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Founders rally to squeeze startup support out of EU

Startups associations are cranking up the pressure on the European Commission for more support measures and a tailored recovery investment plan.

By Marie Mawad in Paris

Startups associations from France and Germany are rallying founders and joining efforts across borders to crank up the pressure on policymakers in Brussels.

As individual governments deploy different shades of generosity and appear more or less keen on bailing out startups, groups of founders are turning their attention to the European Commission and lobbying for tailored measures there.

Associations representing some 3,000 startups across Europe, joined under the label United Tech of Europe, are preparing a coordinated call to policymakers. They want a pan-European plan specifically built to support startups through coronavirus and anticipate life after it.

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Beyond asking for the EU to put out fires, they’re eyeing decisions that could facilitate a recovery for startups from the impact of Covid-19. They’re aiming to put a variety of topics on the table, from competition rules to budgets for tech buyouts.

“It’s time to consolidate the market and produce digital champions out of this crisis,” says Nicolas Brien, chief executive of France Digitale, an industry group that represents more than 1,500 French and European startups. “In an ideal world, the European Investment Fund would open up a gigantic tech buy-out fund and trigger a consolidation wave in the European startup ecosystem.”

The European Commission has made a series of coronavirus-related announcements in recent weeks, through diverse outlets, including its European Investment Fund. It has adopted a pragmatic approach based on feedback from startups.

So far, the Commission unlocked €1bn to allow its European Investment Fund to back loans for small and medium businesses, effectively making it easier to borrow money from banks. The measure has been popular with startups, and should translate into €8bn more in estimated available financing for small and medium-sized enterprises (SMEs), the Commission said.

Separately, the Commission’s European Innovation Council said it will invest €164m in innovative projects that can help in the treatment and testing of Covid-19.

Beyond bridge financing

The move from startups associations comes after contrasting government announcements in recent weeks, earning and stripping countries of their “startup-friendly” tags. 

While France unveiled a €4bn cash injection plan last month, the UK has taken a more reserved approach, steering clear of offering loans for startups. (For a more detailed account of government announcements see our list of state-backed resources for entrepreneurs.)

In the UK, the SOS campaign — Save Our Startups — launched this month with a warning: help, or many of the 30,000 startups in the country could collapse. Founders in Spain, Italy, Portugal and Greece have also pleaded for policymakers to put their money where their mouth is and sounded the alarm that many startups risk disappearing otherwise.

But even in more generous countries, bailout plans are meant only as a temporary remedy: a way to bridge financing gaps in the coming months and help companies get through the eye of the storm. 

That leaves room to deploy measures that are geared towards reinforcing the region’s innovation potential in the mid to long run. Europe should expect founders to knock on its door for that — and a bit extra.

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