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Scale-up Europe: Building Global Tech Leaders in Europe

Scale-up Europe: Building Global Tech Leaders in Europe

June 16, 2021

How the European economy stays at the forefront of technological innovation

Although the global economy was clearly caught in the headlights of the Covid-19 pandemic in 2020, last year was a good year for European startups and tech companies.

The amount of capital going into the European startup ecosystem reached new heights, with EUR 41 bn invested in Europe's startup ecosystem in 2020. That is six times the total invested in 2010. The digital transformation of Europe's entire economy saw great progress made. Numerous political initiatives taken by governments in all countries of Europe helped to keep highly qualified graduates available to European businesses. More than 2 million people now work for a European startup.

That is the good news. The bad news is that, in terms of the amount of funding going into startups in 2020, the European startup ecosystem lags significantly behind the startup scenes in the USA (2020: EUR 141 bn) and Asia (2020: EUR 74 bn).

"It will be crucial to create a startup ecosystem that both enables larger funding rounds and makes listing startups on Europe's stock markets an attractive option."
Portrait of Marcus Berret
Senior Partner, Global Managing Director
Stuttgart Office, Central Europe

To close this gap, in December 2020 the French government launched the Scale-up Europe initiative. The initiative brings together more than 200 of the brightest minds in the European startup ecosystem – startup founders, investors and key figures from universities and political pressure groups.

The initiative has been largely facilitated by Roland Berger. The results of this work – moderating workshops, conducting expert interviews, supporting Scale-Up Europe with teams of experts in Paris, London, Frankfurt and Stuttgart – have now been published in the study Scale-up Europe. How to Build Global Tech Leaders in Europe?

Efforts to put the study findings into practice on a political level will shape France's presidency of the European Union in the first half of 2022. The objective of Scale-up Europe is to have ten tech giants valued at more than USD 100 bn in Europe by 2030.

How can that be done? And what will it take for Europe to close the gap to the United States and Asia?

The study formulates 21 specific recommendations around investment, talents, deep tech and startup-corporate collaboration.

On the financing question, it will be crucial to create a startup ecosystem that both enables larger funding rounds and makes listing startups on Europe's stock markets an attractive option. With regard to talents, the study found that Europe is still seeing too much potential go to waste owing to a lack of diversity in its startup teams and the fact that working in Europe is not attractive enough to the world's best talents. Europe is also found lacking in many ways when it comes to transforming scientific ideas into sound business ideas. The excellence of Europe's research landscape is not sufficiently reflected in the creation of tech giants. And in terms of collaboration between startups and industry incumbents in Europe, not only are there entrenched cultural barriers to be overcome on both sides, but incumbents also need to remove the obstacles currently hampering investments in startups on a larger scale.

The 21 specific recommendations formulated in the study Scale-up Europe. How to Build Global Tech Leaders? are centered on four areas:

Investments:

1. Leverage the multiplier effect of public funding at EU level

2. Create a favorable ecosystem for the listing of tech companies on European stock markets

3. Boost private financing toward the high-performing VC asset class

4. Develop secondary markets in growth assets

5. Develop visibility and information on the performance of European VCs

Talents:

6. For European talents: create a tech worker status with standardized contracts and portability of social rights

7. For non-European talents: create a fast-track European Tech Visa, with favorable inpatriation regimes in EU countries

8. Establish competitive stock option schemes in EU countries and then foster alignment on best practices at European level

9. Develop a European diversity rating based on tech companies' reporting

10. Develop an international culture early on in startup development with English as the working language

11. Help foreign employees settle in, for example with bank account opening or housing

Deep Tech:

12. Create standardized patent transfer frameworks to accelerate technology transfer from public to private

13. Boost the action and visibility of the EIC by promoting a long-term deep tech roadmap complemented with public procurement schemes, adapted funding and administrative support

14. Modernize regulations to take into account breakthrough innovations

15. Promote specific action plan of European public banks and EIF/EIC to help investment funds adapt to deep tech specificities

16. Foster entrepreneurship within universities by: (i) adapting curricula, (ii) encouraging connections between disciplines, (iii) integrating entrepreneurs/VCs in university bodies

Startup-Corporate Collaboration:

17. Establish a tax credit for European corporates investing in European startups

18. Adopt a Small Business Act for business administration that will benefit startups

19. Elaborate a charter of reporting and best practices to be implemented across the ecosystem on collaboration (open innovation, procurement) and takeovers

20. Develop a Tech Erasmus: joint programs allowing employees to work in startup and corporate ecosystems

21. Launch a European Tech Mission, notably in charge of animating a community of startups

Portrait of Marcus Berret
Senior Partner, Global Managing Director
Stuttgart Office, Central Europe
+49 711 3275-7419