SPEECH - Towards a European Startup Ecosystem

June 23rd 2016 | by:

Keynote at the seminar on the attracting entrepreneurs to the EU by Sigrid Johannisse on 23 June 2016. Only the spoken word counts.

Part I: Why startups are important

Startups are the driving force behind innovations that shape the way we live, work, travel, learn and grow old. Startups find solutions for the challenges we face in healthcare, mobility, cybersecurity and climate change. Startups embrace change, have disruption in their DNA and dare to think in new models for business and society.

Without any doubt, the digital revolution that startups have brought about will affect and benefit every European. When listening to our favorite music on Spotify, planning our holidays on Booking.com or talking to our loved ones over Skype, we enjoy the technological innovations of startups.

Startup founders are the new generation in business, who address societal challenges and boost innovation. The generation which lives and works digital. The generation that creates products, apps and platforms that are fit to scale up global, from day one. And by doing so, this generation of startup founders creates jobs.

Nobody creates more jobs than startups and other young companies. Young firms account for 17% of employment and create 42% of all new jobs. Jobs that we need to battle youth unemployment. Jobs that unleash the tremendous talent and potential that is currently left untapped due to unemployment. Jobs we’re all committed to create and is number 1 on the European Commissions’ Workplan.

Part II: Why startups choose Europe

The European Startup scene is growing steadily. Europe is a hotbed of research and innovation, home to first-class resources and top scientists working in fields ranging from medicine to space travel, from nanotechnology to polar research, and from ICT to nuclear fusion. Cities like London, Berlin, Amsterdam, Paris, Stockholm, Madrid etcetera are viewed as innovative hotspots for startups.

Startups tend to think in terms of international growth and expansion. These startups develop products and services that are international from day one and therefore look for markets that allow for scaling up. The European market with 500 million consumers, is the largest in the world and therefore highly attractive.

Part III: why do we need a European startup ecosystem

What founders complain about is lack of strong links among the big hubs. Other challenges include a lack of capital, especially in later-stage funding, investors in Europe aren’t keeping pace with the more frontier technology categories such as artificial intelligence and blockchain and Europe still faces structural obstacles due to administrative differences in the Member States regarding VAT, company law, visas and cultural differences in doing business.

Most of the European founders come from their country of residence, while 7,6% of the founders come from other European countries and 4,3% come from non-European countries, according to the European Startup Monitor 2015.

The Monitor also shows that around 50% of the startups focus their business activities on their home country only. The other half have entered markets in other European countries or even operate worldwide (nearly 30%). 35% plans to expand to other European countries and 46% plans to expand worldwide. That’s the group we should target a European approach to.

With the Digital Single Market Strategy and the Capital Markets Union the European Union is working towards a flourishing ecosystem. We should align more of our policies with the generation that is shaping the opportunities for all Europeans. Especially the European youngsters who’s potential is currently left untapped, will benefit from this. If we want these jobs, we need to give startup founders the space to realise their dreams. Whether they come from Spain or Slovakia or the United States or Russia. Let us open up to innovative new comers. 

Part IV: a European startup visa

The Netherlands introduced the startup visa in January 2015. At StartupDelta we thought: why not a European one? We want a prosperous Europe. Therefore Europe needs more talented entrepreneurs, especially startups. Startups play a key role in job creation, boosting growth and innovation. Startups can be “home-grown” from within the EU, but also from abroad. Europe needs to do better at attracting and retaining non-EU startup founders.

In addition, where European startups benefit from the single European market, startups from outside the EU cannot. For entering each of the 28 European Member States they need to apply for a visa or permit. 7 Member States have implemented startup visa schemes (Italy, Denmark, France, United Kingdom, Ireland, Spain and the Netherlands). Estonia, Slovakia, Finland and Portugal are in the process of developing one.

However, entry and residence of non-EU startup founders is still a national matter at the moment. The visa issued by one Member State is only valid in that state. For each Member State a separate procedure is needed with different sets of conditions that have to be met. This hurdle makes Europe less attractive for non-EU startup founders and obstructs mobility within Europe.

The Netherlands holds the EU Presidency at the moment. The Netherlands believes that a common EU approach could be useful and therefore proposed to introduce a European start-up visa. Neelie Kroes, special envoy of StartupDelta, presented this idea at the informal meeting of Ministers responsible for research and innovation in January. On 27 May 2016, the Competitiveness Council unanimously agreed to explore whether, and, if so, how, a European startup visa could be of added value at EU level.

Part V: what is the added value

A European startup visa scheme could unlock Europe’s potential for non-EU startup founders that want to grow here. It could also improve Europe’s competitive position. Scaling up across Europe will become easier and more attractive for non-EU startup founders if the visa covers the entire European single market.

To create the European startup visa we need to work together.

I am aware of the great efforts we will have to make in safeguarding and securing this visa from falling into the wrong hands. Migration is a pressing issue and the European startup visa should not, in any way, be used by anyone else but the startups we aim to attract and facilitate. All legal and institutional efforts should be in place to guarantee that only high potential startups have access to this visa, in order for them to grow, contribute to Europe and create jobs.

For instance in the case of Tuenti, a successful example of two startup founders from the USA who went to Spain to launch their startup. Founded in 2006, Tuenti is the most successful tech company in the history of the Internet in Spain. Or Subvise, from Nathan Williams who will give a keynote next. It is a software company that tracks the regulatory status of chemicals.

8 Member States already have a national startup visa. Therefore, we’re not entering uncharted territory. They have found that only small numbers of specifically talented people have signed up and received such a startup visa. We don’t have to be afraid to be overrun. Furthermore, most of them come from the large world economies, such as the US, Canada, Russia, India and China (BRIC).

Now, we can take the next step and make it easier for startup founders from outside the EU to come here and get a European startup visa. This will be a powerful measure to spread their bright ideas across our European single market and create jobs. Not hindered by borders of our Member States. Growing, from one Member State to the next.

I thank you for your attention.