Focus, connect and partner to improve conditions for entrepreneurs in Europe

A new report, Fostering Innovation-Driven Entrepreneurship in Europe, has been launched by the World Economic Forum to provide analysis on the challenges faced by Europes high-growth start-ups. The report also sets out an agenda to help them achieve the critical mass needed to reach maturity and compete internationally.

The analysis in the report, which was produced in collaboration with A.T. Kearney, comes from a survey of over 1,000 European entrepreneurs as well as interviews and workshops with policy-makers and other key decision-makers in Europe and China. The results indicated that the ecosystem for developing start-ups in Europe was substantially worse than in North America across all three phases of the entrepreneurial life cycle. These phases are part of a new model for understanding how stakeholders can better support serial entrepreneurs in Europe: 

• Stand up  Promoting the attitudes and skills required to mobilize Europeans with the desire and the ability to create scalable entrepreneurial ventures
• Start up  Gathering the resources to start up a business, with particular focus on access to capital for entrepreneurs across the European Union
• Scale up  Enabling ventures to scale, with particular focus on collaborations between entrepreneurs and large corporations that simultaneously improve the innovation capacity of both partners to create growth and jobs across the region

The report suggests that problems facing Europes entrepreneurs are not because a lack of willingness on the part of policy-makers or actors in the private sector 87% of survey respondents said that they are personally willing to support initiatives in their countries, while Forum interviews and workshops identified a large number of multi-nationals which are seeking to incorporate start-ups in their business activities. Many senior policy-makers at both the European and member state levels, including a number of heads of state and government, are highly motivated to improve conditions for innovative ventures.

Nevertheless, of the three life cycle phases, scaling up is seen as the most challenging for European start-ups, with almost 40% of respondents believing that conditions were unfavourable in their country. Europe has a strong track record in establishing innovation-driven start-ups. However, its weakness lies in helping these businesses grow in and beyond fragmented European markets, said Philipp Rsler, Managing Director, Head of Centre for Regional Strategies, World Economic Forum.

One significant obstacle to fostering innovation-driven entrepreneurship in Europe identified in the report is a lack of collaboration between the private and public sector, which limits the effectiveness of support programmes. Current programmes include interventions to tailor education to the needs of entrepreneurial careers, interventions to improve access to finance, labour market interventions to improve access to talent, and projects to improve framework conditions for cross-stakeholder or cross-regional collaboration.

Policy-makers have invested a lot of effort to improve the conditions for starting innovative ventures in Europe. Our study shows that in order to improve their prospects for achieving real scale, much more focus must be placed on facilitating more and higher quality collaboration among universities, large corporations and small- and medium-sized businesses, said Kai Engel, Partner and Managing Director, Germany, A.T. Kearney.

In order to move beyond Europes current over-reliance on fragmented support services in fostering innovation-driven entrepreneurship and to enable greater public-private collaboration, the report proposes a new European agenda, calling on all stakeholders to collectively focus, partner and connect: 

• Focus  Developing explicit criteria to help stakeholders identify and invest in momentum-building entrepreneurship initiatives
• Connect  Establishing a visible, inclusive network of public and private initiatives, which is considered an important aspect of improving support by 89% of survey participants
• Partner  Achieving both scale and momentum by helping stakeholders to partner across sectors and countries, which is seen as important by 80% of survey participants

The reports findings are based on an online survey taken by 1,132 entrepreneurs across Europe, a series of interviews including European high-level politicians as well as interactive workshops featuring top policy-makers and business leaders over the past year in Davos, London, Berlin, Geneva and Dalian, China. The survey contained in the report was conducted in collaboration with Research and Data Insights, Junior Achievement Young Enterprise, and the European Confederation of Young Entrepreneurs.

The Fostering Innovation-Driven Entrepreneurship in Europe initiative is part of the Forums commitment to improving European competitiveness through research and high-level dialogue. Work packages of the project have been led by members of the World Economic Forums New Champions Community and the European Young Innovators Forum. The projects advisory committee includes ABB, Adecco, A.T. Kearney, Barclays, BT, the European Institute of Technology, the European Private Equity and Venture Capital Association, Henkel, the IMProve European Innovation Management Academy, the Lisbon Council, Microsoft, Royal DSM, Siemens, and Telefonica. The next phase of the project will convene leading businesses, civil society organizations, academics and policy-makers to explore how innovation, growth and jobs can be supported through Europes open innovation ecosystem.