Small firms, big innovation?

By Robert Madelin - Senior Innovation Adviser, European Commission

The Philosopher's stone of the 21st century is the (elusive) starting point from which an economy could reliably arrive at the fastest possible increase in social well-being, sustainable growth and solid employment. And wherever the world's economies are today, that does not seem to be the right starting point for the journey.

The role of smaller, younger and more agile enterprises does seem to be a key way-station on that road: hence the long search in Europe as elsewhere to empower, free and even support the efforts of SMEs and those who found and lead and scale them.

Startups are the seed-corn. I have recently reviewed experience to date with 'our' favourite one-year-old, the Startup Europe Partnership. Their news is good: more big company interest in supporting small founders, more self-confidence from Startups to engage with the Big, more interest from inexperienced potential investors to learn what this is all about.

Similarly, VC investments in Europe are increasing, crowdfunding and peer to peer lending is booming (with an average growth rate +100%!)  and European exits are on the rise.  We are even catching up in the number of unicorns' created: and Europe like the rest of the world clearly needs its share of such fast-growth $1-billion-valuation companies.  

Over the continent, however, we could and certainly need to do better, faster and in more places. The Commission can only help, but will be doing its bit:

  • This autumn, the Commission will be hosting its SME Assembly in November in Luxembourg. There will be SME voices from all 28 member states, showcasing their innovations #ideasfromeu.

  • The Startup Europe Partnership will be publishing its first maps of local innovation ecosystems, in an attempt to draw more funders and founders into the game.

  • The Digital Single Market project will be shaping its efforts to open up the cross-border opportunities that too many SMEs still tell us are closed to them: in our latest surveys, between 37-63% of sellers confess to Eurobarometer that the uncertainty of applicable contractual and consumer law, of corporate taxation, and VAT combine to deter cross-border expansion. Hence the salience of the DSM among the Juncker Top Ten.

Personally, I shall be working in the months ahead on a modest but relevant internal Commission consultancy. The aim is to see whether the EU could feasibly do more in the regulatory, financial and policy agenda to bring EU ideas to market and generally position the continent as a more effective pro-innovation player on the global scene. I am fairly sure that the smaller companies, the startup entrepreneurs and those who support them, will be making a bigger contribution in the next years.

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