Despite good breeding ground, start-ups are struggling to grow in Europe

The ground is fertile, however. An overview, produced by 32 associations representing the interests of start-ups in 20 countries on the continent and published on Wednesday, lists 251 start-ups created after 2000 whose turnover exceeds 10 million euros and which generate at least 1 million in turnover abroad. No less than 70% of them sell outside the borders of Europe. These companies also declare that 94% want to recruit, half of whom have between 11 and 50 employees, and 18% between 51 and 100 employees. A myriad of great gems, therefore, regularly known within their respective countries. But unfortunately, rarely beyond. "These are players with an interesting critical size, but who suffer from a lack of notoriety on a continental scale," says Maya Noël, general director of France Digitale, who coordinates the study for France. "A player like OVH, which is the European leader in the cloud sector and constitutes a viable alternative to American and Asian giants, is little or not known in the Netherlands or in Spain," illustrates the manager. It is difficult to respond to American companies that rely on a market of 330 million consumers speaking the same language and with almost identical administrative rules to grow. "In the United States, setting up a company is the equivalent of a 100 meters. In Europe, it is a 110 meters with 27 hurdles to overcome," illustrates Paul Bazin, investor for the French fund Daphni. Administrative complexity, cultural differences from one market to another and a financing ecosystem that is nothing like the other side of the Atlantic. In his report, Mario Draghi points out the insufficient number of investment funds capable of supporting start-ups by putting up large tickets. "Since 2013, there have been 137 venture capital funds worth more than $1 billion in the United States, compared to only 11 in the EU," the text states. These are all recurring problems, but Europe has still not found a cure for them. "There was the Enrico Letta report, and now there is the Draghi report. We are starting to win the battle of ideas, but this must translate into action," says Maya Noël of France Digitale. For Antoine Latran, a lobbyist for the association sent to Brussels, the release of the former Italian Prime Minister's report at the same time or almost as the renewal of the Commission could give the new executive some ideas. According to him, one of the priority measures would be the creation of a "European status for start-ups that would allow them to benefit from a single market authorization across the continent." Enough to "avoid spending 6 months obtaining authorizations" to sell in each country. In the worst case, start-ups can wait up to three years.

Mario Draghi, who estimates that 800 billion euros should be invested per year by the EU to regain its competitiveness, is targeting the technology sector, among other things. For France Digitale, the budget of the European Innovation Council (EIC), a hybrid structure that provides financial support for disruptive innovations, should be tripled, based on the American Darpa model. "We also need common capital markets," believes Paul Bazin of Daphni. This would make it possible to mobilize the savings of European households to finance growth. The fact remains that the issue, brought back into fashion by the Letta report and pushed by countries such as France and Germany, has been bogged down for several years. Less ambitiously, the creation of a listed market for European tech companies, which often flee to London or the United States to find capital, could make sense in his eyes. "If we want to build giants, we need to break down barriers between national markets and increase their market size," claims this investor. For Maya Noël, if the European market environment is interesting, the creation of international champions capable of competing with the American and Asian giants will require a consolidation of start-ups and the multiplication of merger operations. L.M.

Author: Mediavilla, Lucas