The European tech sector faces its next challenge

Several startups are trying to make the digital skills gap a business opportunity. [REDPIXEL.PL/Shutterstock]

As capital markets are becoming more mature in several European countries, the new challenge for startups is securing talent. Still, remote working, business solutions and upcoming EU policies could disrupt the landscape.

The situation for accessing funding has changed for European startups, as the financial markets have become more mature, and venture capital (VC) is moving from the saturated American market to Europe.

“Access to capital is very good,” Kalle Palling, co-founder of Cachet, told EURACTIV, noting that the government closed its venture capital fund in Estonia because the market was mature enough.

Public funds are also increasingly available, although they usually come in later, complementing private investments and allowing companies to raise more money and scale up faster.

“They follow, they are not leading the investment,” said Simon Foucher, CEO at Numerized.com.

Access to talent

While accessing capital for the European tech sector is becoming less problematic, a new challenge arises in accessing talent.

“The United States came shopping for talent in Europe, now Europe is looking even more East,” stressed Marco Soares, CEO at Proofmarked.com.

Kostiantyn Zagranovskyi, CEO at CapitalView, is a case in point. Some years ago he moved from Ukraine to the Netherlands for a job as a tech specialist and he has now opened his own company.

“Ukraine currently grows very skilled people in the tech field, and a big part of them moves to the US or to Western Europe,” Zagranovskyi said.

However, the inflow of skilled workers does not seem sufficient to fill the long-standing shortage of skilled labour for European businesses, according to a recent survey from Eurochambers.

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Remote work

Improved access to capital means that startups are better able to pay for talent. However, they face fierce competition from large tech companies that pay better and are also more stable and prestigious.

“It’s challenging as a small startup to get talent when Facebook is hiring as well,” said Nicholas Gorman, CEO at SafeScore.

Soares of Proofmarked.com, notes that remote work might increase the attractiveness of startups, as large companies tend to be more conservative in providing flexible working conditions.

Nonetheless, Soares stresses that hiring developers remotely is administratively very complex. “Tax-wise, it is a nightmare,” he emphasised.

Business solutions have been developing in this sense. Remote, a Portuguese startup that has recently surpassed $1 billion in market capitalisation, offers international payroll, taxes, and migration services.

Digital skills startups

Remote is only one example of a tech company turning the digital skill gap into a business opportunity. Smartive, an Italian startup, provides targeted training to upskill and reskill a company’s workforce based on a digital assessment of employees’ talents.

“We like to accompany people in the digital transformation, not only with technological tools but also with a cultural change,” explained Elena Butti, Smartive’s transformative journey specialist.

01talent, a company specialising in digital education, attempts to develop local solutions for addressing the lack of ICT experts.

“There’s about 4.5 million developers shortage in the world. We have a solution that can bring 1 million coders in the next 10 years,” said 01talent’s COO David Sultan.

The company establishes schools in collaboration with local partners and identifies talent based on a selection process. The selected participants receive a training free of charge, concluded which they are directly employed by a partner organisation.

“Once the tenants start to work, it’s sustainable if it makes some profit. With one school, you can create two schools, it is an exponential and viral model,” Sultan added.

Tech visa

At the same time, a great obstacle to accessing talent are the limits to international mobility. “Fortress Europe does not help with that,” said Mehemed Bougsea, CEO at Think-it.

Think-it is a collective of software engineers that promotes the matchmaking of highly-skilled workers, mainly from Northern Africa to the European market. However, Bougsea notes that the EU visa policy makes their very life complicated.

However, the situation is due to improve following the revision of the Blue Card Directive, a proposal to enhance the entry conditions for highly-skilled workers from non-EU countries that was approved last month.

The main changes include immediate family reunification, intra-EU mobility after one year, recognition of three years of IT experience as equivalent to a formal qualification, and simplification of the procedures to access long-term residency status.

“If we want to attract talent to Europe, we need to be attractive,” said Damian Boeselager, one of the MEPs that helped shape the proposal.

EU lawmakers also launched the idea for an EU talent pool, a matchmaking platform based on an expression of interest model. The proposal is expected to be included in the Talent and Skills Package that the Commission will present early next year.

[Edited by Alice Taylor]

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