In the article you will learn what the Startup Nations Standard (SNS) initiative within the European Union is and how it is supposed to contribute to strengthening startups created in the EU Member States.

The digitization of Europe as part of the digital strategy (1) for the period up to 2030 will not be possible without the very broad involvement of companies from all European Union countries as well as from Europe as a whole. It is companies and businesses that are to be the key foundation for structural transformations in the real and digital world. Startups and scale-ups are to be the main beneficiaries of activities and supporting programs on the part of the European Commission and the Member States.

Broadly understood, any new business venture aimed at generating revenues and achieving profitability is a startup , because it is necessary to incur at least minimal financial outlays, which is a kind of investment, and it is permissible to experiment and test the offer on the target group of recipients. Obviously, the degree of intensity of these conditions is the stronger the more the business wants to operate in an innovative and unproven market space. This is usually a characteristic feature of startups in a narrower sense, i.e. those that operate in the area of ​​new technologies (often digital) and are therefore much more capital-intensive.

When a startup has already gone through the experimental stage and has developed a reliable business model, then it can focus on scaling what has been successfully tested. Then we are talking about a scaleup , although the separation of both types of activities is still quite fluid.

The digital strategy ‘Shaping Europe’s digital future’ assumes that by 2030 the number of startups (and scaleups) (2), mainly in the area of ​​new technologies offering ‘unique’ solutions supporting the digitization process, will increase by half. This is a very ambitious goal that naturally requires appropriate preparation and the creation of the appropriate framework conditions. This is what the ‘Startup Nations Standard of Excellence’ initiative, a joint declaration of 24 Member States (3) and Iceland, is intended to serve to support European startups at every stage of their development.

Basic Motivation

According to the declaration, startups have undeniable potential to create breakthrough innovations, new jobs and cooperate with classic industries (4). These are the right foundations to accelerate the process of green and digital transformation .

Here, however, extensive institutional support is necessary to facilitate, inter alia, access to appropriate financing (5) and to guarantee favorable conditions and equal development opportunities for all businesses from every corner of the European Union. The ultimate goal is to create the right conditions for the emergence of more startups with the potential to develop towards innovative enterprises (SME), which can also compete on the global arena and contribute to greater technological independence of Europe as a whole.

This motivation results from the logical assumption that broad and precise support for European startups and scaleups gives an opportunity to co-shape global technological development and thus strengthen the resilience of the EU economy to future crises and challenges. In the longer term, Europe would become a kind of Startup Continent through the long-term transformation of the member states into the so-called Startup Nations , i.e. those that have permanently implemented the principles and best practices supporting development and growth.

Basic assumptions

The declaration is an expression of the general agreement of the signatories to prioritize activities supporting the market of European startups and scale-ups. In particular, it is about:

• ensuring that all startups and scale-ups from EU countries can equally benefit from the best support practices,
• creating a clear EU-wide reference point for defining the characteristics of a startup, in order to gain a tool for shaping a uniform support policy,
• creating favorable conditions for the development of startups as a foundation for success not only at the European level, but also at the global level (6),
• ensuring the implementation of the best practices of supporting startups and scaleups at every stage of their development by EU member states,
• establishing a startup acceleration center (Startup Nation’s hub) to promote and share best practices of support between the signatories of the declaration and to create a unified data platform for all member countries, thus facilitating the transformation process towards startup nations.

Basic standards

The declaration lists eight areas of activities that should be adopted as basic standards and best practices in supporting the development of European startups and scale-ups:

1. Faster and easier creation of startups, e.g. by the possibility of establishing startups both online and offline for an amount not exceeding 100 euros and access to one place with all key information for potential entrepreneurs.
2. Acquiring and maintaining qualified staff (so-called talents), e.g. by simplifying matters related to obtaining a visa (no longer than 1 month) and implementing incentives encouraging experts to return and stay in the European Union (if they have moved to a country outside the EU).
3. Issuing stock options by startups as a form of obtaining funds without the need to share voting rights.
4. Innovation in regulations, e.g. by introducing the so-called test mode in a regulatory sense to support the experimentation phase and minimize bureaucracy and overall administrative burden (use of the “think small first” principle by startups).
5. Supporting innovation and technology transfer, e.g. by encouraging public institutions to buy innovative solutions from startups and ensuring the freedom to transfer technology developed at universities and research institutes.
6. Wide access to various forms of financing, e.g. by enabling access to venture capital for startups through the European Investment Bank (EIB) or introducing tax breaks for private investors supporting startups.
7. Supporting diversity and social inclusion, e.g. by supporting founders from less privileged backgrounds in setting up companies.
8. Digitization of activities by introducing full digital interaction between startups and authorities.

Summary

‘Startup Nations Standard of Excellence’ is an initiative whose goal is to develop a common and uniform policy of supporting startups and scale-ups from the European Union at every level of their development. In practice, it is about designing and implementing a set of precise and functional tools (best practices) for the development of innovative companies in Europe.

By being able to compete effectively on the global market, startups are to contribute to the strengthening of the position of the entire European Union, especially in the area of ​​modern technologies, and to lay the foundations for the ‘digital revolution’ as part of the digital strategy ‘Shaping Europe’s digital future‘. The final vision is to transform the whole of Europe into a so-called a Startups Continent with nations that actively and regularly introduce innovative enterprises to the market (Startup Nations).

‘Startup Nations Standard is undoubtedly the first attempt to create a transnational cooperation platform focused on a specific type of business ventures. It is an initiative that requires the construction of many touchpoints within the framework of various legal and market conditions prevailing in individual EU Member States, including, in particular, the development of a uniform understanding of the concept of a startup and the specifics of this type of business activity. The effects of such cooperation may, in the future, change the role of state authorities towards a conscious initiator of economic development, naturally on the condition that it is possible to create a model of equal public-private partnership.

1) Communication from the Commission, ‘Shaping Europe’s digital future’, COM (2020) 67 final, Brussels, 19 February 2020, p. 5: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:52020DC0067

(2) The strategy mentions the so-called ‘Unicorns’, which are characterized by a high level of innovation and a market value of over 1 billion USD.

(3) Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden .

(4) European Commission – Press release, ’24 EU Member States commit at Digital Day to take action to support growth of EU Startups’, Brussels, 19 March 2021: https://digital-strategy.ec.europa.eu/en/news/24-eu-member-states-commit-digital-day-take-action-support-growth-eu-startups

(5) According to the ‘State of European Tech’ report, in 2020 it was definitely more difficult to obtain funds for starting a business: https://2020.stateofeuropeantech.com/chapter/state-european-tech-2020/article/exec-sum/

(6) In particular, it is about moving from a ‘stand-up’ through a ‘startup’ and ‘scaleup’ to a listed company (IPO) or merger with another company (merger).