European startups are booming. So why is Brussels still obsessed with Big Tech? – POLITICS

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It’s a banner year for European startups, but you can’t tell from the conversation in Brussels.

Estonian ride-sharing company Bolt got their hands on Monday 600 million euros to launch a new grocery delivery service. Officials in Brussels, however, focused on the European Commission’s investigation into Facebook’s proposed acquisition of Kustomer.

It’s part of a model. Newcomers to the continent are raising more money at an unprecedented rate and are emerging as dominant players in ultra-competitive fields such as financial services and green technologies. But Brussels’ relentless focus on taming American Big Tech, coupled with the inexperience of European entrepreneurs in Brussels, could leave European startups adrift.

The bloc’s top digital leaders, including Executive Vice President Margrethe Vestager and Internal Market Commissioner Thierry Breton, are stepping up their efforts against big US tech and meeting CEOs like Intel’s Pat Gelsinger, but they hardly have not met European bosses, so-called unicorns – startups valued at more than a billion dollars – this year, according to their official agendas.

‘Fixation’

Experts say the focus on curbing the excesses of the biggest, mostly American companies, diminishes the good that policymakers and regulators can do for Europe’s own industry.

Even Mariya Gabriel, the innovation commissioner and staunch supporter of startups, called for an end to Europe’s “fixation” with Silicon Valley.

The quest to create a European Google “is lost,” she told POLITICO in June. “We must not waste time because we will not create a European Google or Facebook. Let’s be very realistic about this.”

She is not the only one to say it. Investors are eager to back the claim that European startups can win a battle – if they pick the right one.

This year, European companies have invested 48 billion euros, almost three times more than in the same period last year. Europe accounted for 18% of total global startup funding, its largest share on record.

“Europe has become one of the most interesting regions for US funds to come and invest in,” said Firat Ileri, partner of Hummingbird Ventures, one of the first backers of the British delivery giant. food. Deliveroo.

The Swedish music streaming service Spotify, which went public in 2018, was one of the pioneers. “People started to think: in Europe you can also take startups from one billion to fifty billion,” Ileri said. For investors, the European market is less overheated and therefore more attractive to participate than the American market and less “hard” than China, Russia or Brazil.

But it is not thanks to the EU.

Systemic issues, like a lack of harmonization across the continent, mean that EU startups have to devote a lot of energy to learning and complying with different rules, like hiring non-European recruits or rewards employees with stock options.

Patrick Collison, from fintech giant Stripe, defenders of a “more streamlined common market, fewer inconvenient and inefficient regulations, better legal treatment of stock options and easier access to visas for highly qualified people”.

But it’s unclear if that made a difference. “The startup community has been saying the same thing for over 10 years,” said Simon Schaefer, President of Startup Portugal. “We have always said: this is the red alert signal code. If we don’t harmonize Europe, we can never catch up with the United States and China.”

The problem is, the more time the EU spends limiting apples and Google, the less time it spends focusing on convincing national capitals to harmonize rules on labor, immigration and taxation. , which imposes a natural ceiling on startups and their investors.

“The fragmentation is definitely a downside and is sort of unacceptable given that the United States is years ahead,” Ileri said.

Wish list

EU startups have struggled to get harmonization on the Brussels agenda. The Commission says it is powerless to do anything because it has little or no say in matters such as taxation or immigration.

“Some of the rules are where the EU has no competence, like social security, labor law, taxation, that’s just the name of the game in the European Union,” a senior official said of the Commission. “But we can push the EU states in the right direction.”

But Schaefer, from Startup Portugal, admits his industry hasn’t really pushed the Commission either.

“It’s a public relations problem,” Schaefer said. “Entrepreneurs need to see that politics is the driving factor, not a burden, and they should be more involved.”

Ileri, from Hummingbird Ventures, thinks it’s a cultural thing. While the giants of Silicon Valley aggressively court policymakers, “the EU as a culture is a little more introverted than the US”

The few startups putting pressure on Brussels operate mainly within national umbrella organizations. In May, they handed over another political agenda lobby for more attractive stock option programs or a pan-European start-up visa. The plan is not particularly clear on how to do this. Regarding stock options, the recommendation was as follows: “The department of the Commission for Financial Stability and Capital Markets should coordinate on this political activity. “

It could change. Successful entrepreneurs like Spotify’s Daniel Ek, Stripe’s Patrick Collison or Klarna’s Sebastian Siemiatkowski follow a different path, that of tweets and profiles in Brussels.

The Collison brothers, who started their business in Silicon Valley, take a more assertive approach to involving European policymakers. The company has recruited its main lobbyist in Europe, Sandro Gianella, of Google.

There has been progress.

EU countries agreed in March on the “Starter Nation Standard”, a set of best practices to create an environment conducive to startups, with an office in Lisbon responsible for monitoring progress.

With France assuming the presidency of the EU Council in January, the country plans to form a “coalition of the willing” for an EU start-up visa.

Yet the startup community is still wary of whether policymakers will be able to keep up with the funding boom.

“Politicians are just not digital natives,” Schaefer said.

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