What’s missing from European innovation (and what’s changing)

Fragmented, with very little capital, and with an entrepreneurial culture that is very different from that of the United States. But things are changing in Europe with initiatives like the Startup Europe Partnership

Neelie

Over 7 billion euros have been sanctioned by the European Union in support of innovation, and over two thousand startups have registered in Italy alone, but, regardless of this, Europe continues to lose in the championship games of innovation, allowing the United States, and Silicon Valley, to remain the undisputed victor. But if one listens to Neelie Kroes, vice president of the European Commission and head of the European Digital Agenda, the old country is ready to emerge in the world of startups. «I know we have the tools, the talent and technology to succeed», she states in a video published on YouTube in a very convincing manner. And now Brussels has also officially presented the Startup Europe Partnership (SEP), one of the six initiatives fine-tuned by the European Commission to support innovative enterprises. This is not the first time that SEP has been talked about: announced at the Davos Forum last January, there was then a trial at a meeting held in Naples conducted by Alberto Onetti and Marco Marinucci, who have been entrusted with the project.

But is this truly an indispensable tool? What is it exactly that doesn’t work at a European level?

FRAGMENTATION. First of all, Europe is made up of many different states, each one with its own language, its own identity, and its own laws. «Within an area, that of the European Union, which is less than half that of the United States, there are 28 different countries», explained Onetti. Even the few cases of global success are scattered, without ever managing to define a hub for innovation that is attractive for everyone. Skype, for example, with its 663 million users, was created in Estonia and currently resides in Luxembourg; Spotify and SoundCloud, on the other hand, who have monopolized the online music market, were founded in Stockholm and Berlin; AngryBirds by Rovio and Candy Crush Saga by King, who have “robbed” millions of years from their millions of players, are of Finnish and British origin. Five very successful startups all from different cities, countries even. They are all unique cases.

CAPITAL. There can never be enough. And if there is some, it usually comes from the public sector not private funding, generating, at times, a very inefficient system. The same European Investment Fund, the fund that sustains PMI with risk capital, can be a double-edged sword, which, at times, can kill the same startups it is trying to help (Well-meaning governments are killing the continent’s startups with kindness, is the subtitle of an article by The Economist). One of the biggest errors of public funding is trying to reach an exit as soon as possible, as if startups were a hot potato to be tossed quickly to the first offer that comes along (which are many times far too low). For the public, this allows them to move immediately from one investment to another, but the return in economic terms is far inferior to that potentially given to a more long-term “bet”. As if this is not enough, many studies on venture capital show how for each dollar put in through the public system, one dollar of private capital is pulled out (source, The Economist). It is zero growth for capital, which desists private investments.

THE SOLUTION. It is precisely in this context that the Startup Europe Partnership will be inserted, already presented in the presence of Barroso and Kroes. Captained by Mind The Bridge, the foundation by Alberto Onetti andMarco Marinucci, it should be the bridge between big European and international businesses and European startups. Along with the first two companies to initially adhere, Orange and Telefónica, the first Italian company, Telecom, also recently announced its participation.

It will be a way to re-activate private investments in technology and innovation, starting precisely with structured companies that need to grow and even acquire new knowledge, offered precisely by startups. The initiative will be conducted both offline, by putting various actors in communication with each other at events (the next one in Madrid on 26 June), and online, with a customized matching platform byAngel List that will soon be accessible.

«It is necessary to cook with the ingredients that we already have in Europe and to try and adapt them to European characteristics» declared Onetti, knowing well that some of these characteristics are not exactly favorable to the development of an integrated ecosystem for startups. Two examples: bureaucratic red tape for big businessesand a type of culture particularly linked to a negative view towards failure. But the Commission is even moving in these two directions, aiming to give an accelerated push to the entrepreneurial culture by following the 22 points of the Startup Manifesto, published in September 2013 thanks to an excellent collaboration between European entrepreneurs.

Will this be enough to close the gap that separates us from the giants of innovation? We will see with this new version (beta?) of the European Union that has now been presented.

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