden is an important market for us. Users are connected and it has an tech friendly culture. But it is too small on it’s own. If we want to truly affect users relationships with their homes we need to look beyond Sweden.The EU should continue to focus on lowering the barriers to entry to other European markets.
Soon every new company will be ready to take on the much larger, and much much more diverse, global market. And it can do so faster than it’s American and Chinese counterparts. Europe is small, diverse and open, we should use that to our advantage to compete—not to become another Silicon Valley or Shenzhen.
Photos Credit: Iwan Gabovitchhttps
Two years ago the European Commission launched the SME Instrument to address a notorious funding gap in small early-stage companies that is a major barrier to innovation. Here’s the key steps your start-ups should follow to enjoy this funding opportunity.
The European Commission has fully recognised the key role of ICT in improving the business landscape in Europe and many efforts are being made to foster digital entrepreneurship.
Firmly embedded in Europe 2020 – the European Union’s ten-year growth strategy – the Digital Single Market strategy (formerly known as Digital Agenda) recognises the revolutionary potential that information and communication technology (ICT) offers to boost growth, increase productivity and improve the welfare of citizens and consumers.
The Digital Agenda has set goals with 101 actions, spread over 7 pillars, which will help to reboot the EU economy and enable Europe’s citizens and businesses to get the most out of digital technologies. ‘Pillar V: Research and innovation’ hopes to attract Europe’s best minds to research, acknowledging that world class infrastructures and adequate funding are crucial.
From an economic perspective, the importance of SMEs for economic growth and jobs creation is increasingly obvious: Start-ups create the majority of new jobs. However, Europe is clearly lagging behind other geographical areas in terms of global leadership in this sector.
Therefore, EU level action is essential, as a complement to existing initiatives at local, or national level. The issues identified, such as the need for a stronger culture of entrepreneurship and innovation, or insufficient access to financial resources and human capital, extend well beyond the borders of individual EU member states.
In an effort to maintain Europe’s competitive edge through increased coordination and its attempt to go beyond national fragmented efforts, the European Commission has taken action to help entrepreneurs and SMEs fully exploit the potential of technologies, both in terms of supply of new digital products and services and in terms of demand and smart use of these technologies.
In this spirit, Start-up Europe and the Entrepreneurship 2020 Action Plan were designed to unleash Europe’s entrepreneurial potential, to remove existing obstacles and to foster the culture of entrepreneurship in Europe.
The challenges ahead
Yet, efforts to remove obstacles alone are not enough; turning research/science based innovation into new services and products is a challenging endeavour, as commercialising new forms of innovations is inherently high-risk and requires significant investments and follow-up funding.
It is worth noting that private investments in ICT research in Europe continue to lagging behind (less than half of investments compared with the US).
As such, the EU is currently losing the race on scaling-up disruptive, market-creating innovation with the US leading the pack (101 Unicorns) and China following (36 Unicorns). By contrast, the EU only counts 19 Unicorns.
The lack of sufficient public information for potential investors about technologies developed by small firms or the leakage of new knowledge that escapes the boundaries of firms and intellectual property protection, are amongst the many different challenges young entrepreneurs face.
The challenges of incomplete and leaky information pose substantial obstacles for new firms seeking capital. The difficulty of attracting investors to support an imperfectly understood, as yet-to-be-developed innovation is especially daunting.
Indeed, the term, “Valley of Death”, has come to describe this challenging transition when a developing technology is deemed promising, but too new to validate its commercial potential and thereby to attract the capital necessary for its development.
Lacking the capital to develop an idea sufficiently to attract investors, many promising ideas and firms perish.
Despite these challenges, many firms attempt to make their way across this Valley of Death by seeking financing from the wealthy individual investors (business “angels”) and, later in the development cycle, from Venture Capital firms.
But because the angel market is dispersed and relatively unstructured, with a wide variation in investor sophistication, few industry standards and tools, and limited data on performance and VC funding typically oriented towards much later stages of development, capital remains very difficult to obtain for many high-technology start-ups.
The SME Instrument
In this spirit, the European Commission launched the SME Instrument within Horizon 2020 in the purpose to address a key funding gap in financing for small early-stage companies that is well recognised as a major barrier to innovation.
The instrument addresses the financing needs of internationally oriented SMEs, in implementing high-risk and high-potential innovation ideas. It aims at supporting projects with a European dimension that lead to major changes in how business (product, processes, services, marketing etc.) is done.
The purpose is to launch the company into (new) markets, promote growth, and create high return on investment. The SME instrument addresses all types of innovative SMEs so as to be able to promote growth champions in all sectors.
Unlike private risk capital which flows relatively freely during good times but plummets during economic downturns, this programme provides stable support for high-risk ventures throughout the ups-and-downs of the volatile business cycle. It cushions economic shocks that might otherwise lead to major extinction events for the industry.
To achieve these goals, the SME Instrument project has been bolstered with an €3 billion budget until 2020.
A piece of Advice: 3 steps you should follow
Define the reasons for application
Are you an entrepreneur who has established your own startup/SME? Is your startup/SME based on an innovative IT concept, product or service harnessing the potential to disrupt existing markets? Moreover, don’t hesitate to use the SME instrument basic eligibility check which can tell you if your project is eligible or not.
Build up your business strategy
You are an entrepreneur, planning to start your Startup / SME or have already started and are in the early stages. Your startup / SME is an innovative ICT based concept, product or service which has the potential to ultimately disrupt existing markets.
Bear in mind that a professionally written business strategy is the first thing that will help you grow and sell. Whatever your capital source, you will need to demonstrate to potential investors and lenders that you have taken the time to research the market and competition, identified your target customers, developed a business model and have a marketing plan in place to accomplish your goals and achieve success.
In short, you will need a well polished and compelling business plan that will satisfy lenders and get you in front of potential investors.
Check the application process and start implementing
Make sure that:
– you know the deadline for the phase you apply for. There are three phases: phase 1, phase 2, phase 3, each of them having a different deadline in each semester of the year. All proposals are submitted online;
– the written proposal has met all the requirements proposed by the European Commission;
The Commission has an online register of the organisations participating in the EU research and innovation or education, audiovisual and cultural programmes. This allows consistent handling of the organisations’ official data and avoids multiple requests for the same information.
Interested in learning more about EU funding opportunities for your startup?
The EU Startup Services Team can provide you the useful information you need for every phase of your application process. The services include consulting, evaluation, proposal writing and workshops.
The EU Startup Services Team worked with more than 1300 startups, operates in 21 countries and has held 33 workshops on EU Funding so far, with 9 successful proposals in the last year. The representatives can provide expertise on who should apply, when and which are the steps, but also help you choose the instrument which best fits your stage and your current needs.
Planning to attend the upcoming workshop? Here you can find all the details you need.
 Source: Fortune, ‘The Unicorn list 2016’; ‘Unicorns’ are start-ups with a market value > $1 billion
Picture credits: Susanne Feldt
London’s status as the digital capital of Europe would be at risk if we shut the door on the world’s largest market, says the leader of UK Liberal Democrats Tim Farron.
The Digital Post: What are the major dangers the UK might face if it chooses to leave the EU?
Tim Farron: Leaving the EU would damage the UK’s prosperity, security and influence in the world. Our ability to tackle major international challenges like terrorism or climate change depends on us being able to work closely with our neighbours.
As the UK’s most internationalist and outward-looking party, the Liberal Democrats’ position is clear:
[Tweet “Britain is better off in Europe and Europe is better off with Britain in it.”]
The Digital Post: What Brexit would mean for the thriving UK tech sector? How leaving the EU could affect this industry?
TF: Brexit would be a disaster for the UK’s tech sector. Almost nine in ten firms in the tech sector oppose leaving the EU. The ability to recruit skilled people easily from across the continent is hugely important. Many tech start-ups in the UK have been set up by people from around Europe, driving growth and creating new jobs in our economy.
London’s status as the digital capital of Europe would be at risk if we shut the door on the world’s largest market.
The Digital Post: David Cameron’s policy on immigration has drawn criticism from the UK tech industry given that this latter is highly dependent on foreign talents. What is your opinion?
TF: I see immigration as a blessing, not a curse. Since the turn of the century, immigration has added £20 billion to the UK economy. The Conservative Government must also stop sending mixed messages to the world’s entrepreneurs. Our country thrives when we are open to the world and welcome those who want to work hard, pay into the system and contribute to our economy and society.
photo credits: Boston Public Library
The Digital Single Market is not about bits-and-bytes, not about technologies, not about virtual media. It is about the people, it is about the citizens, it is about the jobs, quality of life and civic participation. Therefore it is important to look into the role of regions and cities in making the Digital Single Market work for Europe.
Our task is to boost digital skills, learning across society and the creation of innovative start-ups. We need to ensure digital literacy and skills for citizens, workers and jobseekers. This also includes the need to imbed digital technologies in education in order to prepare the future generations. We are looking forward to the European Commission’s New Skills Agenda 2016, which promises the promotion of life-long investment in people.
Not only is it enough to have local and regional authorities involved, we must engage our citizens and business to co-create and develop regions and cities together with all stakeholders, if we want to be successful and create thriving entrepreneurial ecosystems in our regions. Public sector, universities, schools, and the private sector all have to actively participate.
The main task of the European Committee of the Regions is to create a “bridge” between the policies and actions. In Europe, we need to connect to digital world in our everyday life in schools, universities, civic organisations and companies. Broadband connectivity in all regions, including remote and rural areas, is a prerequisite for this. The European Commission should report regularly on progress made in overcoming the digital divide, particularly at regional and local level.
Poor profitability means that in the rural areas there is often no market-driven development of high-speed broadband networks, so that the support options at European and national level need to be consistently further developed.
We need to engage cities and regions to invest in digitalisation and broadband connectivity and to use different financing including innovative public procurement and other funds. Here partnering is key to create growth and boost European economies.
In addition, we must continue to promote synergies between different programmes and financing instruments like EU structural funds and Horizon 2020 and European Fund for Strategic Investments (EFSI), and promote European multi-financing and integrated European funding in order to support cities and regions to reap the full benefits from the Digital Single Market. Cross-border, transnational and inter-regional cooperation are also crucial to exchange the best practices between regions.
Entrepreneurship is one of the strongest drivers of growth and job creation. Digital and web entrepreneurship in particular have the potential to boost the economic recovery of Europe. Cities and regions can create a favourable climate for innovations through their interaction with citizens, universities, civic society and local businesses. They have a pivotal role in creating a friendly environment for public and private investments and necessary conditions for the strong startup ecosystems.
In my own city, Espoo, I have participated in the creation of several initiatives to promote innovation and entrepreneurship, such as Aalto University, Startup Sauna, Urban Mill, and the Espoo Innovation Garden.
Investing in entrepreneurial culture and entrepreneurship education is an investment in the future. We have to make sure that promising entrepreneurs can obtain the funding they need to start a business. We have to cut down the regulatory burden our entrepreneurs face. We have to support start-ups that are ready to grow and internationalise, and we should also equip entrepreneurs with the necessary skills to successfully start and run a business.
The CoR is promoting entrepreneurship in Europe’s regions via the European Entrepreneurial Region (EER) awards, created in 2009. EER regions provide us with living examples that illustrate what regions and cities can do to promote entrepreneurship education.
One of the very first EER winners was Kerry County in South-Western coast of Ireland. The County has focused on the early stages of educating future entrepreneurs via Junior Entrepreneur Programme, which introduces entrepreneurship in schools for pupils from 8 to 12 years. The programme has been so successful that it was adopted nation-wide, with 10.000 pupils participating in 2015.
Along with digital divide, we should address the question of innovation divide in Europe. Particularly in rural regions, the public sector is a driver for change and a key player in raising local awareness. There should be a focus on innovation in the public sector itself, as well as on rethinking management processes in public institutions. This will enable these regions to catch up.
Commissioner Carlos Moedas highlighted in the CoR plenary session the new role of cities as the new global powerhouses for progress and societal innovation. Cities create favourable conditions for urban innovation – the synergic interaction between universities, civic society, local and international businesses as well as citizens. This is why we must renew the Urban Agenda to include the Digital Single Market, entrepreneurial spirit and human smart city initiatives.
Picture credits: Danka & Peter
Fintech startups and traditional banks are increasingly realizing that they need to collaborate to capture new opportunities, argues Mariano Belinky, Managing Partner at Santander InnoVentures. Traditional banks can learn from startups new ways of serving costumers while startups can leverage banks’ consumers to bring them their products.
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TDP: Is funding still a major barrier for the European startup ecosystem?
Mariano Belinky: Since December 2014 he manages Santander InnoVentures, Santander Group's global venture capital fund, focused in early stage Financial Technology investments. He joined Santander InnoVentures from McKinsey & Co., where he was an Associate Principal in the Corporate and Investment Banking and Global Risk Management practices, based in New York. Here, he spent six years advising global banks, asset managers and private equity firms acrossNorth America, Europe and Latin America on multiple strategic topics.
photo credit: Chewy734
The European Commission has taken an important first step in outlining possible elements of an EU action plan on Big Data. It is now essential to get the policy framework right. The faster the better.
A second wave of digital transformation is coming.
The first one revolutionized the way we order information and spans technological advances from the advent of the mainframe computer to the arrival of Internet search.
[Tweet “This second wave will reinvent how we make things and solve problems.”]
Broadly it can be summed up in two words: Big Data. The expression ‘Big Data’ is used to describe the ability to collect very large quantities of data from a growing number of devices connected through the Internet.
Thanks to vast storage capacity and easy access to supercomputing power – both often provided in the cloud – and rapid progress in analytical capabilities, massive datasets can be stored, combined and analysed. In the next five years Big Data will help make breakthroughs in medical research in the fight against terminal illnesses. Per capita energy consumption will decline sharply thanks to smart metering another application of Big Data.
Traffic jams will be rarer, managing extreme weather conditions will become more science, less guesswork. Makers of consumer goods of all kinds will be able to reduce waste by tailoring production to actual demand. This new ‘data economy’ will be fertile ground that will allow many new European SMEs to flourish.
Broad adoption of such Big Data applications can only happen if the data is allowed to flow freely, and if it can be gathered, shared and analysed by trusted sources. Size definitely does matter. The bigger the dataset, the more insights we can glean from it, so it’s important that the data can flow as widely as possible.
[Tweet “Some elements of Big Data might involve personal data.”]
People need to be confident these are protected by laws and agreements (such as safe harbour). All actors in the data economy must work hard to ensure that data is as secure as possible against theft and fraud.
The European Commission has taken an important first step in outlining possible elements of an EU action plan for advancing towards the data-driven economy and addressing Europe’s future societal challenges.
To complement this initiative DIGITALEUROPE has drafted a paper outlining what we see as the policy focus in relation to Big Data.
We have identified eight priorities:
– Adopt a harmonised, risk-based and modern EU framework for personal data protection that creates trust while at the same time enabling societally beneficial innovations in the data economy
– Encourage the protection of Big Data applications from cyber attacks, focusing regulatory efforts on truly critical infrastructures
– Support the development of global, voluntary, market-driven and technology-neutral standards to ensure interoperability of datasets
– Clarify the application of EU copyright rules so to facilitate text and data mining
– Boost the deployment of Open Data by transposing the Public Sector Information Directive into national law by June 2015 at the latest (EU Member States)
– Create trust in cross-border data flows by supporting the implementation of the Trusted Cloud Europe recommendations
– Continue addressing the data skills gap by supporting initiatives like the Grand Coalition for Digital Jobs
– Continue encouraging private investment in broadband infrastructure and HPC technologies with public funding DIGITALEUROPE is ready to engage constructively with the European Commission, Parliament and Council to help them formulate a European action plan for the data economy
It is essential to get this policy framework right, but it is also important to move fast. While Europe is preparing the ground for widespread adoption of the new digital age, the rest of the world is not standing still.