A New Era of Innovation and Competitiveness
As the European Union’s president, Ursula von der Leyen, prepares to take up her second five-year term on December 1, she has identified a pressing need for improvement: Europe must get better at scaling startups. In a speech to the European Parliament ahead of a vote confirming her top team (the ‘college of commissioners’), von der Leyen emphasized that closing the ‘innovation gap’ is crucial to the EU’s competitiveness.
The Innovation Gap
Von der Leyen highlighted that while Europe is roughly on par with the US and China in terms of global patent applications, only one-third are commercially exploited. This means that Europe is creating startups at a similar rate as its competitors but struggling to turn them into successful scale-ups. The EU president warned that this gap must be closed for Europe to remain competitive.
A Commissioner Focused on Startups
To address this issue, von der Leyen has created a new commissioner position (Ekaterina Zaharieva) with a portfolio focused specifically on startups. This appointment demonstrates the importance of innovation and entrepreneurship in the EU’s future competitiveness.
Investing More and Focusing Better
Von der Leyen outlined her strategy for reforming conditions for scaling startups as ‘invest more and focus better.’ This approach acknowledges that investing early is essential to fostering innovative businesses. The decision to have a commissioner (Henna Virkkunen) with a tech-heavy portfolio, including a specific brief to foster ‘frontier technologies,’ reinforces this commitment.
Closing the Funding Gap
The EU president emphasized that Europe urgently needs more private investment to deliver on its ambition to drive competitiveness through innovative business ideas. Financial reforms are planned to address this issue. Von der Leyen pointed out that business expenditure for research and development in Europe accounts for about 1.3% of GDP, compared to 1.9% in China and 2.4% in the US. This private sector investment gap must be closed to ensure the EU remains competitive.
EU Startup Priorities
In her speech, von der Leyen outlined several key areas that require attention:
- Investment: Increasing private investment in startups to drive growth.
- Regulation: Simplifying and streamlining regulations to reduce bureaucracy and foster innovation.
- Skills: Developing a workforce with the skills required for the digital economy.
The Way Forward
Von der Leyen’s commitment to improving Europe’s performance in scaling startups is a positive step forward. With a clear strategy and increased investment, the EU can foster a more competitive and innovative environment that supports entrepreneurs and businesses.
