The Start-up and Scale-up Initiative

Content

1. - Results of the public consultation & how to interpret them

2. - Barriers & how to overcome them

3. Ecosystems & how to connect them

4. IP Rights & how to use them

5. Access to Finance & how to improve it

6. Startup Europe, regulatory sandboxes, innovation radar & how to use them

7. European Innovation Council (EIC), innovation related aspects & how to scale

them

Introduction

1. What is the economic and political issue at stake?

2. Why is this Initiative the right answer?

3. Who are we doing this with?

Results of the public consultation under the Start-up Initiative & and how to

interpret them

Public consultation: key facts

Structured around the company life

cycle

571 replies

53%

from

entrepreneurs

16

written

contributions

Reaching beyond the EU

Stand-up: most desired support measures

• Support to entrepreneurial activities – 82%

• Encourage higher education institutions to establish programmes on entrepreneurship – 78%

• Introduce entrepreneurship education in all levels of formal education – 56%

Start-up: main obstacles to start a company

7

Least important Most important

1 2 3 4 5

72%4.2

66%4.0

61%3.7

55% 3.7

46% 3.5

Access to finance

Rules and costs of hiring workers

Resources required to navigate overall regulatory complexity

Tax compliance costs (filing and paying taxes)

Procedures and costs to access industrial and/or IPRs

Average ranking

Scale-up: main obstacles to expand a company

8

Least important Most important

1 2 3 4 5

Understanding and complying with employment law

Compliance costs: tax regulations (not VAT)

Compliance costs with VAT regulations

Securing financing for expansion

Uncertainty about regulatory requirements

65% 4.0

58% 3.8

54% 3.8

53% 3.8

53% 3.7

Outside EU: 4.2

Outside EU: 4.0

Outside EU: 3.9

Outside EU: 3.9

Outside EU: 4.2

Average ranking

Scale-up: main policies/measures to scale-up

9

Least important Most important

1 2 3 4 5

Facilitating links between large corporations and start-ups Providing support for the acquisition of capacity boosting services Developing tailor-made support measures for scale-ups

62% 4.0

62%3.9

62% 3.9

54%3.7

46% 3.6

Creating network of regional support centres for scale-ups

Supporting the uptake of resource efficient solutions to reduce production costs

Average ranking

Boosting innovation: desired measures

Support to universities via e.g. business internship, access to incubators – 71% Promoting partnership between start-ups and medium sized companies – 70% Support to incubators, university R&D and technology transfer programmes – 70%

Ecosystem-level measures for start-ups & scale-ups

11

Least important Most important

1 2 3 4 5

Supporting local/regional/national entrepreneurial ecosystems

Creating EU networks to increase synergies and facilitate access to venture capital, new markets, talent and skills

Connecting start-up ecosystems across the EU

Integrating entrepreneurial ecosystems with the Smart Specialisation Strategy

Creating European centres outside the EU to promote EU start-ups

85% 4.5

81% 4.3

71% 4.1

59%3.9

58% 3.7

Average ranking

Public consultation - the key findings

Barriers & how to overcome them

A. Removing the barriers

Commission will support a major, comprehensive and detailed peer review of all Member State rules and practices towards start-ups and scale-ups.

Addressing tax burdens

Comprehensive package to reduce the complexity and fragmentation of VAT system: 1. simplify and extend MOSS; 2. targeted VAT simplification package for SMEs, 3. definitive VAT regime for cross-border trade Common Consolidated Corporate Tax Base (CCCTB) incentives for businesses to grow cross-border. Broaden forthcoming guidance on best practice in Member State tax regimes for Venture Capital.

Second chance

The Commission will work with the European Parliament and the Council […] to secure timely adoption and implementation of the proposal on preventive restructuring frameworks, second chance for honest entrepreneurs and increased efficiency of restructuring, insolvency and discharge procedures.

Single Digital Gateway Startup Europe

Digital Innovation Hubs Enterprise Europe Network (EEN)

Dedicated Scale-up Advisors

Navigating Information

Ecosystems & how to connect them

Ecosystems

Europe to become the first choice place… for breakthrough ideas…and next leaders.

Size = connectivity Mentorship Inspiration Investment Former Employee Founder

Matchmaking and Connecting

Reinforce Startup Europe

Coordinate EU work… bring stronger coherence… link up national, regional… stakeholders & ecosystems

Connect start-ups:

pilot matchmaking, extend Erasmus for Young

Entrepreneurs

Procurement Opportunities

(i) establish innovation brokers (COSME) to build networks of buyers interested in public innovation procurement, linking with innovative businesses and helping access risk funding

(ii) encourage all Member States to set ambitious innovation buying targets

(iii) provide guidance on innovative procurement - Innovation Partnership

2 Trillion EUR

Skills Build on the New Skills Agenda: - Digital Skills and Jobs Coalition - Blueprint for Sectoral Cooperation on

Skills - Big data tool - European Entrepreneurship Framework - Digital Competence Framework - Scale up the EIT for entrepreneurship,

management and innovation skills

Encourage Member States to make more use of Erasmus+ Knowledge Alliances, and the HEInnovate self-assessment tool

- EU Blue Card

No. 1 challenge for scale-ups:

Finding Talent

Innovation Opportunities

- Changes to Horizon 2020 - support breakthrough innovation projects with the scaling up potential

- European Innovation Council - EIT - investment - Innovation Radar - Innovation Deals & regulatory sandboxes

Social economy and enterprises

Build on the Social Business Initiative, encouraging social start-ups to scale up through: better access to finance, access to markets, regulatory frameworks by advising Member States on policy design. Explore how to facilitate uptake of new technologies & business models, support impact financing of the social economy and enterprises (e.g. G20 Inclusive Business platform) .

IP rights & how to use them

Policy on IPRs and SMEs

33

Focussed on innovative

and creative SMEs

COSME funds: €4,5 million

Commission's commitment to support IP by SMEs :

1. Facilitating IP Access

2. Facilitating IP Use and Enforcement

3. Coordination of IP support and Monitoring impact

Collaboration with EUIPO, Member states and other stakeholders

information and awareness • Streamline and share best practices

• Coordination (mapping, linking, etc.)

IP pre-diagnostic services • training experts

• pilot project (2017-19)

Funding for European patents • for SMEs with the Seal of Excellence

• 50% of pre-grant and attorney fees

(1) Facilitating IP Access for SMEs

34

patent licensing database • knowledge sharing

and business matchmaking

Mediation and Arbitration • Mapping services

• network fit for SMEs

IP litigation insurance and IP valuation • Mapping existing products

• Platform to diffuse best practice and possible co-funding

• IP valuation – identify insurance market methodologies

(2) Facilitating IP Use and Enforcement

35

(3) Coordination of IP support and Monitoring of Impact

Coordination • Streamline support and exchange

of best practices

• Recommendation to and work with Member States

Monitoring • use of EU IPRs by SMEs

• impact of IP support

36

Access to finance & how to improve it

Start-up Scale-up

While financing for start-ups is sufficiently available in EU, funding options are not fully developed when start-ups wish to scale-up in the single market, especially if compared to US.

Contrary to US, venture capital for later stage rounds is still poor in EU, also because funds are small and fragmented.

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

Early stage Late stage

Venture capital for start-ups and scale-ups as % of GDP (2015)

Venture capital investment in Europe (2015)

How to attract investment in European VCs?

-The Pan European Venture Capital Fund of Funds. - Tax incentives for investments into start-ups/scale-ups. - Additional incentives to venture capital.

Crowdfunding and alternative sources of finance

The different forms of investment-based crowdfunding

External sources of SME funding for US and EU, in 2013

Source: Association for Financial Markets in Europe (AFME)

Source: Crowdsurfer

Amounts raised through investment and lending crowdfunding in the EU

Crowdfunding: a small market showing impressive growth

A pan-European platform where Member States’ best practice on crowdfunding can be shared, together with an assessment of financing gaps in alternative sources of finance.

Startup Europe, regulatory sandboxes, innovation radar & how

to use them

••• 48

• Startup and Scaleup Initiative • Removing barriers • Creating opportunities • Access to finance

Scaleups are the new corporates Adopted on 22 November 2016

• Recommendations of the Scaleup Manifesto • Unique insights from Startups and Scaleups stakeholders around Europe • 6 headings, 49-point roadmap to complete the single market, mobilise capital, activate talent, power innovation , broaden education, monitor, measure and evaluate.

••• 49

Startup Europe

• In 2017, the Commission will reinfoce Startup Europe which will take a wider scope beyond the ICT and web startup sector. The Commission will coordinate EU work to connect clusters and ecosystems across Europe, as well as bring stronger coherence between the different EU initiatives in particular by linking up national and regional Ministries, innovation agencies and other stakeholders and ecosystems.

••• 50

Innovation procurement

• In the first FP7 innovation procurement actions, SMEs won 2.5 more times contracts than in standard exercises (73% versus 29%) and 15 times more contracts were awarded cross-border than the average in public procurement in Europe (29% versus 2%).

• Encourage MS to set ambitious innovation buying

targets

Innovation radar

• Makes it easier to spot early on Horizon 2020-funded innovations with market potential and the teams behind them (e.g. SMEs, startups, spin-offs, universities).

• The Commission will use the Innovation Radar to connect potential business partners and investors with Horizon 2020-funded innovators to support them in scaling up.

••• 51

Regulatory sandboxes

• The Commission will explore an enabling framework for regulatory sandboxes, in order to capture the benefits of "the regulator just down the street" in the whole Digital Single Market.

••• 52

European Innovation Council (EIC), innovation related aspects & how to

scale them

56

• European Innovation Council

• Innovation and Regulation • Innovation Principle • R&I Tool • Innovation Deals

• Fund of Funds

57

• Horizon 2020 has made a good start with new focus on innovation

• But more could be done to boost impact of EU

support for breakthrough innovations that create and capture new markets

• Means reaching out to new class of

entrepreneurs/innovators • Step-by-step process: short term actions in 2018-20

potentially leading to a fully-fledged EIC in FP9

European Innovation Council Overview

58

EIC pilot – 10 points 1. Establish a Group of Innovation

Advisors – to provide a user perspective on EU innovation support and advise Commission on reforms

2. Revise Horizon 2020 work programme (2018-20) with simple presentation of instruments targeting market creating innovations

3. Make SME instrument fully bottom up with continuously open call

4. Strengthen evaluation criteria to focus on market creating innovations, with potential to scale, and higher risk profiles

5. Revise and accelerate evaluation process with face to face interviews with teams and faster results (5 weeks rather than 5 months)

6. Provide access to mentors for project teams, targeted to their specific needs

7. Test out new scale-up instruments, e.g. reimbursable grants, blending grants and financial instruments, etc.

8. Gather real time data and intelligence, tracking performance of projects and feeding into policy

9. Work in partnership with existing initiatives - EIT, EIB Group, Eureka, VC and business angel communities – for sharing data & intelligence

10. Improve Horizon 2020 website/ participant portal – with dedicated space for innovators with advice on funding opportunities

59

• Up to 15 personalities with a good track-record in starting and scaling up innovative businesses and/or investing in innovative ventures.

• Mandated to give advice on:

a) The design and implementation of an EIC pilot for the years 2018-20

b) Future design and delivery of EU funding and other support for market-creating innovation under FP9

• The Group will start work early 2017

High Level Group of Innovation Advisors

60

• DG RTD will develop pilot measures for 2018-20 Work Programme

• Ongoing stakeholder discussions, including with Member States

• Link up with H2020 Interim Evaluation and preparations for next Framework Programme (Impact Assessment etc.)

More Info: https://ec.europa.eu/research/eic/index.cfm

Next Steps

61

COUNCIL CONCLUSIONS ON BETTER REGULATION TO STRENGTHEN

COMPETITIVENESS – 26 May 2016

STRESSES that, when considering, developing or updating EU policy or regulatory

measures, the 'Innovation Principle' should be applied, which entails taking into

account the impact on research and innovation in the process of developing and

reviewing regulation in all policy domains. CALLS on the Commission together with

Member States, to further determine its use and to evaluate its potential impact.1

1. The Council recalls the Precautionary Principle.

Innovation and Regulation – Innovation Principle

62

"…innovators, and particularly start-ups, often face regulatory barriers or uncertainties in introducing their innovations to market. As part of its Better Regulation agenda, the Commission is taking into account the potential impact on innovation of current and new regulation, in line with the “innovation principle” as requested by the Council."

- Europe's next leaders: the Start-up and Scale-up Initiative (Nov 2016)

"Creating the right market conditions for innovation includes putting in place a stable, long-term, transparent and predictable regulatory environment. In May 2015, the Commission presented the revised Better Regulation package, recognising that innovation needs to be thoroughly considered in any new legislative proposals. This has been stressed in recent Council conclusions referring to the “innovation principle”. "

"Upcoming legislative proposals relevant to clean energy and climate action, amongst others the revision of the post-2020 strategies on cars/vans and on lorries, buses and coaches, will be subject to an in-depth analysis of their impact on research and innovation."

- Accelerating Clean Energy Innovation (Nov 2016)

Innovation and Regulation – Innovation Principle

63

• Produce report with MT Pres on existing concepts and best practice at MS and EU level (including on use of R&I Tool and ICT Tool)

• Revise and utilise R&I Tool

• Innovation Deals

Better Regulation for Innovation Driven Investment at EU Level (Jan 2016)

EPSC report on Innovation Principle (June 2016)

EESC Opinion on Future-Proof Regulation (Sept 2016)

Innovation and Regulation – Innovation Principle

64

• Tool to assess R&I impacts in the Better Regulation Toolbox

since May 2015

• Toolbox will soon be revised – including R&I Tool

• Make more 'user-friendly'

• Add guidance on regulatory instruments that can be used to

innovation and future-proof legislation?

• Add something on impacts on startups/scaleups?

• Apply and use (Energy and Climate)

Innovation and Regulation – Revision of the R&I Tool

67

• Currently only in the Circular Economy Area

• Pilot: 32 Expressions of Interest -14 countries

• 2 'deals' selected – E-mobility and Wastewater

• Joint Declaration with Commisison, National Authorities, Innovators and Other Stakeholders – Q1 2017

• Standardisation and secondary raw materials/End of waste

• Startup/Scaleup Initiative includes possibility to expand scheme to other areas following evaluation of the pilot

More Info: https://ec.europa.eu/research/innovation-deals/index.cfm

https://ec.europa.eu/research/innovation-

deals/index.cfm

Innovation and Regulation – Innovation Deals

— EU VC Fund-of-Funds Programme —

• 1/4 Challenge

• EU VC funds relatively small (€60 mn vs. double that in US).

• ca. 90% VC investment concentrated in just eight MS.

• Private and especially large institutional investors are shy of VC.

— EU VC Fund-of-Funds Programme —

• 2/4 Objectives

• Increase availability of VC funding for start-ups and SMEs in

EU.

• Attract greater volumes of funding from independent private

investors, including large institutional investors

• Enable VC funds supported to reach a greater size than the

average size of VC funds in EU, and so help firms get follow-

on funding.

— EU VC Fund-of-Funds Programme —

• 3/4 Approach

• Call for independent fund managers with strong track-record (till

31/1/17)

• EU invests a 'cornerstone' of up to €300 mn in one or more

independently managed FoF (max. budget €400 mn for all FoF

invested in)

• Fund manager must raise at least three times as much as EU

investment

— EU VC Fund-of-Funds Programme —

• 4/4 Approach

• EU budget combines resources from H2020 (up to €200 mn),

EFSI (up to €100 mn) and COSME (up to €100 mn foreseen)

• Timing

• Appoint one or more fund managers by mid-2017

• First fund-raising round takes 12 to 18 months