Coadec's Executive Director, Guy Levin, was invited to speak at the EPP Group (the centre-right group in the European Parliament) meeting in Toledo on a panel about the digital single market. Here’s what he said:

 

Thanks and Intro

First off, I just want to say a big thank you to Manfred Weber and the EPP group for inviting me to speak at your bureau meeting.

I run a small non-profit called Coadec, the Coalition for a Digital Economy.

We were set up by tech entrepreneurs in order to represent startups in policy debates, too often dominated by the large players.

So thank you for inviting in a startup voice – it’s great that startup culture and digital innovation are slowly getting more of a seat at the political table.

So – perhaps unsurprisingly – today I’m going to argue that we should be working to fill Europe with startups.

Policy always struggles with tech

‘It is, unfortunately one of the chief characteristics of modern business to be always in a hurry. In olden times it was different.’

That’s a quote from the 1880s, I’ve borrowed from the web comic xkcd, who compiled a list of similar worries about change through history.

In other words, this is nothing new – we know that policymakers, like the rest of society, have always struggled with technological change

In every industrial revolution, there have been those who argued against the pace of change.

And in every industrial revolution there have been vested interests and incumbents who lose out to the ‘disruptive’ new entrants.

This time it’s different

But there is something different this time that makes it even harder.

The pace of change is accelerating

The onward march of Moore’s law has led to plummeting barriers to entry – with todays chips over a million times faster than forty years ago

And this is why the digital revolution is transforming every sector of the economy.

The exciting thing for me is who is driving that change – that it’s startups

Startups are now cheaper than ever to start, and can scale up more quickly than ever before.

Fifteen years ago the cost of storing a gigabyte of data in the cloud was $19 per month, now it’s just 3 cents.

One academic suggests that average cost of creating a mobile app today is less than €6,000.

European success

The good news is that digital startups in Europe are thriving.

In the last decade, Europe has created more than 30, billion dollar tech companies.

The number of European startups getting seed funding has risen 600% in the last 5 years

And companies like Spotify, TransferWise, Klarna and BlaBlaCar – all startups themselves not long ago – are becoming household names across the world.

Why?

But there is a long way still to go.

And sometimes it seems as though policymakers forget that the role of regulation is to protect consumers from harms, not protect incumbents from competition.

Hampering startups with onerous red tape, high taxes, and poor connectivity

But the simple truth is that if we don’t accept the new realities of the digital age, the jobs and innovation will move elsewhere.

So it is vital that policymakers like yourselves to see the opportunity and continue to drive this agenda forward.

Because with a fast growing digital sector come huge benefits.

Economic growth – in the UK last year, despite only making up 1% of companies, high-growth startups contributed a third of all economic growth.

Technical and scientific advances – for example in artificial intelligence and medicine.

High-skilled, creative jobs – with 1 million new digital jobs forecast to be needed by 2020.

So how to we get there?

So how do we realise this digital vision for Europe?

Around Europe startups are stepping up to the political debate, and politicians are listening.

We saw Neelie Kroes’ manifesto with Startup Europe, and since then there have also been startup manifestos in Poland, Holland and Greece.

In the last few weeks a Spanish Startup Manifesto was launched. And in the next few weeks there will be one for Belgium too.

Last year I wrote the UK’s Startup Manifesto – it was backed by over 200 of the UK’s leading entrepreneurs and investors – including founders from companies like Citymapper, King, Shazam and Zopa; as well as partners from venture capitalists like Accel, Balderton and Index Ventures.

While it focussed on the UK, the themes apply to the whole EU, and we called for government to:

1. Improve access to finance
2. Improve access to talent – through skills and immigration reform
3. Build world class digital infrastructure
4. Bring laws and regulations into the 21st century
5. Use digital government to unlock innovation

Opportunity from digital single market and European policy

And at the European level we have that opportunity in front of us now as we debate the Digital Single Market.

Brussels bureaucracy is a million miles away from the day-to-day life of a startup founder.

But I’ve been telling everyone who will listen that a proper Digital Single Market could represent a huge opportunity for startups – putting a market of half a billion consumers within reach.

Too often digital companies struggle to grow in Europe, and make the leap westwards to the US in search of a large market, a more positive culture towards risk, and easier access to finance.

28 sets of regulatory requirements present a barrier even to big players, just think of the burden they pose to a startup.

Should be aiming to identify tangible barriers, and tackle those problems directly.

It shouldn’t be a grand academic exercise, nor an attempt to implement protectionist competition policy through the back door.

It should be about encouraging innovation and reducing the barriers to growth.

So what does that mean?

That means things like a common set of consumer rights.

A clear set of rules on data protection that give consumers confidence, but don’t stifle innovation. And with an effective one-stop-shop so startups only have to deal with one regulator.

It means a simple, single online process for:

-registering a website

-forming a company

-paying VAT

It means copyright reform to help make content portable, and cross-border licencing simpler – letting the next Spotify or Netflix scale up more quickly.

It means reducing the regulatory burden to allow high growth companies to achieve that growth, rather than levelling up across the continent.

In other words we must come at this from angle of innovation.

Conclusion

I talk to startup founders almost every day, and it’s amazing to watch them.

It’s the thing I like most about having moved from government into the tech world – the capacity of small groups of people to have an enormous impact.

Take TransferWise for example, – a London and Tallinn based fintech company – is taking on the banks and offering a much better service for money transfer.

It’s just 5 years old and is rumoured to be the latest member of the unicorn club – those startups valued at over $1 billion.

They’re just one of many great companies proving that Europe can deliver world-class digital companies.

I’m hugely optimistic about the future of startups in Europe.

But only if we shake off some of the old ways and bring policy into the 21st century.

We are still at the beginning of this new industrial revolution, and there’s everything to play for.

So I hope you’ll join me in working towards a Europe full of successful digital startups.

Thank you.