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Startup founders — why aren’t you lobbying more?

Better communication between startup founders and policymakers could benefit both sides

By Zosia Wanat

Linda Griffin’s first experience of Brussels, as a public policy expert for the Swedish gaming company King, didn’t really match her expectations.  

“I went to that role thinking: wow, this is really amazing. European tech success story. All these developers are based in Europe, their growth is exponential… I’m really excited about this,” she says. 

“And I’ll be honest: I walked into Brussels, and no one really cared.”

Every day, policymakers on the European and national level put together rules that determine how European startups are run — from regulating AI, financial services or crypto to setting directives on employee stock options. 

And yet those startups have almost nothing to do with lawmakers in Brussels or national capitals — and don’t seem to care much either. Those that have can often relate to Griffin’s experience.

A nuisance

Big, well-established businesses are used to meeting with policymakers and presenting their views in public consultations, aiming to make any new rules favourable for their work. 

But for startup founders, regulations tend to be a nuisance they have to comply with, rather than an area they’d like to engage in more actively. 

Only 12% of European startups think that policymakers understand the realities they’re facing, while 83% believe that structures are built in favour of large, established businesses, according to a recent report from Stripe. 61% of startups aren’t engaged with policymakers and don’t voice their concerns. 

Even if startups sometimes engage via trade associations, which represent the sector, they rarely join lobbying groups. Digital Europe, a trade body in Brussels which calls itself “the leading trade association representing digitally transforming industries in Europe”, has only three startups among its 97 corporate members. 

“Often on tech files [draft laws], we don’t see as much interest or feedback from startups — of course understandable given resource and time constraints,” says Eva Maydell, a Bulgarian member of the European Parliament, who was the first European politician to introduce the word “startup” into Brussels legal jargon. “I know that their voices should be amplified and listened to. It would certainly improve the policies being put in place.” 

Diverging timelines

The truth is, founders usually have better things to do than participating in time-consuming (and often fruitless) debates over legal clauses.

“At the really early stages, startups’ resources are so limited that most companies don’t have the time or space or energy to think about this in a kind of really deliberate way, even if they’re aware that it matters,” says Patrick Newton at Form Ventures, a UK VC firm that invests in companies with high public policy exposure.

The time frame is also a big issue: startups operate with a short-term perspective, while regulations often take years to finalise. 

“I know that [starttup] voices should be amplified and listened to. It would certainly improve the policies being put in place”

“It’s about how we interpret time,” says Griffin, who is now VP of global public policy at Kry, a Swedish healthtech, and also cofounded the European Tech Alliance, a trade body for startups in Brussels. “Startups are thinking in weeks and months, policymakers are thinking in years,” says Griffin. “How do we bring those two very different schedules together?”

But the lack of communication isn’t only the founders’ fault: the policymakers often don’t try to understand startups’ specific ways of working, needs and challenges, lumping them in the same category as small and medium enterprises (SMEs). 

Mariya Gabriel, the EU commissioner for innovation, notices that among European policymakers there’s no common understanding of what a startup even is. As a result, the Commission has pledged to work on a pan-European definition. 

“That will allow not only us but also the community to address the main issue of representation,” she says. “It can only help us to be as precise as possible and not to make a fusion between SMEs and startups.”

Opportunities ahead

Regardless of the time and energy required, lobbying can pay off for the startup community. 

One successful (ongoing) campaign is Index Venture’s “Not Optional”, through which the UK-based VC firm, along with founders, has been lobbying for better regulations around stock option schemes. 

Several years ago, Index drafted recommendations for founders on how to offer their employees stock options, but quickly realised that no meaningful progress could be made without a policy change. As a result, in 2018, Index wrote a letter, signed by 700 prominent figures in the startup world, calling on policymakers to change the punitive rules that govern stock options. It continues to engage in debates and public consultations on the topic. 

Vojtech Horna from Index says this effort is slowly paying off. Some countries, including France, Poland, Sweden and the Baltics, are changing their stock option regulations and the EU is taking the idea on board. “It’s been steadily improving. The policy wheels are turning much slower than the startup wheels. So obviously, this takes a while.”

Newton says that while he wouldn’t really expect startups to engage in hardcore lobbying to change existing policies, they could play an important role in creating rules in emerging, unregulated areas of economy, such as plant-based food or AI.

“It’s really important that we don’t just see that as a burden,” he says. “It can also prevent there being issues on the horizon if you’re aware of them upfront.”

Ben Rattenbury, VP policy of Sylvera, a carbon intelligence platform that helps carbon traders and governments evaluate and invest in high-quality carbon credits, is taking this approach. Sylvera operates on unregulated markets and engages with politicians who specifically look into this sector. 

“We want to ensure that the regulatory environment that emerges is as fit for purpose as possible, that it has maximum impact, without any downsides, without stifling innovation and without curtailing the growth of the market,” he says. 

He adds that because Sylvera has a similar goal to many politicians — contributing to the fight against climate change — he’s managed to establish a good relationship with the lawmakers. 

“There is a sense of trust, and that we are acting in good faith. They don’t think we’re trying to trick them or manipulate them,” he says. “They really do want to listen, and we’re in a nice place.”

Zosia Wanat is Sifted’s central and eastern Europe reporter, based in Warsaw. She tweets from @zosiawanat

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Robert
Robert

Direct involvement of startup founders will be very difficult for many reasons resulting in low efficiency. There are several organizations that do this indirectly, such as EBAN – European Business Angels Network. #BusinessAngel investors are close to startups, have extensive experience and are well prepared to present the needs of the startup community in EU forum. The next such discussion will take place in Brussels at #EAIS https://europeanangelsummit.com
I invite you, among others to participate in Roundtable about #HealtTech startups there.
See you in Brussels 🙂

Alex Pospekhov
Alex Pospekhov

Great work! I was successfully involved in lobbying of tech-scene in Latvia. Since 2017 I have helped the local authority to make Latvia №1 (according to the Index Venture) a country for the early-stage tech startup. We helped introduce the best law to bring non-EU founders to Latvia, more accessible access to tax breaks, and the local community pushed the “Option bill” with 20% tax makes it brilliant. But such things could happen only when government managers correctly understand the landscape and not just try to do what THEY think is correct. With the recent start of the startup association,… Read more »