EU startup innovation can aid recovery, MEP says

Member of the EU Parliament in the Group of the Progressive Alliance of Socialists Eva Kaili.

Despite the coronavirus pandemic wreaking havoc across a range of sectors in the European single market, the bloc’s economic recovery can be aided by making the most of new markets that will emerge in the startup ecosystem, says European lawmaker Eva Kaili.

Eva Kaili is a Greek MEP with the S&D Group. She has recently been appointed as an advisory board member for the lobby organisation Allied For Startups

You’ve just joined an advisory board for startups as a part of the lobby ‘Allied for Startups’. How much of a critical time is it for Europe’s startup ecosystem at the current time?

Like all businesses, startups face challenges in the current pandemic, from disrupted supply chains to crashes in demand. More so than other businesses, however, startups are at a very vulnerable stage of their development. A Startup Genome survey found more than 40% of startups have less than three months of cash runway, meaning their resilience going into the crisis was low.

What’s more, startups have been excluded from many state aid schemes in Europe, which have focused more on protecting large companies and national champions through the crisis. This is particularly worrying when we consider that startups are the main drivers of jobs and growth in the European economy. We risk smothering today the companies who we will be looking to drive an economic recovery tomorrow.

This is why it is so important to pay attention and support startups now, and it is why Allied For Startups has chosen this moment to launch this Advisory Board. This crisis won’t last forever, and investing in protecting startups now will pay dividends to society as they drive the economic recovery in the coming months and years.

Has the coronavirus crisis resulted in new and innovative markets being opened up? What broader lessons can be learned in terms of our use of technology for fast and effective responses to public crises? 

Absolutely. Survey data shows that 19% of startups have already pivoted to a new area since the beginning of the pandemic. Italian biotech startup Takis Biotech, for example, pivoted from cancer treatments to joining the search for a COVID-19 vaccine. Velmio, a startup developing a pregnancy health app in Estonia, pivoted to use its technology to develop a COVID-19 tracing solution.

More broadly, startups by nature are dynamic and adaptable. They are new businesses often operating in new industries. This allows them to pivot quickly in response to changes in circumstance, which makes them some of the most valuable assets society has in responding to crises that require innovation to escape.

They can only do so, however, if given the support they need to survive the initial economic shock, giving them the breathing room needed to reassess and refocus in a crisis.

The European Parliament is set to adopt a position on the recently renegotiated EU recovery fund and multi-annual financial framework. In terms of the support required for Europe’s startups, do you believe that they will be sufficiently supported at the EU level, considering the various cuts that have been made to research, innovation, and digital programs, for example?

It has been very disappointing to see the cuts in research, innovation and digital programs that have been made at an EU level.

At a time when Europe faces more competition than ever in these areas, it is vital that we prioritize building an innovative European digital economy. To regain trust in the system we must remain relevant to the challenges of this new world. I strongly believe that we will fight to make it right and achieve Green Innovation for the EU’s resilience to be the priority and the spirit of the new MFF.

Thinking about Europe’s innovative startups of the past, a historical problem has been how European startups have been bought out by larger, third-country firms. How can this be avoided in the future?

If startup founders see a future for their business, they can and will stay in. It is our job as policymakers to make sure that the EU market offers founders the opportunities to start, grow and ultimately to succeed from Europe.

Creating laws that have one rule for the big ones and one rule for the small ones incentivizes our startups to stay small and get bought out. We have to ensure that the rules we make don’t introduce ceilings to growth, locking smaller companies in Europe out of high-value sectors. It’s also important to keep our innovative startups European.

Especially during COVID in our Competition report, we added the very crucial Amendment that calls on the Commission to propose immediately a temporary ban of foreign takeovers of European companies by state-owned entities or government-linked companies from third countries;

In what way can the upcoming Digital Services Act help to foster innovation for Europe’s startup scene? 

The DSA can build a framework that encourages growth and does not create additional regulatory barriers for European startups. Startups need legal certainty, particularly those online, and the more complex the rules, the more they favour large companies, equipped to navigate legal challenges.

And we shouldn’t get caught up in the idea of creating one rule for large tech companies and one for everybody else. If we do that, we’ll be locking growing businesses out of the premier league of companies, and Europe will be left with a lot of small businesses that are unable to compete at the top level internationally.

What’s your take on the EU’s pursuits in the industrial data space, and how confident are you that the bloc’s new approach to the liberalization of data can have benefits for European startups?

Data is the fuel that feeds the engine of digital start-ups. It is therefore evident that greater access to public data and data sharing between businesses (B2B) will be very important in developing products and services.

The vast amount of data generated in Europe by the public sector should be available for the common good and from European SMEs and start-ups towards this goal. My belief is that we can achieve privacy safety and innovation without protectionism, to still avoid compromising our fundamental EU values.

What are the potential pitfalls for startups of the Commission’s plans for greater data sharing environments? Do you think that there are some businesses that may see it as a competitive disadvantage if they are forced to share their industrial data?

It seems to me that the real value of data lies in its use and even re-use. The difference in policies between member states makes it very difficult to envisage a common European data space and for creating the so wanted “common single market for data” but the Commission’s paper on A European strategy on data is quite promising.

It’s true that many companies might feel threatened by the B2B data sharing but I think that the re-use of the non-personal data between them will help open innovation and will create further supply chain optimization. Governance of Data and Global Common standards could be the catalyst to transform with AI in almost all sectors in this world.

[Edited by Zoran Radosavljevic]

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