The time is now: Transforming Europe into a startup powerhouse

Europe finds itself at a critical crossroads in its quest to become a global leader in innovation. Startups are vital contributors to economic competitiveness, driving job creation, fostering technological breakthroughs and stimulating growth across the globe. Yet, the EU has yet to fully unlock their potential. This challenge has never been clearer, especially while the Europe Startup Nations Alliance (ESNA) works to improve the conditions of the EU’s startup ecosystem.

Mario Draghi’s recent report offers a stark reminder: not a single EU company founded in the last 50 years has reached a €100 billion valuation, whereas companies from the United States routinely achieve this milestone. This is a wake-up call for Europe. If it is to remain competitive on the global stage, it must rethink and streamline its startup ecosystem, nurturing the conditions necessary for sustainable growth. Additionally, according to another report, this time by Enrico Letta, the EU possesses a vast, yet underutilized pool of data, expertise and startups. If these resources are not fully leveraged, there is a risk that global players – better positioned to capitalize on them – will take the lead. This missed opportunity could undermine Europe’s strategic autonomy and economic security as other regions tap into the EU’s untapped innovation potential.

As the European Commission embarks on a new term, President Ursula von der Leyen has articulated an ambitious vision for the 2024-29 mandate, one focused on sustainable prosperity, democratic values and innovation. At the heart of her vision lies the creation of a “28th regime”, an innovative framework allowing EU member states to opt into a shared legal system for specific areas. Crucially, this regime could ensure regulatory coherence across Europe, benefiting startups. This flexibility is vital if Europe is to cultivate a more dynamic startup environment, easing regulatory burdens while fostering sustainable growth.

When compared with other global regions, European startups suffer from regulatory fragmentation, limited late-stage funding and market disparities. In the United States, startups benefit from relatively uniform regulations, making it easier to scale across states. European startups, by contrast, must navigate 27 distinct and diverse jurisdictions. Draghi’s report emphasizes the urgent need for a more unified European market, one that removes these barriers, fosters cross-border collaboration and introduces a new approach to supporting startups. The need for action has never been more pressing.

A notable development in this effort is the appointment of the EU’s first commissioner for startups, research and innovation. This new role goes beyond administration; it signals a firm commitment to giving startups a strong voice in EU policy. By addressing startup needs in regulation, funding and ecosystem support, the commissioner will have a significant impact on Europe’s potential to become a leading destination for entrepreneurial talent.

Initiatives like the EU Startup Nations Standards, managed by ESNA, play a critical role in strengthening Europe’s global position by promoting best practices, streamlining visa processes for global talent and advocating for tax advantages on equity issuance. Since March 2021 ESNA has been focused on realizing the vision of positioning Europe at the forefront of the global startup ecosystem. Its collaboration with members aims to accelerate European entrepreneurship by enhancing national policy frameworks across EU member states, aligned with the common standards set out in the EU Startup Nations Standard Declaration, and continually identifying and implementing best practices into actionable policies.

President von der Leyen’s 2024-29 mandate marks a pivotal moment for Europe’s startups and the need to position innovation as the cornerstone of sustainable growth. By emphasizing the need for startup-friendly policies, the commissioner for startups will play a key role in connecting the Commission’s broader ambitions with the specific needs of entrepreneurs, fostering a more innovation-driven policy environment across Europe. While ESNA operates independently, its objectives align with the broader goals of this agenda, paving the way for consistent regulations and sustainable financing.

The new College of Commissioners offers a unique opportunity to place startup-focused policies at the core of its economic strategy. To achieve its ambition of becoming the world’s most innovative economy, Europe must support startups every step of the way. The vision articulated by ESNA, in line with Draghi’s and Letta’s insights, focuses on simplifying market entry and prioritizing digital-first policies that empower startups. Europe’s entrepreneurs are eager to tackle global challenges, but they need a supportive ecosystem to thrive. Achieving this requires a unified commitment from the College of Commissioners, recognizing startup policy as integral to Europe’s economic future.

On November 27-28 the ESNA Forum 2024 will serve as a platform to accelerate this momentum, bringing together key stakeholders in Brussels to discuss these pressing issues and collaborate on actionable solutions for Europe’s startup ecosystem.

Europe possesses the tools, talent and ambition to become a global leader in innovation. Thanks to the groundwork laid by ESNA, the insights of Draghi and Letta, and the commitments of the commissioner for startups, the path forward is clear – but time is of the essence. Europe’s startup ecosystem is not only an economic driver but also represents the continent’s potential to lead in the global digital economy. By adopting policies that remove bureaucratic obstacles and prioritize investment and talent, Europe can transform itself into a thriving innovation hub.

This is Europe’s moment to shine. With ESNA’s support in creating the right framework, the continent can realize its vision of becoming a formidable entrepreneurship powerhouse, driving economic growth and technological advancement on a global scale.