EU to help start-ups to spark job creation

EPA / MARCIN OBARA

An interior view of the Google campus in the Koneser Praga Center historic building, which was opened in Warsaw, Poland, 19 November 2015.

Commission hopes to find the remedy to the very small number of the EU flourishing and expanding start-ups, as their survival rate is at the moment extremely limited, to 2-3 years, with even fewer growing into larger firms.


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High-growth firms are always expected to create more new jobs compared to other enterprises, and with start-ups accounting for a large proportion of these high-growth businesses, the European Commission is turning its attention to the start-up ecosystem to create more jobs.

EU start-ups increase the 28 member states’ innovation and competitiveness, strengthening the economy while providing a great deal of social benefits, including offering more flexible and modern working arrangements.

In order to improve the overall situation, together with attempts to harmonise the insolvency framework, the European Commission has presented more efforts to improve its Single Market Strategy.  “Improving the ecosystem for start-ups and scale-ups in Europe will have a direct beneficial effect on jobs and growth in the EU,” reads the Communication from the EU Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.

Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said that the Commission wants to help start-ups stay and grow within the EU, “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,” while improving access to funding.

Along with Commissioner for Internal Market, Industry, Entrepreneurship and SMEs Elżbieta Bieńkowska, Katainen presented a plan that will improve start-ups’ access to finance, provide entrepreneurs with a second chance and simplify tax filings.

The Commission along with European Investment Bank (EIB) are launching a Pan-European Venture Capital Fund of Funds,  providing investments of up to a maximum budget of €400, triggering a minimum of €1.6bn in venture capital funding. This tool aims to complement existing EU funding instruments such as the European Fund for Strategic Investments (EFSI), COSME programme for small and medium-sized enterprises (SMEs)and Horizon 2020,  the EU’s research and innovation funding programme.

While tabling a new proposal on insolvency law, in order to allow companies in financial difficulties to restructure early on so as to prevent bankruptcy and firing employees, the Commission is further proposing taxation simplifications including the recent proposal for the re-launch of the Common Consolidated Corporate Tax Base. (CCCTB), the EU VAT system and further guidance on national tax regimes for venture capital.

This way, the Commission hopes to find a remedy to the very small number of flourishing and expanding start-ups in the EU, as their survival rate is at the moment extremely limited, to 2-3 years, with few start-ups growing into larger firms.

It has been estimated that there could be up to 1 million new jobs created and up to €2 trillion added to GDP of the EU over the next 20 years if the share of scale-ups would match that of the US.

Apart from the above proposals, the Commission wants to help start-ups and scale-ups to navigate the often dispersed information sources, the Enterprise Europe Network (EEN) will expand its advisory services with dedicated Scale-up Advisors.

In 2017 under the High-Level Group of the Competitiveness Council, the Commission will support a major, comprehensive and detailed peer review of all Member State rules and practices towards start-ups and scale-ups. At the same time, the Commission will reinforce Startup Europe which will take a wider scope beyond the ICT and web start-up sector, connecting clusters and ecosystems across the EU.

Furthermore, the Commission will launch a number of pilot measures on matchmaking, linking start-ups, mid-caps and larger enterprises and extend the Erasmus for Young Entrepreneurs programme to incubators and entrepreneurs in international markets within 2017.  Along with all the above, the EU’s executive arm will introduce measures on EU procurement.

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