Despite what many people may think, there is no real lack in capital supply for Europeans interested in launching their own start-ups in the digital domain.
The rise of (digital) technology start-ups is a global phenomenon, with extensive start-up ecosystems – such as the one in Silicon Valley – being replicated all over the world. Like any other region, Europe is highly interested in reaping the economic and societal benefits of a flourishing start-up economy.
In a recent speech, Neelie Kroes (the former Commissioner for Europe’s Digital Agenda) stated for instance that two out of three (!) new jobs in Ireland are created by start-ups in the first five years of existence.
Not all is rosy, though. Critics often say that it remains hard for European start-ups to get access to the proper financial means to kickstart their businesses.
But is that really the case?
It’s definitely not their biggest problem. Despite what many people may think, there is no real lack in capital supply for Europeans interested in launching their own start-ups in the digital domain.
Virtually each region has done a good job in developing the appropriate funding mechanisms to support start-ups’ launch activities. In other words: it’s not (all) about the money. As a matter of fact, three bigger threats to European start-ups’ longer-term growth can be discerned – culture, regulation and mindset.
A first issue is Europe’s fragmented market – not so much from a geographical perspective, but rather from a cultural one. Indeed, in spite of all good intentions, it remains difficult for European start-ups to sell their products across ‘cultural’ borders. The use of different languages is one obstacle, of course, but divergent social aspirations and cultural values are equally important barriers.
For example, selling a solution for personalized online advertising might be perfectly acceptable in one region because of the advantages it brings (instead of being spammed, one only gets to see those ads that are in line with his/her interests), but it may fail completely in cultures where this is perceived as a direct assault on people’s privacy.
Intra-European legal and regulatory barriers present additional obstacles. A concrete example is the burden that accompanies the launch of pan-European digital health solutions, with each European country having issued its own regulations related to the development, sale, usage and reimbursement of products and services in the digital health realm.
And finally, there’s mindset. Contrary to the US, where everything is big and aimed towards rapid international expansion, European start-ups typically have a more ‘provincial’ mindset. In today’s global, digital economy, though, that’s a major shortcoming. In order to really succeed, start-ups should have international ambitions right from the start.
As we observed already, none of those barriers exist in the US – making this geographical and cultural region a single, big ‘unified’ market with more than 320 million consumers.
Both its scale and transparency make it an easier target to introduce products and grow. A bit ironically perhaps, even conquering the rest of the European market is typically easier if done from the US…
So, how can we address those challenges? I see three important lines of action, in which European policy makers have a major role to play:
– From a regulatory perspective, measures should be taken to further unify the European market – so that its full potential of more than 500 million consumers and potential investors can be tapped.
Streamlining regulation in domains such as digital health, for instance, would already open up a wide range of growth opportunities for potentially hundreds of European start-ups.
Obviously, this would not help us overcome the cultural boundaries overnight; but to that end, instruments are already in place, such as the European Network of Living Labs (ENoLL), to help companies investigate how people will respond to new products and features – before the actual market launch.
– To foster the pan-European growth of start-ups and overcome the provincial mindset, a number of good initiatives have already been taken as well.
One concrete example is the creation of EIT Digital, which helps European start-ups accelerate their growth – o.a. by finding European and worldwide customers for their products and solutions, or by helping them raise funds.
– And finally, when it boils down to securing first customers, Europe should investigate the concept of ‘innovative procurement’– a best practice that has already been widely adopted by the UK and US administrations. It requires government bodies and local branches of big multinationals to allocate a certain percentage of their public procurement activities to innovative start-ups.
As such, start-ups can more easily get the necessary credentials and references to continue growing their businesses. According to certain estimates, public procurement is worth €2,000 billion to the EU economy – so dedicating even 1% of that amount to innovative procurement still equals €20 billion per year to support the European start-up ecosystem.
But also for that, a cultural and regulatory shift is required…
photo credit: Shumona Sharna
During this day it will be provided detailed information on ICT-25 and other topics in the call that most likely will be of great interest to you. As you know the call will close on 14 April 2015. In addition to the presentations, there will be plenty of opportunity for you to ask questions, to interact and to look for partners for your proposal ideas. In the beginning of 2015 we will post all information you need to register (e.g., program, registration). Kindly follow our website for all upcoming information.
The power of connectivity is transforming existing economic, political, and social structures. In a word, the Internet is disrupting established systems. The resulting uncertainty is as much a risk as an opportunity.We are on the hedge of a new frontier.
In December 2003, Sir Arthur C. Clarke noted that “satellite television, Internet, mobile phones, email – all these are technological responses to a deep-rooted human desire to communicate and access information. Having achieved unprecedented progress in the field of communications during the past half century, we now have to pause to think of social, cultural and intellectual implications of what we have created.”
As economies and societies are increasingly becoming data-driven, interactions between individuals, the groups they belong to and the institutions that govern them are evolving dramatically.
The transformational power of connectivity is immense and resonates far beyond technology itself, as the Internet is changing existing dynamics of economic, social and political construct.
Preconceptions of accountability, transparency, privacy, and even democracy are being reconsidered. Political systems, the fabrics of social contracts and the nation state are being challenged by an ever growing desire to know, share and control.
As a result, the enabling power of the Internet is blurring physical borders between countries and peoples, between governments and citizens, between businesses and consumers; what used to create wealth, welfare, influence and power is no longer certain. And this uncertainty is as much a risk as an opportunity.
These evolutions are fuelled by new technologies that disrupt established systems. In this regard, the Internet is no more different than the printing press, the telephone, the light bulb, the locomotive or the airship. These inventions not only served the technical purpose that their creators intended them to have, but also revolutionized systems all together.
The telephone, for instance, provided a new technical way of communicating, but it also generated new rules of etiquette – a new societal way of behaving and communicating. The light bulb transformed factories, cities and homes; it changed the way people live, work and interact. Hence the power of technology lies not only in its mechanics, but also in its capacity to transform the environment it is used in.
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– whether it is between individuals, between businesses, between machines, or between citizens and governments. Information is participation. And participation leads to contribution.
In December 2013, Jason Pontin, Editor of the MIT Technology Review, argued that these new technologies “don’t solve humanity’s big problems.” Indeed, they don’t. But perhaps their purpose is less in solving problems for now, than in creating opportunities for collective contribution.
Ultimately, throughout the world, the big question is one of control: control of information, control of its flow, and protection of that control. As Sir Arthur cautioned, “it is vital to remember that information – in the sense of raw data – is not knowledge; that knowledge is not wisdom; and that wisdom is not foresight. But information is the first essential step to all of these.” In essence, the Information Age is much more than a big problem to be solved; it is humanity’s New Frontier.