The European Commission’s Start-up and Scale-up Initiative is being launched to help start-ups deliver their full innovation and job creation potential
It pulls together all the possibilities that the EU already offers as a boost for start-ups and adds a new focus on venture capital investment, insolvency law and taxation.
Many new entrepreneurial firms fail to last longer than the critical first few years, and many more take their business elsewhere rather than tapping into the EU’s 500 million potential customers. The new European Commission initiative, Start-up and Scale-up, is determined to change that.
“Today’s local start-ups could become tomorrow’s global success stories. We want to help start-ups stay and grow in Europe. By helping them navigate the – often perceived – regulatory barriers to fully benefiting from the Single Market. By making it easier for them to have a second chance, without being stigmatised if their idea doesn’t succeed the first time around. And by improving access to funding by boosting private venture capital investment,” said Jyrki Katainen, Vice-President responsible for Jobs, Growth, Investment and Competitiveness.
To this end, the Commission initiative is trying to create a more coherent framework to allow start-ups to grow and do business across the continent with a range of existing and new measures.
Access to funding boost for start-ups
This includes improved access to finance through a Pan-European Venture Capital Fund of Funds, to be launched in partnership with the European Investment Bank. The EU will provide cornerstone investments of up to €400 million, while the fund manager(s) must raise at least three times as much from private sources, providing a minimum of €1.6bn in venture capital funding. The fund should complement existing EU instruments such as the European Fund for Strategic Investments (EFSI), the COSME programme for small and medium-sized enterprises, and the Horizon 2020 research and innovation funding framework.
The Commission has also put forward a legislative proposal on insolvency law to allow companies in financial difficulty to restructure early, thereby preventing bankruptcy and redundancies. Honest entrepreneurs will benefit from a second chance, as they will be fully discharged of debts from previous unsuccessful business ventures after a maximum of three years.
Scaling up has to become simpler
Tax system simplifications, including the recent proposal for a Common Consolidated Corporate Tax Base (CCCTB) to support small and innovative companies expanding their business across borders, are also aimed at reducing barriers for start-ups. Plans are in the pipeline for a simplification of the EU VAT system, further guidance on national tax regimes for venture capital, and a major peer review of best practices to support start-ups and scale-ups in all Member States.
“Today start-ups do not fully take advantage of the opportunities of the Single Market. Starting and scaling up a company across Europe has to become simpler,” said Elżbieta Bieńkowska, Commissioner responsible for Internal Market, Industry, Entrepreneurship and SMEs. “Europe needs to become the first choice place for great business ideas to grow into successful companies. This is about new jobs, innovation and competitiveness for Europe.”