EU Startups and scale up strategy - with a focus on European Innovation Act

Key points

The EESC believes that :

• Europe needs to strongly reinforce innovation and research and has a lot of catching up to do when it comes to commercialising the product of this innovation and research through spin-offs, start-ups and scale-ups. In strategically relevant industries, there is growing concern that the environment in Europe has become too fragmented, too dense and too slow to keep pace with rapid technological developments globally;

• the main reasons for this are the decreasing understanding of market economy processes and the increasingly fragmented regulations and their implementation in the single market which are hampering cross-border market ramp-up and technology transfer from research to industry;

• slow administrative processes, limited digitalisation and inconsistent application of EU regulations at national and regional level pose further obstacles for businesses;

• the European Innovation Act (EIA) can offer relief for cross-border start-ups and scale-ups if it contains cross-cutting simplifications for start-ups and can be enforced as binding in all Member States, also taking into account workers’ rights and employee participation. The Committee stresses that the European Innovation Act should be aligned with the principles of a just transition, ensuring that innovation contributes to economic growth, competitiveness and job creation, while taking into account the need to accompany workers and regions affected by technological and industrial transformation;

• a catalogue of criteria for evaluating innovation content and growth prospects would be more efficient and accurate than a binding definition of start-ups and scale-ups. A ranking of founder-friendly universities could also support the EIA. Furthermore, the EIA should strengthen the role of research and technology organisations and the European Institute of Innovation and Technology (EIT), particularly in deep-tech and capital-intensive sectors;

• Europe-wide tax incentives for employee share ownership would promote innovation and growth. Founders should also be offered risk protection, alongside ensuring appropriate safeguards for employees and creditors in line with existing insolvency frameworks.

For more information please contact the INT Section Secretariat.