EU Science Hub

Digital start-ups

Digitally-enabled start-ups are key vehicles channelling digital technology into economic and social benefits. These firms are also more likely to scale-up their businesses and become high-growth companies.

Given their peculiar characteristics, digitally-enabled start-ups respond differently to the conditions of the entrepreneurial ecosystem than traditional firms in low-tech activities. Specifically, digital start-ups can be particularly hampered by the difficulty in accessing talent, funding and new markets.

The JRC is researching into the European start-up ecosystems to provide evidence-based policy recommendations to support the specificities of start-ups. The research addressing the digital startups ecosystem is twofold:

  • First, it pursues newer and more adequate metrics to evaluate the framework conditions that digital start-ups enjoy across the EU Member States.
  • Second, empirical studies on start-ups' data both regarding EC initiatives and complementary data sources.

1. Framework conditions for digital start-ups

As digitisation transforms entrepreneurial activities - the entrepreneurial opportunities like the practices to pursue them - policymakers need adequate metrics to monitor the arising digital entrepreneurship in order to support the new productivity potential to the benefits of economies and societies.

In 2018 the JRC has released The European Index of Digital Entrepreneurship Systems - EIDES. The EIDES addresses the challenge posed by the novel entrepreneurship by disentangling the digital component within both general framework conditions and systemic framework conditions. Particularly for the systemic framework conditions, the EIDES distinguishes threes entrepreneurial stages in the EU28 countries:

  1. Stand-up
  2. Start-up and
  3. Scale-up

2. Evidence from start-ups in EU

Digital start-ups are companies that build on a technology that tends to adhere to reality with extreme plasticity. The outcomes of digital firms revolutionises the traditional business models where the supply of well-identified products or services would match the demands of precise clienteles.

Digital companies develop "non-well" identified services which shape continuously around the evolving reality and, at the same time, accrue knowledge readily embodied in their functioning.

Digital start-ups develop ideas to readily share with either clients or other businesses which then feedback to startups with enriched inputs. This dynamic is the essence of the digital ecosystem.

The processes revolving around the digital entrepreneurship are much more dynamic therefore more unintelligible.

As the business game enabled by digital start-ups acquired risk, therefore potential, also policy attempts to adapt its support to innovation accordingly.

Between 2015 and 2016, the European Commission funded the second Start-Up Europe  initiative, which was specifically targeting digital start-ups and their ecosystems. Concerning this initiative of the European Commission, the JRC has published a report in 2018 about the The Startup Europe Ecosystem in order to develop a theoretical framework for the policy support offered to entrepreneurship, and to gather evidence from nearly 700 startups that took part in the initiative.